Operating profit margin
In the year under review, the Group’s operating profit margin increased by 0.2 percentage point to 12.1 percent. Currency fluctuation and changes in the scope of consolidation had a slightly positive effect on the Group’s margin. On a like-for-like basis the operating profit margin improved by 0.1 percentage point. Adjusted for restructuring and merger costs booked in 2014, the operating profit progressed by 0.9 percentage point on a like-for-like basis. This margin improvement was mostly driven by a strong effect from higher prices underpinned by favorable volume development, while cost containment measures associated to the Holcim Leadership Journey proved to be effective. Adjusted for restructuring and merger costs, fixed costs were stable as compared to the previous year.
At constant scope and exchange rate, operating profit margin in Asia Pacific fell by 0.7 percentage point, as stronger prices were not sufficient to cover the unfavorable effects from inflation-induced increases in input costs. The margin decrease in this Group region was brought about by Holcim Indonesia and ACC in India while improvements in Ambuja Cements in India and Holcim Philippines partly mitigated this drop.
In Latin America, the operating profit margin dropped by 0.4 percentage point on a like-for-like basis. While cost hikes driven by inflation could be passed on to customers through higher prices, the corresponding margin improvement was negatively impacted by a drop in volumes. Holcim Mexico succeeded in improving its margin, but other Group companies such as Holcim Argentina, Holcim Brazil and Cemento Polpaico in Chile failed to match the previous year’s margin, putting pressure on the regional indicator.
In Europe, the operating profit margin grew by 1.2 percentage points like-for-like. Volumes losses were largely compensated by successful price increases and lower costs, partially resulting from the restructuring measures implemented in previous years. Weaker margins recorded in Azerbaijan, Spain and France were offset by growth in most other Group companies and primarily in Aggregate Industries UK and Holcim Italy. Adjusted for restructuring costs booked in Europe, the operating profit margin grew by 2.0 percentage points.
In North America, the operating profit margin grew by a solid 3.1 percentage points on a like-for-like basis, mostly on the account of Holcim US. Strong volume growth and a favorable price development throughout all segments contributed to this success.
The like-for-like operating profit margin was up by 1.2 percentage points in Africa Middle East. Successful price increases in Morocco and overall cost containment in the region (except for Ivory Coast) were the main reasons behind this progress. Furthermore, lower depreciation charges in Guinea contributed positively to the margin growth.
In the cement segment, the operating profit margin decreased like-for-like by 0.6 percent to 17.0 percent. With the exception of Asia Pacific, Latin America and Europe, all Group regions reported a margin improvement in this segment. In the aggregates segment, the margin improved like-for-like by 1.2 percentage points to 8.9 percent, driven by Europe and North America. In the product segment other construction materials and services, the operating profit margin rose by 0.9 percentage point to -0.1 percent on account of the better performance in Europe and North America.