LafargeHolcim makes good progress in 2017
Net sales grew 4.7 % on a like-for-like basis for the full year, largely driven by higher cement volumes. Recurring EBITDA reached CHF 5990 million for the full year.
Free cash flow grew by 1.5 % for the full year. Net debt stood at CHF 14346 million as of 31.12.2017, a reduction of around CHF 400 million compared to the previous year.
Strategy 2022 – “Building for Growth” to drive growth
LafargeHolcim launched its new Strategy 2022 – ‘Building for Growth’, aiming to drive profitable growth and simplify the business to deliver resilient returns.
The new strategy will shift gears towards growth of the top and bottom line over the next five years. Over this period, the group commits to the following targets:
annual net sales growth of 3 to 5 %
annual recurring EBITDA growth of at least 5 %
improvement in free cash flow to over 40 % of recurring EBITDA
improvement in ROIC to more than 8 %
The strategy is based on the four value drivers of Growth, Simplification & Performance, Financial Strength and Vision & People.
The building materials market is a CHF 2500 billion fragmented global market which is forecast to grow 2 to 3 % per annum, faster than GDP.
LafargeHolcim will invest in markets where greater opportunities exist while being more selective in other markets. The group will build a fourth business segment, Solutions & Products, to take advantage of products and applications that are closer to the customer.
The value driver Simplification & Performance will create a cost disciplined operating model and a corporate-light structure. There will be a greater focus on countries, with local markets empowered and fully profit and loss accountable. The 35 biggest markets will report directly to group management and local profit and loss leaders will be assigned for all four business segments. The two corporate business functions Performance & Cost and Growth & Innovation have been merged and the group management is reduced to nine members. The simplification will allow LafargeHolcim to improve its cost efficiency considerably. This is expected to create an SG&A cost saving of CHF 400 million per annum with the related program expected to be completed by Q1 2019. As part of this program, the corporate offices in Singapore and Miami will be closed by mid-year.
Outlook 2018
For 2018, LafargeHolcim targets net sales growth of 3 to 5 % and an over-proportional increase in recurring EBITDA of at least 5 % on a like-for-like basis. While there is a focus on selected growth initiatives, Capex spending will remain below CHF 2 billion.
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