Holcim Expects India Weakness To Continue

By John Revill

ZURICH--Cement maker Holcim Ltd (HOLN.VX) said it expects its important Indian market to remain "difficult" into the second quarter as a result of lower-than-expected government spending on infrastructure projects.

The Swiss company blamed a weaker performance by its Indian subsidiaries ACC Ltd. (500410.BY)and Ambuja Cements Ltd. (500425.BY) as one of the main reasons for a 7.2% fall in group sales during the three months to the end of March.

Holcim didn't give any specific sales figures for India, but analysts at Zuercher Kantonalbank estimate its India sales fell 7.5% to 956 million Swiss francs ($1.01 billion) while operating profit fell 21% to CHF206 million.

Martin Huesler, an analyst at the bank said the slowdown in India was a concern, particularly when the management said the downward sales trend would continue in the second quarter.

India is important for Holcim as the country represents around a fifth of the company's operating profit, he said.

"In India we had some slightly negative developments in some regions in April," Chief Executive Bernard Fontana told a conference call.

"We expect a difficult environment, but we will still have significant results in India," he said.

The company now expects the cement market to grow by around 5% this year in India, rather than the traditional 8%.

Government spending on infrastructure in India was not as high as Holcim had expected, while prices for cement had remained subdued as a result of oversupply in the market.

Underlying cement consumption for the housing market in India was rising, a trend Holcim said it expected to continue.

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