Nov. 11 (Bloomberg) -- Holcim Ltd., the world’s second- biggest cement maker, reported profit that beat analyst estimates on plant closures and said it will exceed a 600 million Swiss-franc ($595 million) savings target for this year.

The company reduced cement capacity by 10 million tons and shut down aggregate and ready-mix concrete operations in weaker markets. That helped save 573 million francs in fixed costs in the first nine months of the year, it said in a statement today.

“They’re well, well ahead on their cost cutting,” said Tim Cahill, an analyst at Davy Stockbrokers, which has an “in line” rating on the stock. “Very good performance by the management team and I think the stock will do better on these numbers.”

Holcim said it will limit spending on existing factories to a minimum while maintaining plans to expand in faster-growing emerging markets. In the Asia-Pacific region it aims to add 7.3 million tons of capacity in 2009 and 5.1 million tons in 2010. The Swiss company has made acquisitions, agreeing to purchase Cemex SAB’s Australian unit for $1.6 billion, as the Mexican company and rivals HeidelbergCement AG and Lafarge SA sell assets to pay down acquisition-driven debts.

Outlook for Markets

“Building-materials markets are expected to return to modest growth in the second half of 2010 on the back of the stimulus programs” in North America, Chief Executive Officer Markus Akermann said. European markets will stay “challenging,” while in emerging markets demand should remain “solid,” and many countries in the Asia-Pacific region will see strong demand, he added.

He predicted earnings before interest, taxes, depreciation and amortization will grow next year, and energy costs are likely to fall.

Holcim’s shares rose 2.55 francs, or 3.7 percent, to close at 72.2 francs in Zurich, after gaining as much as 5.8 percent earlier. It was the second-best-performing stock in the 20- member Swiss Market Index.

Other companies besides Lafarge and HeidelbergCement that may divest building-material holdings include Anglo American Plc, which is considering the sale of its Tarmac unit, which supplies asphalt and aggregates.

Akermann said today he wasn’t interested in acquiring Tarmac as Holcim already had a “strong” position in the U.K. and would face antitrust issues.

Wider Profit Margin

Holcim’s operating profit margin in the third quarter widened to 18.1 percent from 16.3 percent a year earlier, and the company’s debt fell 14 percent to 12.9 billion francs.

Net income in the third quarter totaled 673 million francs, unchanged from a year earlier, the Jona, Switzerland-based company said. The mean estimate of five analysts surveyed by Bloomberg was a profit of 464.6 million francs. Revenue fell 18 percent to 5.69 billion francs.

“The cost savings have taken hold,” said Zuercher Kantonalbank analyst Martin Huesler. “The industrialized markets are clearly better than expected thanks to the cost savings. Perhaps the bottom has been reached.”

Holcim aims to keep its fixed cost base stable next year, excluding spending resulting from added capacity, Akermann said.

The company raised 61 million francs by selling carbon dioxide emission certificates in Europe as a result of reduced cement reduction.

Capital spending for expansion will decrease to 1.3 billion francs in 2010 from 2.4 billion francs this year, while maintenance spending will increase to 500 million francs from 400 million francs, said Chief Financial Officer Theophil Schlatter.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net. Antonio Ligi in Zurich at aligi@bloomberg.net

Last Updated: November 11, 2009 12:20 EST