Media release on first quarter 2013

• Increased net income and cash flow from operating activities
• Higher operating EBITDA in Europe and Latin America
• First quarter results in India were impacted by negative market environment
• The Holcim Leadership Journey and the sale of a stake in Australia strengthened financial results
• Reduction of net financial debt over the past twelve months, higher ROIC before tax

Holcim succeeded in increasing net income and cash flow from operating activities, further reducing net financial debt compared with the end of March 2012 and achieving a better ROIC before tax. This was achieved despite the weaker construction activities in India, Morocco and France, the harsh winter in the northern hemisphere and the early Easter period which reduced the number of working days.

Market and weather-induced decreases in sales volumes in all segments and higher variable costs impacted operating results. Price improvements, cost savings, primarily in fixed costs in Europe and Latin America, and the sale of a stake of 25 percent in Cement Australia compensated for this, and as a result Holcim was able to report an increase in net income in the first quarter. This success was substantially supported by the Holcim Leadership Journey.

Group regions Europe and Latin America achieved an improvement of operating EBITDA – in absolute terms and also like-for-like. In Asia, where the growth trend is unbroken in most countries, the considerably weaker results of both Indian Group companies impacted the operating result of the whole region. The smaller Group region Africa Middle East primarily felt the negative effects of Morocco. Overall, like-for-like operating EBITDA decreased by 6.1 percent.

Sales development
Consolidated cement sales decreased by 5 percent to 32.1 million tonnes. Sales increases were achieved primarily by Group companies in Ecuador, Russia and Azerbaijan. Deliveries of aggregates were down by 8.6 percent to 28.6 million tonnes. Favorable market conditions were reported in Switzerland. Declines in aggregates were recorded in Australia, Ecuador and Spain in particular. Sales of ready-mix concrete declined by 16.8 percent to 8.4 million cubic meters. However, this decline was mainly due to restructuring measures. Asphalt sales contracted by 17.7 percent to 1.1 million tonnes. 

Financial results
Consolidated net sales were 7.2 percent lower at CHF 4.3 billion. Operating EBITDA fell by 9.5 percent to CHF 650 million. The main reason for this development was the lower performance of both Indian Group companies. Better results were achieved in Group regions Europe and Latin America. Key drivers of this success were further cost cuts as well as stable or slightly better selling prices. Operating profit came to CHF 270 million, corresponding to a decrease of 17.8 percent. Net income was 164.1 percent higher year-on-year at CHF 295 million, and the share of net income attributable to shareholders of Holcim Ltd increased to CHF 187 million.

Cash flow from operating activities, which is traditionally negative in the first quarter, showed a substantial improvement, up 35.2 percent to CHF -323 million. The main reason for this was an improvement in net working capital. Net financial debt decreased 8.5 percent to CHF 10.8 billion over the past twelve months. In addition, the international rating agency Moody’s changed the outlook of the assigned Baa2 rating to stable from negative. 

Holcim Leadership Journey continues on track
Launched last May, the Holcim Leadership Journey program is progressing in line with targets. Despite the difficult market environment, projects in the Customer Excellence work stream still contributed CHF 26 million to operating profit in the first quarter of 2013; the Cost Leadership work stream strengthened operating profit by CHF 143 million.

Outlook for 2013
Holcim anticipates an increase in sales of cement in 2013, but it will be challenging to reach the previous year’s levels in the aggregates and ready-mix concrete businesses. While Group regions Asia Pacific, North America and Latin America are expected to witness higher sales volumes, Holcim is somewhat less optimistic with regard to Europe and Africa Middle East.

Turning to operating EBITDA and operating profit, the Board of Directors and Executive Committee expect a further improvement of margins. The Holcim Leadership Journey, which will gain further momentum in all streams as planned, will also contribute to this development. Under similar market conditions, significant organic growth in operating EBITDA and operating profit should be achieved in 2013. 

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Holcim is one of the world's leading suppliers of cement and aggregates (crushed stone, sand and gravel) as well as further activities such as ready-mix concrete and asphalt including services. The Group holds majority and minority interests in around 70 countries on all continents.
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