Tough industry conditions affects LafargeHolcim merger

30 July 2015

Weak profit forecasts from Holcim and Lafarge weighed on the newly merged LafargeHolcim, the world’s biggest cement maker, highlighting tough conditions that have sparked more consolidation across the sector.

With investment on hold in much of the world due to an uncertain global economic and political outlook, makers of building materials are focused on cutting costs and boosting efficiency.
German group Heidelberg Cement agreed on Tuesday to buy control of Italcementi in a deal that values its smaller Italian rival at €6.7-billion ($7.4-billion).

LafargeHolcim CE Eric Olsen said on Wednesday the group, the product of a merger of equals which closed earlier this month, continued to operate in a “demanding” global market environment that had affected first-half performance.

The last standalone results from Swiss-based Holcim and France’s Lafarge caused the merged group’s shares to drop 5.3% by 0907 GMT.

Kepler Cheuvreux analysts said that synergies generated from the merger should help improve results. This puts pressure on LafargeHolcim, which said it expected to deliver at least 100-million Swiss francs ($103.7-million) in synergies by the end of the year as part of its programme to achieve 1.5-billion francs in cuts in three years’ time.

LafargeHolcim said it aims to pay a dividend of at least 1.30 Swiss francs per share this year, while it expected net proceeds of around 6 billion francs by year-end from divestments.


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