HeidelbergCement to Buy 25% of Cement Australia from Holcim

By John Revill

ZURICH--Swiss cement maker Holcim Ltd (HOLN.VX) Thursday said it was selling a 25% stake in its Cement Australia operations to German peer HeidelbergCement AG (HEI.XE).

Holcim and HeidelbergCement will operate the unit as a joint venture, with each holding a 50% stake in the business.

The terms of the deal, which has been approved by the Australian authorities, were not disclosed.

The move is part of Holcim's so-called leadership journey strategy, where the Jona-based company is aiming to increase operating profit by at least 1.5 billion Swiss francs ($1.57 billion) from its 2011 levels by the end of 2014 through higher sales and efficiencies.

Holcim Chief Executive Bernard Fontana, who launched the scheme last year, wants to achieve this by increasing energy efficiency, reducing logistics costs and making selective divestments.

Last year Holcim reduced its stake in Siam City Cement Company in Thailand and sold its minority shareholding in its operations in Guatamala, for a combined CHF374 million.

It also reorganized its European operations, with capacity adjustments in Spain and the closures of plants in France and Belgium, to reduce European cement production capacity by 10%.

The restructuring triggered CHF181 million in cash costs and CHF457 million in writes offs, Holcim said in March.

The Holcim leadership journey contributed CHF158 million to the company's annual operating profit in 2012, the company said at the time, adding that the Holcim Leadership Journey would "gain further momentum" in 2013.

Cement Australia operates two cement plants and a grinding station in the east and southeast of Australia and in Tasmania with a total annual capacity of 4.2 million tonnes of cement.

A new grinding station in Port Kembla, New South Wales, with an annual capacity of 1.1 million tonnes of cement will go on stream in 2013.

The company has more than 1,000 employees and recorded a turnover of approximately 1 billion Australian dollars ($1.03 billion) in 2012.

Write to John Revill at [e-mail]

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