Tempered sales no hindrance to LafargeHolcim profit growth

During its first full calendar year, LafargeHolcim Ltd. reported lower U.S., Canadian and worldwide cement, aggregate and ready mixed concrete shipments against prior year levels, but paced financial and operating benchmarks outlined upon the July 2015 Lafarge Group and Holcim Ltd. merger.

“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.”

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, mainly due to an economic downturn in Western Canada and comparisons with mild weather in the U.S. and Canada during fourth quarter 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 construction in the third and fourth quarters. 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 in India, Nigeria and key European countries will fuel 2017 growth.

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

ACCELERATOR RENDERING: LafargeHolcim

LafargeHolcim Ltd. plans to scale up access to innovative methods through entrepreneur collaboration. The Start-Up Accelerator will offer on-site accommodation at the Group’s Research & Development Center in Lyon, France, where young companies can develop, test, and market their construction and urban planning solutions. The project is building on LafargeHolcim’s experience working with start-ups in such areas as sustainability, innovative construction systems or digital, plus extensive partnerships with customers, end-users, and research facilities worldwide.

“We can offer [young companies] a sophisticated laboratory environment and access to years of experience in creating and applying building materials in thousands of projects and challenging environments around the world,” says LafargeHolcim Growth & Innovation Group Head Gérard Kuperfarb. “In return, we believe that the start-ups will bring new ideas and solutions that change the face of construction in the coming years. We are committed to looking for new solutions for our customers so having the opportunity to bring new ideas together with our own R&D will be invaluable.”

The Start-Up Accelerator will offer entrepreneurs from around the world the R&D Center infrastructure along with access to a network of technical experts, plus commercial and market perspectives across all continents. As part of the project, LafargeHolcim is also planning to partner with other companies to extend innovation projects along the construction value chain. The first young companies are expected to join the facility in mid-2017.