We have strengthened our position in Asia. Half-Year Report 2002 Operating targets achieved – strong Swiss franc hurts results Sales volumes increased again in our three core segments cement, aggregates and re ady-mix concrete. Practi- cally all Group companies achieved their operating targets as measured in local curre ncy, partly because the selective restructurings of recent years have started to bear fruit. Consolidated net sa les of CHF 6,441 million (first half 2001: 6,582) fell just short of the strong results in the first six months of 20 01 owing to currency movements. Main factors were the weakness of the US dollar as well as the euro. In a ddition, a number of local currencies in Latin America, the South African rand and the Egyptian pound a ll fell substantially. Adjusting for currency movements, consolidated sales exceeded the results in the cor responding year-back period, and also consolidated operating profit of CHF 935 million (first half 2001: 997) compared favorably with the same period in the previous year. EBITDA at CHF 1,706 million (first half 200 1: 1,789) held up well. Cash flow from operating activities rose by 26.6 percent to CHF 781 million (first half 2001: 617), which is a gratifying result. However, Group net income after minority interests posted a drop to CHF 292 million in the first half of 2002 (first half 2001: 397). The reason for this is additional ordinary income. It fell from CHF 102 million in the first half of 2001 to CHF -18 million in the first half of 2002, lar gely due to depreciation and amortization of non-operating assets of CHF 63 million related to the unresolved crisis in Argentina, lower interest income owing to market developments and a fall in dividend income fr om affiliated companies. Increased efficiency in Europe Developments in the economic environment in Europe did not hold any surprises. W hile building activity remained brisk in Spain, the crisis in the German construction industry worsened. Mo st countries in central and eastern Europe reported solid demand for building materials. Consolidated ceme nt sales and deliveries of aggregates were both up. Only sales of ready-mix concrete came in slightly below the figure for the previous year. Operating profit for Group region Europe posted an above-average gain of 12.3 percent to reach CHF 274 million (first half 2001: 244). This substantial improvement reflects the success of rati onalization measures in the preceding years. Production bottleneck in Colorado (USA) removed In the Portland plant, clinker production started on schedule in the second quarter of 2002. This gradually removed the production bottleneck that had existed in the US Midwest for the previo us year. The commission- Key Figures Group Holcim January–June 2002 2001 ±% Annual cement production capacity million t 139.7 121.2 +15. 3 Sales of cement and clinker million t 43.5 42.1 +3.3 Sales of aggregates million t 42.3 40.0 +5.8 Sales of ready-mix concrete million m 3 12.2 12.2 – Personnel number 50,128 48,022 +4.4 Net sales million CHF 6,441 6,582 –2.1 Operating profit million CHF 935 997 –6.2 EBITDA million CHF 1,706 1,789 –4.6 Cash flow from operating activities million CHF 781 617 +26. 6 Group net income before minority interests million CHF 427 511 –16.4 Group net income after minority interests million CHF 292 397 –26.4 Earnings per dividend-bearing bearer share CHF 7.48 10.56 –29.2 Earnings per dividend-bearing registered share CHF 1.50 2.11 –28.9 Earnings per bearer share pre goodwill amor tization CHF 11.22 13.78 –18.6 2 Shareholders’ Letter Strong volume growth in Asia Pacific Economic recovery in the ASEAN region continues to make good progress. The buildi ng sector in particular is expanding robustly on the back of strong growth in residential construction in sever al countries. Shipments of cement from our Thai company exceeded expectations, and all plants in Saraburi are operating at full capacity. Sales growth in the region was bolstered by the full consolidation of the Indonesian PT Semen Cibinong, which we acquired at the end of 2001. The Group’s company in Australia also managed to in crease sales of cement, and its aggregates and ready-mix concrete segments reported substantially higher volumes. However, in the first half of 2002, operating profit in Group region Asia Pacific declined 6.9 percent to CHF 81 million (first half 2001: 87), due to the cost of integrating our newly consolidated Indonesian subsidiar y. The flattening global economy and negative currency developments influence the out look for the year In recent months, overall economic conditions have deteriorated perceptibly, and so me countries have had to revise their growth forecasts downwards. Despite the progress made in our operatio ns in the first half of 2002, factors beyond our control remain a source of uncertainty. This applies particularly to international economic