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LafargeHolcim launches new growth strategy

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World Cement,


LafargeHolcim’s new leadership set out its stall for reviving the company, as the company booked a CHF3.83 billion writedown in 4Q17. New CEO Jens Jenisch said the company would cut costs, target fewer markets, and selling assets as part of strategy for building growth.

The impairment charge was booked following a reassessment of the company’s portfolio of assets. Two-thirds of the impairments were concentrated in Algeria, Malaysia, Iraq, Brazil, Indonesia, and Egypt.

Under its new Strategy 2022 – Building for Growth, Jenisch said the company would target annual net sales growth of 3 – 5%, annual recurring EBITDA growth of at least 5%, improvement in free cash flow to over 40% of recurring EBITDA, and an improvement on return on invested capital to more than 8%.

“The strategy is underpinned by a new set of targets that centres on growth, improving profitability, increasing cash generation, and producing more attractive and sustainable returns for shareholders,” Jenisch said.

As part of the new strategy, the company will streamline its corporate structure, focusing greater accountability on the local leadership, while merging corporate business functions into one business area. Two corporate offices – in Singapore and Miami – will also be closed.

In addition to the corporate restructure, a fourth business area will be built to include “products and applications that are closer to the customer”, such as precast and other concrete products, asphalt, mortars, and contracting and services. This segment already has net sales of CHF2.1 billion.

Acquisitions will be selective and bolt-on to existing country-based organisations. Funding for M&A and other growth activities will be funding by the sale of assets worth at least CHR2 billion. CAPEX will meanwhile be kept below CHF2 billion per year.

Including the impairment charge, the company booked a loss of CHF1.68 billion in 2017. Like-for-like earnings were up 6.1% at CHF5.99 billion, while like-for-like sales were up 4.7% at CFH26.90 billion.

Like-for-like sales of cement were up 3.3% at 209.5 million t – the strongest growth from the company’s three business areas. Like-for-like sales of aggregates were up 0.3%, while sales of ready-mixed concrete were down 2.8%.

Read the article online at: https://www.worldcement.com/europe-cis/05032018/lafargeholcim-launches-new-growth-strategy/

 

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LafargeHolcim news Cement news 2018