- Net Sales growth of 3.5% LfL
- Over-proportional increase in Recurring EBITDA1 of 10.8%
LfL
- Net income 3 up 110%
- Strong progress in free cash flow 1 : up CHF 735m
- Significant deleveraging with net debt 1 reduction of 30%
- 2019 targets confirmed
Regulatory News:
LafargeHolcim (Paris:LHN):
Half-Year 2019 Performance
Group (in million CHF)
H1 2019
H1 2018
±%
±%LfL
Net Sales
13,059
13,272
-1.6
3.5
Recurring EBITDA (pre-IFRS16)
2,662
2,484
7.2
10.8
Operating profit (EBIT, pre-IFRS16)
1,559
1,078
44.7
Net income2
1,009
318
217.9
Net income2 before impairment &
divestments (pre-IFRS16)
780
371
110.0
EPS3 (CHF)
1.30
0.62
108.2
Free Cash Flow (pre-IFRS16)
262
-473
Net financial debt (pre-IFRS16)
11,340
16,127
-29.7
Jan Jenisch, CEO: “We have achieved a strong first half of the
year and successfully continued our profitable growth strategy. All
business segments have contributed to this success and to the
continued over-proportional growth in profitability.
Our financial discipline resulted in strong progress in cash
flow and a significant reduction in debt. We are executing our
Strategy 2022 – ‘Building for Growth’ at full speed and we are
confident that we will achieve our targets for 2019.”
1 pre-IFRS16 2 Attributable to shareholders of LafargeHolcim Ltd
3 Before impairment and divestments, pre-IFRS 16
NET SALES GROWTH IN ALL
REGIONS
Net Sales amounted to CHF 13,059 million in the first half of
2019, growing by 3.5% like-for-like compared to the prior-year
period. This achievement has been driven by successful pricing
management and higher cement volumes. Net Sales grew in all regions
supported by a favorable market environment in general, in
particular in Europe and North America.
OVER-PROPORTIONAL INCREASE OF RECURRING
EBITDA1
Recurring EBITDA1 during the reporting period reached CHF 2,662
million, up 10.8% on a like-for-like basis. Even though volumes
were lower than expected, Q2 Recurring EBITDA1 improved strongly by
7.1% on a like-for-like basis. This was the fourth consecutive
quarter of over-proportional growth of Recurring EBITDA1 over Net
Sales since Q3 2018. The growth was driven by continuing positive
price over cost momentum, thanks to strict cost discipline and
effective price management. As announced, the SG&A cost savings
program was completed in Q1 2019, delivering the targeted CHF 400
million cost savings on a run-rate basis.
Recurring EBITDA1 like-for-like and profitability increased in
all four business segments. The Aggregates and Ready-Mix Concrete
businesses continued to improve margins and to close the gap with
best-in-class performers.
REGIONAL PERFORMANCE
Europe delivered very good results during the first half of 2019
supported by good market dynamics across the region. Net Sales grew
by 7.2% while Recurring EBITDA1 was up 17.1% on a like-for-like
basis. Both price increases and improved operational efficiency
were the main drivers of this strong margin growth.
In North America, Net Sales were impacted by weather and
flooding in the US during Q2. Net Sales grew by 2.8% for the
half-year and Recurring EBITDA1 improved slightly by 1.0% on a
like-for-like basis. A strong order book and positive price
momentum in the US are expected to support improvement in the
second half of the year.
In Latin America, Net Sales improved by 3.1% and Recurring
EBITDA1 decreased by 4.1% on a like-for-like basis in a softer
market environment.
The Asia Pacific region showed strong Recurring EBITDA1 growth,
with price improvement and costs savings in India. China continued
to contribute solidly to the region’s positive result. Net Sales
grew by 2.1% and Recurring EBITDA1 grew by 17.4% in the first half
of 2019 on a like-for-like basis.
In Middle East Africa, the turnaround has been successfully
achieved in Q2: Recurring EBITDA1 increased by 1.9% on a
like-for-like basis. Nigeria delivered a solid performance, Iraq
showed further signs of recovery and Algeria is stabilizing. For
the first half of 2019 Net Sales grew by 0.3% on a like-for-like
basis, while Recurring EBITDA1 decreased by 6.6%.
