Swiss cement maker Holcim Ltd is confident it will meet its targets this year despite expecting a slowdown in US cement consumption, the group's chief executive told Reuters on Thursday.
The global credit crisis has had no material impact on Holcim's financing, the head of the world's largest cement maker also said in an interview, and it expected to continue to be able to spend money on acquiring rivals. "The housing crisis in the US will certainly get tough in the remainder of 2007 and 2008," Chief Executive Markus Akermann said in the telephone interview.
But Holcim was on track to beat its own long-term target for core profit in internal operating EBITDA (earnings before interest, tax, depreciation and amortisation) this year. "In August, I said that we are confident that we can exceed the 5 percent long term organic like-for-like EBITDA growth target in 2007. That is as valid today as it was valid in August," Akermann said.
The US residential market was seen declining 14.7 percent in 2007 and 6 percent in 2008, Akermann said, citing figures from the Portland Cement Association (PCA). "When we convert these figures into volumes then you see that, yes, there is an impact but not a dramatic one," he said.
Growth in the industrial and commercial building sector was likely to remain robust in 2007, but a contraction was seen in 2008 and 2009. Growth in the infrastructure sector was seen at 8.6 percent in 2007 and 2.1 percent in 2008, he said. "We expect that the cement consumption in 2007 will be 6.8 percent below the 2006 figure and (we see) a slight reduction also in 2008 of roughly 1.5 percent to 2 percent," he said.
The failure of some borrowers to repay their mortgages and a crisis in the low-income subprime lending market have slowed real estate construction in the United States. Holcim's North-American region accounted for nearly 17 percent of group sales in the first half of 2007. Holcim was well positioned to deal with a US slowdown, Akermann said, due to its broad geographical spread and presence in emerging markets, echoing analysts' comments that Holcim is better placed than some of its rivals.