Swiss cement maker Holcim says it plans to sell the majority share of its South African business to a local consortium for around SFr1.2 billion ($974 million).This content was published on August 24, 2006 - 15:23
Thursday's news came as the world's second-largest cement maker announced its first-half results, posting a 44 per cent jump in profit to SFr1.088 billion, in line with analysts' expectations.
The Swiss company agreed to sell 85 per cent of its stake in Holcim South African to a consortium of workers and black investors led by Bunker Hills Investments.
South African law requires companies ranging from banks to miners to sell part of their businesses to black South Africans, who were excluded from the mainstream economy under apartheid that ended in 1994, according to a strategy known as "Black Economic Empowerment".
Holcim will retain a 15 per cent share in the newly founded company, AfriSam, which would hold a 54 per cent stake in Holcim South Africa. The company said it was not forced to sell at a discount.
The move follows similar South African sell-offs by Holcim's French rival Lafarge, which announced last month that it would sell 26 per cent of its mining activities and 10 per cent of its manufacturing activities in South Africa.
Analysts told swissinfo they were surprised by the high percentage to be sold off by Holcim but said the stake's value as mentioned by the company looked solid.
Holcim said it remains firmly engaged in South Africa and this solution was in the best interests of Holcim South Africa and shareholders.
In the first-half results, sales rose by 38 per cent to SFr10.9 billion, Holcim said, benefiting from a construction boom in most markets, while a spate of acquisitions and solid prices for its products helped lift its business.
Operating profit during the first six months rose to SFr1.941 billion, from SFr1.448 billion.
"The results were in line with expectations; there has clearly been some slow-down in the second quarter but that was expected," said Mike Betts at JP Morgan.
Holcim said that against the backdrop of a favourable global economic development, the construction industry produced a solid performance in most regions.
Among the few exceptions were a small number of Asian countries, in which political uncertainties impaired economic growth.
By contrast, demand for building materials in North and Latin America remained very strong and in Europe the building industry continued to gain strength, it announced.
Holcim repeated its target of growth in internal operating earnings before interest, tax, depreciation and amortisation for 2006 above its long-term average target of 5 per cent.
swissinfo with agencies
Holcim is the world's number two cement maker behind Lafarge of France.
It was formerly called Holderbank, taking its name from a village in northern Switzerland where it was founded in 1912.
Swiss industrialist Thomas Schmidheiny is a major shareholder in the company.
Holcim holds majority and minority interests on more than 70 countries on all continents. It has 89,000 employees worldwide, 1,300 in Switzerland. The company's headquarters is in Zurich.
Financial figures first-half 2006:
Sales: SFr10.879 billion ($8.831 billion) (+38% compared with 2005)
Operating profit: SFr1.941 billion (+34%)
Net income: SFr1.088 billion (+44%)
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