LafargeHolcim chief sets out plan to revive company's fortunes
LafargeHolcim's new chief executive has set out his plan to revive the company's fortunes by cutting costs, selling assets and focusing on fewer markets as the world's biggest cement maker announced a €3.25bn write off.
CEO Jan Jenisch took over in September to get the company back on track after a difficult marriage between France's Lafarge and Switzerland's Holcim in 2015. On foot of the deal, Ireland's CRH acquired a number of assets which had been put on the block under the direction of competition authorities.
LafargeHolcim stock fell more than 7pc after the strategy was revealed. Analysts said the new goals lacked ambition.
LafargeHolcim also reported a €2.7bn net loss during its fourth quarter, hit by the impairment charge as Jenisch cleared the decks for his overhaul.
Previous CEO Eric Olsen left after the company admitted paying armed groups in Syria to keep a plant running.
Jenisch now has a five-year plan targeting annual sales growth of 3 to 5pc, recurring ebitda (earnings before interest, tax, depreciation and amortisation) growth of at least 5pc, improvement in free cash flow to over 40pc of ebitda, and boosting the return on invested capital to more than 8pc.
"The merger is now behind us... it was quite an exercise and not an easy one. Building materials is a market that is growing above GDP globally, so would we would expect building materials to grow 2pc to 3pc," he said.
US President Donald Trump's decision to impose hefty charges on imported steel and aluminium would not hurt LafargeHolcim's business in the United States because the company makes all its products for its largest market in the country, Jenisch said.
The revamp would include a focus on fewer markets to concentrate on the United States, Latin America, India and Africa.
"While the strategy looks sensible and more realistic than previous targets, it probably implies a reduction in consensus expectations," UBS analysts said.
In contrast to LafargeHolcim, French building material company Saint-Gobain's annual operating profit rose 7.5pc.