Holcim to invest US $ 20 mn to develop Ruhuna plant capacity

Ramani KANGARAARACHCHI

Holcim Sri Lanka Lanka will invest US $ 20 million to develop grinding capacity at the Ruhuna plant in Galle to meet the future demand in emerging markets. Vice President Marketing and Sales Viraj Gunasekera told Daily News Business that the grinding capacity will be increased by 600,000 tons once the work is completed in 2013. At present the production stands at 400,000 tons per annum .

He said the hotel chains in the North and East has just started work and there will be a rapid growth of demand for cement in the next 2-3 years. The GDP growth of the country is expected to remain at 6-7 % and demand for cement will be little higher.

Another packing plant also will be set up in Trincomalee with an investment of US $ 4 to 5 million next year.

However,the retail market for cement is expected to be moderate in the coming years, meanwhile the demand for building materials is to rise in the emerging markets in 2012 in Asia and Latin America, as well as in Russia and Azerbaijan. In North America , cement volumes will also increase. In Europe however, sales volumes are expected to decrease in all segments.

Meanwhile, the Holcim Group continues to have the advantage of a strong presence in emerging markets, where construction activity remains high. This unique geographic diversification in the industry helped support sales in the first nine months of 2012 in spite of a difficult market situation in Europe . Compared with the previous year, Holcim achieved higher consolidated sales of cement and nearly stable sales of ready-mix concrete often at better prices. The Group companies in India, the Philippines,Indonesia, Russia,Thailand , Mexico and the USA recorded significantly higher cement sales.

Consolidated cement sales increased by 3 percent to 111.4 million tonnes in the first nine months of 2012. Deliveries of aggregates declined by 7.7 percent to 120.3 million tonnes, and ready-mix concrete volumes contracted by 1.7 percent to 35.5 million cubic meters. Sales of asphalt decreased by 14 percent to 6.6 million tonnes, primarily due to poor business development in the UK .

Despite the difficult market situation in Europe,the consolidated net sales increased by 4.8 % to CHF 16.2 billion and operating EBITDA by 5.9 % to CHF 3.1 billion. Operating profit also increased over proportionally compared with net sales by 7.2 % to CHF 1.9 billion.

These results reflect the solid performance in a number of emerging markets, stronger demand for building materials in North America , improvements in efficiency, and the first successes of the Holcim Leadership Journey. Compared with the previous year, the operating EBITDA margin improved by 0.2 % points to 19.4 %, despite restructuring costs totaling CHF 58 million in nine months in Spain , Brazil , UK , Mexico and now Hungary. On a like-for-like basis, i.e. excluding changes in the scope of consolidation and exchange rates, the Group grew at the operating EBITDA level by 6.4 % in the first nine months of the year. All Group regions achieved organic growth except for Europe and Africa Middle East.

Net income increased by 10.3 % to CHF 1.1 billion and the share of net income attributable to shareholders of Holcim Ltd rose by 9.8 % to CHF 783 million.

Due to the higher operating EBITDA and lower taxes paid, cash flow from operating activities improved by 19.1 %to CHF 1.1 billion. With CHF 11.6 billion, net financial debt remained stable. Gearing improved to 56.3 % (year-end 2011: 58.8).

The Holcim Leadership Journey, a Group-wide programme introduced in May, is progressing positively. Regions and Group companies have already started to implement initial measures and the organizational adjustments at Group level have been made.