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Holcim’s Europe Restructuring Slows Credit Improvement: Moody’s

Holcim Ltd.’s (HOLN) accelerated restructuring program to counter weaker demand for building materials in Europe will slow the recovery of the firm’s credit metrics this year, Moody’s Investors Service said.

Revamp costs of at least 100 million francs ($109 million) in the fourth quarter will give the cement-maker a worse-than- expected cash position at year-end, Moody’s analysts said in a note published today. The ratings firms expects the cuts to boost Zurich-based Holcim’s credit metrics “from a strategic medium- to long-term perspective.”

Holcim, the only one of its peers to have kept an investment grade rating, has had to double this year’s restructuring costs and is writing off 410 million francs of property plant and equipment. Chief Executive Officer Bernard Fontana is deepening a European savings effort which has already included plant closures from Hungary to Spain.

France’s Lafarge SA (LG), the second largest-cement maker behind Holcim will follow Holcim in announcing restructuring measures in Europe over the next one to two years, Moody’s analyst Stanislas Duquesnoy said in a phone interview.

Holcim’s retained cash flow as a percentage of net debt, a metric Moody’s uses to assign ratings, has improved materially since the Swiss firm was assigned a negative outlook on its Baa2 rating in September 2011.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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