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LafargeHolcim grows 2016 profits on tempered North American, global sales

Sources: LafargeHolcim Ltd., Zurich; CP staff

During its first full calendar year, LafargeHolcim reported lower U.S., Canadian and worldwide cement, aggregate and ready mixed concrete shipments against 2015 levels, yet paced a three-year timeline of ambitious financial and operating benchmarks announced upon the Lafarge Group-Holcim Ltd. merger in July 2015.

“We have demonstrated our earnings potential in 2016 [and] delivered significant improvements in EBITDA, cash flow and earnings per share with outperformance on synergies and excellent progress on cost and pricing,” LafargeHolcim CEO Eric Olsen tells shareholders. “Strong execution was visible across our five regions, which all grew earnings. This performance underlines the strength of our diversified portfolio, which has a good balance of mature and developing markets … We expect to deliver top line improvement and strong growth in 2017, and are on track to reach 2018 targets.”

LAFARGEHOLCIM LTD.

North America         2016                           2015

Cement                     19.5 million mt            21.8 million mt

Aggregate                 108 million mt             115 million mt

Ready mixed             8.7 million m3             9.3 million m3

Sales                         $5.53 billion                $5.62 billion

Worldwide                2016                           2015

Cement                      233 million mt            256 million mt

Aggregates                283 million mt            292 million mt

Ready mixed              55 million m3             57 million m3

Sales                          $26.6 billion               $29.2 billion

The LafargeHolcim North America region posted solid 2016 results, supported by a strong performance in the U.S. and despite challenging Canadian market conditions. Year-over-year cement, aggregate and ready mixed concrete volumes decreased slightly, mainly due to an economic downturn in Western Canada and comparisons with mild weather in the U.S. and Canada during fourth quarter of 2015. U.S. cement volumes were down slightly in 2016, impacted by lower construction growth in LafargeHolcim-specific markets versus the national average, as well as comparatively unfavorable weather conditions for third and fourth quarter construction. Aggregates and ready mixed concrete demand remained stable throughout last year.

U.S. operations accelerated “capture of synergies through supply chain, plant network optimization, manufacturing and procurement with renegotiating of post-merger purchasing contracts. Organic cost savings measures were also implemented,” LafargeHolcim management notes, adding that a positive trajectory in the domestic market, plus India, Nigeria and key European countries will fuel 2017 growth.