Accelerated growth momentum with +5.8% in Net Sales LFL in Q3 Over-proportional increase in Recurring EBITDA of +8.1% LFL
- Strong Net Sales growth of 5.8 LFL in Q3
- All four business segments contributing
- Over-proportional increase in Recurring EBITDA of 8.1 LFL in Q3
- SG&A cost savings program delivering results ahead of target
| Group | Q3 2018 | Q3 20172 | ± | ± LfL |
|---|---|---|---|---|
| Net Sales of cement | 4,707 | 4,628 | 1.7 | 6.5 |
| Net Sales of aggregates | 1,175 | 1,120 | 4.9 | 6.0 |
| Net Sales of ready-mix concrete | 1,454 | 1,408 | 3.3 | 3.8 |
| Net Sales of Solutions & Products | 737 | 694 | 6.2 | 5.6 |
| Net Sales1 | 7,362 | 7,175 | 2.6 | 5.8 |
| Recurring EBITDA | 1,867 | 1,774 | 5.2 | 8.1 |
All figures expressed in millions CHF.
1 Net Sales shown after eliminations.
2 Net Sales Q3 2017 restated by CHF 231m due to the reporting of Gross Sales from trading activities, following the application of the IFRS 15, effective 1 January 2018. This had no impact on Recurring EBITDA. Recurring EBITDA Q3 2017 restated by CHF 24m due to the reclassification of the Group share of net income of Huaxin to joint ventures.
Jan Jenisch, CEO: “In Q3 we were able to increase our positive momentum and to continue delivering on our Strategy 2022 – “Building for Growth”. Despite headwinds from steep cost inflation, we delivered stronger Net Sales and our earnings grew even faster. I am very satisfied with our growth in volumes, our solid pricing and the impact of our cost and efficiency programs. We are executing at full speed on our Strategy 2022 – “Building for Growth”.”
PERFORMANCE OVERVIEW
Like-for-like Net Sales grew by 5.8 percent for the third quarter and by 5.1 percent in the first nine months of 2018 compared to the prior-year period. Growth was driven by increased demand as well as sales price increases. All four business segments contributed to the Net Sales increase.
Recurring EBITDA grew over-proportionally by a very strong 8.1 percent in Q3 compared to the prior-year period on a like-for-like basis, demonstrating strong momentum. Steep cost inflation in energy and logistics was more than offset by the company’s volume growth as well as the effectiveness of its pricing and efficiency programs.
The North America region delivered a robust contribution supported by favorable market conditions and successful commercial initiatives. Results from the Latin America region were lower in Q3 2018 compared to the very strong performance in the prior-year period, impacted by weakening demand in several countries. The Europe region delivered positive results overall, with continued good momentum from most key markets. The Middle East Africa region showed signs of stabilization in key markets. The Asia Pacific region had another strong quarter, supported by contributions from China and India as well as improved performance in South East Asia.
STRATEGY 2022
The execution of Strategy 2022 – “Building for Growth” is at full speed and well on track on all four value drivers: Growth, Simplification & Performance, Financial Strength and Vision & People.
On Growth: to date four bolt-on acquisitions have already been completed in highly attractive markets, the most recent being the acquisition of Denver (US)-based ready-mix concrete manufacturer Metro Mix in August. The July 2018 acquisition of the Vritz sandpit (FR) helps secure reserves in a well-positioned market for the next three decades. The business segments Aggregates and Ready-Mix Concrete achieved improved margins, a significant step in the implementation of the company’s Strategy 2022 - “Building for Growth”.
On Simplification & Performance: with the successful implementation of a new operating model based on a corporate-light structure and simple reporting lines, the company has achieved significant progress in its CHF 400 million SG&A savings program. The execution of this program is ahead of plan and has started to deliver results in Q3. The corporate offices in Singapore and Miami have been closed and the Zurich and Paris offices will be closed within Q1 2019.
On Financial Strength: since June 2018, more than CHF 1.3 billion has been successfully refinanced at attractive terms leading to an improved debt maturity profile and a decrease in financing costs. Progress towards the divestment target of CHF 2 billion has been made.
