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LafargeHolcim to continue to limit CAPEX

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World Cement,

LafargeHolcim is to continue limiting its capital expenditure (CAPEX), the company said in its recent annual report, targeting a run rate of less than CHF2 billion per year from 2018. Cumulative CAPEX for 2016 – 2017 is currently on target to be below CHF3.5 billion.

“With the already-installed capacity and our know-how in preventative maintenance and capacity optimization, we are successfully pursuing a lean capital spending strategy, significantly reducing our capital investment without hindering our ability to grow our business,” the company said.

The control on CAPEX forms one of the company’s four strategic pillars and focuses on developing low-capital intensive growth opportunities, rather than the traditionally capital-heavy approach to growth seen in the cement industry in the past.

The “asset-light” approach to growth has already included the conversion of a cement mill to process petcoke at LafargeHolcim’s Egyptian business. The conversion helped the company reduce its fuel costs and strengthen the security of its fuel supply – but saved CHF30 million when compared to installing a new mill.

The strategy also incorporates developing franchise models for the ready-mixed concrete and retail businesses, as well as leveraging its global trading platform to supply markets, rather then investing in local clinker production.

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