Holcim beats savings target, Lafarge merger on track

FRANKFURT: Swiss cement maker Holcim reported 2014 profits slightly above forecast after exceeding its cost-cutting target and said its merger with France's Lafarge was on track to complete in the first half of the year.

Holcim on Monday said net sales fell 3 percent to 19.1 billion Swiss francs ($20.2 billion) mainly due to negative currency effects, but rose 3 percent on a like-for-like basis. The sales figure was broadly in line with Reuter’s poll forecasts.

Holcim plans an all-share merger with its French peer to better cope with overcapacity and sluggish demand dogging the sector since the 2008 economic crisis. The merger will create the world's biggest cement maker with $44 billion in sales.

The company said it would pay a dividend of 1.30 francs per share for 2014, below the poll average, after cash flow from operating activities dropped 10 percent to 2.5 billion francs.

"Holcim's results were broadly in-line with consensus expectations and once again confirm the better shape of the Swiss company versus its designated merger partner Lafarge, questioning the exchange ratio for the merger," Baader-Helvea analyst Patrick Appenzeller wrote in a note.

Holcim said the United States, Philippines, Mexico, India and Indonesia had contributed to a 1 percent rise in cement volumes, while sales of aggregates fell 1 percent largely due to a restructuring of Holcim's business in Latin America.

It said cement volumes should rise in all regions apart from Europe this year, helping like-for-like operating profit to rise to between 2.7 and 2.9 billion francs, with operating margins rising thanks to higher pricing and ongoing cost savings.

Adjusted operating profit rose 5 percent in 2014, or 10 percent on a like-for-like basis, to 2.47 billion francs, while net profit attributable to shareholders rose 1 percent to 1.29 billion, beating expectations.

Holcim said negative currency effects as a result of a leap in the franc after Switzerland abandoned its peg to the euro cost it 1.03 billion francs in net sales and 147 million francs in operating profit.