JONA (dpa-AFX) - Swiss-based cement giant Holcim Ltd. (HCMLY.PK) Monday said it will recognize extraordinary cash-neutral impairment charges of around 775 million Swiss francs (about $812 million) in the fourth quarter against its net income. These include a charge related to restructuring of its South African business, AfriSam, and also charges stemming from weak demand for construction materials. The company will take 415 million francs in impairment charge due to a financial restructuring agreement related to AfriSam and about 360 million francs in impairments due to weak demand for construction materials and insufficient production capacity utilization rates in Spain, parts of Eastern Europe, and the U.S. As announced in 2007, Holcim initiated a transaction to create AfriSam, which was previously Holcim South Africa, as part of the South African policy to support Black Economic Empowerment, or BEE. The company sold its majority stake to a BEE-compliant consortium and was holding a 15 percent stake in AfriSam. Holcim said it is now writing off investments made up of a notes issue, accrued interest and foreign currency movements by 415 million francs in the fourth quarter. Holcim, in 2009, subscribed to a notes issue of AfriSam totaling ZAR 2.6 billion, or 292 million francs. Due to fall in demand for construction materials since 2010, AfriSam was forced to initiate additional financial restructuring measures in 2011 and Holcim agreed to the measures after extensive negotiations. Holcim added that since the financial crisis in 2008, cement consumption in Spain has decreased 65 percent, fell about 30 percent in parts of Eastern Europe and was down around 45 percent in the U.S. '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 CHF 360 million will be charged in the fourth quarter 2011,' the company noted. This impairment consists of 328 million francs related to the Europe region and 32 million francs from North America in connection with the permanent closure of Catskill and Artesia plants of Holcim US. In addition, Holcim stated that its ability to pay dividend for 2011 has remained unchanged and the board would decide on the level of the payout at the end of February 2012. In Zurich exchange, Holcim shares are currently trading at 50.75 francs, down 2.12 percent, on a volume of 634 thousand shares. In US, HCMLY.PK ended on Friday at $10.8.
Copyright RTT News/dpa-AFX
© 2012 AFX News