____________________________
1pre-IFRS16
NET INCOME3 UP 110%
Net Income3 attributable to shareholders of LafargeHolcim
reached CHF 780 million versus CHF 371 million in the first half of
2018 benefitting from strong improvement of costs below Recurring
EBITDA.
Restructuring, litigation, implementation and other
non-recurring costs stood at CHF 71 million, compared to CHF
300 million in the first half of 2018. The decrease reflects the
completion of the SG&A cost savings program in the first
quarter 2019.
Net financial expenses3 for 2019 totaled CHF 329 million
compared to CHF 455 million in the first half of 2018. This
improvement is the result of successful refinancing and
deleveraging actions. During the first half of the year, a EUR 500
million hybrid bond has been issued and expensive bonds have been
successfully repurchased. Since January 2018, the Group has
refinanced CHF 2.1 billion in total.
Excluding impairment & divestments, the Group’s effective
tax rate improved to 27.0% compared to 27.7% in the full year
2018.
Earnings per share3 more than doubled to CHF 1.30 for the
half-year.
STRONG PROGRESS IN FREE CASH
FLOW1
Free Cash Flow1 improved significantly by CHF 735
million to reach CHF 262 million compared to CHF -473 million in
the first half of 2018, reflecting the improvement in Recurring
EBITDA1 and Net Working Capital, lower income tax and interest
paid.
Net capital expenditure for the first half was CHF 606
million compared to CHF 526 million for the first half 2018.
SIGNIFICANT DELEVERAGING
ACHIEVED
Net financial debt1 has been reduced by CHF 4,787 million
compared to June 30, 2018, to CHF 11,340 million at the end of June
2019, down 30% and allowing the company to reach the deleveraging
target faster than anticipated. This very strong improvement has
been achieved through successful initiatives and highly
value-accretive divestments in Southeast Asia. Both credit rating
agencies, Moody’s and Standard & Poor’s, upgraded the company’s
outlook to “stable” in March 2019.
TRANSACTIONS AND
DEVELOPMENTS
The divestments of Indonesia, Malaysia and Singapore have
been successfully closed. For the Philippines a selling agreement
has been signed with closing subject to customary and regulatory
approval. These transactions have been executed with a high
valuation, above 21 times 2018 Recurring EBITDA and result in a
significant deleverage of 0.6 times Net Debt to Recurring EBITDA
ratio. After the closing of the Philippines transaction, the exit
from the hyper competitive arena of Southeast Asia will be
completed.
____________________________
1 pre-IFRS16 3 Before impairment and divestments, pre-IFRS
16
The company has signed 6 bolt-on acquisitions in attractive
markets which will help to fuel future growth. The acquisitions in
Romania, Australia, Germany, the United States and Canada will
allow LafargeHolcim to strengthen its Ready-Mix and precast
concrete businesses in growth markets.
The Annual General Meeting on May 15, 2019 approved a CHF 2 per
share dividend. Shareholders were given the choice of having the
dividend paid out in cash, in new LafargeHolcim Ltd shares issued
at a discount to the market price, or as a combination of cash and
shares. 73% of shareholders elected to be paid in shares, making it
a very successful scrip dividend program.
PROGRESS IN
SUSTAINABILITY
In the first six months, the company continued to reduce its CO2
emissions per ton of cementitious material by 1.4% compared to the
prior-year period. The use of alternative fuel such as waste and
biomass, to replace fossil fuel, grew by over 10% during the same
period.
Since 1990, LafargeHolcim has reduced its carbon emissions per
ton of cement by more than 25 percent - leading international
cement companies with the highest reduction compared to the 1990
baseline. With a target of 520 kg net CO2/ton by 2030,
LafargeHolcim remains the most ambitious company in the sector,
committed to reducing emission levels in line with a 2 degree
scenario, as agreed at the COP21 world climate conference in
Paris.
Health & Safety improved with the Lost Time Injury Frequency
Rate (LTIFR) continuing its downward trend.
