Holcim Lanka maintains steady growth

Ramani Kangaraarachchi

Holcim Sri Lanka has been able to maintain a 25 per cent growth despite the global economic turbulence.

"The construction activities were pretty low during the third quarter of 2008 as not much new commercial projects started and even home building has slow down.

But Holcim Sri Lanka has been able to maintain a 25 per cent growth with difficulties," Managing Director Holcim Sri Lanka Peter Spirig told the Daily News Business.

He said the decline in building activity in the country during the third quarter and increasing costs put pressure on income statement of Holcim Sri Lanka and it has lead to several capacity adjustments which include a number of cost-cutting measures such as reducing imports of cement and energy cost, minimising new recruitments, not filling the vacancies of retiring staff members integrating departments he said.

In the third quarter, the global economy declined much more than expected. Holcim is expecting that the course of business will remain difficult in the coming months.

The construction materials markets of the five Holcim Group regions were affected differently.

The US, the UK and Spain in particular saw sharp falls in demand for construction materials. In contrast, several European Group companies recorded gains in terms of volume, particularly in central, eastern and southeastern Europe.

Holcim operated successfully in Latin America and Group region Africa Middle East. With a few exceptions, capacity in the construction sector of the Asia Pacific region was well utilised and Group companies sold higher volumes.

In view of the increasingly difficult market situation in Spain and the US, it is planned to close the plants Torredonjimeno of Holcim Spain and Dundee and Clarksville of Holcim US. These customers will be served efficiently from the neighbouring plants. Expected closing costs of CHF 300 million will be recognised in the fourth quarter.

On a like-for-like basis and considering the changed economic environment, Holcim Group nonetheless posted encouraging results for the first nine months of the year.

In Group region Asia Pacific, capacity utilisation in the construction industry remained good. Volumes increased in a number of construction materials markets also the higher than average market momentum was partially lost.

This is particularly the case for India, Vietnam, Malaysia, Indonesia and Australia. In Thailand, the political situation created uncertainty among investors in construction projects. In the Philippines and New Zealand, the economic situation deteriorated after a good start at the beginning of the year.

Due to residential construction activity and a number of infrastructure projects, sales of cement by the two Indian Group companies were up compared to the previous-year period.

In a number of market regions, growth in cement consumption was slightly muted. Rising cement imports from Pakistan led to tougher competition in some places.