In comparison to 2013, Holcim’s net sales fell 3.1 per cent from CHF19.7 billion ($AUD26.6 billion) to CHF19.1 billion ($AUD25.8 billion) in 2014. The company’s operating profit also decreased 1.7 per cent from CHF2.4 billion ($AUD3.2 billion) to CHF2.3 billion ($AUD3.1 billion), and its operating EBITDA was down 3.8 per cent from CHF3.9 billion ($AUD5.3 billion) to CHF3.7 billion ($AUD5.1 billion).
These negative results were mainly attributed to unfavourable currency effects paired with costs associated with Holcim’s impending merger with fellow international construction materials supplier Lafarge.
According to the annual report, Australian net sales to customers in 2014 were CHF1.6 billion ($AUD2.2 billion), down on CHF1.9 billion ($AUD2.5 billion) in 2013. The sales for the broader Asia-Pacific region (incorporating Australia) did not fare much better, with operating profit down 9.4 per cent from CHF1 billion ($AUD1.4 billion) to CHF934 million ($AUD1.3 billion) and net sales decreasing 4.3 per cent from CHF7.3 billion ($AUD9.8 billion) to CHF7 billion ($AUD9.4 billion). This was also said to be due to negative foreign exchange effects.
Reduced construction activity impacts results
Holcim’s full year report for 2014 noted that its Australian business had been impacted by the “sharp decline” in resource sector investment, with aggregate volumes dropping. The decrease in Australia’s total construction activity was also mentioned, although the strong growth of the residential construction sector was acknowledged.
“In response to a continuing low growth environment and the decline of resource sector investment, Holcim Australia adjusted its footprint and reduced headcount to be more agile and effective,” the report read.
Conversely, ready-mix concrete shipments and like-for-like cement volumes in Australia increased, despite reduced demand from the resources sector.
Looking ahead, Holcim’s report indicated that the company believed the road infrastructure and residential sector would continue to expand in Australia over 2015 but not enough to mitigate the decline in construction activity in the resources sector.
At a global level, the report stated, “Holcim expects for 2015 that the global economy continues its gradual recovery … In this environment, cement volumes should increase in all group regions in 2015 with the exception of Europe. Aggregate and ready-mix concrete volumes are expected to increase.”
The report outlined the company’s expectations that the Asia Pacific region would grow, although still at a “modest pace” and forecast like-for-like operating profit adjusted for merger-related costs to be between CHF2.7 billion ($AUD3.6 billion) and CHF2.9 billion ($AUD3.9 billion) in 2015.
“Higher pricing and ongoing cost savings are anticipated to offset cost inflation, leading to a further expansion in operating margins in 2015,” the report added.
Holcim’s full year results are available at www.holcim.com