LafargeHolcim report sustained earnings growth in Q3
Momentum sustained in third quarter driven by pricing strategy, synergies and cost management
LafargeHolcim have reported consolidated net sales of CHF7 billion during the third quarter of 2016, 3.1% lower than the same period in 2015 on a like-for-like basis.
Adjusted operating EBITDA was CHF1.69 billion for the quarter, a year-on-year improvement of 10.5% on a like-for-like basis, while margins showed the benefits of synergies, reduced costs and increased prices. Adjusted operating EBITDA margin rose to 23.9% in the quarter, a 290 basis points increase on the figure for the same period in 2015.
Synergies contributed CHF183 million in third quarter. As a result, at the end of the third quarter the 2016 synergies target of CHF450 million had been achieved and the Group now expects to deliver full-year incremental synergies of at least CHF550 million.
On a like-for-like basis, operating free cash flow improved by CHF1 billion year on year and stands at CHF317 million after nine months, while net debt at the end of the third quarter was CHF16.5 billion compared with CHF18.3 billion at the same time last year.
Globally, cement sales volumes in the third quarter reduced by 4% year-on-year on a like-for-like basis. Notably, this was impacted by short-term declines in Nigeria, as a result of gas supply interruptions, and India, due to the extended monsoon period.
Excluding Nigeria and India, volumes were down 2% on the back of lower demand in the US, non-recurring volume gains in Mexico in the prior year and continuing challenging conditions in Brazil and Indonesia.
Eric Olsen (pictured), chief executive officer of LafargeHolcim, said: ‘With these results, we are demonstrating that our focus on pricing, synergies and cash flow is delivering results. Our earnings momentum is accelerating and we are on track to achieve our commitments for 2016, resulting in a year of solid progress towards our 2018 objectives.
‘These results demonstrate the strength of our balanced portfolio with solid contributions from both mature and emerging countries across our regions. As we anticipated, challenging conditions in Nigeria continued to impact our earnings, but we started to see the positive effects of higher prices and of our actions to diversify our fuel mix towards the end of the quarter.
‘Beyond the benefits from the divestment programme, we continue to focus on reducing net debt and driving strong cash flow generation.’
