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Tuesday, May 4, 2010

Holcim Q1 beats poll, eyes emerging market growth

Holcim, the world's second-largest cement-maker, posted a narrower first-quarter net loss than expected and said growth was likely to come from India and other emerging countries this year.

Holcim reported a net loss after minorities of 68 million Swiss francs ($62.90 million) as a one-off tax charge of 182 million francs weighed, but this still beat the average forecast in a Reuters poll.

The cement maker hit an upbeat tone about the Asia Pacific region and expects 10 percent growth in India, while demand in Latin America, Africa and the Middle East was likely to be stable. About three quarters of Holcim's cement production capacity is in emerging markets.

"Holcim delivered a sound result and its outook became more positive," said Vontobel analyst Serge Rotzer.

"Due to the excellent geographic portfolio we remain positive for Holcim and are expecting an ongoing slight improvement in the mature regions," he said.

Shares in the company were down 0.1 percent at 81.75 Swiss francs by 0906 GMT, outperforming a 2.0 percent fall in the STOXX 600 construction index.


Holcim, which competes with France's Lafarge, Mexico's Cemex and Germany's HeidelbergCement, cautioned that the outlook for Europe and North America was still uncertain after heavy snowfalls in the first three months of the year slowed construction there.

"Only over the coming months will it become clear whether the weak demand in the first quarter of 2010 was due more to the hard winter or to the general adverse economic conditions," Holcim said.

The group has said government stimulus plans could help these markets to recover, but did not give any further updates on this on Tuesday.

Bad weather also hit the results of Wienerberger, the world's largest brick-maker, on Tuesday when it posted a core loss.

Holcim spent much of 2009 battling fallout from the financial crisis, as companies curbed investment spending and construction projects were halted.

Mexican rival Cemex last month posted a wider-than-expected first-quarter loss as it struggled with slumping sales due to fewer building projects during the winter.

Holcim trades at 13 times estimated 2011 earnings, a premium to Lafarge at 11 times but a discount to Cemex at nearly 23 times.

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