LafargeHolcim reports resilient Q3 demand

LafargeHolcim has posted resilient third-quarter trading figures, with sales down just 2.6% on a like-for-like basis to CHF 6.455 billion (CHF 7,142bn Q3 2019).
Quarry Products / October 30, 2020
By Guy Woodford
LafargeHolcim has posted resilient Q3 trading figures. Pictured is Holcim's Untervaz cement plant in Switzerland

The French-Swiss industry heavyweight, the largest building materials group in the world, recorded recurring EBIT (earnings before interest and taxes) of CHF 1.445bn in Q3 2020, up 10% on CHF 1.418bn in the same period of last year.

LafargeHolcim says that despite ongoing uncertainties relating to the COVID-19 pandemic, it remains confident about the future. The group highlights the resilience of its strategy, the agility of its decentralised business model, the rigorous execution of its action plan ‘HEALTH, COST & CASH’ and its strong financial position.

Welcoming the robust trading figures, Jan Jenisch, LafargeHolcim CEO, said: “As we navigate the pandemic, our number one priority is to keep our people and communities safe. I would like to sincerely thank all our people who are going above and beyond to make this happen around the world. In particular, I would like to applaud our many front-line workers who have never stopped providing products and services to our customers during these challenging times.

"Our third-quarter results demonstrate the resilience of our business and the strength of our decentralised, empowered operating model. I am very proud of our team’s agility in executing our action plan ‘HEALTH, COST & CASH’ ahead of targets. Our third-quarter performance demonstrates a strong resilience in demand for our products and an over-proportional increase in margins.

“I expect a solid closing of 2020, resulting in a Free Cash Flow of above CHF 2.75 billion and a strong balance sheet that will allow us to pursue growth opportunities. We accelerated our ambition to lead the way in green construction with our net-zero pledge and partnership with the Science-Based Targets initiative. I am very proud of the global launch of our green concrete, ECOPact, earlier this year, as well as our EcoLabel, to transparently share the environmental benefits of our products.”

LafargeHolcim’s markets in Europe recovered with group recurring EBIT margin up strongly in the third quarter. Sales were back on last year’s level, with stronger cement demand in Western and Central Europe than in the third quarter of 2019 and softer volumes in Eastern Europe. The Recurring EBIT margin improvement of 230 basis points was driven by execution of the cost action plan and effective price management.

The North America region delivered improved Recurring EBIT margin. Volumes in all business segments were impacted by COVID-19 and an unfavourable comparison base due to deferred sales. An over-proportional cost decline supported the healthy recurring EBIT margin compared to volumes as well as effective price management. The region was affected by the slowdown in the oil and gas industry in Western Canada.

The Latin America region delivered an outstanding performance for the LafargeHolcim Group with strong cement demand recovery in Mexico and Brazil and excellent cost savings initiatives across the region in the third quarter. The significant Recurring EBIT growth was over-proportional to sales, and price management was efficient overall.

The recurring EBIT growth of the Asia Pacific region in the third quarter was said by LafargeHolcim to be driven by resilient volumes and strong operational efficiency in India. Volumes in China were above last year’s level, partially offset by softer markets in the Philippines and Australia. Recurring EBIT margin expansion was supported by effective cost and price management.

LafargeHolcim’s Middle East Africa region achieved strong results in the third quarter. Resilient demand, large sales growth in Nigeria, strict cost discipline and successful turnaround initiatives are all said to have contributed to an impressive trading period. These factors also helped drive a 350 basis points-expansion in the recurring EBIT margin for the region.


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