Zurich - Holcim will book a 775 million Swiss franc ($819m) charge in the fourth quarter, raising the prospect the cement maker may trim its dividend after a slump in demand for construction material and a South African unit’s restructuring.
Holcim’s ability to pay a dividend for 2011 has not changed and its board will decide on the size of the payout in February, the company said on Monday.
“The payout will probably come down only slightly,” Vontobel analyst Serge Rotzer said. Holcim paid a dividend of 1.50 francs per share for 2010.
Shares in the firm, which fell 29% last year, had fallen 1.6% in morning trade, compared with a 0.2% slip in the sector index.
Since 2008, demand for cement in Spain has plummeted by more than half, fallen by about a third in parts of Eastern Europe and by 45% in the United States, Holcim said.
Because demand for construction materials will only recover at a modest pace and production capacity will not be used fully, an impairment charge of 360 million francs will be booked, it added.
“It seems that the construction giant is feeling the fall in cement consumption in some regions of the world more than previously believed,” analysts at Wegelin said in a note.
“As such the writedown should make sense but may still leave investors with a bitter aftertaste.”
Holcim, which competes with France’s Lafarge and Mexico’s Cemex, is also writing off investments of 415 million francs in the fourth quarter due to restructuring at AfriSam, formerly Holcim South Africa, in which it now holds a 15% stake.