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LafargeHolcim report second-quarter results

Eric Olsen

Pricing and synergies in a number of countries drive up Q2 operating margins and earnings

PRICING and synergies drove improvements in LafargeHolcim’s operating margins and earnings in the second quarter (Q2) of 2016, with adjusted operating EBITDA margin up 210 basis points to 23.4%, compared with the same period last year (Q2 2015: 21.3%), and adjusted operating EBITDA up 6% on a like-for-like basis to CHF1.7 billion (Q2 2015: CHF1.6 billion).

Net sales in the second quarter of 2016 were 2% lower, on a like-for-like basis, at CHF7.28 billion (Q2 2015: CHF7.80 billion).

 

Commenting on the results, Eric Olsen (pictured), chief executive officer of LafargeHolcim, said: ‘Our focus on pricing and synergies is delivering visible earnings momentum, driving a 210 basis points year-on-year improvement in operating margins and a 6% increase in like for like adjusted operating EBITDA in Q2.

‘Without the effect of Nigeria, where our plants were affected by gas shortages, adjusted operating EBITDA would have increased by 13% in the quarter. Nigeria is a high-growth market and we are adapting our plants to reduce our dependency on gas to restore supply and capture growth. We expect these measures to take effect by the end of the year.

‘With the recent divestments announced in India, Sri Lanka, China and Vietnam, we have exceeded our CHF3.5 billion commitment for the whole of 2016 in a little over seven months. These transactions, all secured at good conditions, also help us to streamline and simplify our operations and allow us to maximize synergies in countries like Morocco, China and India.

‘Following the successful execution of our divestment programme to date, we are extending the programme to CHF5 billion. We expect to complete the remainder of this by the end of 2017.’

Mr Olsen added that while macroeconomic risks continue to affect some of LafargeHolcim’s markets, the company is delivering on its commitments and remains on track to achieve its 2016 targets.

Meanwhile, LafargeHolcim have announced changes to their Executive Committee reflecting the evolution of the Group’s portfolio following recent divestments and a transition to the next stage for the company as it closes the integration phase.

Pascal Casanova, currently responsible for the Latin America Region, will now take responsibility for North America, including Mexico; Roland Köhler, currently responsible for the Europe Region, will add Australia, New Zealand and Trading to his responsibilities; Martin Kriegner, currently responsible for India, will join the Executive Committee and take additional responsibility for South East Asia; and Oliver Osswald, currently responsible for operations in Argentina, will join the Executive Committee with responsibility for Central and South America.

As a result of these changes, Alain Bourguignon and Ian Thackwray have decided to pursue new opportunities outside the Group.

As of 5 August 2016, the Executive Committee, chaired by chief executive officer Eric Olsen, will be composed of the following members: Urs Bleisch, group head of performance & cost; Pascal Casanova, region head North America, including Mexico; Roland Köhler, region head Europe, Australia/New Zealand and Trading; Martin Kriegner, region head India and South East Asia; Gérard Kuperfarb, group head of growth and innovation; Caroline Luscombe, group head of organization and human resources; Oliver Osswald, region head Central and South America; Saâd Sebbar, region head Middle East and Africa; and Ron Wirahadiraksa, chief financial officer.

Commenting on the changes, Mr Olsen said: ‘I would like to thank Alain and Ian for their contribution towards building our new culture and footprint, and putting our synergies well on track. I wish them every success in their future endeavours.

‘I am happy to welcome Martin and Oliver as new members of the Executive Committee. Together with Pascal and Roland, they bring valuable combined experience in retail, commercial transformation and performance management, and will be key assets for the new team.’

 

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