Operating results fourth quarter

Sales volumes and principal key figures

 

Oct–Dec
20141

Oct–Dec
20131

±%

±%
like-for-like

1

The percentage split disclosed for mature markets and emerging markets is calculated based on the sum of the operating segments Asia Pacific, Latin America, Europe, North America and Africa Middle East, and does not include Corporate/Eliminations.

Sales of cement in million t

34.4

34.6

–0.6

–0.6

– of which mature markets in %

22

21

 

 

– of which emerging markets in %

78

79

 

 

Sales of aggregates in million t

39.4

39.7

–0.7

–0.5

– of which mature markets in %

86

85

 

 

– of which emerging markets in %

14

15

 

 

Sales of ready-mix concrete in million m3

9.2

10.0

–8.0

–7.1

– of which mature markets in %

59

59

 

 

– of which emerging markets in %

41

41

 

 

Sales of asphalt in million t

2.6

2.6

+2.8

+2.8

 

 

 

 

 

Net sales in million CHF

4,867

4,778

+1.9

+1.9

– of which mature markets in %

49

48

 

 

– of which emerging markets in %

51

52

 

 

Operating EBITDA in million CHF

1,006

945

+6.5

+5.9

– of which mature markets in %

42

39

 

 

– of which emerging markets in %

58

61

 

 

Operating EBITDA margin in %

20.7

19.8

 

 

Operating profit in million CHF

598

559

+6.9

+8.9

– of which mature markets in %

35

31

 

 

– of which emerging markets in %

65

69

 

 

Operating profit margin in %

12.3

11.7

 

 

Net income in million CHF

458

319

+43.5

 

Net income – shareholders of Holcim Ltd in million CHF

355

233

+52.5

 

Cash flow from operating activities in million CHF

1,451

1,615

–10.1

–8.1

Demand for cement, aggregates and other construction materials and services is seasonal, as climatic conditions affect the level of activity in the construction sector. Holcim typically experiences a reduction in sales during the first and fourth quarters, reflecting the effect of the winter season in its principal markets in Europe and North America, and tends to see an increase in sales in the second and third quarters, reflecting the effect of the summer season. This effect can be particularly pronounced in harsh winters.

On a like-for-like basis, cement deliveries of 34.4 million tonnes declined by 0.2 million tonnes or 0.6 percent compared to the fourth quarter 2013. The solid growth of 14.6 percent in North America could not make up for volume drops in Europe, Latin America and Africa Middle East while volume growth slowed down in Asia Pacific.

Sales of aggregates reached 39.4 million tonnes. They declined by 0.2 million tonnes or 0.5 percent on a like-for-like basis, impacted by the business restructuring last year in Latin America and lower sales volume in Asia Pacific and Africa Middle East. These unfavorable developments could be partly offset by the robust growth in North America and improvements in Europe. In Europe, volumes slightly progressed in the fourth quarter, backed by lively activity in the United Kingdom and in Romania which compensated for market contraction in other countries such as France, Belgium and Switzerland.

9.2 million cubic meters of ready-mix concrete were supplied in the quarter, a year-on-year reduction of 0.7 million cubic meters or 7.1 percent on a like-for-like basis. With the exception of North America, all regions recorded lower volumes. In Europe, the drop was mostly driven by a shrinking construction market in Western and Central Europe. In Latin America especially, volumes dropped as the ready-mix concrete business has been rationalized and re-oriented toward the most-profitable markets.

Million CHF

Oct–Dec
2014

Oct–Dec
2013

±%

±%
like-for-like

 

 

 

 

 

Net sales by region

 

 

 

 

Asia Pacific

1,764

1,679

+5.1

+2.4

Latin America

770

793

–2.9

+1.5

Europe

1,303

1,367

–4.7

–3.6

North America

958

828

+15.7

+14.4

Africa Middle East

207

218

–5.4

–6.5

Corporate/Eliminations

(134)

(107)

 

 

Total

4,867

4,778

+1.9

+1.9

 

 

 

 

 

Operating profit by region

 

 

 

 

Asia Pacific

232

229

+1.1

–1.1

Latin America

174

147

+18.1

+19.1

Europe

113

121

–6.5

+8.6

North America

99

52

+90.0

+88.8

Africa Middle East

49

54

–10.1

–10.5

Corporate/Eliminations

(68)

(44)

 

 

Total

598

559

+6.9

+8.9

 

 

 

 

 

Cash flow

 

 

 

 

Cash flow from operating activities

1,451

1,615

–10.1

–8.1

 

 

 

 

 

Net capital expenditures on property, plant and equipment to maintain productive capacity and to secure competitiveness

(373)

(346)

–7.9

 

Investments in property, plant and equipment for expansion

(237)

(373)

+36.5

 

Financial di(in)vestments net

39

(74)

+152.5

 

Cash flow from investing activities

(570)

(793)

+28.1

 

Fourth quarter consolidated net sales increased year-on-year by CHF 89 million or 1.9 percent to CHF 4,867 million. A favorable currency translation effect of 0.4 percent almost canceled out the impact from the change in structure of -0.4 percent on net sales. At constant scope and exchange rates consolidated net sales rose by CHF 90 million or 1.9 percent. The quarterly net sales increase was supported by favorable price development in all regions and primarily North America, Europe and Asia Pacific. However, negative volume effect in Europe, Latin America and Africa Middle East harmed the Group’s net sales.

The quarterly operating EBITDA rose year-on-year by CHF 62 million or 6.5 percent to CHF 1,006 million. The currency effect of 0.6 percent slightly benefited the operating result, while the change in structure had no significant influence. On a like-for-like basis, the operating EBITDA rose by CHF 55 million or 5.9 percent. Adjusted for restructuring costs of CHF 33 million and merger costs of CHF 23 million booked in the quarter, the like-for-like operating EBITDA growth reached CHF 111 million or 11.8 percent.

The quarterly operating profit increased year-on-year by CHF 39 million to CHF 598 million. Adjusted for the positive currency impact of 0.9 percent and the unfavorable change in structure effect of 2.9 percent, the like-for-like operating profit rose by CHF 50 million or 8.9 percent. Excluding restructuring and merger costs of CHF 58 million, the operating profit growth reached CHF 108 million or 19.2 percent on a like-for-like basis. This improvement was largely driven by North America, where good market conditions allowed for favorable price and volume development. By contrast with the sluggish development observed in the previous quarters in 2014, like-for-like operating profit grew by 19.1 percent in Latin America thanks to lower fixed costs and successful price increases in some countries. After a setback in the third quarter 2014, Europe once again posted a positive performance despite merger-related costs. In Asia Pacific, operating profit slightly missed last year’s level as effects from cost increases could not be compensated by favorable volume and price development. Africa Middle East, affected by volume reductions in its chief markets, reported negative operating profit growth in the quarter.

The quarterly operating profit margin increased like-for-like by 0.8 percentage point to 12.3 percent. Adjusted for merger and restructuring costs, the margin rose by 2.0 percentage points on a like-for-like basis to 13.5 percent.

Fourth quarter cash flow from operating activities decreased year-on-year by CHF 164 million or 10.1 percent. On a like-for-like basis, the cash flow from operating activities declined by CHF 130 million or 8.1 percent; the positive operating EBITDA variance was offset by the unfavorable change in net working capital recorded in all regions and primarily Europe.