SWITZERLAND: Holcim Profit Falls Short of Estimates on Costs: Shares Drop

Holcim Ltd., the world’s second- largest cement maker, reported first-quarter profit that fell short of analysts’ estimates as raw-material costs climbed and governments postponed infrastructure projects.

Earnings before interest, taxes, depreciation and amortization fell 17 percent to 753 million Swiss francs ($872 million), the Jona, Switzerland-based company said in a statement today. Royal Bank of Scotland analyst John Messenger had predicted 843 million francs.

Holcim couldn’t raise prices enough to offset above-average costs for materials, transportation and fuels, such as coal. Chief Executive Officer Markus Akermann said today he couldn’t be sure if price levels “will stick.” While a mild winter in parts of Europe helped spur construction activity among private developers, governments struggling with budget deficits held back on projects.

“Volume increases were encouraging but insufficient to make up for input cost increases as yet,” JP Morgan analyst Michael Morris and colleagues said. “There are signs of recovery emerging as demand is improving in the U.S. and Asia.”

The Swiss cement maker reported net income of 10 million francs, compared with a year-earlier loss of 68 million francs. Analysts in a Bloomberg survey had predicted 109.8 million francs. Sales declined 1.8 percent to 4.66 billion francs.

Holcim fell as much as 4.6 percent in Zurich trading, the most in eight months. The stock traded 3.7 percent lower at 72.15 francs as of 9:09 a.m. local time.

Deliveries Rise

Cement deliveries rose 7.2 percent, led by the Asia Pacific region. The company is expanding capacity in India to 60 million tons as the country’s growing population spurs spending on housing, roads, ports and bridges.

“We are still of the opinion that the construction sector in the mature markets will recover and that the growth in the emerging markets will continue,” Holcim said.

The strategy to grow in emerging markets mirrors that of Lafarge SA, the world’s No. 1 cement maker, which reports first- quarter earnings tomorrow. Analysts predict a 21 percent increase in Ebitda to 552 million euros ($819 million).