November 28, 2018 / 6:14 AM / 21 days ago

LafargeHolcim sees slower 2019 sales growth but higher profitability

BIRMINGHAM, England (Reuters) - LafargeHolcim (LHN.S) expects slower sales growth but higher profitability in 2019, the world’s largest cement maker said on Wednesday, adding that it is counting on “solid market demand” for its building materials to continue.

FILE PHOTO: The company's new logo is pictured at the headquarters of LafargeHolcim in Zurich, Switzerland, July 15, 2015. REUTERS/Arnd Wiegmann

The French-Swiss company expects full-year sales growth of 3 percent to 5 percent next year, a slowdown from the 4 percent to 6 percent targeted for this year, after disposals of businesses and currency swings are taken into account.

It aims to increase recurring earnings before interest, tax, depreciation and amortisation by at least 5 percent in 2019, up from its target of a 3 to 5 percent improvement in 2018.

The company’s shares were indicated 1.3 percent higher in premarket activity as investors welcomed the higher profit target.

The outlook was made as LafargeHolcim prepared for its first investor day on Wednesday under Chief Executive Jan Jenisch in the British city of Birmingham, as he focuses on cutting costs, concentrating on certain markets and making small acquisitions.

The company’s performance in 2018 showed the strategy was working, with the company simpler than before and ahead of its target to save 400 million francs (313.85 million pounds), the executive said.

In May, the cement maker announced the closure of its offices in Singapore, Paris and Miami, and the plan to shift its headquarters from Zurich. LafargeHolcim had said it would sell assets worth about 2 billion francs and could also head out of two or three countries.

The biggest deal so far came earlier this month when it sold its Indonesian business to Semen Indonesia (SMGR.JK) for about $917 million (719.50 million pounds).

“With the recent divestment of our Indonesia operations, we reached a major milestone in focusing our portfolio which allowed us to accelerate deleveraging,” said Jenisch, adding that he aimed to speed up debt reduction in 2019, cutting the ratio of net debt to recurring EBITDA to two or less by year-end.

Jenisch also confirmed LafargeHolcim’s targets for net sales growth of 4 to 6 percent in 2018 and increasing recurring EBITDA by 3 percent to 5 percent, both on a like-for-like basis.

Analyst Bernd Pomrehn at Bank Vontobel was pleased the company had already given guidance for 2019 “which in our view demonstrates management’s confidence to deliver on its Strategy 2022.”

Reporting by John Revill; Editing by Thomas Seythal and Sherry Jacob-Phillips

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