- Early priorities
on health measures for employees, partners and communities
- Resilient performance
with net sales decrease 10.8% LFL, Recurring EBIT decrease 22.0%
LFL - Rapid
execution of action plan “HEALTH, COST & CASH” delivering
visible results -
Over-proportional cost decline vs volumes development in May and
June - Excellent
free cash flow1 generation of CHF 749m (+198%), strong balance
sheet and liquidity -
Further strengthening leadership in green construction
- Fast demand recovery
with an encouraging outlook for second half of 2020
Regulatory News:
LafargeHolcim (Paris:LHN):
PERFORMANCE OVERVIEW
Group (in million CHF)
H1 2020
H1 2019
±%
±% LfL
Net sales
10,693
13,059
-18.1
-10.8
Recurring EBIT
1,194
1,667
-28.4
-22.0
Recurring EBIT margin
11.2
12.8
Net income2
347
1,009
-65.7
Net income before impairment and
divestments2
501
769
-34.8
EPS
0.55
1.68
EPS before impairment and divestments
0.80
1.28
-37.1
Free cash flow1
749
252
+198
Net financial debt
10,652
12,650
-15.8
Jan Jenisch, CEO: “I’m very proud of our teams’ rapid and agile
response to the crisis since the beginning of January. We were
quick to respond and take all necessary measures to protect the
health of our people while supporting our communities, from
donating materials to build emergency field hospitals all the way
to supplying essential goods, touching the lives of over four
million people around the world.
“Our half-year results demonstrate the great resilience of our
business. I’m encouraged by our team’s agility to weather the storm
with the rapid execution of our “HEALTH, COST & CASH” action
plan, effectively driving cost savings ahead of expectations,
improving net working capital and delivering record free cash
flow1.
“The peak of the crisis is behind us. We expect a solid second
half of the year based on June’s full recovery, the trend of our
order book and upcoming government stimulus packages.
“As an essential sector to keep society running, we look forward
to playing our part in driving the recovery. We are accelerating
our sustainability efforts to ensure our green solutions are fully
part of the recovery. I am confident LafargeHolcim will emerge
stronger from this crisis.”
RESILIENT PERFORMANCE AND RECORD FREE
CASH FLOW1
Net sales of CHF 10,693 million decreased by 18.1%
compared to the prior year, of which 10.8% was on a like-for-like
basis, reflecting the severe impact of the implementation of strict
lockdowns of construction sites in several major operating
countries. The strong appreciation of the CHF against all
currencies accounted for 6.2% of the absolute decrease. Following
the easing of the lockdowns, net sales in all five regions resumed
prior-year levels by the end of June.
Recurring EBIT reached CHF 1,194 million, a decrease of
22.0% like-for-like for the half year. Swift implementation of the
“HEALTH, COST & CASH” action plan helped to offset the earnings
impact of the crisis.
Tax and financial expenses have continued to reduce, allowing
net income2,3 to reach CHF 501 million.
Earnings per share3 were CHF 0.80 for the first half of
2020 compared to CHF 1.28 in the prior-year period.
Free cash flow1 reached a record CHF 749 million in the
six-month period, up 198% compared to CHF 252 million in the first
half of 2019.
Net debt amounted to CHF 10.7 billion as at 30 June 2020,
down by 15.8% compared to CHF 12.7 billion as at 30 June 2019.
BUILDING A HEALTHIER WORLD
TOGETHER
Since the beginning of the crisis, LafargeHolcim teams around
the world have undertaken extraordinary measures to fight COVID-19
across their communities, touching the lives of more than four
million people. Advancing access to health infrastructure for all,
LafargeHolcim donated five million kilograms of material to build
emergency field hospitals from Wuhan to Boston. Furthermore, the
Group donated over two million relief and emergency kits, including
personal protective equipment, food and water.
In the first half of 2020 LafargeHolcim achieved a number-one
Environmental, Social and Governance (ESG) ranking in the
construction materials sector out of more than one-hundred peer
companies, according to ESG research and ratings agency
Sustainalytics. Playing its part in a green recovery, LafargeHolcim
is advancing its leadership in sustainable and circular
construction, notably with the worldwide rollout of ECOPact, its
green concrete. Further accelerating the transition to renewable
energy, LafargeHolcim leveraged 3D printing in an innovative
partnership with GE Renewable Energy and COBOD to build more
powerful wind turbines.
