Strong Swiss franc dents Holcim profit

Reuters

ZURICH (Reuters) - Holcim <HOLN.VX>, the world's second-largest cement maker, posted weaker-than-expected profit in the second quarter, pummeled by the strong Swiss franc and rising raw material costs.

The franc, which has hit one record after another against the euro and dollar in the past six months, has hurt profits at several Swiss companies, among them pharma giant Roche <ROG.VX> and chemicals maker Clariant <CLN.VX>.

Continue Reading Below

Net profit after minorities fell 13 percent in the second quarter from a year earlier to 347 million Swiss francs ($438 million), missing the 358 million forecast by analysts in a Reuters poll.

Rivals Lafarge <LAFP.PA> and HeidelbergCement <HEIG.DE> also posted disappointing earnings after price rises failed to offset a surge in energy and raw material costs.

Still, Holcim said cost cuts and further price rises should put it on track to achieve like-for-like EBITDA (earnings before interest, tax, depreciation and amortization) similar to a year ago.

"The global rise in energy, raw material and transportation costs, as well as the related margin squeeze, call for further price adjustments," it said in a statement.

Shares in Holcim, which is providing cement for the London 2012 Olympic venues, are expected to fall 1.1 percent at the open, according to pre-market data from bank Clariden Leu.

The construction industry has been struggling to emerge from the global economic crisis, particularly in developed markets in North America and Europe.

Holcim said it had seen no indications of a sustained recovery in the United States, bar a few road building projects.

In Europe, however, demand for building materials rose in almost all countries, although weaker public sector spending and tough competition weighed on prices.

Demand was particularly strong in Latin America, and Holcim said the Asia-Pacific region, where it makes more than a third of its sales, remained on a positive track for growth.

($1 = 0.793 Swiss Francs)

(Editing by David Cowell and David Hulmes)