ZURICH (Reuters) – Holcim (HOLN.VX ), the world’s largest cement maker, said cost cuts helped boost profitability in Latin America and Europe as it eked out a small increase in operating profit in the second quarter.
Faced with a slump in the European construction industry, Chief Executive Bernard Fontana has slashed costs and cut capacity in the region, at the same time expanding into high-growth emerging countries such as Indonesia, Brazil and Ecuador.
Earnings before interest, tax, depreciation and amortisation (EBITDA) inched up 0.3 percent to 1.17 billion Swiss francs ($1.25 million) in the second quarter. Analysts on average had forecast a fall of 4 percent to 1.14 billion.
Sales fell 3 percent to 5.3 billion francs, dragged down by falling demand in India, Canada, Mexico and Morocco.
Holcim confirmed its guidance to achieve organic growth in EBITDA and operating profit in 2013. But it omitted the word “significant” which it had used in the previous quarter.
Some analysts had cautioned that Holcim’s guidance for significant organic growth had looked ambitious given weaker than expected economic growth in the first half.
Bad weather has weighed on the sales of cement makers this year, prompting French rival Lafarge (LAFP.PA ) to trim its forecast for market growth to between 0 and 3 percent. It had previously forecast growth between 1 and 4 percent.
Last month, Holcim restructured its operations in India to cut costs as profits at cement makers in the country come under pressure from a slowdown in home building and infrastructure projects.
Shares in Holcim trade at 13.6 times forward earnings over the next twelve months, in line with Lafarge and HeidelbergCement (HEIG.DE ). The stock has gained more than 10 percent since this year’s June 24 low of 63.40 francs.
(Reporting by Caroline Copley- editing by Tom Pfeiffer)
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