developments and to currency movements vis-à-vis the Swiss franc. Given the current economic situation, it seems unlikely that we will match last year’s results. However, thanks to consistent programs to improve efficiency, a general trend of falling interest rates and measures taken to stabilize the financial markets, we are confident about the medium-term outlook. Dr. Willy Kissling Markus Akermann Chairman of the Board of Directors a.i. CEO Konzernabschluss 3 Shareholders’ Letter Consolidated Statement of Income of Group Holcim Million CHF Notes January– June 2002 Unaudit January– June 2001 Unaudit ±% April– June 2002 Unaudit April– June 2001 Unaudit ±% Net sales 4 6,441 6,582–2.1 3,594 3,719–3.4 Production cost of goods sold (3,336) (3,438) (1,803) (1,868) Gross profit 3,105 3,144–1.2 1,791 1,851–3.2 Distribution and selling expenses (1,421) (1,450) (765) (800) Administration expenses (602) (577) (325) (318) Other depreciation and amortization (147) (120) (76) (60) Operating profit 5 935 997 –6.2 625 673 –7.1 Additional ordinary income (expenses ) 6 (18) 102 (32) 69 EBIT 917 1,099–16.6 593 742–20.1 Financial expenses 7 (247) (344) (119) (171) Group net income before taxes 670 755–11.3 474 571–17.0 Income taxes (243) (244) (176) (180) Group net income before minority int erests 427 511–16.4 298 391–23.8 Minority interests (135) (114) (83) (76) Group net income after minority inter ests 292 397–26.4 215 315–31.7 CHF Earnings per dividend-bearing bearer share 7.48 10.56–29.2 Fully diluted earnings per bearer shar e 7.45 10.38–28.2 Earnings per dividend-bearing registered share 1.50 2.11–28.9 Fully diluted earnings per registered hare 1.49 2.08–28.4 4 Consolidated Statement of Income Consolidated Consolidated Balance Sheet of Group Holcim Million CHF 30.06.20 02 Unaudit 30.06.20 01 Unaudit 31.12.20 01 Audite Cash and cash equivalents 2,817 1,108 2,137 Marketable securities 90 538 105 Accounts receivable 2,581 3,192 2,456 Inventories 1,325 1,581 1,416 Prepaid expenses and other current assets 264 318 253 Total current assets 7,077 6,737 6,367 Financial investments 2,373 3,082 3,312 Property, plant and equipment 14,189 14,610 14,235 Intangible and other assets 3,079 3,321 3,130 Total long-term assets 19,641 21,013 20,677 Total assets 26,718 27,750 27,044 Trade accounts payable 1,088 1,152 1,187 Current financing liabilities 2,678 4,177 2,729 Other current liabilities 1,235 1,519 1,342 Total short-term liabilities 5,001 6,848 5,258 Long-term financing liabilities 10,053 8,500 9,281 Deferred taxes 1,119 1,291 1,213 Long-term provisions 880 972 909 Total long-term liabilities 12,052 10,763 11,403 Total liabilities 17,053 17,611 16,661 Interests of minority shareholders 2,694 2,043 2,741 Authorized capital 402 402 402 Reserves 6,569 7,694 7,240 Total shareholders’ equity 6,971 8,096 7,642 Total liabilities and shareholders’ equity 26,718 27,750 27,044 5 6 Statement of Changes in Consolidated Equity Statement of Changes in Consolidated Equity of Group Holcim January–June Million CHF 2002 Unaudit ed 2001 Unaudit ed Authorized capital as at January 1 402 377 Capital paid-in 0 25 Authorized capital (A) 402 402 Reserves Capital surplus as at January 1 2,570 1,945 Capital paid-in 0 631 Shareholders’ equity – convertible bonds 54 0 Capital surplus (B1) 2,624 2,576 Retained earnings as at January 1 4,665 4,703 Change in treasury shares (5) (369) Profit distribution (195) (188) Group net income after minority interests 292 397 Effect of increase in participations (5) (7) Gain on cash flow hedges 8 0 Gain on available-for-sale securities 20 0 Retained earnings (B2) 4,780 4,536 Currency translation adjustments as at January 1 5 75 Currency translation adjustments (840) 507 Currency translation adjustments (B3) (835) 582 Total reserves (B1+B2+B3) 6,569 7,694 Total shareholders’ equity (A+B1+B2+B3) 6,971 8,096 Consolidated Consolidated Cash Flow Statement of Group Holcim January–June Million CHF 2002 Unaudit ed 2001 Unaudit ed ±% Operating profit 935 997 –6.2 Depreciation and amortization of operating assets 721 681 Other non-cash items (10) 49 Change in net working capital (375) (662) Cash generated from operations 1,271 1,065 +19.3 Additional ordinary income 57 97 Interest paid (309) (338) Income taxes paid (238) (207) Cash flow from operating activities (A) 781 617 +26.6 Investments in property, plant and equipment net (551) (780) Financial investments net (155) (1,217) Cash flow from investing activities (B) (706) (1,997) +64.6 Dividends paid (314) (290) Equity capital paid-in 54 656 Movements of treasury shares net (5) (362) Increase in current financing liabilities 120 309 Proceeds from long-term financing liabilities 1,587 833 Repayment of long-term financing liabilities (631) (494) Decrease in marketable securities 4 214 Cash flow from financing activities (C) 815 866 –5.9 In(De)crease in cash and cash equivalents (A+B+C) 890 (514) Cash and cash equivalents as at January 1 2,137 1,536 In(De)crease in cash and cash equivalents 890 (514) Effects of exchange rate movements (210) 86 Cash and cash equivalents as at June 30 2,817 1,108 [...]