OUTLOOK
The accelerated sales growth and over-proportional increase in Recurring EBITDA demonstrates the strength of Strategy 2022 – “Building for Growth”. This positive momentum is expected to continue in Q4 with the following underlying market trends:
- Continued growth in North America
- Softer cement demand in Latin America
- Strong markets in Europe
- Challenging but stabilizing conditions in Middle East Africa
- Continued demand growth in Asia
Based on the above trends and positive momentum, the Net Sales guidance for 2018 is adjusted upwards to 4 to 6 percent on a like-for-like basis (compared to 3 to 5 percent as previously guided).
While continued headwinds from cost inflation remain challenging, the volume growth, solid pricing and efficiency programs are expected to result in further growth in Recurring EBITDA in Q4. The Recurring EBITDA growth guidance for 2018 is adjusted to 3 to 5 percent on a like-for-like basis.
GROUP AND REGIONAL FIGURES
| Group | Q3 2018 | Q3 2017 | ± | ± LfL | 9M 2018 | 9M 2017 | ± | ± LfL |
|---|---|---|---|---|---|---|---|---|
| Sales of cement (million tonnes) |
57.2 | 56.2 | 1.9 | 5.1 | 165.4 | 163.8 | 1.0 | 4.6 |
| Sales of aggregates (million tonnes) |
80.0 | 80.1 | -0.1 | 3.0 | 205.3 | 208.1 | -1.4 | 1.5 |
|
Sales of ready-mix concrete
(million m 3 ) |
13.5 | 13.3 | 1.2 | 1.1 | 38.0 | 37.7 | 0.9 | 1.3 |
| Net Sales (million CHF) |
7,362 | 7,175 | 2.6 | 5.8 | 20,634 | 20,093 | 2.7 | 5.1 |
| Recurring EBITDA (million CHF) |
1,867 | 1,774 | 5.2 | 8.1 | 4,351 | 4,356 | -0.1 | 2.5 |
| Asia Pacific | Q3 2018 | Q3 2017 | ± | ± LfL | 9M 2018 | 9M 2017 | ± | ± LfL |
|---|---|---|---|---|---|---|---|---|
| Sales of cement (million tonnes) |
21.1 | 21.6 | -2.3 | 5.7 | 66.6 | 68.2 | -2.4 | 5.3 |
| Sales of aggregates (million tonnes) |
7.8 | 8.1 | -4.1 | -4.1 | 23.6 | 23.7 | -0.5 | -0.5 |
|
Sales of ready-mix concrete
(million m 3 ) |
3.2 | 3.4 | -5.4 | -5.4 | 9.3 | 9.5 | -1.8 | -1.4 |
| Net Sales (million CHF) |
1,770 | 1,787 | -0.9 | 7.0 | 5,576 | 5,463 | 2.1 | 8.6 |
| Recurring EBITDA (million CHF) |
378 | 308 | 22.7 | 35.0 | 1,151 | 1,000 | 15.1 | 22.6 |
| Europe | Q3 2018 | Q3 2017 | ± | ± LfL | 9M 2018 | 9M 2017 | ± | ± LfL |
|---|---|---|---|---|---|---|---|---|
| Sales of cement (million tonnes) |
12.6 | 12.1 | 3.8 | 3.8 | 33.9 | 32.3 | 4.9 | 4.9 |
| Sales of aggregates (million tonnes) |
32.0 | 33.9 | -5.7 | 1.1 | 91.0 | 93.9 | -3.1 | 2.8 |
|
Sales of ready-mix concrete
(million m 3 ) |
5.0 | 4.6 | 9.9 | 8.8 | 14.3 | 13.5 | 6.2 | 5.4 |
| Net Sales (million CHF) |
2,027 | 1,883 | 7.7 | 6.9 | 5,692 | 5,209 | 9.3 | 4.6 |
| Recurring EBITDA (million CHF) |
480 | 450 | 6.6 | 4.4 | 1,079 | 1,000 | 7.9 | 2.7 |
| Latin America | Q3 2018 | Q3 2017 | ± | ± LfL | 9M 2018 | 9M 2017 | ± | ± LfL |
|---|---|---|---|---|---|---|---|---|
| Sales of cement (million tonnes) |
6.3 | 6.7 | -5.1 | -3.6 | 18.9 | 18.5 | 2.4 | 6.3 |
| Sales of aggregates (million tonnes) |
1.0 | 1.0 | -4.4 | 6.7 | 2.7 | 3.3 | -19.0 | -1.5 |
|
Sales of ready-mix concrete
(million m 3 ) |
1.4 | 1.4 | -3.7 | 4.4 | 4.2 | 4.4 | -5.7 | 11.8 |
