INTERVIEW - Holcim Serbia Sees 2010 Turnover Flat, River Shipping Unit To Turn to Profit in 2011

The company also hopes that its latest acquisition, loss-making river transport company Kamenko Gagrcin, will break even next year before turning to profit in 2011, Holcim Serbia Manager Gustavo Navarro told SeeNews in an interview.

Holcim Serbia's cement sales dropped by 25% in terms of volume in 2009 as a result of the crisis, Navarro said but gave no figure.

The company, which employs about 700 people, doubled its consolidated net profit to 1.28 billion dinars ($19.6 million/13.3 million euro) last year. It boosted its consolidated operational revenue to 6.34 billion dinars last year from 5.39 billion dinars in 2007.

Holcim bought the Novi Popovac cement factory, in central Serbia, for some $60 million in 2001. In 2006, Holcim opened a 2.0 million euro concrete factory with annual capacity of 100,000 cubic metres a year in Belgrade. The company controls one-third of the cement market in Serbia.

“Everyone says we’ve hit the bottom, so it can’t get any worse. But I don’t expect a big recovery next year. Maybe towards the end of the year we can see some recovery,” said Navarro.

“We’ve had good years – 2007 and 2008 – which gave hope that things would continue this way. But now all this investment influx has been disrupted. The banks stopped lending, everything ground to a halt. And so there really is no money for development,” Navarro said.

“Construction-wise, Serbia lags behind its neighbours by about five years. So it has some major catching-up to do. And this has started to happen: hefty investments were made here between 2001 and 2006 and when the money started pouring in, construction took off. But this is not a process than can start immediately, it takes planning.” 

“The impact from the crisis has been severe for both ourselves and our partners in the industry. The only investments we continue to make are in environmental protection and health and safety at work,” Navarro said. He added that between two and three million euro will be set aside for investments next year. No information was immediately available on the company's investment plans for 2009.

Holcim bought 69% of Kamenko Gagrcin for 1.5 million euro in June, pledging to invest a further 1.0 million euro in the struggling river shipping company.

“I am saying this is because 2009 is a crisis year and we need to invest in it in order to rebuild the business, so I don’t think we can turn it around immediately,” Navarro said. He also said that Kamenko Gagrcin has very good management but has suffered underinvestment over the past five years. 

“So, basically, we are going to focus this investment of 1.0 million [euro] on renewing the fleet as well as on environmental protection and [occupational] health and safety.

Kamenko Gagrcin's vessels are 20 to 25 years old which is a normal age for a fleet if the ships are kept in good repair, Navarro said. The company owns 20 cargo ships with a combined capacity of 12,600 deadweight tonnes and employs about 170 people.

The river shipping company, based in the town of Sombor, in the northern province of Vojvodina, posted a net loss of 71.4 million dinars on 352 million dinars in operational revenue last year. It operates a port located on a canal linking the rivers Danube and Tisa.

(1 euro = 95.9317 Serbian dinars)