OUTLOOK 2020
Based on the speed of June’s rebound, the company expects a
solid second half of the year and anticipates for full year
20204:
- Fast demand recovery with an encouraging outlook for the second
half of 2020
- Execution of action plan “HEALTH, COST & CASH” to continue
ahead of targets
- Free cash flow1 generation above CHF 2 billion
- Debt leverage below 2x
- Solid second half of the year expected
KEY GROUP FIGURES
Group Q2
2020
2019
±%
±% LfL
Net sales (CHFm)
5,400
7,099
-23.9
-17.0
Recurring EBIT (CHFm)
932
1,362
-31.6
-26.1
Recurring EBIT margin (%)
17.3
19.2
Group H1
2020
2019
±%
±% LfL
Net sales (CHFm)
10,693
13,059
-18.1
-10.8
Recurring EBIT (CHFm)
1,194
1,667
-28.4
-22.0
Recurring EBIT margin (%)
11.2
12.8
Operating profit (EBIT)
1,005
1,581
-36.4
Net income2
347
1,009
-65.7
Net Income before impairment and
divestments2
501
769
-34.8
EPS before impairment and divestments
0.80
1.28
-37.1
Cash flow from operating activities
1,330
1,067
24.7
Free cash flow1
749
252
198
Net financial debt
10,652
12,650
-15.8
Group results by segment
H1 2020
H1 2019
±%
±% LfL
Sales of cement (mt)
87.2
103.8
-16.0
-13.1
Net sales of cement (CHFm)
7,029
8,783
-20.0
-11.6
Recurring EBIT of cement (CHFm)
1,131
1,441
-21.5
-14.0
Recurring EBIT margin of cement (%)
16.1
16.4
Sales of Aggregates (mt)
113.8
121.7
-6.5
-6.0
Net sales of Aggregates (CHFm)
1,699
1,907
-10.9
-5.5
Recurring EBIT of Aggregates (CHFm)
101
174
-42.0
-40.1
Recurring EBIT margin of Aggregates
(%)
5.9
9.1
Sales of Ready-Mix Concrete (m m3)
19.2
23.6
-18.6
-15.8
Net sales of Ready-Mix Concrete (CHFm)
2,103
2,595
-19.0
-12.3
Recurring EBIT of Ready-Mix Concrete
(CHFm)
-47
13
-475.6
-617.4
Recurring EBIT margin of Ready-Mix
Concrete (%)
-2.2
0.5
Net sales of Solutions & Products
(CHFm)
819
996
-17.8
-13.9
Recurring EBIT of Solutions & Products
(CHFm)
6
39
-84.0
-94.9
Recurring EBIT margin of Solutions &
Products (%)
0.8
3.9
REGIONAL PERFORMANCE H1
Asia Pacific
The Asia Pacific region experienced the most severe COVID-19
related disruption yet delivered a resilient Recurring EBIT margin,
led by India and supported by effective cost and price management
as well as lower input costs. China delivered a full recovery over
the second quarter with volumes closing at higher levels than in
the prior-year period and activity was also resilient in
Australia.
Asia Pacific
H1 2020
H1 2019
±%
±% LfL
Sales of cement (mt)
28.0
38.9
-28.0
-21.0
Sales of aggregates (mt)
13.1
13.3
-1.4
2.2
Sales of ready-mix concrete (m m3)
3.6
5.2
-31.0
-16.4
Net sales to external customers (CHFm)
2,413
3,417
-29.4
-18.0
Recurring EBIT (CHFm)
437
682
-35.9
-29.6
Recurring EBIT margin (%)
18.1
19.9
Europe
Results for the Europe region were impacted by COVID-19 with
full recovery in June. Markets in Germany, Central and Eastern
Europe were resilient. Strict lockdown measures in the UK and
France impacted the performance of the region. Volumes suggest a
V-shaped recovery in June for the majority of markets, except in
the UK.
Europe
H1 2020
H1 2019
±%
±% LfL
Sales of cement (mt)
20.9
22.5
-7.0
-7.0
Sales of aggregates (mt)
51.9
57.2
-9.3
-9.2
Sales of ready-mix concrete (m m3)
8.3
9.6
-14.2
-14.6
Net sales to external customers (CHFm)
3,274
3,796
-13.8
-9.4
Recurring EBIT (CHFm)
288
408
-29.4
-26.2
Recurring EBIT margin (%)
8.7
10.6
Latin America
The Latin America region showed an expanding Recurring EBIT
margin amid COVID-19, with an especially strong contribution from
Mexico. Performances in Ecuador, Colombia and El Salvador were
significantly impacted by the pandemic. Most markets experienced a
strong recovery in June.
Latin America
H1 2020
H1 2019
±%
±% LfL
Sales of cement (mt)
10.4
12.1
-14.3
-14.3
Sales of aggregates (mt)
2.2
2.0
7.8
7.8
Sales of ready-mix concrete (m m3)
1.6
2.5
-34.7
-34.7
Net sales to external customers (CHFm)
980
1,331
-26.4
-12.1
Recurring EBIT (CHFm)
275
358
-23.0
-12.0
Recurring EBIT margin (%)
27.9
26.7
Middle East Africa
The Middle East Africa region showed resilient margins and
recovery from the impact of COVID-19 by June. Volumes declined in
Algeria, Egypt, Iraq and South Africa due to government
restrictions and curfews. Ramadan in May slowed down the recovery
in the respective countries. Nigeria delivered a resilient
performance.
