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WRAPUP 1-Harsh winter hits sales at big cement makers
May 8, 2013 / 8:10 AM / 5 years ago

WRAPUP 1-Harsh winter hits sales at big cement makers

* Sales hit by wintry weather in Europe, U.S.

* Holcim operating profit hurt by weaker Indian results

* Sales of Cement Australia boost Holcim net profit

* Cartel fine dents HeidelbergCement net profit

* Both firms plan cost cuts, price hikes

ZURICH/FRANKFURT, May 8 (Reuters) - Holcim and HeidelbergCement said on Wednesday a long winter in Europe and North America contributed to a fall in first-quarter sales, putting more pressure on the cement makers’ plans to cut costs and raise prices.

The bad weather added to problems of overcapacity in the construction sector, which is battling weak construction spending due to government austerity measures and sluggish economic growth.

In Austria, Wienerberger, the world’s biggest brickmaker, also blamed the snowy winter in Europe for holding back building activity and contributing to a fall in first-quarter profits.

Sales at Switzerland-based Holcim fell 7.2 percent to 4.3 billion Swiss francs ($4.57 billion) in the quarter, falling short of the average analyst forecast of 4.6 billion in a Reuters poll.

At Germany’s HeidelbergCement, sales dropped to 2.76 billion euros ($3.61 billion), compared to 2.8 billion euros expected by analysts.

In response to the weak economic climate, Holcim and HeidelbergCement have been cutting costs and selling non-core assets.

Holcim, the world’s largest cement maker by market value, started a cost-cutting drive last year to boost profits by at least 1.5 billion francs by the end of 2014. The company said the programme contributed 169 million to operating profit in the first quarter.

Holcim said it expected further improvement of operating margins this year, helped by costs cuts and price hikes.

It also stuck to its prediction for higher cement sales in Asia, North America and Latin America, but remained less optimistic about Europe, Africa and the Middle East.

HeidelbergCement said in February it aimed to accelerate a cost-cutting programme to save an extra 150 million euros this year, bringing its target for cutting annual costs over three years ending 2013 to 1 billion euros.

The company, based in Heidelberg in southern Germany, said it was continuing to raise prices.

HeidelbergCement’s net profit in the quarter, which missed analysts’ expectations, was affected by increased provisions for a cartel fine for cement price fixing.

It was fined 160 million euros for fixing the cement price with peers including Holcim and Lafarge from 1990 to 2002.

The company posted a net loss after minorities of 235 million euros ($308 million) from 208 million euros in the same period a year earlier.

Holcim’s first-quarter operating profit fell 17.8 percent to 270 million francs, hit by weaker results from its Indian subsidiaries.

Net profit increased to 187 million francs from 10 million francs, boosted by the sale of its 25 percent share in Cement Australia to HeidelbergCement.

Holcim shares rose 2.4 percent to 74.25 euros at 0750 GMT, while HeidelbergCement shares dropped 0.7 percent to 55.65 euros, compared with a 0.3 percent increase in the sector .

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