Since Lafarge merged with Holcim 2 years ago it has pushed through extensive disposals as well as slashed costs and investment spending © AFP
Swiss-French cement group LafargeHolcim has lowered its forecast for growth in global cement markets this year after second-quarter sales fell short of expectations.
The world’s largest cement company by sales foresaw its markets growing this year by between 1 per cent and 3 per cent.
That compared with the 2 per cent to 4 per cent it had expected in May. The group blamed the gloomier forecasts largely on weaknesses in Southeast Asian countries and in Nigeria.
LafargeHolcim was formed by the €41bn merger two years ago of Lafarge of France and Holcim of Switzerland.
Since the deal was completed, it has pushed through extensive disposals as well as slashed costs and investment spending, but has faced a glut in cement markets as well as sluggish global economic growth.
At SFr6.85bn, LafargeHolcim’s net sales in the second quarter fell short of the almost SFr7bn expected on average by analysts.
They were also down from the SFr7.28bn reported in the same period a year ago — but were up 3.6 per cent on a like-for-like basis.
SFr6.85bn
LafargeHolcim’s net sales in the second quarter — short of the almost SFr7bn expected on average by analysts
Phil Roseberg, analyst at Bernstein, described the second-quarter growth as “strong” but said LafargeHolcim was “still catching up from the post-merger collapse” in like-for-like sales.
Adjusted pre-tax operating profits of SFr1.74bn in the second quarter were 10.1 per cent higher than a year earlier on a like-for-like basis.
That was slightly better than expected by analysts and by lunchtime in Europe, LafargeHolcim’s shares were trading up 0.5 per cent at SFr57.45.
Beat Hess, chairman, said countries such as the US, India, Nigeria and Mexico had made “significant contributions to earnings, more than offsetting headwinds in some of our markets”.
The post-merger restructuring programme remained on track, Mr Hess said, and the group still expected to deliver “double-digit” like-for-like growth in pre-tax operating profits in the full year.
In the UK, demand had been stronger than expected since last year’s vote to leave the EU, but LafargeHolcim warned “uncertainty is now growing” in the UK market.
Over the past year, LafargeHolcim has been dogged by a scandal over a plant it operated in Syria until September 2014.
In April, Eric Olsen resigned as chief executive to help draw a line under the controversy, although the company said he was not involved in or aware of any wrongdoing.
Mr Olsen was replaced by Jan Jenisch, chief executive of Swiss chemicals company Sika. LafargeHolcim said Mr Jenisch would start his new job earlier than expected, on September 1.