Middle East Africa
H1 2020
H1 2019
±%
±% LfL
Sales of cement (mt)
15.6
17.6
-11.6
-11.6
Sales of aggregates (mt)
1.4
3.4
-60.1
-60.1
Sales of ready-mix concrete (m m3)
1.2
1.9
-35.7
-35.7
Net sales to external customers (CHFm)
1,177
1,476
-20.3
-14.8
Recurring EBIT (CHFm)
137
193
-29.3
-27.0
Recurring EBIT margin (%)
11.5
13.0
North America
The North America region delivered a remarkable performance with
a Recurring EBIT up 20 percent for the first half of 2020 over the
prior-year period on a like-for-like basis. This leading
performance amid COVID-19 was largely due to fast and effective
cost management in the US, partly offset by the impact of lockdowns
in Eastern Canada and the economic challenges facing Western Canada
due to a slowdown in the oil & gas industry.
North America
H1 2020
H1 2019
±%
±% LfL
Sales of cement (mt)
8.9
9.0
-1.4
-1.4
Sales of aggregates (mt)
45.2
45.7
-1.1
-0.6
Sales of ready-mix concrete (m m3)
4.5
4.4
2.7
1.5
Net sales to external customers (CHFm)
2,566
2,645
-3.0
0.8
Recurring EBIT (CHFm)
260
225
15.6
19.7
Recurring EBIT margin (%)
10.1
8.5
RECONCILIATION TO GROUP
ACCOUNTS
Reconciling measures of profit and loss to the LafargeHolcim
Group’s consolidated statement of income
Million CHF
H1 2020
(Unaudited)
H1 2019
(Unaudited)
Net sales
10,693
13,059
Recurring operating costs
(8,717)
(10,658)
Share of profit of joint ventures
176
272
Recurring EBITDA after leases
2,152
2,673
Depreciation and amortization of property,
plant and equipment, intangible and long-term assets
(958)
(1,007)
Recurring EBIT
1,194
1,667
Restructuring, litigation and other
non-recurring costs
(39)
(71)
Impairment of operating assets
(151)
(14)
Operating profit
1,005
1,581
Million CHF
H1 2020
(Unaudited)
H1 2019
(Unaudited)
Recurring EBITDA after leases
2,152
2,673
Depreciation of right-of-use assets
185
205
Recurring EBITDA
2,337
2,878
Million CHF
H1 2020
(Unaudited)
H1 2019
(Unaudited)
Recurring fixed costs
(2,922)
(3,436)
Recurring variable costs
(5,795)
(7,222)
Recurring operating costs
(8,717)
(10,658)
Million CHF
H1 2020
(Unaudited)
H1 2019
(Unaudited)
Net income
447
1,128
Impairment
(143)
(23)
Profit/(loss) on divestments
(11)
265
Net income before impairment and
divestments
601
886
Net income before impairment and
divestments Group share
501
769
Reconciliation of the Free Cash Flow after leases to the
consolidated cash flows of the LafargeHolcim Group
Million CHF
H1 2020
(Unaudited)
H1 2019
(Unaudited)
Cash flow from operating
activities
1,330
1,067
Purchase of property, plant and
equipment
(442)
(647)
Disposal of property, plant and
equipment
30
41
Repayment of long-term lease
liabilities
(169)
(209)
Free cash flow after leases
749
252
Reconciliation of Net financial debt to the consolidated
statement of financial position of the LafargeHolcim Group
Million CHF
H1 2020
(Unaudited)
H1 2019
(Unaudited)
Current financial liabilities
2,736
2,862
Long-term financial liabilities
11,697
12,886
Cash and cash equivalents
3,736
3,045
Short-term derivative assets
14
29
Long-term derivative assets
31
25
Net financial debt
10,652
12,650
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
Like-for-like information is information
factoring out changes in the scope of consolidation (such as
divestments and acquisitions occurring in 2020 and 2019) and
currency translation effects (2020 figures are converted with 2019
exchange rates in order to calculate the currency effects).
Recurring fixed costs
Recurring fixed costs refer to all
recurring costs not directly related to volumes such as
Maintenance, Personal costs in Production, Administration,
Marketing and Sales Expenses, Third party services and depreciation
of right-of-use assets.
Recurring variable costs
Recurring variable costs include recurring
operating costs directly related to volumes such as raw materials
and finished goods purchases, inventory variation, energy, quarry
outsourcing and distribution costs. The addition of variable and
fixed recurring costs equals the total recurring operating
costs.