OUTLOOK 2019
The outlook for 2019 is unchanged with solid global market
demand expected to continue in 2019 with the following market
trends:
- Continued market growth in North America
- Softer but stabilizing cement demand in Latin America
- Continued demand growth in Europe
- Stabilizing market conditions in Middle East Africa
- Continued demand growth in Asia Pacific
Based on the above trends and the successful execution of
Strategy 2022, the previously communicated targets are confirmed
for 2019:
- Net Sales growth of 3 to 5 percent on a like-for-like
basis
- Recurring EBITDA pre-IFRS16 growth of at least 5 percent on a
like-for-like basis
- Ratio of Net Debt to Recurring EBITDA 2 times or less4 by end
of 2019
- Continue improving cash conversion
- Capex and Bolt-on acquisitions less than CHF 2 billion
4 Pre-IFRS16 and at constant foreign exchange
KEY FIGURES
Group Q2
2019
2018
±%
±%LfL
Net Sales (CHFm)
7,099
7,442
-4.6
1.2
Recurring EBITDA (pre-IFRS16) (CHFm)
1,853
1,784
3.9
7.1
Operating profit (EBIT) (pre-IFRS16)
(CHFm)
1,280
1,010
26.8
Group H1
2019
2018
±%
±%LfL
Net Sales (CHFm)
13,059
13,272
-1.6
3.5
Recurring EBITDA (pre-IFRS16) (CHFm)
2,662
2,484
7.2
10.8
Operating profit (EBIT) (pre-IFRS16)
(CHFm)
1,559
1,078
44.7
Group results by segment
H1 2019
H1 2018
±%
±%LfL
Sales of cement (mt)
103.8
108.2
-4.0
0.7
Net Sales Cement (CEM) (CHFm)
8,783
8,866
-0.9
5.2
CEM Recurring EBITDA (pre-IFRS16)
(CHFm)
2,173
2,074
4.8
8.7
CEM Recurring EBITDA margin (pre-IFRS16)
(%)
24.7
23.4
Sales of aggregates (mt)
121.7
125.3
-2.9
-2.4
Net Sales Aggregates (AGG) (CHFm)
1,907
1,917
-0.5
1.5
AGG Recurring EBITDA (pre-IFRS16)
(CHFm)
329
310
5.9
7.7
AGG Recurring EBITDA margin (pre-IFRS16)
(%)
17.2
16.2
Sales of ready-mix concrete (m m3)
23.6
24.6
-4.0
-2.0
Net Sales Ready-Mix Concrete (RMX)
(CHFm)
2,595
2,657
-2.3
-0.4
RMX Recurring EBITDA (pre-IFRS16)
(CHFm)
92
47
94.4
83.7
RMX Recurring EBITDA margin (pre-IFRS16)
(%)
3.5
1.8
Net Sales Solutions & Products (SOP)
(CHFm)
996
1,050
-5.1
1.1
SOP Recurring EBITDA (pre-IFRS16)
(CHFm)
69
53
29.7
52.9
SOP Recurring EBITDA margin (pre-IFRS16)
(%)
6.9
5.1
REGIONAL PERFORMANCE H1
Asia Pacific
2019
2018
±%
±%LfL
Sales of cement (mt)
38.9
45.5
-14.6
-2.7
Sales of aggregates (mt)
13.3
15.9
-16.0
-12.4
Sales of ready-mix concrete (m m3)
5.2
6.1
-15.5
-2.2
Net Sales to external customers (CHFm)
3,417
3,807
-10.2
2.1
Recurring EBITDA (pre-IFRS16) (CHFm)
860
773
11.3
17.4
Europe
2019
2018
±%
±%LfL
Sales of cement (mt)
22.5
21.3
5.5
5.5
Sales of aggregates (mt)
57.2
59.0
-3.1
-2.7
Sales of ready-mix concrete (m m3)
9.6
9.3
3.7
3.5
Net Sales to external customers (CHFm)
3,796
3,664
3.6
7.2
Recurring EBITDA (pre-IFRS16) (CHFm)
678
599
13.2
17.1
Latin America
2019
2018
±%
±%LfL
Sales of cement (mt)
12.1
12.6
-4.2
-4.2
Sales of aggregates (mt)
2.0
1.7
15.8
15.8
Sales of ready-mix concrete (m m3)
2.5
2.8
-11.3
-11.3
Net Sales to external customers (CHFm)
1,331
1,428
-6.8
3.1
Recurring EBITDA (pre-IFRS16) (CHFm)
446
488
-8.7
-4.1
Middle East Africa
2019
2018
±%
±%LfL
Sales of cement (mt)
17.6
17.7
-0.5
-0.5
Sales of aggregates (mt)
3.4
4.1
-16.8
-16.8
