Net sales

Net sales by region

Million CHF

Jan–Dec 2015

Jan–Dec 2014

±%

±% like-for-like

Asia Pacific

9,048

9,512

(4.9)

(1.7)

Europe

7,356

8,367

(12.1)

(2.4)

Latin America

3,241

3,540

(8.4)

2.8

Middle East Africa

4,536

4,969

(8.7)

1.9

North America

5,678

5,418

4.8

5.4

Corporate/Eliminations

(376)

(368)

(2.3)

25.8

Total

29,483

31,437

(6.2)

0.1

Net sales reached CHF 29,483 million in 2015 which represented a decrease of 6.2 percent from CHF 31,437 million in 2014. The strong appreciation of the Swiss Franc was clearly felt with a negative foreign currency impact of CHF 1,981 million or 6.3 percent. On a like-for-like basis, net sales increased by 0.1 percent. Net sales in North America, Latin America and Middle East Africa improved compared to 2014 whereas net sales recorded in Europe and Asia Pacific underperformed compared to the previous year’s levels.

Net sales in Asia Pacific amounted to CHF 9,048 million, a decline of 1.7 percent on a like-for-like basis. Excluding China and India, the region recorded a net sales growth of 2.1 percent on a like-for-like basis. China suffered from subdued economic growth, a competitive environment and oversupply in the cement market. Prices fell well behind last year’s level while volumes also reduced. In India, tepid demand from private investment, along with delays in previously announced government infrastructure and other projects contributed to the weak results. Cement prices and volumes suffered as a result. In Australia, aggregate prices declined and ready-mix concrete volumes dropped due to a subdued resource sector. These negative developments in the region were partially offset by countries such as the Philippines, Vietnam, Sri Lanka and South Korea. The Philippines achieved a stellar year with improvement in both cement prices and volumes attributable to the robust development in private and public construction. The construction boom in Vietnam translated into top line growth thanks to the participation in strategic projects. The election year in Sri Lanka and the anticipated subsequent stability fueled the volume increase and compensated for lower prices as government controlled prices were reduced at mid-year. South Korea also witnessed volume and price improvements attributable to growing demand from private and public investments.

In Europe, net sales receded by CHF 204 million or 2.4 percent on a like-for-like basis. The largest decreases were recorded in France, Switzerland, Azerbaijan, Italy and Poland. All three segments in France were impacted by a declining housing market and sluggish government spending. The Swiss economic environment suffered a setback as a result of the Swiss Franc appreciation. The results were marked by slowing construction activities and pressure on prices and volumes due to higher imports. Azerbaijan went through a challenging economic phase due to lower oil prices and significant currency devaluation which negatively impacted construction activities. The results were further affected by competitive pressures on both cement prices and volumes. Italy was affected by the sluggish economic environment and social structural issues which reduced the purchasing power. In Poland, a cooler construction market and delayed infrastructure contracts coupled with the competitive environment caused prices and volumes in cement and ready-mix concrete to decrease. While adverse performance was recorded in most of the European countries, higher net sales were achieved in the United Kingdom and Romania. In the United Kingdom, the market was fueled by a strong housing sector and the start of public infrastructure projects. These translated into higher prices and volumes, especially in the asphalt business line. Romania benefited from higher volumes across all segments thanks to improved market conditions which paved the way for opportunistic projects in the Bucharest area and the northern region.

In Latin America, net sales increased by CHF 100 million or 2.8 percent on a like-for-like basis. This was mainly driven by Mexico, Argentina, and Colombia. In Mexico, the economic recovery was fueled by the National Infrastructure Plan which translated into price and volume increases. In Argentina, the commercial excellence focus on value adding segments and higher volumes were the key for its commercial success. Colombia continued the positive momentum of 2014 based on strong market growth and significant public infrastructure and housing projects. This development converted into higher cement prices and volumes. Most countries in the region achieved an increase in net sales; however, Brazil and Ecuador negatively impacted the results. In Brazil, the combined effect of low oil prices and political uncertainty heavily affected the economy. As a result, infrastructure projects were cut back and cement demand dropped significantly, impacting both volumes and prices. In Ecuador, public investment in infrastructure projects also suffered from low oil prices and higher trade deficits, which caused volumes to decline.

In Middle East Africa, net sales increased by CHF 92 million or 1.9 percent on a like-for-like basis. Algeria, Kenya, Egypt, Nigeria and Uganda saw improved net sales. Prices and volumes increased across all segments in Algeria attributable to positive market trends and government projects. Cement price and volume increases in Kenya were supported by investments in infrastructure. In Egypt, demand improved and better energy availability compared to competitors led to higher kiln utilization rates. Volume increases offset lower prices as competitors resumed their production. Uganda achieved higher net sales thanks to a cement price increase while Nigeria benefited from favorable product mix and geographical presence. Partly offsetting this growth, Syria, Zambia, Iraq and Lebanon recorded lower net sales in 2015. In Syria, the plant stoppage made sales impossible. In Zambia, the entrance of a new competitor and the general slowdown in mining and commercial activities due to power shortages and on-going macroeconomic challenges negatively impacted net sales. Iraq was affected by political instability and disruptions of material flows. Prices in Iraq remained below levels observed last year. In Lebanon, the economic and the political environment were marred by the spillover of the Syrian conflict. As a result, lower market demand hampered the price and volume growth.

North America achieved an increase in net sales of CHF 295 million or 5.4 percent on a like-for-like basis. Both the United States and Canada positively contributed to this performance. The sustained economic recovery in the United States translated into higher prices in all segments. Despite lower oil related investments, cement and aggregate volumes also increased thanks to mild weather and participation in large projects. Top line performance in Canada was improved but mixed. In East Canada, a good market mix and pricing gains were the results of an increase in exports to the United States and in the number of construction projects. In West Canada, the oil dependent sector of the economy displayed signs of difficulties such as slowdown of the housing market, project cancellations, and layoffs. Therefore, both volumes and prices suffered.

The relative weight of North America in the Group net sales increased to 19 percent (2014: 17) whereas the relative weight of Europe decreased to 25 percent (2014: 27). The relative weight of other regions remained the same as in 2014. In 2015, the relative weighting of developing markets in the Group’s net sales remained unchanged at 49 percent.