LafargeHolcim Stock Dips On Hefty Q4 Loss, Dividend Stable; Sees Growth Ahead

Shares of LafargeHolcim (HCMLY.PK,HCMLF.PK) were losing around 4 percent in the morning trading in Switzerland after the cement giant reported Friday a hefty net loss in its fourth quarter, compared to prior year’s profit, hurt by impairment charges. Net sales increased on higher cement and aggregates sales. Further, the company maintained its dividend.

Looking ahead, for 2018, LafargeHolcim said it targets net sales growth of 3 to 5 percent and an over-proportional increase in Recurring EBITDA of at least 5 percent on a like-for-like basis.

The building materials and solutions company also launched its new Strategy 2022 – ‘Building for Growth’, aiming to drive profitable growth and simplify the business to deliver resilient returns and attractive value to stakeholders. Over this period, the company projects annual net sales growth of 3 to 5 percent and annual Recurring EBITDA growth of at least 5 percent.

The company also projects improvement in free cash flow to over 40 percent of Recurring EBITDA and improvement in Return On Invested Capital or ROIC to more than 8 percent.

Group Chief Executive Officer Jan Jenisch said, “In 2017 we made good progress across all key metrics. The growth in sales and the over-proportional increase in EBITDA represent a good performance and give us a very good basis to build on….. Our new Strategy 2022 – ‘Building for Growth’ will allow us to more vigorously capture market opportunities, capitalizing on the best assets in a growing building materials market.”

For its fourth quarter, net loss was 3.12 billion Swiss francs or 5.21 francs per share, compared to prior year’s profit of 453 francs or 0.75 franc per share.

The latest results were hurt by 3.71 billion francs impairment charges that mainly affected goodwill and assets revalued in the context of business combinations.

Net income before impairment and divestments was 270 million francs or 0.45 franc per share, compared to 393 million francs or 0.65 franc per share a year ago.

Recurring EBITDA grew 2.7 percent from last year to 1.70 billion francs with growth in most regions, while recurring EBITDA margin was 25.4 percent, same as last year.

In Asia Pacific, recurring EBITDA was 4.3 percent down as solid performances in India, China and Australia were offset by challenging market conditions in a cost inflationary environment in South East Asia.

Recurring EBITDA in Middle East Africa fell 33 percent on a tough prior year comparable base and worsening conditions in some key markets.

The company’s net sales increased 2.7 percent to 6.70 billion francs from 6.53 billion francs a year ago. On a like-for-like basis, net sales grew 6.2 percent.

Sales of cement were 53.7 million tonnes, down 4 percent on a reported basis, but up 7.9 percent on a like-for-like basis.

Sales of aggregates dropped 1 percent from last year to 70.5 million tonnes, while like-for-like sales edged up 0.5 percent. Sales of ready-mix concrete dropped 0.9 percent.

Further, the company said its Board of Directors will submit a proposal for shareholder approval at the AGM on May 8 for a dividend of 2 francs per share, stable compared to the prior year.

In Zurich, LafargeHolcim shares were trading at 52.62 francs, down 4.3 percent.

by RTT Staff Writer

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