LafargeHolcim recently released its fourth quarter and full-year 2015 results as well as its outlook for 2016. Overall, like-for-like net sales grew slightly for Q4 (up 1.7 percent) and the FY (0.1 percent) versus 2014. Fourth quarter results were impacted by challenges in selected markets, such as Brazil. However, the company is encouraged by positive developments in markets including the United States, Mexico and Argentina.
The company performed well in large parts of the Latin America market during 2015 but was significantly impacted by the deteriorating economic situation in Brazil. Mexican infrastructure projects had a positive effect, and Argentina experienced a stabilization of economic activity over the course of 2015. However, Brazil, the region’s largest economy, saw continued shrinkage in the construction sector and an impact on its trading partners in the region.
Adjusted for currency effects, net sales in the region increased by 2.8 percent in 2015 driven by better performance in Mexico, Argentina and Colombia, while operating EBITDA decreased 2.4 percent to CHF 876 million ($908 million) mainly driven by declines in Brazil. Adjusted for merger, restructuring and other one-offs, operating EBITDA was stable for the full year. Overall, like-for-like net sales grew in Q4, up 1.3 percent.
LafargeHolcim posted solid results in North America as a result of both the continuing recovery in the United States as well as successful price management and cost optimization.
Cement and aggregate volumes increased as a whole across the U.S. and in the eastern states of Canada, offset partially by reduced demand in some regions (such as Western Canada and Texas) where oil and commodity investments were under pressure, and as a result of divestments in some states. Large projects in this region included the St Croix Crossing in Minnesota, and the MGM Casino in Washington, D.C.
Overall, like-for-like net sales grew for Q4 (up 3.1 percent) and the FY (up 5.4 percent) versus 2014 while operating EBITDA adjusted for merger, restructuring and other one-offs, rose 12 percent for the full year.
Eric Olsen, CEO of LafargeHolcim, said: “In a challenging environment in selected markets, we have exceeded all our 2015 commitments in terms of capex, synergies and net debt reduction. Our focus on cash flow delivered solid results in Q4. We have also made significant progress on our divestment plan, while accelerating the pace of integration across the group and cost management actions.
“Many of the key elements of the merger are now behind us. Our organization is in place; synergies will continue to gain momentum in 2016 with notably more than [$466 million] of incremental EBITDA synergies expected for this year; and we have taken decisive actions to further adjust and streamline our costs, notably in the most difficult markets.
“Overall, we see demand in our markets growing 2 to 4 percent during 2016. Emerging markets will continue to grow overall, supported by their strong long-term fundamentals and despite the challenging evolution in some of these markets. Given our footprint, we are well placed to benefit from the dynamic conditions in many of our key markets.
“We expect to see the combined effect of synergies, additional cost reductions and a strengthening pricing environment driving solid progress toward our 2018 objectives. Free cash flow generation is the key measure of our value creation strategy. With strict capital allocation discipline and the maximization of our cash flow, we are committed to maintaining solid investment grade rating and returning cash to shareholders.”
