July 27, 2018 / 6:48 AM / in 23 days

LafargeHolcim restructuring, Africa troubles dent first half profit

ZURICH (Reuters) - LafargeHolcim (LHN.S) first half profit fell 43 percent, the company said on Friday, as the world’s largest cement took 300 million Swiss francs (£230.42 million) in restructuring costs from its overhaul under Chief Executive Jan Jenisch.

FILE PHOTO: The logo of LafargeHolcim, the world's largest cement maker, is seen at its headquarters in Zurich, Switzerland March 2, 2017. REUTERS/Arnd Wiegmann/File Photo

The Zurich company said first-half net profit tumbled to 371 million Swiss francs ($373.24 million), from 651 million francs a year earlier.

Sales rose 2.7 percent to 13.27 billion francs, while the company confirmed its target of increasing net sales by 3 to 5 percent every year, and lifting its core operating profit by at least 5 percent.

Under Jenisch, who took over last September, the company has been slashing costs, announcing earlier this year it will close its head offices in Zurich and Paris and shed around 200 jobs as it aims to save 400 million annual francs by the end of first quarter of 2019.

The bulk of the restructuring is done, Chief Financial Officer Geraldine Picaud said, although she declined to say how many jobs overall had been cut as part of the program.

LafargeHolcim, formed by a 2015 merger of France’s Lafarge and Switzerland’s Holcim, has also been targeting faster growth by concentrating on fewer markets and making small acquisitions.

Jenisch said he was pleased with the sales growth, particularly the acceleration during the second quarter when sales increased by 5 percent, up from a 2.7 percent rate in the first three months of the year.

AFRICA TROUBLES

“Operational issues in some markets have been addressed and we expect to deliver increasing margins as we capture the upward trend in demand through the second half of 2018,” he said.

“We had a couple of plants where I was not happy the output was not in line with market demand. We made sure we can maximize their output in the second half.”

LafargeHolcim’s figures were supported by strong growth in India, one of the company’s largest markets, where its subsidiary Ambuja Cement (ABUJ.NS) this week posted a 27 percent increase in profit during the second quarter.

But losses in Africa weighed, with the regional unit reporting a loss earlier this week after being hit by higher finance charges and losses from its South African business.

Jenisch sees the Africa and Middle East region remaining tough, while adding the company would press ahead with its disposal program where it aims to raise about 2 billion francs from selling cement plants.

“We are on track here we have done our portfolio review, we will hopefully announce something later this year,” Jenisch said. “But nothing I can talk about at this time.”

Reporting by John Revill, editing by John Miller

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