LafargeHolcim to target emerging markets

LafargeHolcim Ltd is confident that a rally will continue in emerging markets this year. Higher cement buying in countries such as India, Indonesia, the Philippines and Vietnam is offsetting slower growth in China, leaving LafargeHolcim CEO, Eric Olsen, optimistic about continued expansion in markets that represent about 55 per cent of his company’s footprint.

Indonesia is certainly one country where the comapny is aiming to thrive. PT Holcim Indonesia has lent IDR200bn (US$3bn)  to affiliate PT Lafarge Cement Indonesia under an agreement signed last Thursday, the cement maker announced. Lafarge Cement will use the loan, which will mature on 22 March 2017, to fund working capital.

“Our volumes in emerging markets are fantastic,” he said Monday at Bloomberg’s offices in New York. “Things are growing and growing well throughout large parts of the world.”

“The China story only matters for cement in China,” he said. “It doesn’t affect your plants in Africa and the Middle East. Your plants in Latin America, your plants in North America are not affected by China.

The company was formed in July, when France’s Lafarge SA and Switzerland’s Holcim Ltd merged to create the world’s biggest cement company. Mr Olsen has promised to sell US$3.5bn in assets this year to streamline the company’s portfolio and comply with regulators, while committing to an additional US$1bn of internal cost savings.

Mr Olsen, who is selling assets in India that had been owned by Lafarge, said the divestiture will be sealed in three to four months. Building growth is picking up after years of stagnation, boosting optimism about the country’s economic recovery, he said.

“It’s a great time to be marketing assets in India,” he said.

LafargeHolcim’s shares have tumbled 39 per cent in the last 12 months amid slower growth in China and Brazil, key markets for the combined company.

“No one will debate that growth in the emerging markets will come at some point,” said Inton, of Morningstar. “At some point they will develop and they’ll need the cement. The bigger question is how long it will take.”