LafargeHolcim on Wednesday release its results for the first three months of the year, reporting improved pricing in a number of markets, encouraging signs in India and parts of Europe but tough market conditions in Malaysia and Indonesia.
For the first three months of the year, LafargeHolcim posted a decline in cement shipments of 15 per cent at 48.1Mt. Shipments of aggregates were 0.2 per cent ahead at 51.7Mt while ready-mixed concrete deliveries were came down by 9.4 per cent to 11.4Mm³. However, like-for-like sales increased by over five per cent thanks to better pricing in many countries and accelerating volume momentum in March.
The Asia group region (including Australasia) saw deliveries came down by 23.6 per cent to 23Mt while while deliveries of aggregates were three per cent lower at 7.1Mt and ready-mixed concrete deliveries dropped by 22.6 per cent to 3Mm³. In its commentary, the group stressed that Indonesia continues to be affected by new capacity in an oversupplied market as it saw volumes down by 11.2 per cent. Adverse weather was also a contributing factor in the quarter. In Malaysia the market suffered from competitive pressures and demand is yet to recover from the decline seen in 2016. In the Philippines where LH reported a 9.2 per cent drop in volumes, the market slowed against a high comparison base due to pre-election spending in 1Q16. However, volumes were noted to have accelerated in March. In India LafargeHolcim said the impact of demonetisation abated during the 1Q17 and the two main local subsidiaries between them sold 12.62Mt of cement and clinker, an increase of 3.3 per cent, but pricing remained soft. Volumes in China registered a 4.4 per cent recovery.
Europe cement deliveries improved by 6.3 per cent to 8.2Mt while shipments of aggregates rose by 5.3 per cent to 26.6Mt and ready-mixed concrete deliveries did edge ahead by 0.2 per cent to 4Mm³. Cement volumes recovered strongly and rose in most markets, advancing in Russia (62.3 per cent), Germany (36.2 per cent), Hungary (30.6 per cent), Spain (27.6 per cent) and Italy (27.1 per cent). However, there was a 13.8 per cent reduction in Romania. Pricing improved in most markets, most notably in Russia following an extended period of challenging market conditions.
Middle East Africa regional volumes were down across the board with cement deliveries falling by 16.1 per cent to 9.1Mt, aggregates shipments dropped 30.3 per cent to 2.5Mt, while ready-mixed concrete deliveries were down 13 per cent to 1.2Mm³. Despite a 17 per cent reduction in Nigerian volumes amid softer market demand nationwide, the business benefitted from favourable pricing dynamics over the quarter as well as an improved operational performance. Volumes in Egypt were down by 24.5 per cent for cement and by 30.8 per cent for aggregates. In Iraq cement deliveries rose by 13.8 per cent, while in Algeria the increase was 13.3 per cent. South Africa showed a 40 per cent volume drop, but pricing was ahead. Uganda and Zambia were difficult markets, also suffering from overcapacity. Heavy rains also had a negative impact in the period under review.
Latin America group region saw a combination of positive pricing trends supported by cost discipline which contributed to strong growth in earnings despite an overall decline in cement (3.5 per cent to 5.8Mt), aggregates (38 per cent to 1.1Mt) and ready-mix volumes (9.7 per cent to 1.5Mm³). Holcim Apasco in Mexico saw cement volumes decline by 6.7 per cent, but prices increased. In Brazil volumes continued to fall in response to the weaker economy and cement volumes fell by a further 4.8 per cent during the quarter. On the other hand, Ecuador registered an improvement, as did Argentina. Holcim Colombia saw volumes drop by 29.9 per cent in a market which is currently characterised by intense competition as well as low levels of investment in construction and infrastructure.
Volume guidance reiterated
On its outlook, management reiterated its guidance of 2-4 per cent global volume growth for the market in which it operates. It pointed to several countries including the US, India, Nigeria and some countries in Europe as being positive contributors to overall volume growth in the year.
