Business in Europe and North America strongly suffered from the economic downturn and the severe and prolonged winter. Holcim achieved organic growth in operating EBITDA in the Group regions Latin America and Asia Pacific. Remarkable progress was also made versus the fourth quarter, particularly in India. Overall, Africa and the Middle East reported only a moderate downturn.

The cost-cutting program ongoing at all levels and the rapid reduction in capacity had a positive impact on fixed costs. Holcim succeeded in scaling back expenses in administration, sales and distribution.

Investments in property, plant and equipment for maintenance and financial investments were significantly reduced. However, the 2009 – 2012 capacity expansion program approved by the Board of Directors and the Executive Committee largely continued as planned, even though the associated investments were somewhat lower than in the first quarter of 2008.

Holcim attaches great importance to a strong balance sheet and solid liquidity. This policy yields fruit. Since the beginning of the year, CHF 2.5 billion have been refinanced at competitive terms.

Consolidated deliveries of cement decreased by 13.2 percent to 29.7 million tonnes. Sales volumes of aggregates declined by 23.2 percent to 25.1 million tonnes. Ready-mix concrete sales decreased by 17.1 percent to 8.7 million cubic meters. Asphalt sales came to 1.6 million tonnes, which represents a decline of 15.8 percent.

With consolidated net sales of CHF 4.523 billion (-17.9 percent) operating EBITDA declined by 33.7 percent to CHF 763 million. The operating EBITDA margin reached 16.9 percent (first quarter 2008: 20.9). Cash flow from operating activities was negative in the first quarter as expected. However, at CHF -161 million, the previous year's level was only marginally missed despite the lower operating EBITDA. This was due to a vigorous focus on net current assets, particularly the efficient management of accounts receivables and the systematic reduction of inventory. Net income decreased by 62 percent to CHF 195 million. Net income attributable to equity holders of Holcim Ltd declined by an above-average 80 percent to CHF 74 million. This reflects among other things the lower contribution from Europe.

Declining economy and hard winter in Europe
Whereas at the beginning of 2008 the construction sector was still largely sound and mild temperatures prevailed, in the first quarter of 2009 the economic situation and prolonged cold spells led to a sharp decline in deliveries of building materials.

First quarter results 2009 - Europe

Due to the adverse weather conditions in France and Belgium, Holcim delivered less building materials. Structural and civil engineering projects were affected; the commercial, industrial and housebuilding sectors clearly felt the weaker economy. The Group company in the Netherlands increased its sales volumes slightly in comparison with the first quarter of 2008. Business activity at Aggregate Industries UK was affected by a combination of bad weather and economic conditions. However, the stimulus programs initiated by the government are beginning to bolster road building. In Spain, the downturn in the construction industry continued. Both Group companies continued to scale back production capacity and mothballed a number of quarries and ready-mix concrete plants. Amid declining cement exports, Holcim Germany continued deliveries to construction sites which had started the previous year, but new projects were scarce. In Southern Germany and Italy, deliveries declined because of market conditions and the winter weather. In Switzerland, capacity in the construction sector remained well utilized, but here too low temperatures and the weakening market led to lower sales volumes.

In Eastern and Southeastern Europe, the decline in market momentum in the construction sector experienced since autumn 2008 continued. This was compounded by the harsh winter, causing a drop in deliveries of cement and ready-mix concrete throughout the region. Particularly affected were the Group companies in Hungary, Slovakia and the Czech Republic. In Bulgaria, deliveries were adversely affected by cement imports, and in Croatia and Romania liquidity bottlenecks of clients led to a slowdown in demand. In Russia, construction activity virtually came to a standstill because of the financial crisis and falling commodity prices. Amid increasingly intense competition, Alpha Cement posted a significant loss in volumes. Azerbaijan has recently seen an increase in shipments of cement from neighboring countries, while at the same time, there has been a noticeable decline in domestic demand for building materials, particularly in the housebuilding and industrial sectors. As a result, Garadagh Cement sold less cement. In the eastern European markets including Russia, clinker and cement production was adjusted in line with demand by temporary shutdowns.

Consolidated cement sales in Europe declined by 30.1 percent to 5.1 million tonnes. Deliveries of aggregates were down 25.7 percent to 16.2 million tonnes. Sales of ready-mix concrete decreased by 21.3 percent to 3.7 million cubic meters.

As a result of a decline in demand across the region and weather-related delivery cancellations, Group region Europe’s operating EBITDA decreased by 71.9 percent to CHF 119 million. The full impact of the cost-cutting measures initiated last autumn particularly in Spain and in the UK has not yet been seen. Accordingly, internal operating EBITDA development was negative at -69.3 percent.

North America still in the grip of recession
The US recession paralyzed construction activity at all levels. This had an increasingly negative effect on the Canadian economy. North America also suffered from an exceptionally hard winter, which made pouring concrete impossible in many parts of the country and further depressed the market.