Recurring operating costs
The Recurring operating costs is an
indicator representing all recurring costs. It is defined as:
+/– Recurring EBITDA after leases;
– net sales; and
– share of profit of joint ventures
Recurring EBITDA
The Recurring EBITDA (earnings before
interest, tax, depreciation and amortization) is an indicator to
measure the performance of the group excluding the impacts of
non-recurring items. It is defined as:
+/– Operating profit (EBIT)
- depreciation, amortization and
impairment of operating assets
- restructuring, litigation and other
non-recurring costs
Recurring EBITDA Margin
The Recurring EBITDA margin is an
indicator to measure the profitability of the Group excluding the
impacts of non-recurring items. It is defined as the Recurring
EBITDA divided by net sales.
Recurring EBITDA after leases
The Recurring EBITDA after leases
(earnings before interest, tax, depreciation and amortization) is
an indicator to measure the performance of the Group including the
impacts of lease depreciation and excluding the impacts of
non-recurring items.
The Recurring EBITDA after leases is
defined as the Recurring EBITDA less the depreciation of
right-of-use assets.
Recurring EBIT
The Recurring EBIT is defined as Operating
profit/loss (EBIT) adjusted for restructuring, litigation and other
non-recurring costs and for impairment of operating assets.
Restructuring, litigation and other
non-recurring costs
Restructuring, litigation and other
non-recurring costs comprise 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
Profit/loss on disposals and other
non-operating items comprise capital gains or losses on the sale of
Group companies and of material 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 interest and other major lawsuits.
Net income/loss before impairment and
divestments
Net income/loss before impairment and
divestments excludes impairment charges and capital gains and
losses arising on disposals of investments which, because of their
exceptional nature, cannot be viewed as inherent to the Group’s
ongoing activities. It is defined as:
+/- Net income/loss
- gains and losses on disposals of Group
companies
- impairments of goodwill and long-term
assets
EPS (Earnings Per Share) before
impairment and divestments
The EPS (Earnings Per Share) before
impairment and divestments is an indicator that measures the
theoretical profitability per share of stock outstanding based on a
net income/loss before impairment and divestments. It is defined as
Net income/loss before impairment and divestments attributable to
the shareholders of LafargeHolcim divided by the weighted average
number of shares outstanding.
Capex or Capex Net (Net Maintenance and
Expansion Capex)
The Capex or Capex Net (Net Maintenance
and Expansion Capex) is an indicator to measure the cash spent to
maintain or expand its asset base. It is defined as:
+ 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 after leases
The Free Cash Flow after leases is an
indicator to measure the level of cash generated by the Group after
spending cash to maintain or expand its asset base. It is defined
as:
+/– Cash flow from operating
activities
– Net Maintenance and Expansion Capex
– Repayment of long-term lease
liabilities
Net financial debt (“Net debt”)
The Net financial debt (“net debt”) is an
indicator to measure the financial debt of the Group after
deduction of the cash. It is defined as:
+ Financial liabilities (short-term and
long-term) including derivative liabilities
– Cash and cash equivalents
– Derivative assets (short-term and
long-term)
Debt Leverage
The Net financial debt to Recurring EBITDA
ratio is used as an indicator of financial risk and shows how many
years it would take the Group to pay back its debt.
Cash conversion
The cash conversion is an indicator that
measures the Group’s ability to convert profits into available
cash. It is defined as Free Cash Flow after leases divided by
Recurring EBITDA after leases.
ADDITIONAL INFORMATION
The analyst presentation of the results and our 2020 half-year
report are available on our website at www.lafargeholcim.com
The financial statements are based on IFRS can be found on the
LafargeHolcim Group website.
Media conference: 09:00 CET
Switzerland: +41 58 310 5000
France: +33 1 7091 8706
UK: +44 207 107 0613
US: +1 631 570 5613
Analyst conference: 10:00 CET
About LafargeHolcim LafargeHolcim is the global leader in
building materials and solutions and active in four business
segments: Cement, Aggregates, Ready-Mix Concrete and Solutions
& Products. Its ambition is to lead the industry in reducing
carbon emissions and shifting towards low-carbon construction. With
the strongest R&D organization in the industry, the company
seeks to constantly introduce and promote high-quality and
sustainable building materials and solutions to its customers
worldwide - whether individual homebuilders or developers of major
infrastructure projects. LafargeHolcim employs over 70,000
employees in over 70 countries and has a portfolio that is equally
balanced between developing and mature markets.
More information is available on www.lafargeholcim.com
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.
1 After leases 2 Group share 3 Before impairment and divestments
4 Subject to pandemic-related uncertainties
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