Results for 2003: Holcim improves efficiency and reports significantly higher Group net income despite weak dollar

9 March 2004

Holcim generated substantially better results and margins against a weak overall economic environment. This impressive performance is the result of measures to enhance shareholder value, as well as the Group's unique global presence in the industry with its clear focus on growth markets. However, the weak dollar had a negative impact on the results.

Consolidated operating profit grew 1.2 percent to CHF 1.925 billion (2002: 1.903), while consolidated net income jumped 35.6 percent to CHF 686 million (2002: 506). The Board of Directors will be proposing to the Annual General Meeting that the dividend be increased by CHF 0.15 to CHF 1.15 gross per registered share.

  • Strategy of strengthening positions in growth markets has again proven effective, and measures to increase shareholder value are producing results.
  • Increased sales volumes in all three core segments of cement, aggregates and ready-mix concrete.
  • Consolidated net sales up 2.4 percent in local currency; down 3.2 percent in Swiss francs.
  • Thanks to cost savings and efficiency enhancements, operating profit rises 9.7 percent in local currency, and also shows an increase of 1.2 percent in Swiss francs.
  • Group net income after minority interests improved by 45.7 percent in local currency and 35.6 percent in Swiss francs.
  • The operating EBITDA margin reaches 26.3 percent.
  • The Board of Directors will be proposing to the Annual General Meeting on May 14, 2004, that the dividend be raised by 15 percent.
  • Holcim is confident that the internal operating growth seen in 2003 will continue in 2004.


Sales trend and financial results

Holcim's cement and clinker deliveries increased to 94.3 million t (2002: 90.5). Sales of aggregates were lifted to 95.9 million t (2002: 92.1), and ready-mixed concrete volumes reached 27.0 million m3 (2002: 25,3).

On consolidated net sales of CHF 12.600 billion (2002: 13.010) Holcim achieved an operating EBITDA of CHF 3.311 billion (2002: 3.341), an operating profit of CHF 1.925 billion (2002: 1.903) and a Group net income after minority interests of CHF 686 million (2002: 506). Earnings per dividend-bearing registered share came to CHF 3.51 (2002: 2.59). Cash flow from operating activities also significantly exceeded the previous year at CHF 2.619 billion (2002: 2.388).


Key influencers

In our core segment of cement, sales rose across all five Group regions. Key factors contributing to this growth were the initial full-year consolidation of our Group company in the Philippines and the acquisition of a cement plant in Spain. Nevertheless, given the much weaker US dollar the impact of our successes in the market place was not fully reflected in the consolidated accounts. For instance, sales increased in local currency terms but after translation into Swiss francs there was a slight fall. Group regions Africa Middle East and Asia Pacific both achieved higher operating results, and this was reflected in our overall operating results. Latin America again provided the greatest contribution. The increase in Group net income after minority interests is the culmination of improvements in efficiency, an increase in ordinary income, reduced financial charges and lower minority interests. Lower financing charges and successful management of net working capital enabled an increase in cash flow despite negative currency influences.

Investment activity

Net investments in property, plant and equipment were up CHF 40 million at CHF 1.292 billion. The slightly higher level of investment reflects the construction and modernization of cement plants in the US, Romania, South Africa, Costa Rica and Vietnam. Investments in existing plants to streamline and improve production and distribution processes as well as environmental protection and occupational safety amounted to CHF 915 million (2002: 917).

Proposed dividend

The Board of Directors will be proposing to the Annual General Meeting on May 14, 2004 that the gross dividend be increased by CHF 0.15 to CHF 1.15 per registered share.

Election to the Board of Directors

The Board of Directors has also decided to propose to shareholders at the General Meeting that Mr H. Onno Ruding, who holds a doctorate in economic science, be elected to the Board of Directors of Holcim Ltd. Onno Ruding (65) is a citizen of the Netherlands. He sat on the Board of Governors of the World Bank for several years, and from 1982 until 1989 served as Finance Minister of the Netherlands. Currently, he is also President of the Board of the Centre for European Policy Studies (CEPS) in Brussels.

Outlook for 2004

Although only a fairly modest brightening of activity is expected in the construction industry, Holcim is nevertheless optimistic that it can sell more cement, aggregates and concrete in key markets. Holcim will benefit in particular from a strengthening of business in the developing countries and emerging markets, and should derive above-average benefits from greater efficiency in North America.

A solid balance sheet enabled Holcim to invest selectively in new markets or Group companies. Holcim's worldwide presence and enhanced cost efficiency justify the confidence of the Board of Directors and Executive Committee that the internal growth in operating profit seen in 2003 will continue in 2004.

Key Figures
Holcim Group   2003 2002 +/-% +/-% in local currency
Production capacity cement in m t 145.2 141.9 +2.3  
Sales of cement and clinker in m t 94.3 90.5 +4.2  
Sales of aggregates in m t 95.9 92.1 +4.1  
Sales of ready-mix concrete in m m3 27.0 25.3 +6.7  
Personnel   48 220 51 115 -5.7  
Net sales in m CHF 12 600 13 010 -3.2 +2.4
Operating EBITDA in m CHF 3 311 3 341 -0.9 +6.8
EBITDA in m CHF 3 383 3 399 -0.5 +6.6
Operating profit in m CHF 1 925 1 903 +1.2 +9.7
Group net income before minority interests in m CHF 932 797 +16.9 +26.6
Group net income after minority interests in m CHF 686 506 +35.6 +45.7
Cash flow from operating activities in m CHF 2 619 2 388 +9.7 +17.4
Gearing in % 87.4 93.9    

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Holcim is one of the world's leading suppliers of cement, aggregates (gravel and sand), concrete and construction-related services. The Group holds majority and minority interests in more than 70 countries on all continents.

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