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Cement giant beats expectations, foresees slower growth

A year after it became the world’s largest cement producer, Swiss-based LafargeHolcim has reported improved second-quarter profits and more changes to its leadership, but forecast lower global demand for 2016 due to decreasing sales and problems in Nigeria.

The company, created through a mega-merger of Swiss cement giant Holcim and French industrial group Lafarge in July 2015, also said on Friday it expects market demand to grow by 1-3% this year, less than the 2-4% range it predicted in May.

The company reported that its adjusted operating earnings before interest, tax, depreciation and amortisation rose 2.6% to CHF1.71 billion ($1.76 billion) in the second quarter, which beat expectations. CEO Eric Olsen also named new members to an executive committee.

Pressure to deliver

The merger had promised higher profitability, but the second-quarter results were mainly due to a recovery of prices that Olsen said were equivalent to last year’s levels. “We expect further increases over the course of the second half,” he said.

The price of cement rose 2.2% in the second quarter after increasing 1.2% in the first quarter, the company said. But revenue of CHF7.27 billion fell 6.7% due to lagging global growth.

The company also has sold off assets in China, Vietnam and Sri Lanka. But it said Nigeria alone accounted for CHF96 million in lost profit.

“Challenging conditions in a few markets – most notably Nigeria, where strikes andinterruptions to gas supplies prevented us from serving a growing market – impacted groupresults for the quarter,” the company said.


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