Switzerland-based Holcim Ltd. announced a management shake-up as new Chief Executive Officer Bernard Fontana said the Swiss cement maker may need to further streamline its business in Europe to stem falling demand. Holcim will introduce a “leaner and more efficient” structure, including a new head of Europe, as of September 1. The cement maker also cut its outlook for the region as it reported second-quarter earnings, predicting a contraction for 2012 after previously anticipating a stable development. “When the market goes so low, you need to adapt your cost,” Fontana, who took over in February, said on a conference call.
A building slump in Europe, which accounted for 29 percent of Holcim’s sales in 2011, means cement makers are in the midst of restructuring their units in that region, including headcount reductions and plant closures. Second-quarter net income at Holcim rose 9.2 percent from a year earlier to 379 million Swiss francs ($389 million). The gain was Holcim’s first in five consecutive quarters. Sales rose 2 percent to 5.6 billion francs, below the 5.7 billion-franc average estimate of analysts in a Bloomberg survey.
As part of the changes announced today, three managers will leave the executive committee and Urs Bleisch has been promoted to head Fontana’s “Holcim Leadership Journey.”
Holcim will bundle several European divisions into one unit led by Roland Koehler, who is now CEO of Holcim Group Support Ltd. Bernard Terver, who leads Holcim’s U.S. businesses, will join the executive committee. Executive Committee members Benoit-H. Koch, responsible for North America, the U.K., Norway and the Mediterranean, and Patrick Dolberg, responsible for Western and central Europe, will leave the company.
Holcim will increase operating profit by at least 1.5 billion francs by the end of 2014 by cutting energy consumption, supply chain costs, and introducing measures to improve customer loyalty, Fontana said in May. The company said today it expects better than previously forecast growth in North America and reiterated its target of overall organic growth in operating earnings before interest, taxes, depreciation and amortization this year.