In the first half of 2015, Holcim generated higher cash flow from operating activities and increased net income supported by the gain from the divestment of the group’s minority shareholding in Siam City Cement (Thailand) in March. However, Holcim was faced with an overall challenging development as lower than anticipated demand in some markets caused volume declines in cement and impacted financial performance. Positive dynamics in markets such as the United Kingdom, the United States, Mexico and the Philippines were not able to compensate for these effects.
Consolidated cement volumes decreased 2.0 percent to 67.6 million tons as group regions Asia Pacific, Europe and Africa Middle East reported declines. Cement volumes did not decline in North America and Latin America.
Adjusted for merger-related costs, operating EBITDA was lower, despite the positive developments in the group regions of North America and Latin America. Operating profit adjusted for merger-related costs also declined. While group companies including Aggregate Industries UK, Holcim (US), Holcim Mexico and Holcim Spain reported increased like-for-like financial performance, the development in Indonesia, at Ambuja Cements, and in Switzerland and France was less favorable.
Like-for-like net sales across the group were almost unchanged in the first half of the year. Reported net sales were down 3.1 percent to $8.95 billion, as better performance in North America could not compensate for lower sales in other group regions.
Operating profit adjusted for merger-related costs of $89 million was down 5.5 percent to $944 million. The adjusted operating profit margin decreased to 10.6 percent. Reported operating profit decreased by 12.3 percent to $856 million, as increases in the group regions Latin America and North America were not able to compensate for merger-related costs and lower performance in Asia Pacific, Europe and Africa Middle East.
Cement volumes should increase in all group regions in 2015 with the exception of Europe and Africa Middle East, according to the company. On a stand-alone basis and unconnected to the merger with Lafarge, it would have expected like-for-like operating profit adjusted for merger-related cost to be approximately 10 percent below the low end of the initial guidance of $2.8 billion to $3.0 billion in 2015. Following the successful completion of the merger the stand-alone guidance is not relevant anymore as LafargeHolcim results will be impacted by several items including required divestments and ramp-up of the synergies.
