Holcim Scales Back 2013 Profit Forecast on Global Economy

Holcim Ltd. (HOLN), the world’s largest cement maker, lowered its profit forecast for 2013 as the worldwide economy grew less than expected in the first six months and demand fell short of forecasts from India to Mexico.

Second-quarter net income rose 1.7 percent to 383 million Swiss francs ($410.6 million) from 377 million francs a year earlier, the Jona, Switzerland-based company said in a statement. Analysts surveyed by Bloomberg predicted 369 million francs. Sales of 5.3 billion francs were less than the 5.5 billion-franc average estimate.

“Global economic growth in the first half of 2013 was weaker than foreseen,” Holcim said, adding that construction activity was hurt by bad weather for building. Excluding acquisitions and disposals, operating earnings before interest, taxes, depreciation and amortization and operating profit are likely to increase this year, Holcim said, scaling back from a May 8 forecast of “significant organic growth.”

Chief Executive Officer Bernard Fontana, the first outsider to lead Holcim when he took over last year, is pressing ahead with plant closings across Europe to free up cash for investments in cement plants in Asia and Latin America. French competitor Lafarge SA (LG) said July 26 that it will sell more assets to cut debt after a decline in European demand and poor weather for construction cut second-quarter profit.

Lafarge, like Holcim, is cutting costs and pushing sales of higher-margin services to ease debt, amid a lingering slump in Europe’s construction activity. Fontana has pledged to gain as much as 700 million francs in operating profit this year from tweaking pricing, closing plants and cutting energy costs under Holcim’s Leadership Journey reorganization program.

Operating profit rose by 376 million francs in the first half as a result of Leadership Journey measures, Holcim said.

Holcim stuck to a forecast for increasing cement sales this year, driven by higher sales in Asia Pacific and Latin America, while lowering its prediction for North America, saying that it now expects sales to be unchanged compared to a previous forecast for growth.

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

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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