UPDATE 3-Holcim Q3 profit beats poll, eyes N.American growth
* Q3 profit flat at 673 mln Sfr, beats 497 mln Sfr forecast
* Sees N.American growth from H2, 2010, cautious on Europe
* Set to exceed cost-saving target for 2009
* Shares up 5.6 pct
(Adds CFO, analyst comment, updates shares)
By Katie Reid
ZURICH, Nov 11 (Reuters) - Cement maker Holcim (HOLN.VX) said stimulus programmes were set to return North America to growth in the second half of 2010 as it posted forecast-beating quarterly figures.
The world's second largest cement maker, which warned European markets would stay tough, easily beat expectations with a third-quarter net profit of 673 million Swiss francs ($667 million), unchanged from the year-ago period. It also said it was on track to exceed its 600 million franc cost-cutting target for 2009.
At 1145 GMT, shares in the group were trading 5.6 percent higher at 73.55 francs, while the Dow Jones Stoxx European construction index .SXOP was 1.5 percent higher and rival Lafarge (LAFP.PA) was up 2.8 percent.
"Holcim results were clearly surprising at almost all levels and especially relative to its peers. It remains the 'primus inter pares' in the sector," said Vontobel analyst Serge Rotzer.
Brightening global economic prospects are helping to lift the outlook for the building industry as a recovery in economic activity is likely to trigger more infrastructure and construction spending.
Lafarge (LAFP.PA) has said it expected developed markets to recover by the second half of next year, while emerging markets could come back sooner, and Mexico's Cemex (CX.N) has said it expects its cement volumes to grow in 2010. [ID:nL6713710] [ID:nN30260976]
Holcim expects earnings before interest, tax, depreciation and amortisation (EBITDA), its own benchmark for core profit, to return to growth next year, but Chief Financial Officer Theophil Schlatter said it was still too early to predict when it would return to a long-term target of 5 percent growth.
MIXED MARKETS
Holcim's strong balance sheet allowed it to take advantage of the global construction slump and snap up debt-laden Cemex's Australian operations at a knock-down price earlier this year, while other rivals have had to divest assets.
"Holcim's results were excellent and clearly better than Lafarge's Q3 2009 performance, mainly helped by a more favourable regional exposure and more effective cost cutting," Helvea analyst Patrick Appenzeller said.
"Therefore, we expect the outperformance of Holcim versus Lafarge to continue. We see significant upside to our profit estimates, especially for 2009 and most probably also for 2010 and beyond," he said.
Holcim expects building activity to remain solid in emerging markets, which account for around 75 percent of Holcim's cement capacity, adding that it anticipates Asia Pacific in particular seeing strong demand.
The group cautioned, however, that some European markets, like Spain, Britain and eastern Europe including Russia, would remain challenging for a longer period.
"More optimistic is Holcim with regard to the development in North America, as building materials markets are expected to return to modest growth in the second half of 2010 on the back of the stimulus programs," it said.
Sales at Holcim fell 18 percent to 5.7 billion francs, slightly missing a Reuters consensus forecast for 5.8 billion, but still indicating that demand was starting to stabilise as sales had fallen 20 percent the previous quarter.
Holcim's steely grasp on costs throughout the crisis has protected its profitability and bottom line from crumbling demand for building materials in Europe and North America.
The group has saved 573 million francs in fixed costs so far this year through job cuts as well as plant closures and its operating EBITDA margin rose to 25.8 percent in the third quarter from 24.8 percent in the previous three months.
Analysts polled by Reuters had on average expected a net profit after minorities of 497 million francs.[ID:nL68202] ($1=1.009 Swiss Franc) (Reporting by Katie Reid; editing by Elaine Hardcastle and Jon Loades-Carter)