... exchange mo in Argentina Financial expenses capitalized 14 21 vements and to the lower interest rate level The position “ Depreciation and Total (247) (344) exchange rates and the generally lower interest rate level Foreign exchange gain net derived mainly from Latin American currencies The reduction in financial expenses is due to lower foreign Notes to the Consolidate 9 d Financial Statements 8 Contingent... (hereafter ‘ atements, deviate 3 Segment Information Information by regi Europ North Latin Africa Asia Corporat Total on e Americ AmericMiddle E Pacifice / Group Eliminatio a a ast January–June 20022 00 120022 00 120022 00 120022 00 120022 00 120022 00 120022 001 Income statement Million CHF Net sales 2,257 2,218 1,244 1,371 1,731 1,879537 603 843 675(171) 164) ,441 ( 6 6,582 Operating profit 274 244 77 157 417 425 120... preparation of interim financial state The unaudited consolidated second quart ments requires management to make estimates and assumpti er interim financial statements (hereafter ‘interim financial st ons that affect the reported amounts of revenues, expenses, a atements’) are prepared in accordance with IAS 34 Interim Fi ssets, liabilities and disclosure of contingent liabilities at the d nancial Reporting The... during the period atements as they in which the circumstances change provide an update of previously reported i nformation There were no significant changes in accounting policies or estimates or in any provisions or impairment charges from those disclosed in the annual financial statements 2 Changes in the Scope of Consolidation and Other Significant Acquisitions The following significant changes were... nancial Reporting The accounting policies used in the prepar ate of the interim financial statements If in the future such ation of the interim financial statements and the presentation estimates and assumptions, which are based on manage are consistent with those used in the consolidated financial st ment’s best judgment at the date of the interim financial st atements for the year ended December 31, 2001... lawsuits, claims, investigations and proceedings, including product liability, commercial, environmental and health and safety matters No significant changes in the Group’s contingent liabilities have occurred since the last annual financial statements 9 Post-Balance Sheet Events There were no significant post-balance sheet events 10 Notes to the Consolidated Financial Statements Holcim securities... capitalization ts to differ mateof Holcim Ltd amounted to approximately rially from the statements made in this do CHF 13.7 billion at cument June 30, 2002 Holcim assumes no obligation to update o r alter forwardlooking statements whether as a result of new information, future events or otherwise Financial Reporting Calendar Third quarter 2002 results conference for press and analysts 2002 2002 annual results conference... expenses is due to lower foreign Notes to the Consolidate 9 d Financial Statements 8 Contingent Liabilities In the ordinary course of business, the Group is involved in 10 Principal Exchange Rates Income state Balance sh ment eet Average exchange rates ±% 30.06.20 30.06.20 31.12.20 in C Closing exchange ra 2002 2001 1 EUR 1.47 1.53 –3.9 02 1.47 01 1.52 01 1.48 1 USD 1.63 1.72 –5.2 1.48 1.80 1.68 1 CAD 1.04... Million CHF 8 Notes Financial expenses to the Consolidated Financial Statements Interest earned on cash and cash equivalents The reduction in financial income is due to losses on the sale Foreign exchange gain (loss) net 28 3 19 (68) (18) 55 33 23 (9) 102 2002 7 Fi 2001 (329) (396) 30 36 amortization of non-operating assets” includes depreciation 38 (5) and amortization of non-operating assets of Cimpor... (141) 335 January–June 2002 2001 Million CHF Volume and price 12 9 Change in structure (17) 55 Currency translation adjustments (57) 0 6 Total Additional Ordinary Income (Expenses) (62) 64 January–June 2002 2001 effectively Million CHF transferred to the Holcim Group at that date Dividends earned Financial income Other ordinary income Depreciation and amortization of non-operating assets Total nancial . We have strengthened our position in Asia. Half- Year Report 2002 Operating targets achieved – strong Swiss franc hurts results Sales volumes increased again in our three. Consolidate d Financial Statements 9 8 Contingent Liabilities In the ordinary course of business, the Group is involved in lawsuits, claims, investigations and proceedings, including product. regi on Europ e North Americ a Latin Americ a Africa Middle E ast Asia Pacific Corporat e / Eliminatio Total Group January–June 20022 00 120022 00 120022 00 120022 00 120022 00 120022 00 120022 001 Income statement Million