Sales of ready-mix concrete (m m3)
1.9
2.0
-3.5
-3.5
Net Sales to external customers (CHFm)
1,476
1,535
-3.8
0.3
Recurring EBITDA (pre-IFRS16) (CHFm)
327
365
-10.5
-6.6
North America
2019
2018
±%
±%LfL
Sales of cement (mt)
9.0
8.8
2.9
2.9
Sales of aggregates (mt)
45.7
44.5
2.7
2.1
Sales of ready-mix concrete (m m3)
4.4
4.4
0.2
-6.6
Net Sales to external customers (CHFm)
2,645
2,475
6.9
2.8
Recurring EBITDA (pre-IFRS16) (CHFm)
495
470
5.2
1.0
RECONCILIATION TO GROUP
ACCOUNTS
Reconciling measures of profit and loss to LafargeHolcim
Group consolidated statement of income
Million CHF
H1 2019
(post-IFRS16)
IFRS16 impact
H1 2019
(pre-IFRS16)
H1 2018
Net sales
13,059
0
13,059
13,272
Recurring costs excluding SG&A
(9,427)
183
(9,610)
(9,666)
Recurring SG&A
(1,026)
33
(1,059)
(1,335)
Share of profit of joint ventures
272
0
272
213
Recurring EBITDA
2,878
216
2,662
2,484
Depreciation and amortization
(1,211)
(193)
(1,018)
(1,104)
Impairment of operating assets
(14)
0
(14)
(2)
Restructuring, litigation, implementation
and other non-recurring costs
(71)
0
(71)
(300)
Operating profit (EBIT)
1,581
22
1,559
1,078
Profit (loss) on disposal and other non-op
items
248
1
247
(52)
Net financial expenses
(378)
(39)
(338)
(449)
Share of profit of associates
7
0
7
9
Net Profit (loss) before tax
1,459
(16)
1,475
585
Income tax
(330)
4
(335)
(191)
Net income (loss)
1,128
(12)
1,140
394
Reconciliation of Net Income before impairment and
divestments with Net Income as disclosed in Financial
Statements
Million CHF
H1 2019
(post-IFRS16)
IFRS16 impact
H1 2019
(pre-IFRS16)
H1 2018
Net income (loss)
1,128
(12)
1,140
394
Impairment
(23)
0
(23)
(1)
Profit (loss) on divestments
265
0
265
(49)
Net income before impairment and
divestments
886
(12)
898
444
Net income before impairment and
divestments Group share
769
(11)
780
371
Adjustments disclosed net of taxation
Reconciliation of Free Cash Flow to consolidated cash flows
of LafargeHolcim Group
Million CHF
H1 2019
(post-IFRS16)
IFRS16 impact
H1 2019
(pre-IFRS16)
H1 2018
Cash flow from operating
activities
1,067
199
868
53
Purchase of property, plant and
equipment
(647)
0
(647)
(586)
Disposal of property and equipment
41
0
41
61
Free Cash Flow
461
199
262
(473)
Reconciliation of net financial debt to consolidated
statement of financial position of LafargeHolcim Group
Million CHF
H1 2019
(post-IFRS16)
IFRS16 impact
H1 2019
(pre-IFRS16)
H1 2018
Current financial liabilities
2,862
284
2,578
4,891
Long-term financial liabilities
12,886
1,026
11,860
13,807
Cash and cash equivalents
3,045
0
3,045
2,466
Short-term derivative assets
29
0
29
66
Long-term derivative assets
25
0
25
38
Net financial debt
12,650
1,310
11,340
16,127
NON-GAAP DEFINITIONS
Some non-GAAP measures are used in this release to help describe
the performance of LafargeHolcim. A full set of these non-GAAP
definitions can be found on our website.
Measures
Definition
Like-for-like
Factors out changes in the scope of
consolidation (such as divestments and acquisitions occurring in
2019 and 2018) and currency translation effects (2019 figures are
converted with 2018 exchange rates in order to calculate the
currency effects).