First quarter results 2009 - North America

Holcim US sold less cement in all regions. In particular, the markets adjacent to the Mississippi/Missouri River as well as those in Texas were strongly affected. Residential construction activity was extremely weak in these areas; numerous commercial and industrial projects were halted. On the east coast and in the northeast of the US, heavy snowfall paralyzed construction activity. The number of private building starts remained at a very low level. Demand for building materials was at least partly supported by the government's multi-year infrastructure plan and by major investment projects in the energy sector. Thanks to its broad product range, Holcim US was able to partially offset some of the negative market factors. With the decision to mothball two more plants – Artesia and Mason City – with a total annual capacity of 1.4 million tonnes of cement, the adjustment to the lower demand continues.

For the reasons mentioned, Aggregate Industries US also saw a further decline in sales of aggregates, ready-mix concrete and asphalt. The extensive cost-cutting measures were systematically continued and the efforts to reduce capacity were stepped up.

Market and weather conditions also negatively influenced Holcim's sales of cement, aggregates and ready-mix concrete in Canada. In Ontario in particular, demand was hit by the sharp decline in residential and industrial construction. In the provinces of Quebec and Alberta, the decline in volumes was less pronounced.

Cement deliveries in Group region North America declined by 33.3 percent to 1.8 million tonnes. Sales of aggregates fell by 30.8 percent to 4.5 million tonnes, and volumes of ready-mix concrete were down by 27.3 percent to 0.8 million cubic meters.

Because of the decline in sales volumes, consolidated operating EBITDA was negative at CHF -54 million (first quarter 2008: -14). This was due to the deterioration in business activity, particularly at Holcim US. In contrast, Aggregate Industries US reported a reduction in the seasonal loss. This confirms that the cost-cutting measures introduced last year are starting to have an effect. St. Lawrence Cement (since April 2009 Holcim Canada) posted a better result compared with the first quarter of 2008. Internal operating EBITDA deteriotated in this Group region by 271.4 percent.

Regionally different but overall satisfactory growth in Latin America
In Latin America, the construction sector has proved to be much more stable than in North America or Europe. However, the countries to the south of the US – particularly Mexico – increasingly felt the impact of the US recession.

First quarter results 2009 - Latin America

Holcim Apasco, which operates throughout Mexico, was affected by the weaker domestic demand and lost volumes across all segments. Exports of clinker and cement also declined. At least, the government's economic stimulus program in the center and south of the country generated some positive impetus.

In El Salvador, investment activity was quite restrained in the run-up to the presidential elections. Cement deliveries also decreased in Costa Rica and Nicaragua. Many projects were postponed, amongst other things because of greater difficulty to access credits.

Holcim Ecuador continued to benefit from solid demand. Government-subsidized housebuilding and expansion of transport infrastructure led to volume increases in all segments. In Colombia, construction activity decreased slightly after the previous year's strong growth, but deliveries of aggregates and ready-mix concrete still increased. At Holcim Brazil, construction activity was dampened by heavy rainfalls and a decline in demand for building materials of the export-oriented business sectors. The Group company focused on products with high margins, deliberately accepting a drop in volumes of cement. Ready-mix concrete showed a positive development. Minetti in Argentina delivered slightly less cement, but increased sales in the downstream segments. In Chile, Cemento Polpaico sold less aggregates and ready-mix concrete due to the market entry of new competitors.

The Group companies affected by the weaker market conditions responded swiftly and adjusted production capacity. Measures included the temporary closure of one kiln line at the Ramos Arizpe (Mexico), Maya (El Salvador), Pedro Leopoldo (Brazil) and Cerro Blanco (Chile) plant. At the same time, the ready-mix concrete network was streamlined in several markets.

Cement deliveries in Group region Latin America were down by 16.7 percent to 5.5 million tonnes. Sales of aggregates decreased by 3.3 percent to 2.9 million tonnes. Volumes of ready-mix concrete diminished by 14.3 percent to 2.4 million cubic meters.

Holcim Apasco only narrowly missed its previous year's result in local currency. Apart from the Central American Group companies and Cemento Polpaico, all other companies in Group region Latin America improved their results. Due to the strong Swiss franc, operating EBITDA for Group region Latin America decreased by 10.9 percent to CHF 253 million. The Group region posted internal operating EBITDA growth of 5.3 percent. This also reflects the rapid implementation of the cost-cutting programs and the stable price environment.

After Holcim Venezuela was nationalized in 2008, the Swiss parent company has not received compensation, despite the fact that bilateral investment protection agreements are in place between the two countries. Therefore, the matter has been taken to the competent court of arbitration at the World Bank in Washington D.C. Holcim is claiming that the Venezuelan state owes it compensation at the market value for 100 percent of the share capital in Holcim Venezuela.

