Holcim Analysis
As one of international company that concentrate of cement manufacturing, Holcim growing as the past 5 years. Author tries to summarize what factor that takes a part in the Holcim business growing. Focusing on the financial report from 2007-2011, there are some critical factors that can be analyze. Statement of Income of Holcim Group 2007-2011 | | 2011| 2010| 2009| 2008| 2007| Statement of income| | | | | | | Net sales| Million CHF| 20744| 21653| 21132| 25157| 27052| Gross profit| Million CHF| 8528| 9274| 9060| 11041| 12979| Operating EBITDA| Million CHF| 3958| 4513| 4630| 5333| 6930| Operating EBITDA margin| %| 19.
| 20. 8| 21. 9| 21. 2| 25. 6| EBITDA| Million CHF| 4264| 4988| 5229| 5708| 8468| Operating profit| Million CHF| 1933| 2619| 2781| 3360| 5024| Operating profit margin| %| 9.
3| 12. 1| 13. 2| 13. 4| 18. 6| Depreciation, amortization and impairment| Million CHF| 2367| 1934| 1858| 1985| 1919| EBIT| Million CHF| 2235| 3054| 3371| 3723| 6549| Income taxes| Million CHF| 449| 615| 623| 663| 1201| Tax rate| %| 40| 28| 24| 23| 21| As the following years starting from 2007 the net sales in 2011 indicates the lowest achievement.
With this data, we can state that the selling movement is suffering until the current year. This can be the low of buying power of Holcim product or the limitation Holcim can create the product. The tax also increases dramatically in the past 5 years. Statement of Cash Flow of Holcim Group 2007-2011 Statement of cash flows| | 2011 | 2010 | 2009 | 2008 | 2007 | Cash flow from operating activities| Million CHF| 2753| 3659| 3888| 3703| 5323| Cash flow margin| %| 13. 3| 16. 9| 18.
4| 14. 7| 19. 7| Investments in property, plant and equipment for maintenance Million CHF| 752| 410| 376| 1104| 1043| Investments in property, plant and equipment for expansion| Million CHF| 886| 1182| 1929| 3287| 2245| Purchase (Disposal) of financial assets, intangible and other | | | | | | | assets and businesses net| Million CHF| 154| -230| 2125| 747| -50| As the following years Cash flow activities also decreasing which means operation in terms of cash oriented is decrease. Although the selling out and cash flow activities is decreases, Holcim seems likely to investing in property, plant, and equipment. Statement of Financial Position of Holcim Group 2007-2011As the following financial position of Holcim Grop from 2007-2011, it can be seen that the total asset is decreasing each years and the total liabilitites also decrease except in 2009.
Holcim Group 2007-2011 Analysis 1. ROE (Return on Equity) = Net Income / Avg Shareholders Equity ROE from 2007-2011 are decreasing because of the Net Income from 2007-2011 also decreasing (See Appendix 2). From the fact above it can be seen that the most efficient year is 2007, and as the time goes the efficiency of the company is decreasing. 2. ROA (Return on Assets)={Net Income + [Interest Expense 1-Tax Rate)]} / Average Total Assets ROA represent how efficient management is at using its assets to generate earnings. Higher ROA means earning more money on less investment.
It can be seen that the highest ROA from 2007-2011 is 9. 4% in 2007. The ROA start decreasing from 2008-2011. It shows that Holcim from each year is getting less efficient in managing their assets. 3. CEL= Net Income/{Net Income+[Interest Expense (Cmn Equity Leverage) (1-Tax Rate)]} Common equity leverage represent that the shareholders of HOLCIM receiving a large portion of the total return generated by the company.
007 is the higher CEL compare to the other years, which is 1. 035. in 2007, the shareholders earn the highest portion of total return that generated by the company. it is because of either the company not using leverage or using leverage very effectively. 4. CSL (Capital Structure Leverage)=Avg Total Assets / Avg Shareholders Equity It can be seen that from 2007-2009 the CSL of HOLCIM is increase but start from 2010-2011 the CSL decrease significantly.
High level of CSL indicates that a company is using leverage large potential earning power and high levels of risk. . PM (Profit Margin) ={Net Income + Interest Expense (1-Tax Rate)} / Sales Profit margin measures how much out of every dollar of sales a company actually keeps in earnings. The highest PM is in 2009, the PM ke increasing from 2007 until the highest PM is in 2009, which is 10. 2%.
In 2010 and 2011 the profit margin decrease significantly. Profit margin is very useful when comparing companies within the same industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. . AT (Asset Turnover)=Sales / Avg Total Assets Asset turnover represent the speed with which assets move through operations, or the number of times during a given period that assets are acquired, used, and replaced or in other word a firm’s efficiency at using its assets in generating sales or revenue. It can be seen that from 2007-2010 the AT ratio is decreasing and increase significantly in 2011.
7. LTD/TA= Long-term Debt / Total Assets Long-term debt ratio measures the importance of long-term liabilities as a source of asset financing.It can be seen that the ratio is up and down each years and in 2011 the ratio reach the lowest point. The greater a company’s leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more risky because they have more liabilities and less equity.
8. COGS/S=Cost of Goods Sold / Sales The cost of goods sold (COGS) to sales ratio shows the percentage of sales revenue used to pay for expenses which vary directly with sales. In the 2007 Holcim perform good sales revenue that indicates the high intense of COGS. 9. A/R Turnover=Sales / Avg Account ReceivableAn accounting measure used to quantify a firm’s effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.
The A/R for each year seems stable that indicate the outlets payment is good. 10. CR (Current Ratio)=Current Assets / Current Liabilities A liquidity ratio that measures a company’s ability to pay short-term obligations. The ratio indicates the power of pay the payable, within the year Holcim perform well. 11. OpEx/S = Operating Expenses / SalesReports the operating expenses as a percent of Net Revenues.
This then is a measure of the total overhead employed in the firm per Net Sales Revenue Dollar; thereby giving an indication of the efficiency of the cost structure of the company. 12. Inventory Turnover = COGS / Avg Inventory A ratio showing how many times a company’s inventory is sold and replaced over a period. In the following year, Holcim seems cannot manage well as 2007. The sold of the inventory keep decreases along the year.
13. QR (Quick Ratio) =(Cash + ST Invest + A/R) /Current Liabilities An indicator of a company’s short-term liquidity.
