Operating results fourth quarter

Sales volumes and principal key figures

 

 

Oct–Dec 2015

Oct–Dec 2014

±%

±% like-for-like

Sales of cement

million t

66.5

63.4

4.8

4.8

– of which mature markets

%

29

30

 

 

– of which developing markets

%

71

70

 

 

Sales of aggregates

million t

75.8

73.7

2.9

2.9

– of which mature markets

%

88

88

 

 

– of which developing markets

%

12

12

 

 

Sales of ready-mix concrete

million m3

14.3

14.2

0.8

0.8

– of which mature markets

%

63

63

 

 

– of which developing markets

%

37

37

 

 

Net sales

million CHF

7,441

7,912

(5.9)

1.7

– of which mature markets

%

51

51

 

 

– of which developing markets

%

49

49

 

 

Operating EBITDA

million CHF

988

1,474

(33.0)

(26.9)

– of which mature markets

%

32

37

 

 

– of which developing markets

%

68

63

 

 

Operating EBITDA adjusted

million CHF

1,395

1,647

(15.3)

(8.4)

– of which mature markets

%

43

41

 

 

– of which developing markets

%

57

59

 

 

Operating EBITDA margin

%

13.3

18.6

 

 

Operating EBITDA margin adjusted

%

18.8

20.8

 

 

Cash flow from operating activities

million CHF

1,560

1,774

(12.0)

(8.2)

Cash flow from operating activities adjusted

million CHF

1,726

1,870

(7.7)

(3.5)

Demand for cement, aggregates, ready-mix concrete and other construction materials and services is seasonal, as climatic conditions affect the level of activity in the construction sector. The Group typically experiences a reduction in sales during the first and fourth quarters, reflecting the effect of the winter season in its principal markets in Europe and North America, and tends to see an increase in sales in the second and third quarters, reflecting the effect of the summer season. This effect can be particularly pronounced in harsh winters.

On a like-for-like basis, cement deliveries of 66.5 million tonnes increased by 4.8 percent or 3.1 million tonnes compared to the fourth quarter of 2014. With the exception of China, most countries in Asia Pacific witnessed volume growth in the fourth quarter, led by contributions from Indonesia, the Philippines and Vietnam. As a result the region reported a 6.2 percent increase compared to the prior year. The region Middle East Africa also reported strong cement sales volumes with a notable increase of 10.8 percent driven by gains in Algeria and Egypt. North America, with a volume growth of 6.9 percent, mostly stemming from the United States, further contributed to this improvement. That said, volume declines in Brazil continued to weigh on the results in Latin America, which fell by 5.8 percent. Europe benefited from mild weather conditions in the fourth quarter, which partly offset the lackluster business environment. Quarterly sales volumes in Europe were down 1.6 percent.

Sales of aggregates touched 75.8 million tonnes in the quarter, representing an increase of 2.9 percent or 2.1 million tonnes. All regions, except Latin America, recorded volume gains in the fourth quarter. Asia Pacific delivered substantially more aggregates with an increase of 11.8 percent largely driven by Australia and China. North America recorded sales volume growth of 2.1 percent where solid growth in the United States and East Canada was partly offset by the lack of infrastructure projects in West Canada. Middle East Africa posted an increase of 14.8 percent for the quarter, mainly as a result of increased deliveries in Egypt. In Europe, where volumes sold grew 1.6 percent, many markets benefited from favorable winter conditions, which offset the lack of momentum in some central European markets. In Latin America, the restructuring of the aggregates business in Mexico and the low demand in Brazil impacted volumes negatively leading to a decline of 14.2 percent.

Shipments of ready-mix concrete reached 14.3 million cubic meters, a year-on-year improvement of 0.8 percent on a like-for-like basis. While ready-mix concrete volumes were on par with last year’s levels in Middle East Africa, the growth of 6.1 percent in Europe and 2.8 percent in North America, was partially offset by a of 3.1 percent decline in Asia Pacific.

