- Financial restructuring agreement relating to AfriSam (South Africa) leads to an impairment charge.
- Weak demand for construction materials and insufficient production capacity.
utilization rates in Spain, parts of Eastern Europe, and the US prompt impairment charges. - Payout potential for the 2011 financial year remains unchanged.
As announced in 2007, Holcim initiated a transaction to
create AfriSam (previously Holcim South Africa), the leading
cement and construction materials company in the country, as
part of the South African policy to support Black Economic
Empowerment (BEE). Holcim sold its majority stake to a
BEE-compliant consortium, and has since held a minority stake
of 15 percent in AfriSam. The Group continued to support the
company technically, and in 2009 subscribed to a notes issue
in the amount of ZAR 2.6 billion, or CHF 292 million. As
demand for construction materials has heavily decreased since
2010, AfriSam found itself forced to initiate additional
financial restructuring measures in 2011. Holcim agreed to
these measures yesterday after extensive negotiations. Due to
this restructuring decision, Holcim is writing off
investments, made up of the notes issue, accrued interest and
foreign currency movements, by CHF 415 million in the fourth
quarter of 2011.
As a consequence of the decrease in demand for construction
materials in some regions, Holcim is making value
adjustments. Since the financial crisis in 2008, cement
consumption in Spain has decreased by 65 percent, in parts of
Eastern Europe by 30 percent, and in the US by 45 percent. As
demand for construction materials will only slowly recover,
and production capacity utilization rates will remain
unsatisfactory, property, plant and equipment, and goodwill
impairment amounting to CHF 360 million will be charged in
the fourth quarter 2011. This figure comprises CHF 328
million from Group region Europe (Spain and certain markets
in Eastern Europe), and CHF 32 million from North America,
related to the permanent closure of the Catskill and Artesia
plants of Holcim US.
The total of these cash-neutral impairments amounts to CHF
775 million. A payout potential for the 2011 financial year
(pre-impairment) remains. The Board of Directors will decide
on the level of the payout at the end of February 2012, as
part of the year-end financial statement to be submitted to
the Annual General Meeting.
* * * * * * *
Holcim is one of the world's leading suppliers of cement
and aggregates (crushed stone, gravel and sand) as well as
further activities such as ready-mix concrete and asphalt
including services. The Group holds majority and minority
interests in around 70 countries on all continents.
* * * * * * *
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Corporate Communications: Tel. +41 58 858 87 10
Investor Relations: Tel. +41 58 858 87 87
* * * * * * *
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