LafargeHolcim: cement volumes up 1.4% but revenues flat

LafargeHolcim: cement volumes up 1.4% but revenues flat
Published: 12 May 2016

In its results for 1Q16, LafargeHolcim announced that cement volume sales rose by 1.4 per cent YoY with the Asia-Pacific region accounting for most of the improvement. Like-for-like revenues were almost unchanged on 1Q15, rising by just 0.1 per cent to stand at CHF6.062bn (US$6.244bn).

In the earnings statement, LarfargeHolcim cited “challenging” conditions in Nigeria, Brazil and India as the reason for slow growth. The company also noted that the first quarter typically saw less activity and said it remains committed to achieving the 2018 targets it announced in November 2015.

Volume sales of cement were up 1.4 per cent YoY to 56.6Mt, while aggregates were down 1.4 per cent and ready-mix up 1.7 per cent.

Volume sales of cement in the Asia Pacific region amounted to 30.1Mt, up 6.6 per cent on 1Q15. The figures were buoyed by positive performances in Indonesia and the Philippines, but the Indian market proved less tractable, with falling prices counteracting rising volumes. The firm also reported production issues in Malaysia.

Cement sales in North America grew by 18.9 per cent by volume, but at 3.4Mt LafargeHolcim remains a small presence in the market. Across all the company’s businesses in the region sales climbed by 10.1 per cent on a like-for-like basis.

The Middle East and Africa saw cement sales up 3.1 per cent to 10.8Mt, but lower prices in Nigeria hit revenues, as did energy shortages and logistics issues. In cash terms, sales fell 4.4 per cent on a like-for-like basis.

European cement volumes were down by 3.1 per cent to 7.7Mt, while revenues fell by 3.5 per cent. Sales in Russia and Azerbaijan were cited as the reason for the decline.

In Latin America cement volumes were down by 10.7 per cent to 6Mt, while overall revenues were down 1.7 per cent on a like for like basis. Brazil was seen as the biggest culprit here as its economic troubles have dampened both public and private construction activity.

Responding to the results, LafargeHolcim’s chief executive, Eric Olsen, said: “In the first quarter, which is typically our smallest quarter, we saw solid demand for our products and a strengthening pricing environment with sequential quarter-on-quarter improvement of cement average selling prices.

“We know that we have more to do to increase momentum in 2016 and we are fully committed to delivering synergies, strengthening pricing, and maximizing cash flow generation. We are also well advanced with our divestment program and the proceeds will reduce our net debt this year.

“The first quarter is not indicative of our full year performance. We are on track with our plan and we see favorable underlying trends. I am confident that 2016 will mark sound progress towards reaching our 2018 objectives and we expect to deliver at least a high single digit like-for-like increase in adjusted operating EBITDA for the year.”