Million CHF

Oct–Dec 2015

Oct–Dec 2014

±%

±% like-for-like

Net sales by region

 

 

 

 

Asia Pacific

2,363

2,448

(3.5)

2.6

Europe

1,783

1,946

(8.4)

(1.2)

Latin America

784

892

(12.0)

1.3

Middle East Africa

1,077

1,196

(10.0)

3.7

North America

1,501

1,500

0.1

3.1

Corporate/Eliminations

(67)

(70)

(4.1)

(2.7)

Total

7,441

7,912

(5.9)

1.7

 

 

 

 

 

Adjusted operating EBITDA by region

 

 

 

 

Asia Pacific

400

456

(12.4)

(6.5)

Europe

304

372

(18.4)

(11.7)

Latin America

217

249

(13.0)

(7.0)

Middle East Africa

271

363

(25.4)

(12.9)

North America

326

302

8.1

11.6

Corporate/Eliminations

(123)

(95)

28.9

(38.7)

Total

1,395

1,647

(15.3)

(8.4)

 

 

 

 

 

Cash flow

 

 

 

 

Cash flow from operating activities

1,560

1,774

(12.0)

(8.2)

Cash flow from operating activities adjusted

1,726

1,870

(7.7)

(3.5)

Net capital expenditures on property, plant and equipment to maintain productive capacity and to secure competitiveness

(505)

(498)

(1.5)

(8.2)

Investments in property, plant and equipment for expansion

(408)

(449)

9.2

(5.0)

Fourth quarter consolidated net sales were stable compared to previous year with a slight like-for-like increase of 1.7 percent. The unfavorable currency development continued to negatively impact net sales, which dropped by 7.6 percent in the fourth quarter. In the cement business, the overall increase in sales volume offset price pressure in Middle East Africa, Europe and Asia Pacific. However, weaker prices in the aggregates and ready-mix concrete businesses burdened the Group’s top line growth.

The adjusted operating EBITDA decreased by 8.4 percent or CHF 139 million on a like-for-like basis. The currency effect of minus 6.8 percent, reflecting the sharp appreciation of the Swiss Franc, further impaired the operating results. North America improved its performance by 11.6 percent or CHF 35 million, supported by a favorable economic environment driving volumes and prices up. The contribution was coming mainly from the United States. However, in all other regions the operational performance deteriorated in the quarter. Sales of CO2 emission rights were lower by CHF 46 million (mainly Europe). Unfavorable effects from lower sales volumes in Germany, Russia and Azerbaijan, accentuated by price pressure in many countries, particularly in Switzerland, and Poland contributed to drive the adjusted operating EBITDA of the region down by 11.7 percent. In Asia Pacific, operating EBITDA decreased by CHF 30 million or 6.5 percent on a like-for-like basis. The largest declines were recorded in China and Indonesia, where the prices remained under pressure. The operating EBITDA in Middle East Africa declined by CHF 47 million or 12.9 percent on a like-for-like basis. Zambia, Nigeria and Iraq reported mainly negative developments. In Zambia, higher production costs coupled with lower volumes and prices. In Iraq, volumes and prices suffered, explained by domestic instability. Operations were stopped in Syria for the full year of 2015. Operating EBITDA improved mainly in Morocco, Algeria and Jordan, partially offsetting the negative trend in the region. In Latin America, operating EBITDA decreased by CHF 18 million or 7.0 percent on a like-for-like basis. Overall positive price effects could not offset the impact of lower volumes mainly in Brazil and Ecuador. Additionally, Brazil faced cost inflation, which put an additional burden on the operating EBITDA of the region.

As a result, the quarterly adjusted operating EBITDA margin of the group, decreased by 2.1 percentage points to 18.8 percent based on constant exchange rates.

In the quarter, CHF 407 million merger, restructuring and other one-offs were recorded, of which CHF 79 million was in Europe, CHF 61 million in Middle East Africa, CHF 43 million in Asia Pacific, CHF 44 million in North America and CHF 20 million in Latin America.

Cash flow from operating activities in the quarter decreased by CHF 146 million or 8.2 percent on a like-for-like basis. The deterioration was primarily driven by lower operating EBITDA in Brazil, China and Switzerland and the material impact of the cash effective merger, restructuring and other one-offs. The decline of the adjusted cash flow from operating activities is reduced to CHF 66 million or 3.5 percent.