| Net Sales (million CHF) |
698 | 746 | -6.5 | 7.8 | 2,126 | 2,205 | -3.6 | 11.1 |
| Recurring EBITDA (million CHF) |
251 | 288 | -13.0 | -5.5 | 739 | 785 | -5.8 | 1.2 |
| Middle East Africa | Q3 2018 | Q3 2017 | ± | ± LfL | 9M 2018 | 9M 2017 | ± | ± LfL |
|---|---|---|---|---|---|---|---|---|
| Sales of cement (million tonnes) |
9.2 | 8.8 | 5.1 | 5.1 | 26.9 | 26.9 | 0.0 | 0.0 |
| Sales of aggregates (million tonnes) |
2.6 | 2.7 | -5.8 | -5.8 | 6.7 | 8.0 | -16.3 | -16.3 |
|
Sales of ready-mix concrete
(million m 3 ) |
1.1 | 1.1 | 1.2 | 1.2 | 3.1 | 3.6 | -13.6 | -13.6 |
| Net Sales (million CHF) |
772 | 803 | -3.8 | -1.3 | 2,306 | 2,541 | -9.2 | -5.5 |
| Recurring EBITDA (million CHF) |
200 | 232 | -13.6 | -9.8 | 566 | 824 | -31.3 | -26.9 |
| North America | Q3 2018 | Q3 2017 | ± | ± LfL | 9M 2018 | 9M 2017 | ± | ± LfL |
|---|---|---|---|---|---|---|---|---|
| Sales of cement (million tonnes) |
6.1 | 5.9 | 4.0 | 4.0 | 14.9 | 14.4 | 3.7 | 3.7 |
| Sales of aggregates (million tonnes) |
36.8 | 34.4 | 6.9 | 6.9 | 81.3 | 79.2 | 2.7 | 2.7 |
|
Sales of ready-mix concrete
(million m 3 ) |
2.8 | 2.9 | -2.5 | -5.0 | 7.2 | 6.7 | 6.1 | -1.1 |
| Net Sales (million CHF) |
1,891 | 1,790 | 5.6 | 4.7 | 4,366 | 4,194 | 4.1 | 3.3 |
| Recurring EBITDA (million CHF) |
643 | 621 | 3.5 | 2.9 | 1,113 | 1,093 | 1.8 | 2.5 |
ABOUT LAFARGEHOLCIM
LafargeHolcim operates four businesses segments: Cement, Aggregates, Ready-Mix Concrete and Solutions & Products, which includes precast concrete, asphalt, mortar and building solutions. LafargeHolcim's broad portfolio is focused on solving the toughest challenges that masons, builders, architects and engineers face, from urbanization to population growth and the demand for affordable housing. Headquartered in Switzerland, LafargeHolcim holds leading positions in all regions across the globe. It employs approximately 80,000 employees in around 80 countries and has a portfolio that is equally balanced between developing and mature markets.
Important disclaimer - forward-looking statements:
This document contains forward-looking statements. Such forward-looking statements do not constitute forecasts regarding results or any other performance indicator, but rather trends or targets, as the case may be, including with respect to plans, initiatives, events, products, solutions and services, their development and potential. Although LafargeHolcim believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions as at the time of publishing this document, investors are cautioned that these statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are difficult to predict and generally beyond the control of LafargeHolcim, including but not limited to the risks described in the LafargeHolcim's annual report available on its website (www.lafargeholcim.com) and uncertainties related to the market conditions and the implementation of our plans. Accordingly, we caution you against relying on forward-looking statements. LafargeHolcim does not undertake to provide updates of these forward-looking statements.
