LafargeHolcim has announced its first set of financial results since the closing of the merger. Net sales for 3Q15 were CHF7825 million, down 8.7% y/y or -1.1% on a like-for-like basis. For the nine months to the end of September, sales were down 0.6% on a like-for-like basis at CHF22 042 million. Adjusted operating EBITDA was down 8.9% on a like-for-like basis, at CHF1639 million in 3Q15 and down 3.2% on a like-for-like basis for 9M15. The group blamed the merger and restructuring costs, adverse foreign exchange, the slowdown in the economies of China and Brazil and a ‘softness’ in France and Switzerland. This was countered by good performance in the US, UK and most countries in Asia Pacific and much of Latin America. Sales volumes in all product lines declined slightly in 9M15, while cash flow declined 55% to CHF697 million and in 3Q15 to CHF315 million. This group attributed this to merger costs, lower operating EBITDA and disappointing performance in working capital in the third quarter. However, synergy action plans started to deliver with CHF36 million generated in 3Q15. This came primarily from the most immediate actions taken, such as optimising logistic flows in overlapped countries and launching a review of procurement contracts.
“In this quarter, following a thorough integration preparation, we kick-started the actual integration process to have the right organisational structure, action plans and people in place in order to ensure the success of the merger,” said CEO Eric Olsen, adding that the company will present its first 3-year plan at he Capital Markets Day on 1 December. This will come into effect on 1 January 2016 and will become the benchmark by which LafargeHolcim’s performance will be judged.
“(W)e have started laying solid foundations for the new company on which we will build the future success of LafargeHolcim,” Olsen continued. “I am confident in our ability to deliver on the announced synergies and thanks to disciplined capital allocation and superior execution we will outperform our sector. We will maximise cash flow and create sustainable value with the focus on returning excess cash to shareholders while continuing to provide our customers with world-leading innovative products and solutions.”
The 2016-18 3-year LafargeHolcim strategic plan is built on five value-creating pillars:
- Synergies and cost leadership – accelerate full merger synergy delivery to the end of 2017 and drive continuous cost reductions.
- Commercial excellence – accelerate full merger synergy delivery, targeted customer-centric driven solutions to deliver differentiation, continuous focus on value, cross selling, early project involvement and integrated offerings.
- Lean capital spending – manage Capex strictly, asset-light business model leveraging existing asset footprint and tightly manage working capital requirements.
- Dynamic portfolio management – optimise portfolio and extract full value, with expected divestments of CHF 3.5 billion1 in 2016.
- Strict capital allocation discipline – commit to a solid investment grade rating, progressive dividend policy and returning excess cash to shareholders through dividends or share buy-backs.
The plan does not rely on a market recovery and assumes only 2% underlying market growth.
The Group estimates that cement volumes will be higher for 2015 in all regions except Europe. Aggregates volumes are expected to be higher in all regions except in Latin America and Europe. Ready-mix concrete volumes are expected to decrease in all regions, except Asia Pacific. Net debt is expected to be below CHF17.5 billion on a reported basis at the end of the year. 2015 synergy targets confirmed with CHF100 million expected by the end of the year and capital expenditure below CHF1.4 billion for the second half of 2015.
Adapted from press release by Katherine Guenioui
Read the article online at: https://www.worldcement.com/europe-cis/25112015/lafargeholcim-reports-first-financial-results-since-merger-67/