Holcim warns on 2010 as India monsoon hits Q3

ZURICH: Holcim, the world's second-largest cement maker, warned that meeting last year's key profit levels will be a challenge after third-quarter income was hit by sliding Indian cement prices due to a harsh monsoon.

Holcim net income attributed to shareholders fell 19 per cent to 544 million Swiss francs ($566.5 million), beating a forecast for 495 million francs in a Reuters poll.

However, operating earnings before interest, taxation, depreciation and amortisation (EBITDA) -- which Holcim sees as its key performance indicator -- fell 16 per cent to 1.234 billion francs, missing an average forecast for 1.4 billion.

Holcim expects the European and North American construction markets -- which contribute almost half its sales -- to stay subdued and said it would be challenging for the group to match the previous year's operating EBITDA of 4.63 billion francs.

Holcim shares, which have fallen 17 per cent this year compared to a 3 per cent fall for the DJ Stoxx European construction index, were indicated down 3 per cent, according to pre-market data from Clariden Leu.

Holcim holds 46 per cent stakes in both ACC Ltd and Ambuja Cements Ltd , India's second and third-biggest cement producers, making it the European cement group most exposed to India. Both already reported a weak third quarter.

Holcim said it was hit by falling prices in important markets, including India, Europe and the United States, and higher variable production and distribution costs.

"Holcim was severely affected by this in India. The onset of the monsoon -- which was particularly harsh this year - prompted a slide in cement prices right across the country," it said.

However, it predicted a rapid rise in demand for building materials after the monsoon.

French group Lafarge, the world's biggest cement producer, posted disappointing third-quarter results last week, with sales down 2 per cent to 4.5 billion euros. Mexican company Cemex, the world's No. 3, blamed weak revenue from its key European and US markets for its quarterly loss.

However, German rival HeidelbergCement beat expectations for quarterly profit as US states started dipping into federal funds for highway projects.