By John Revill
ZURICH (Reuters) -Holcim cut its guidance for full-year sales growth on Friday after a downturn in Europe and North America hit second-quarter sales at the cement and building materials maker.
In the first results under new CEO Miljan Gutovic, Holcim reduced its outlook for sales growth to the low single-digit percentage range from its previous outlook for growth above 6%.
The downgrade came after Holcim’s second-quarter sales fell 1.6% to 7.23 billion Swiss francs ($8.21 billion), missing analysts’ forecasts for 7.31 billion francs.
Its shares fell 2.2% in early trading.
Downturns in North America, where building projects have been hit by unfavourable weather including tornados and heavy rains in Texas, and continued weak market conditions in Europe were the main factors in the sales decline.
Gutovic, who took charge in May, said he was not concerned by the U.S. situation, citing the ongoing need to rebuild roads, airports and buildings, and that the outcome of November’s presidential election would not dampen demand.
“Fundamentally it’s sound over there,” Gutovic told reporters. “For us, whatever happens in November is irrelevant The need to revamp infrastructure in the U.S. is there.”
Plans to spin off Holcim’s North American business were still on track and expected to be completed in the first half of 2025, added the executive who took charge in May.
Despite the sales downturn, Holcim increased its recurring operating profit 8.2% to 1.68 billion Swiss francs in the April to June period, beating analysts’ forecasts.
Cost cuts and higher margins from businesses it has acquired aided the improvement at the company whose results give an insight into the construction sector.
As a result, Holcim raised its full-year operating profit (EBIT) margin guidance to above 18.5% from 18% previously.
“We are focusing on the profitability, our number one focus is to continue EBIT growth,” said Gutovic.
Zuercher Kantonalbank analyst Martin Huesler said: “The slightly reduced revenue outlook is not entirely surprising due to the subdued residential construction markets, and, with regard to our earnings estimates, will probably be more than offset by the increased margin guidance.”
($1=0.8806 Swiss francs)
(Reporting by John Revill; Editing by Rachel More, Clarence Fernandez and Jan Harvey)
