Sales down for LafargeHolcim but ‘solid’ recovery expected

Global cement, concrete and aggregates company LafargeHolcim has reported that in the first half of 2020 net sales dropped 18% to CHF10.7 billion (US$11.7 billion) from CHF13.1 billion (US$14.3 billion) during the same period last year.

This reflects a 10.8% decline on a like-for-like (LFL) basis, factoring out changes in the scope of consolidation and currency translation effects.

Swiss-based LafargeHolcim, which earlier this year ditched its full-year guidance, had previously reported it expected the second quarter to be the worst hit as Covid-19 shut down construction projects around the world.

The company reported in its half yearly statement that it had hit the bottom of the crisis, with sales in all five of its regions returning to 2019 levels by the end of June as lockdowns eased.

“I’m very proud of our teams’ rapid and agile response to the crisis since the beginning of January,” states Jan Jenisch, CEO of the Swiss-based building materials manufacturer. “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 building emergency field hospitals, all the way to supplying essential goods, touching the lives of over four million people around the world.”

Jenisch added that, “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.”

Regional results

The Asia Pacific region experienced the most severe Covid-19 related disruption for the company, yet delivered a strong Recurring EBIT (earnings before interest, tax, depreciation and amortization) margin, led by India and supported by effective cost and price management as well as lower input costs.

Results for that region showed net sales to external customers at CHF2.4 billion (US$2.6 billion) for the first half of this year, down from CHF3.4 billion (US$3.7 million) in the same period of 2019.

China delivered a full recovery over the second quarter with volumes closing at higher levels than in the prior-year period and activity also bounced back in Australia.

LafargeHolcim says North America delivered a remarkable performance. This leading performance amid Covid-19 was reported to be 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 as a result of a slowdown in the oil & gas industry.

Europe was impacted by Covid-19 but saw a full recovery in June. Markets in Germany, Central and Eastern Europe were resilient. Strict lockdown measures in the UK and France impacted performance of those countries. Volumes suggest a V-shaped recovery in June for the majority of markets, except in the UK, the company says.

In Latin America, there was an especially strong contribution from Mexico. Performances in Ecuador, Colombia and El Salvador were significantly impacted by the pandemic, however. Most markets experienced a strong recovery in June.

Middle East Africa showed healthy 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 and Ramadan in May slowed down the recovery in the respective countries.

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