In reporting its Q3 financial results, Holcim showed net income like-for-like increased by 13.7% in the third quarter despite lower sales volumes and that its operating EBITDA margin increased to 25.8%.

In the mature markets, demand for building materials decreased further in the third quarter. However, in many emerging markets the construction industry continued to grow, particularly in Asia, driven by the strong market growth in China and India.

Therefore, operating EBITDA development remained clearly negative in Europe. Also, North America has yet to see a pick-up. However, the third-quarter performance was better than in the first six months. Group region Africa Middle East nearly maintained its position compared with the previous year. Latin America and primarily Asia Pacific achieved solid organic growth.

The current results were possible because Holcim reacted to the macroeconomic environment. The company reduced production capacity by roughly 10 million tons of cement in markets with weak demand. This was achieved through temporary and permanent plant closures. Also, numerous operations in the aggregates and ready-mix concrete business were shut down.

Despite the somewhat difficult market environment, Holcim continued to pursue its strategic expansion program as planned and commissioned 5.6 million tons of cement capacity in the course of the year. The acquisition of Cemex Australia also shows great promise. The new company now operates as Holcim Australia. It gives Holcim an optimal position in cement, aggregates, ready-mix concrete and concrete products on a continent that is back on the growth path.

Consolidated cement deliveries decreased by 8.9% to 99.1 million tons in the first nine months. Sales of aggregates also fell by 18.9% to 103.2 million tons, and volumes of ready-mix concrete sold were down by 17.8% to 30.4 million cubic meters. Asphalt sales amounted to 8.1 million tons, which represents a decrease of 21.4%.

Holcim US again experienced volume losses in all market regions in the third quarter. The east of the country, the Great Lakes region and Texas have been strongly affected. Flooding along the Mississippi and Missouri rivers also impacted cement demand.

The low level of construction activity put pressure on the business of Aggregate Industries US. Less building materials were sold than in the previous year’s period. However, asphalt sales benefited somewhat from road construction in the third quarter.

As a result of weak domestic demand and a lack of export opportunities to the US, Holcim Canada sold less cement. In Ontario, commercial and industrial construction declined in particular. In Quebec, commercial and infrastructure construction cushioned the decline in demand in other segments. The weakness in private house building had a negative effect on the sale of aggregates and ready-mix concrete, particularly in Ontario and Western Canada.

The three North American Group companies responded to the difficult market environment by reducing production early in the downturn. Two cement plants of Holcim US were shut down and two others mothballed. In both countries, Holcim also reduced the number of aggregates plants and ready-mix concrete facilities including its fleet of mixer and pump trucks. In the administrative area, a number of rigorous cost-cutting measures were implemented.

On a consolidated basis, cement deliveries in North America declined by 25.9% to 8.3 million tons. Sales of aggregates dropped by 21.2% to 29.7 million tons and ready-mix concrete sales amounted to 4.1 million cubic meters, equivalent to a reduction of 25.5%.

In July, Holcim US started the commissioning of the new Ste. Genevieve cement plant in Missouri and produced its first clinker. The plant has an annual capacity of 4 million tons of cement and production will be gradually ramped up as construction work on the site comes to completion. Thanks to this new plant, containing integrated shipping and dispatch facilities on the Mississippi river, Holcim US will be able to supply customers on a new, cost-efficient basis.

Despite strong regional differences, Latin America's economy remained very stable overall. However, Mexico and Central America have experienced a significant weakening of their economies due to their proximity to the United States. This had a negative effect on the construction industry. In contrast, demand for building materials in Ecuador increased and remained at a solid level in Colombia and Argentina. As the first country of this group region, Brazil returned to moderate economic growth in the middle of the year. In Chile, the wait-and-see investment attitude had a noticeable impact on cement consumption.

In Mexico, both private house building and commercial and industrial construction remained weak. Holcim Apasco sold less cement and ready-mix concrete. However, government programs to stimulate residential and infrastructure construction strengthened demand in some parts of the country.

Due to the delayed release of public funds for road building and a strong decline in private construction, Cemento de El Salvador saw a volume decline in all segments. Private construction activity in Costa Rica and Nicaragua was very weak, and the group companies experienced declining sales volumes.

Holcim Ecuador significantly increased its sales in all segments. Holcim Colombia sold less cement, but achieved higher sales volumes of aggregates and ready-mix concrete. In Brazil, Holcim focused on high-margin cement types, consciously accepting volume declines. The sales of aggregates suffered from various project delays and sometimes difficult weather conditions. Sales of ready-mix concrete slightly increased. For Cemento Polpaico in Chile, the recession and the market entry of a new competitor led to lower volumes in all segments. Minetti in Argentina sold less cement due to market conditions, but increased its sales of aggregates and ready-mix concrete.

