Challenges for LafargeHolcim

LafargeHolcim’s fourth quarter results were affected by challenges in various markets, most notably Brazil, Switzerland, China, Indonesia, Zambia, Nigeria and Azerbaijan, but the group said it was making “significant progress” with its integration of the two companies.

Holcim and Lafarge completed a merger last July, creating the largest construction materials producer in the world.

Eric Olsen, CEO of LafargeHolcim, said that despite challenging environments in some markets, it had exceeded all its 2015 commitments in terms of capital expenditure, synergies, and net debt reduction.

“Our focus on cash flow delivered solid results in the fourth quarter,” he said. “We have also made significant progress on our divestment plan, while accelerating the pace of integration across the group and cost management actions.”

The group recently received a revised order from the Competition Commission of India (CCI) for the divestment of its interest in Lafarge India.

“Many of the key elements of the merger are now behind us,” said Olsen. “Our organisation is in place – synergies will continue to gain momentum in 2016 with notably more than CHF450 million (€411.88 million) of incremental EBITDA (earnings before interest, taxes, depreciation and amortization) synergies expected for this year, and we have taken decisive actions to adjust and streamline our costs further, notably in the most difficult markets.”

He said that overall, the group saw demand in its markets growing 2 to 4% during 2016.

“Emerging markets will continue to grow overall,” he said, “supported by their strong long-term fundamentals and despite the challenging evolution in some of these markets.

“Given our footprint, we are well placed to benefit from the dynamic conditions in many of our key markets.”

The group said fourth quarter results had been impacted by challenges in markets such as Brazil, Switzerland, China, Indonesia, Zambia, Nigeria and Azerbaijan, and also by lower CO₂ revenues and adverse foreign exchange.

However, it said it was encouraged by positive developments in markets including the US, Mexico, Argentina, the Philippines, Australia and the UK.

LafargeHolcim said that 2016 would be a year of progress towards its 2018 targets.