Clock ticking on LafargeHolcim integration

LafargeHolcim is the largest cement producer in the world Keystone

Eric Olsen, the new chief executive of the merged LafargeHolcim cement producing giant, has given himself the deadline of 1,000 days to complete the cultural and financial integration of the two companies and realise the commercial value of the union.

Swiss cement group Holcim took on a new chief executive, two co-chairmen and a different brand name on Friday after finalising its merger with French industrial group Lafarge.

Having completed the issuance of new shares last Friday, which started trading on Tuesday in Zurich and Paris, the newly branded company – worth around $46 billion (CHF43.5 billion) – has started business in earnest under its changed banner.

Speaking to journalists in Zurich on Wednesday, Olsen said the next 100 days would be spent fine-tuning a variety of business plans with a view of completing the operational and cultural transition of two former firms into the new single entity within 500 days – or the end of the year.

The company targets synergy savings, or economies resulting for the companies from the merger, of €1.4 billion (CHF1.46 billion) within the next three years. “Within 1,000 days we will have reached our full synergy potential,” said Olsen.

“Looking back, we have achieved something despite challenges that at times appeared insurmountable,” Olsen said, in reference to the deal nearly collapsing at the start of the year.

“My job is to bring these two groups together and leverage the best out of both of them.”

So far, LafargeHolcim has announced a handful of job cuts as the combined entity starts to realise operational savings. Olsen provided no further details, but said that €250 million of the €1.4 billion savings would be accounted for by eliminating posts that duplicated business efforts.

“Reductions will occur in many countries where we have overlapping operations,” he told reporters, singling out the United States as one market where redundancies could take place. The one-off cost of merging the two firms, including redundancy packages, is estimated to reach around €1 billion.

As two separate companies, the merged firm achieved sales of €33 billion last year. Results for the first half of 2015 are expected on July 29.