In Latin America, cement sales declined by 17% to 17.1 million tons. Deliveries of aggregates fell 11% to 8.9 million tons. Sales of ready-mix concrete decreased by 15.6% to 7.6 million cubic meters. This reduction in volumes is partly attributable to changes in the scope of consolidation. Due to the nationalization by decree in June 2008, Holcim Venezuela was deconsolidated. As a consequence, Holcim decided for strategic reasons to sell its interests in Panama, the Dominican Republic, Haiti and the Caribbean at the end of July, which also reduced sales volumes.

The demand for building materials varied in the markets supplied by Holcim. In Morocco and Lebanon, the construction industry enjoyed a high level of activity. However, local factors dampened the construction industry in West Africa and the Indian Ocean.

In Morocco, despite the early Ramadan, demand for cement reached the previous year’s level. The continued high demand for building materials was driven by public programs for residential construction and the expansion of infrastructure in road building and tourism. Significantly higher were the aggregates sales of Holcim Morocco, partially due to the commissioning of a new quarry.

The more stable political situation in Lebanon helped the Chekka plant to enjoy a high level of capacity utilization. Holcim Lebanon slightly decreased its cement exports to neighboring countries to better serve the domestic construction industry. Sales of ready-mix concrete rose substantially.

Despite political and economic turbulence, the West African group of countries, managed by Holcim Trading, maintained its volumes. Due to the expansion of its grinding capacity, the Abu Dhabi-based affiliate National Cement experienced a further increase in sales. In the Indian Ocean area, business activity was moderate. The government crisis in Madagascar and the lack of follow-up orders from infrastructure projects in La Réunion led to a substantial decrease in sales volumes.

The cement sales of group region Africa Middle East decreased by 5.7% to 6.6 million tons. Comparable with the previous year’s level, sales of aggregates were 1.9 million tons and volumes of ready-mix concrete decreased by 11.1% to 0.8 million cubic meters.

Group region Asia Pacific benefited from a positive business and investment climate. In India, the government’s infrastructure push and residential construction led to higher sales volumes of building materials. Construction activity was also brisk in Vietnam, the Philippines and Indonesia. In Thailand, the construction industry began to grow slightly after a long period of stagnation. However, in New Zealand the building recession continued. In Australia, the demand for building materials rebounded somewhat after the slowdown in growth in the first half of the year.

Indian group company ACC sold more cement in all regions of the country. Deliveries of ready-mix concrete remained stable at the previous year's level. Ambuja Cements likewise enjoyed high capacity use, increasing its cement sales volumes both domestically and in the export market. Holcim Bangladesh also sold more cement.

Siam City Cement in Thailand saw full capacity use of the four large kiln lines at its Saraburi plant thanks to higher exports. In the domestic market, the group company sold less cement and deliveries of ready-mix concrete also declined. By contrast, there was a considerable increase in sales of aggregates. The robust market situation in Ho Chi Minh City and in the southern Mekong Delta region led to higher sales of cement and ready-mix concrete at Holcim Vietnam.

Although there are a number of industrial building projects under way on the peninsular of Johor, sales at Holcim Malaysia recovered only modestly as a result of subdued business levels in the other construction sectors. In Singapore, the intensive price competition in infrastructure construction continued, and the group company delivered less ready-mix concrete to large building sites. However, building materials volumes in residential construction picked up somewhat.

Holcim Philippines benefited from solid residential and infrastructure construction across the country, selling significantly higher volumes of cement. In order to maximize its service to domestic customers, the group company refrained from exporting cement. As a result of the healthy market situation, a mothballed kiln line in the Lugait plant will be brought back into production before the end of this year. The good investment climate in the region also had a favorable impact on cement exports of Holcim Indonesia. The company compensated almost completely for the decline in sales volumes for infrastructure projects on Java through higher cement and clinker exports. Deliveries of aggregates and ready-mix concrete continued to suffer from a shortage of major construction sites.

Due to market and weather conditions, Cement Australia sold less cement, particularly on the east coast. The sales of Holcim New Zealand remained under pressure in the third quarter. However, due to an acquisition, the group company reported an increase in sales in the aggregates segment.

Cement sales in Asia Pacific rose by 1.6% to 49.9 million tons in the first nine months of 2009. Sales of aggregates declined by 11.4% to 3.1 million tons and ready-mix concrete deliveries dropped by 10.9% to 4.9 million cubic meters.

Following the successful completion of due diligence and the approval of the Australian authorities, Holcim completed its acquisition of Cemex Australia Oct. 1. The new group company operates as Holcim (Australia) Pty Ltd, and is fully consolidated. Through this acquisition, Holcim has also extended to Australia its mature market strategy of operating not only in the cement business but also in aggregates and ready-mix concrete. The capital increase at Huaxin Cement in China has yet to be completed.

In Europe, especially in Spain, the United Kingdom and Eastern Europe including Russia, the markets will remain challenging for a longer period. Holcim is more optimistic regarding the development in North America, as building materials markets are expected to return to modest growth in the second half of 2010 on the back of the stimulus programs. The situation going forward looks more positive for most of the emerging markets in Latin America, Africa Middle East and Asia Pacific. Here, building activity will for the most part remain solid. Especially in Asia Pacific, many of the countries can expect to see strong demand.