Stable construction materials markets in Africa and the Middle East
In Group region Africa Middle East, activity was satisfactory, but growth slowed compared with the first quarter of 2008.

First quarter results 2009 - Africa, Middle East

Holcim Morocco continued to benefit from residential construction and infrastructure projects. However, a combination of January's heavy rainfall and weaker market conditions led to a decline in the sales of building materials in all segments. Holcim Lebanon increased its domestic sales of cement and ready-mix concrete. The export of cement proved more difficult due to the partial import ban imposed by Syria and the increased competitive pressure in Iraq's deficit market. In West Africa, cement sales were above the level of the previous year. In the Indian Ocean area, the political crisis has paralyzed the construction industry in Madagascar. La Réunion and Mauritius also experienced a subdued start of the year.

Cement sales decreased by 16 percent to 2.1 million tonnes in Group region Africa Middle East, but it should be borne in mind that Egyptian Cement was only deconsolidated at the end of January 2008. Sales of aggregates and ready-mix concrete volumes remained stable at 0.4 million tonnes and at 0.2 million cubic meters, respectively.

The Group strengthened its position in the Gulf region with the addition of the newly consolidated Qatar-based grinding capacity of Holcim Trading and the commissioning of a second cement mill at National Cement in Abu Dhabi, an affiliate of Holcim. At the beginning of March, the new Mfamosing plant in Southeastern Nigeria started cement production. This plant with an annual capacity of 2.4 million tonnes of cement is consolidated using the proportionate method of consolidation.

Group region Africa Middle East’s operating EBITDA declined by 25.7 percent to CHF 78 million. Holcim Lebanon as well as the West African group of countries managed by Holcim Trading recorded an improved financial result. The other Group companies did not reach the encouraging results of the first quarter of 2008. Internal operating EBITDA development stood at -12.4 percent.

Positive business development in Asia Pacific
The construction sector in most of Group region Asia Pacific operated at capacity, and demand for building materials was brisk, accordingly. Particularly in India, the Group companies benefited from rural housebuilding and the government’s economic stimulus program. However, growth momentum in some countries was slowed by the impact of the global economic crisis, and Thailand in particular continued to suffer from political instability.

First quarter results 2009 - Asia Pacific

The two Indian Group companies ACC and Ambuja Cements increased their sales of cement significantly in all areas. Holcim Bangladesh also recorded a rise in sales volumes. Sri Lanka, Malaysia and Thailand experienced a decline in cement consumption. At the Saraburi plant, Siam City Cement had to temporarily close another kiln line in response to falling cement and clinker exports. Holcim Vietnam held its own in a rather difficult cement market and was able to significantly increase sales of ready-mix concrete.

The Philippine Group company increased its sales of cement and ready-mix concrete, while reducing exports of clinker and cement in favor of domestic demand. Holcim Indonesia's exports more than compensated for a dip in domestic cement sales caused by market and weather factors.

In Australia, Cement Australia's sales suffered from a weaker market coupled with adverse climatic conditions. Floods in the north of Queensland and a record heat wave in the state of Victoria led to delays in important road building projects. In New Zealand, the recession continued to soften demand for building materials. Holcim was only able to achieve higher sales volumes in the aggregates segment.

Cement deliveries in Group region Asia Pacific reached 16.8 million tonnes. The Indian Group companies and Holcim Indonesia were key drivers of this positive sales development. Sales of aggregates increased by 10 percent to 1.1 million tonnes. Ready-mix concrete delivery volumes were down by 5.9 percent to 1.6 million cubic meters. This was due to the restrained construction activity in the urban centers of Jakarta and Bangkok and a decline in business activity in New Zealand.

In local currency terms, virtually all Group companies in Asia Pacific increased their operating EBITDA. The two Indian Group companies made a significant step forward. The companies in Vietnam, the Philippines and Indonesia also improved their results. Although the majority of local currencies lost ground against the Swiss franc, massively in some cases, the operating EBITDA of this Group region increased by 4 percent to CHF 419 million. The Group region posted positive internal operating EBITDA growth of 17.9 percent.

Outlook
The global crisis combined with the weather-related sluggish start to the new year in many construction markets confirms that 2009 will turn out to be a difficult year. In Europe and North America, the next few months will show to what extent the decline in demand for building materials is attributable to the hard winter as opposed to the recessionary environment. It is remarkable that Group regions Latin America and in particular Asia Pacific have posted organic growth at operating EBITDA level.

Because of the difficult economic environment, the Board of Directors and the Executive Committee still refrain from communicating any predictions about the Group's performance in 2009. Holcim continues to concentrate on those factors that management can influence. The cost-cutting programs and the quick shutdown of excess capacity will offset the effects of the decline in sales. Priority is given to the financial stability of the Group. A virtually stable cash flow from operating activities, compared with the first quarter of 2008, and the successful capital market transactions are testimony to the success of the respective actions.

First quarter results 2009 - Key figures