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.

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