Restructuring, litigation,
implementation and other non-recurring costs
Significant items that, because of their
exceptional nature, cannot be viewed as inherent to the Group's
ongoing performance, such as strategic restructuring, major items
relating to antitrust fines and other business related litigation
cases.
Profit/loss on disposals and other
non-operating items
Comprises capital gains or losses on the
sale of Group companies and of property, plant and equipment and
other non-operating items that are not directly related to the
Group's normal operating activities such as revaluation gains or
losses on previously held equity interests, disputes with
non-controlling interests and other major lawsuits.
Recurring EBITDA
Defined as:
+/– Operating profit (EBIT)
- depreciation, amortization and
impairment of operating assets
- restructuring, litigation,
implementation and other non-recurring costs
Recurring EBITDA Margin
Recurring EBITDA divided by Net Sales
Net income before impairment and
divestments
+/- Net income (loss)
- capital gains or losses on the sale of
Group companies
- impairment of goodwill and assets
Earnings Per Share (EPS) before
impairment and divestments
Net income before impairment and
divestments attributable to the shareholders of LafargeHolcim
divided by the weighted average number of shares outstanding.
The Net Maintenance and Expansion Capex
(“Capex” or “Capex Net”)
+ Expenditure to increase existing or
create additional capacity to produce, distribute or provide
services for existing products (expansion) or to diversify into new
products or markets (diversification)
+ Expenditure to sustain the functional
capacity of a particular component, assembly, equipment, production
line or the whole plant, which may or may not generate a change of
the resulting cash flow
– Proceeds from sale of property, plant
and equipment
Free Cash Flow
Defined as:
+/– Cash flow from operating
activities
– Net Maintenance and expansion Capex
Net financial debt (“Net debt”)
+ Financial liabilities (Long Term &
Short Term) including derivative liabilities
– Cash and cash equivalents
– Derivative assets (Long Term & Short
Term)
Invested Capital
+ Net working capital
+ Investments in associates and joint
ventures
+ Property, plant and equipment
+ Goodwill
+ Intangible assets
+ Deferred tax assets
+ Pension assets
– Short-term provisions
– Defined benefit obligations
– Deferred tax liabilities
– Long-term provisions
Net Operating Profit After Tax
(“NOPAT”)
+/– Net Operating Profit (being the
Recurring EBITDA, adjusted for depreciation and amortization of
operating assets but excluding impairment of operating assets)
– Standard Taxes (being the taxes applying
the Group's tax rate to the Net Operating Profit as defined
above)
ROIC (Return On Invested
Capital)
Net Operating Profit After Tax (NOPAT)
divided by the average Invested Capital. The average is calculated
by adding the Invested Capital at the beginning of the period to
that at the end of the period and dividing the sum by 2 (based on a
rolling 12 month calculation)
Cash conversion
Free Cash Flow divided by Recurring
EBITDA
Non-recurring SG&A
Fixed Costs included in the Rec. EBITDA,
include Sales & Marketing, Administration, Corporate
Manufacturing & Logistics
Savings expressed at constant 2017 FX rate
and constant scope
ADDITIONAL INFORMATION
The analyst presentation of the results and our 2019 half-year
report are available on our website at www.lafargeholcim.com
The financial statements based on IFRS can be found on the
LafargeHolcim Group website.
Media conference: 09:00 CEST
Switzerland: +41 58 310 5000
France: +33 1 7091 8706
UK: +44 207 107 0613
US: +1 631 570 5613
Analyst conference: 10:00 CEST
About LafargeHolcim
LafargeHolcim is the global leader in building materials and
solutions. We are active in four business segments: Cement,
Aggregates, Ready-Mix Concrete and Solutions & Products.
With leading positions in all regions of the world and a
balanced portfolio between developing and mature markets,
LafargeHolcim offers a broad range of high-quality building
materials and solutions. LafargeHolcim experts solve the challenges
that customers face around the world, whether they are building
individual homes or major infrastructure projects. Demand for
LafargeHolcim materials and solutions is driven by global
population growth, urbanization, improved living standards and
sustainable construction. Around 75,000 people work for the company
in around 80 countries.
More information is available on www.lafargeholcim.com Follow us
on Twitter @LafargeHolcim
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.
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