Holcim cuts spending to meet tough conditions

Zurich: Holcim, the world's second-largest cement maker, said on Thursday it would scale back investments this year as it braces itself for challenging conditions, though it would benefit from government stimulus projects.

Maintenance capital expenditure would be cut to 400 million Swiss francs (Dh1.3 billion) in 2009 from 1.2 billion in the previous year and only projects with short-term payback periods would be approved, the group said in slides prepared for a presentation with analysts.

Holcim, which competes with France's Lafarge, Mexico's Cemex and Germany's HeidelbergCement, also said it would reduce spending on expansion to 2.5 billion francs from 3.5 billion in 2008.

"Commissioning of most of the additional expansion projects [is] in the pipeline in 2009 [and there will be] no new investments," the group said in the slides.

Slowing construction due to the economic downturn has hit building materials companies and the outlook is bleak as the effects of the financial crisis spread to former growth markets.

But Holcim said it was well positioned to benefit from various government stimulus plans that "will provide the basis for building material demand over the next two to three years."

The group also said it had a solid balance sheet and adequate liquidity as well as no financial covenants at corporate level.