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Written by: Staff
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ZURICH, Mar 1 (Reuters) Recent acquisitions and price increases helped Holcim, the world's second-biggest cement maker, to report a 75 per cent increase in net profit for 2005, beating market expectations and its rivals' performance.

The Swiss company, a leading supplier of cement, gravel and sand, said on Wednesday it made a net profit of 1.54 billion Swiss francs ($1.2 billion) on sales up 40 percent at 18.47 billion.

''Holcim exploited its strengths in a favourable economic climate and buttressed its market position through major acquisitions,'' the company said in a statement.

It said it expected construction activity to remain favourable in its main markets in 2006, while both group companies and newly acquired units such as Britain's Aggregate Industries are expected to report sound growth.

''Holcim expects to be able to absorb higher energy costs with price adjustments and efficient energy management,'' the company said.

It added that core operating profit growth -- earnings before interest, tax, depreciation and amortisation -- would be above 5 per cent in 2006, after reaching 10.5 per cent in 2005.

The shares were trading 2 per cent higher at 105.50 Swiss francs by 1120 GMT (1650 IST), while analysts welcomed the result and the proposed dividend of 1.65 francs, up from 1.25 francs.

''This is a good result across the board,'' Christian Arnold, a Bank Vontobel analyst, said. ''I can't see anything disappointing.'' Analysts had been expecting news from Holcim on plans to raise further funds, but the firm said on Wednesday it would only decide on how and when to raise fresh cash once it has completed a tender offer for a further stake in India's Gujarat Ambuja Cements (GACL).

REASONABLE START Chief Executive Markus Akermann told Reuters that the firm had seen a reasonable start to 2006 and that it expected to be able to continue raising prices where possible this year.

''Generally, the year has begun reasonably in terms of volumes and pricing,'' Akermann said. In 2005, energy costs accounted for around 10.4 per cent of sales -- excluding new acquisitions -- and Akermann said this would rise further.

Zuercher Kantonalbank said it shared Holcim's confidence for 2006: ''The construction sector as well as the pricing environment in all significant markets are promising for Holcim.

Holcim continues to profit from the long-term potential of emerging markets.'' Holcim said demand had continued to grow in all of its sales regions in 2005 and that the acquisitions in India and the UK had also lifted sales of aggregates and ready-mix concrete.

Holcim is the latest building materials firm to post a strong rise in 2005 earnings after France's Lafarge saw its net profits rise 5 per cent to 1.1 billion euros.

However, investors were disappointed by a subdued outlook from Lafarge, a company which analysts say is not as well placed as Holcim in emerging markets and is more dependent on slower-growing industrialised markets.

Against the backdrop of a booming construction industry, 18 analysts polled by Reuters had on average expected the group to post a 63 per cent jump in net profit to 1.49 billion francs.

REUTERS SD HT1752

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