LafargeHolcim reports growth in sales and EBITDA in Q3

Year-on-year cement volumes were up 4.7 percent; cement prices across markets improved by 5.6 percent

Group Performance

The group delivered solid like-for-like operating adjusted EBITDA growth in the third quarter with positive contributions from Latin America, North America and Europe. Market conditions were challenging in Asia Pacific, Middle East and Africa, where actions are being taken to address weakness in key countries. Like-for-like cement volumes were up 4.7 percent in Q3 and 1.8 percent for the year to date. Globally, cement prices improved by 5.6 percent in the quarter compared to the prior year on a like-for-like basis. Synergies of CHF 97 million were delivered in Q3, with the group already exceeding its year-end target of CHF 1 billion of total synergies in July.

Operating adjusted EBITDA increased by 5.9 percent in the quarter to CHF 1,750 million on a like-for-like basis, and was 9.2 percent higher in an year-to-date comparison. Pricing, cost discipline and synergies contributed to higher margins with the adjusted EBITDA margin improving by 80 points in Q3, and 100 points for the first nine months. Net income for the quarter declined to CHF 433 million on higher proceeds from disposals in the prior year period. Recurring Net Income grew by 7.9 percent to CHF 1,270 million for the year to date and was down to CHF 589 million for Q3 in a year-on-year comparison.

Commenting on the performance, Jan Jenisch, Group CEO of LafargeHolcim, said: ÔÇ£In the past two months I have visited many of our operations and have been impressed by the experience and enthusiasm of our employees. LafargeHolcim is a first-class company with growing profits in an attractive industry. While the company delivered solid quarterly results, they do not reflect our full potential. As the market leader, we will hold ourselves to a higher standard than anyone else in our sector."

Outlook 2017 and 2018

Overall, LafargeHolcim expects cement demand globally to increase by 1 to 3 per cent in aggregate for 2017. Following a strong first half and solid Q3, growth in like-for-like EBITDA is expected to moderate further for the remainder of 2017. For 2017, the group expects to deliver: 5 to 7 percent growth in operating EBITDA over 2016 on a like-for-like basis.

ÔÇ£Today we have reset expectations for the Group's outlook to a level that reflects the current business dynamics. While I am reviewing the business, I have an immediate focus on simplification, cost discipline and performance management. We will reduce complexity and focus on operational excellence in order to fully realize the potential of LafargeHolcim. My goal is to generate leading margins and an attractive growth profile, positioned for sustainable value creation for our employees, customers and shareholders.ÔÇØ, added Jenisch.

For 2018, the company has reset some of the volume and pricing assumptions that underpinned earnings targets to reflect current business dynamics. LafargeHolcim expects that will translate into a growth rate for Operating EBITDA Adjusted on a like-for-like basis of at least 5 percent. The business review is under way, including country strategies and a focus on simplification, cost discipline and performance management. A strategic and outlook update will be provided in March 2018 when full year 2017 results are published. On this occasion, the group will also give an update on portfolio management. So far, the disposal program has completed CHF 4.4 billion in enterprise value.