Third quarter growth for LafargeHolcim
By Sandy Guthrie30 October 2017
Third quarter results at materials producer LafargeHolcim are reported to have shown 4.1% year-on-year growth to CHF6.9 billion (€5.95 billion) on a like-for-like basis.
Meanwhile, LafargeHolcim has said that it is in talks with the board of directors of Pretoria Portland Cement (PPC) regarding a possible transaction in Africa.
It added, though, that no agreement had yet been made with PPC, a leading regional cement manufacturer with a presence in southern and eastern Africa.
Adjusted operating EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter was reported to have increased by 5.9% in the quarter to CHF1.75 billion on a like-for-like basis and was 9.2% higher for the year to date.
LafargeHolcim said that pricing, cost discipline and synergies contributed to higher margins, with operating EBITDA margin adjusted improving by 80 basis points in the third quarter, and 100 basis points for the first nine months.
Jan Jenisch, who took over as group CEO on 16 October, 2017, said, “In the past two months I have visited many of our operations and have been impressed by the experience and enthusiasm of our employees.
“LafargeHolcim is a first-class company with growing profits in an attractive industry. While the company delivered solid quarterly results, they do not reflect our full potential. As the market leader, we will hold ourselves to a higher standard than anyone else in our sector.”
He said the group had “reset expectations” for its outlook to a level that reflected the current business dynamics.
“While I am reviewing the business,” he said, “I have an immediate focus on simplification, cost discipline and performance management. We will reduce complexity and focus on operational excellence in order to fully to realise the potential of LafargeHolcim.
“My goal is to generate leading margins and an attractive growth profile, positioned for sustainable value creation for our employees, customers and shareholders.”
LafargeHolcim claimed it had delivered solid like-for-like operating EBITDA adjusted growth in the third quarter, with positive contributions from Latin America, North America and Europe.
It said market conditions were challenging in Asia Pacific, and in the Middle East and Africa, where actions were being taken to address weakness in key countries.
Like-for-like cement volumes were up 4.7% in the third quarter and 1.8% for the year to date. Globally, cement prices improved by 5.6% in the quarter compared to the previous year on a like-for-like basis, said LafargeHolcim.
It added that synergies of CHF97 million (€83.80 million) had been delivered in the third quarter, with the group exceeding its year-end target of CHF1 billion (€863.83 million) of total synergies by July.
According to LafargeHolcim, overall cement demand globally was expected to increase by 1 to 3% in aggregate for 2017. Following a strong first half and solid third quarter, growth in like-for-like operating EBITDA adjusted is expected to moderate further for the remainder of 2017.
For 2017, the group expects to deliver 5 to 7% growth in operating EBITDA adjusted over 2016 on a like-for-like basis.
For 2018, the group has reset some of the volume and pricing assumptions that underpinned earnings targets to reflect current business dynamics. It said it expected that this would translate into a growth rate for operating EBITDA adjusted on a like-for-like basis of at least 5%.
Jenisch joined LafargeHolcim from Swiss company Sika, which has a leading global position in the development and production of systems and products for the building materials and automotive sectors.
He had been CEO of Sika AG since January 2012.
Beat Hess, chairman of LafargeHolcim, said, “Jan Jenisch is a CEO that is widely respected for consistently delivering strong business results and he comes with a deep understanding of the building materials sector.
“His agile leadership style and his personal skills will be a good fit with our company culture and the management team of LafargeHolcim.”
Géraldine Picaud has been appointed as Chief Financial Officer of LafargeHolcim and member of the executive committee with effect from 1 February, 2018.
Ron Wirahadiraksa, the current CFO, has decided to pursue opportunities outside the group.
Picaud, a French national, joins the group from Essilor International, a leading ophthalmic optics company, where she has been group CFO and member of the executive committee since 2011.