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LafargeHolcim looks downstream of core business in Strategy 2022

Sources: LafargeHolcim Ltd., Zurich; CP staff

Coupled with the release of 2017 financials showing moderate year-over-year sales and EBITDA (earnings before interest, taxes, depreciation and amortization) gains, LafargeHolcim outlined a five-year plan to drive profitable growth and simplify the business to deliver resilient returns and attractive value to stakeholders. Strategy 2022 – Building for Growth targets annual net sales growth of 3 to 5 percent and recurring EBITDA of at least 5 percent, and is based on four value drivers:

Growth through capitalizing on the global construction market, projected to expand at 2 to 3 percent annual rate. Management will execute more aggressive strategies for Aggregates and Ready Mixed Concrete alongside the strong Cement business, and build a fourth segment, Solutions & Products, to take advantage of deliverables that are closer to the customer. Currently spanning precast, concrete products, asphalt, mortars plus contracting and services, the segment presently generates annual sales of $2.2 billion. Agile, country-based growth strategies will target value-enhancing bolt-on acquisitions to leverage scale and margins.

•  Simplification & Performance will create a cost disciplined operating model and corporate-light structure. The 35 biggest markets will report directly to LafargeHolcim management and local profit and loss leaders will be assigned for all four business segments. As previously announced, Performance & Cost and Growth & Innovation corporate business functions have been merged and Group management reduced to nine members.

Financial Strength will ensure disciplined value creation through maintaining an investment grade credit rating. Growth will be funded through divestment of $2 billion-plus in selected assets during the course of 2019. Capital expenditure levels will be kept below $2.1 billion annually and excess free cash flow used to pay an attractive dividend.

Vision & People further develops the values of trust and integrity, commitment to health & safety, and desire to be at the forefront of sustainable construction solutions and innovation. Management seeks to foster an entrepreneurial leadership style and a focus on long-term success.

“Strategy 2022 – ‘Building for Growth’ will allow us to more vigorously capture market opportunities, capitalizing on the best assets in a growing building materials market,” says LafargeHolcim CEO Jan Jenisch. “We have already started to create a leaner more agile organization, moving considerably closer to our customers through the empowerment of country management. Our vision is to be a global blue chip company in the attractive and growing building materials market.”