Holcim To Take 4Q Impairment Charge Of CHF775 Million

Holcim Ltd. (HOLN.VX) Monday said it will take extraordinary cash-neutral impairments of 775 million Swiss francs against net income after tax in the fourth quarter.

MAIN FACTS:

- The charges relate to financial restructuring agreement for AfriSam (South Africa).

- In addition, weak demand for construction materials and insufficient production capacity, utilization rates in Spain, parts of Eastern Europe, and the U.S. prompt impairment charges.

- Payout potential for the 2011 financial year remains unchanged.

- As announced in 2007, Holcim initiated a transaction to create AfriSam (previously Holcim South Africa), the leading cement and construction materials company in the country, as part of the South African policy to support Black Economic Empowerment (BEE).

- Holcim sold its majority stake to a BEE-compliant consortium, and has since held a minority stake of 15 percent in AfriSam.

- The Group continued to support the company technically, and in 2009 subscribed to a notes issue in the amount of ZAR2.6 billion, or CHF292 million.

- As demand for construction materials has heavily decreased since 2010, AfriSam found itself forced to initiate additional financial restructuring measures in 2011.

- Holcim agreed to these measures yesterday after extensive negotiations. Due to this restructuring decision, Holcim is writing off investments, made up of the notes issue, accrued interest and foreign currency movements, by CHF415 million in the fourth quarter of 2011.

- As a consequence of the decrease in demand for construction materials in some regions, Holcim is making value adjustments.

- Since the financial crisis in 2008, cement consumption in Spain has decreased by 65 percent, in parts of Eastern Europe by 30 percent, and in the U.S. by 45 percent.

- As demand for construction materials will only slowly recover, and production capacity utilization rates will remain unsatisfactory, property, plant and equipment, and goodwill impairment amounting to CHF360 million will be charged in the fourth quarter 2011.

- This figure comprises CHF328 million from Group region Europe (Spain and certain markets in Eastern Europe), and CHF32 million from North America, related to the permanent closure of the Catskill and Artesia plants of Holcim U.S.

-Zurich Bureau, Dow Jones Newswires, [phone]; [e-mail]