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Monday, 28 March 2016 00:00 - - {{hitsCtrl.values.hits}}
Reuters - LafargeHolcim, expects to match the market’s 2-4% expansion this year “at most”, the restructuring Swiss-French cement maker said last week after reporting a surprise fourth-quarter loss.
Chief Executive Eric Olsen said China and Brazil would remain tough places to do business in an overall improving environment for emerging markets, where LafargeHolcim is counting on cost cuts and efficiency gains to shore up profit.
“We would expect real pockets of growth in North America, we see markets in Europe in a better position in 2016 compared to 2015,” he said on a conference call with reporters.
He said Mexico, East Africa and the Philippines were growing well and India would in particular benefit from low oil prices.
“China will continue to be more difficult. Brazil will continue to be difficult,” he said, adding that he expected the world’s biggest cement group to make a net profit this year.
The group posted a fourth-quarter loss of 2.86 billion Swiss francs ($2.9 billion) after booking 3 billion francs in impairment and other charges.
However, it maintained the 1.50 franc per share dividend announced in November and said it was on track to hit its 2018 financial targets.
Fourth-quarter adjusted operating earnings before interest, tax, depreciation and amortisation (EBITDA) fell 15.3% to 1.40 billion francs, below the 1.45 billion expected by analysts polled by Reuters.
Sales fell 5.9% to 7.44 billion francs, below the 7.51 billion expected by analysts.
“Many of the key elements of the merger are now behind us,” Olsen said in the results statement, forecasting “notably more” than 450 million francs of incremental EBITDA synergies expected this year. “The key challenge will be H1, when the pricing comparison basis remains very challenging,” UBS analysts said in a research note, keeping their neutral rating.
“Overall, we believe there are likely downside risks to the 6.1 billion Swiss francs 2016 consensus EBITDA forecast,” UBS added. That would be up from 5.75 billion in 2015.
Net debt fell by 1 billion francs to 17.3 billion francs in the quarter, and it reiterated its aim to maintain a solid investment grade debt rating. It expects net debt to drop to around 13 billion francs in 2016.
LafargeHolcim said its 3.5-billion-franc divestment program was well under way with confirmed deals in South Korea and Saudi Arabia. In Morocco it agreed with partner SNI to enlarge a joint venture by merging two companies.
