LafargeHolcim, the global building materials and solutions company, has announced its results for the first quarter of 2019.
- Strong growth in net sales, up +6.4%
- Over-proportional increase in recurring EBITDA, up +20.6%
- Profitability increase in all business segments
- Significant reduction in debt for the year end
- 2019 targets confirmed
Jan Jenisch, Chief Executive Officer of LafargeHolcim, commented, “We had a very strong start of the year and I am especially pleased to see our strong sales growth and an over-proportional increase in profitability. Our momentum is very positive and the 1Q19 is the third consecutive quarter with Recurring EBITDA growing faster than Net Sales.”
“Our strategic decision to divest South East Asia was executed with very attractive valuations allowing us to achieve a new level of financial strength. We have delivered on the promised strengthening of our balance sheet and we are on track to accelerate the execution of our Strategy 2022 – ‘Building for Growth’.”
“Our momentum in the past three quarters, a solid global market demand and the ambitions of our teams give us great confidence for reaching our targets for the full year.”
Continuation of Strong Momentum
Like-for-like net sales grew by 6.4% for the first quarter compared to the prior-year period, while recurring EBITDA grew over proportionally by 20.6%.
The Europe region delivered very good results with strong volume growth in all business segments and significant price increases. Improved operational efficiency in our plants and an early start of the construction season allowed the company to grow margins further.
The North America region had a good start of the year, with good volume growth in the quarter and several multi-year construction contracts supporting a strong order book. The region also made further progress on its cost savings program.
The Latin America region delivered a resilient performance in a softer market environment. Effective price management and cost savings nearly offset the challenging environment in key countries. Recovery is ongoing in Brazil and Colombia while Mexico and Argentina experienced lower cement demand.
The Asia Pacific region continued its strong momentum based on strong cement demand in India and progressive price improvement in most markets. Profitability in Australia and the Philippines was higher and China continued to contribute solidly to a positive result in the region.
Markets in the Middle East Africa region have started to stabilize overall. Turnaround plans in several countries are delivering visible results. Changes in supply and demand in key countries are still impacting prices.
LafargeHolcim’s growth strategy generated strong sales growth and an over proportional increase in profitability. The execution of Strategy 2022 – “Building for Growth” is building up momentum and 1Q19 is the third consecutive quarter with recurring EBITDA growing faster than net sales.
Growth was achieved in all four business segments supported by solid global market demand. Four bolt-on acquisitions were completed in North America, Australia and Europe and key investment programs have progressed.
The CHF 400 million SG&A cost savings program has supported the quarter’s performance and is on track to deliver the targets for the full year. The Recurring EBITDA has increased in all four business segments. The Aggregates and the Ready-mix Concrete business segments continued to improve margins and to close the gap to best in class performance.
Based on the strategic portfolio review, the exit from the increasingly hyper competitive arena in South East Asia was executed. The divestments were achieved at attractive valuations leading to a new level of financial strength. The net debt to recurring EBITDA ratio is expected to improve by 0.6 times at the closing of all transactions and we are over achieving on our ambitious de-leveraging targets for 2019. Both credit rating agencies, Moody’s and Standard Poor’s, upgraded the outlook for LafargeHolcim to “stable” in March 2019.
The positive momentum in Q1 is expected to continue in 2019 with:
- Continued market growth in North America
- Softer but stabilizing cement demand in Latin America
- Continued demand growth across most countries in Europe
- Challenging but stabilizing market conditions in Middle East Africa
- Continued demand growth in Asia Pacific
Based on the above trends and the successful execution of Strategy 2022, the previously communicated targets for 2019 are confirmed:
- Net Sales growth of 3 - 5% on a like-for-like basis
- Recurring EBITDA growth of at least 5% on a like-for-like basis
- Ratio of net debt to recurring EBITDA 2 times or less by end of 20192
- Continue improving cash conversion
- Capex and bolt-on acquisitions of less than CHF 2 billion
Read the article online at: https://www.worldcement.com/special-reports/15052019/lafargeholcim-announces-first-quarter-results/