LafargeHolcim shares Q1 financial results
Published by Emily Thomas,
Jan Jenisch, CEO: “I am pleased to share that we are off to a strong start to the year, delivering record Q1 results, with net sales up 7.4% and Recurring EBIT up 131%. This continues our strong growth momentum of the last quarters, and we expect it to accelerate with the Firestone Building Products acquisition and the many government stimulus investments ahead. We are set to deliver the targets of Strategy 2022 one year in advance.”
“The pandemic has emphasised for all of us the need to build back a better normal. We are fully committed to playing our part. For instance, in the US, we are ready to contribute to President Biden’s American Jobs Plan, offering a once-in-a-generation opportunity to rebuild infrastructure, such as roads and bridges, in a more sustainable way, while making buildings more energy-efficient. With our sustainable building solutions, from Firestone’s insulating roofing systems to our ECOPact green concrete, we are committed to deploying our technologies at scale to put climate action at the heart of the recovery.
“I would like to sincerely thank everyone within LafargeHolcim for their continued resilience and agility throughout the pandemic. I’m extremely proud of how our teams are keeping our people and operations safe, while going above and beyond to stand by our communities. Our number one priority remains the health and safety of all.”
Growth momentum continues
The company got off to a record start to 2021, led by net sales improving by 7.4% and an increase in Recurring EBIT of 130.7% compared to the prior year period, both on a like-for-like basis. Cement volumes grew by 5.6% for the Group and Ready-Mix Concrete volumes grew by 2.2%, while Aggregates volumes decreased by 4.0%, all on a like-for-like basis. All regions showed significant increase in Recurring EBIT margin.
The Europe region showed good momentum with a strong increase in margin. Performance in March was excellent, with strong volumes in all segments and strong pricing trends overall. Market conditions improved in the UK and demand in France continued to be strong. These factors led to over-proportional Recurring EBIT growth compared to net sales.
The Middle East Africa region delivered strong improvement in Recurring EBIT margin. The region returned to cement volume growth, driven by branded product sales. Good trends in Iraq, Kenya and Nigeria led to strong Recurring EBIT margin improvement of 380 basis points versus the prior year.
North America showed good momentum with volume back to the 2019 level despite unfavourable weather at the start of the year. Market demand in the US was strong and Canada West, which had been affected by a slowdown in the oil & gas sector, showed signs of stabilisation. The Recurring EBIT margin for the region improved by 170 basis points versus the prior year.
The Latin America region continued its outstanding performance, with volume growth in all business segments. Strong cement demand growth was driven by residential and infrastructure sectors. The region delivered an excellent operational performance, with a record Recurring EBIT margin improvement of 810 basis points versus the prior year.
The Asia Pacific region showed record performance with strong growth in cement volumes. India’s outstanding performance was supported by excellent volumes as well as effective price and cost management. Improving activities in Australia were supported by government stimulus programs. The region achieved a record Recurring EBIT margin expansion of 730 basis points versus the prior year.
Firestone acquisition successfully closed
The transaction to buy Firestone Building Products successfully closed on 31 March 2021. The acquisition represents a milestone in the transformation of LafargeHolcim to become the global leader in innovative and sustainable building solutions. All 1900 employees joined LafargeHolcim. Firestone Building Products will be part of the newly established Global Business Unit Solutions & Products, under the direction of Jamie Gentoso, who has been appointed to the Group Executive Committee.
Firestone Building Products is the market leader in commercial roofing and building envelope solutions in the United States with net sales above US$1.8 billion in 2020, 15 manufacturing facilities, 1800 distribution points and three R&D laboratories. It will remain headquartered in Nashville, Tennessee. The 2021 outlook for Firestone Building Products is strong, with results to date above expectations.
In addition, LafargeHolcim completed four bolt-on acquisitions across Europe in the quarter. Notable bolt-ons include Edile Commerciale and Cemex Rhone Alpes, both suppliers of ready-mix concrete and aggregates, ideally located in two of Europe’s largest metropolitan areas, Milan, Italy, and Lyon, France. With 35 ready-mix concrete plants, these operations strengthen LafargeHolcim’s position in two of the most dynamic and attractive areas in Europe, with strong demographic trends and key infrastructure projects. LafargeHolcim also announced its investment in XtreeE, a French start-up specialising in large-scale 3D printing, in the first quarter.
Strengthening leadership in sustainability
In addition to its record financial results, LafargeHolcim has continued to advance on its leading sustainability achievements in 2021. Vigeo.Eiris, the environmental, sustainability and governance (ESG) rating and research agency, has ranked LafargeHolcim as number one in its sector, giving the company its highest rating of A1+. LafargeHolcim was also named best in its sector in terms of transitioning to a low-carbon economy. This rating places LafargeHolcim within the top 2% of companies ranked worldwide.
The Solar Impulse Foundation endorsed ten LafargeHolcim green building solutions with its Solar Impulse Foundation efficient solution label. The labelled solutions contributed to the Solar Impulse Foundation’s challenge of identifying 1000 clean technologies that protect the environment in a profitable way. Each awarded solution was strictly assessed by a pool of independent experts. Among the recognised products is ECOPact green concrete, which was launched globally in July 2020 and is now available in 16 countries, including the US and India, with an accelerated rollout ahead. ECOPact is complemented by the company’s EcoLabel, which has been deployed across 100 products around the world to transparently communicate their environmental profile, with at least 30% lower CO2 footprint, or 20% recycled content.
Other notable events in the quarter include LafargeHolcim’s engagement as a founding member in the MIT Climate and Sustainability Consortium (MCSC). Working with MIT’s world-class research teams, LafargeHolcim is working alongside a cross section of industry leaders to develop innovation-driven solutions to tackle climate change. LafargeHolcim also committed to publish its first Climate Transition report in 2022 and will submit it for shareholder approval at the 2022 Annual General Meeting.
LafargeHolcim expects positive demand trends in all regions, to be accelerated as of H2 2021 from various stimulus programmes, as governments announce measures to support the economic recovery with a focus on infrastructure. LafargeHolcim is ready to contribute to these programmes around the world, from the CHF 2 trillion ‘Build Back Better’ plan in the US, to the nearly CHF 2 trillion expected from India’s ‘National Infrastructure Pipeline’ plan, and the UK’s CHF 800 billion infrastructure plan.
The company expects to develop the Firestone Building Products business in 2021, to accelerate bolt-on acquisitions and to continue to progress on its 2030 sustainability targets. LafargeHolcim further expects to achieve all Strategy 2022 targets one year in advance, delivering:
- Net sales growth of 3%-5% LFL
- Over-proportional growth in Recurring EBIT of at least 10% LFL
- Return on invested capital above 8%
- Cash conversion of above 40%
- Debt leverage below 2x
- Capex less than CHF 1.4 billion
Read the article online at: https://www.worldcement.com/europe-cis/23042021/lafargeholcim-shares-q1-financial-results/
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