Holcim, the Swiss company merging with Lafarge of France to create the world’s biggest cement company, said its first half profit increased 5.9 per cent as Middle Eastern, North America and European sales offset foreign exchange losses and restructuring costs.
The earnings missed analyst forecasts and the company’s stock plunged by more than 5 per cent in early trading.
Net income increased to 406 million Swiss francs (Dh1.6 billion) in the first six months of the year from 383m francs in the same period the previous year, the Jona, Switzerland-based company said.
Total cement sales advanced 2 per cent to 70 million tonnes during the period but restructuring and merger costs of 50m francs weighed heavily on earnings before interest tax depreciation and amortisation, it said.
The company’s operations in the United States and Morocco reported especially strong earnings, it said.
“Group regions North America, Africa, Middle East and Europe recorded particularly strong cement sales,” said Bernard Fontana, the company’s chief executive. “Despite progress in a number of countries in Asia Pacific negative exchange rate effects continued to be a main burden on the group’s financial results.”
Holcim and Lafarge agreed in April to merge and create LafargeHolcim in what will be the largest global cement company with operations in 90 countries. The companies have teamed up ahead of the merger to sell off assets in order to avoid any anti-competition concerns by watchdogs. The $40bn merger is planned to happen in the first half of 2015, it said.
“Both companies will continue to consider whether divestments would be necessary where there might be overlaps depending on regulatory requirements,” said Mr Fontana. “The proposed divestments are subject to review and further discussions with the regulatory authorities and to the agreement of our business partners when relevant.”
For the remainder of the year, Holcim expects that cement sales will increase in all regions with North American markets continuing to show the most promise as the US recovers economically. That will come despite a year that will continue to show uneven economic growth.
“Latin America on the other hand could continue to face uncertainties in Argentina but should overall show slight growth in 2014,” said Mr Fontana. “The Asia Pacific region is expected to grow although at a comparatively slower pace than experienced in recent years. Africa and the Middle East is expected to gradually improve.”
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