LafargeHolcim's net sales fall to CHF5.293bn in 1Q20
LafargeHolcim announced its 1Q20 results with net sales reaching CHF5.293bn (US$5.4bn), down 11.2 per cent from CHF5959m in the 1Q19. Recurring EBIT totalled CHF262m in the 1Q20, represening a decline of 14.1 per cent from CHF305m in the 1Q19.
Jan Jenisch, LafargeHolcim CEO, said: "The company had a strong start to the year as 1Q20 performance remained well ahead of last year’s results until Mid-March, when the impact of COVID-19 spread beyond China into all business regions. Nevertheless 1Q2020 results remained resilient with net sales of -3.3 per cent and Recurring EBIT -2.6 per cent compared to the prior-year period, both on a like-for-like basis."
Regional highlights
Group sales of cement reached 44.9Mt, down 10.4 per cent from 50.1Mt in the 1Q19. Aggregate sales totalled 49.1Mt in the 1Q20, declining 1.1 per cent when compared with the 1Q19. Meanwhile, ready-mix sales totalled 9.8Mm3, down from 11.4Mm3, a fall of 13.8 per cent.
Asia-Pacific
Asia-Pacific recorded cement sales of 15.8Mt in the 1Q20, down from 20.9Mt in 1Q19, a fall of 24.3 per cent. Sales of aggregates in the region declined 14.7 per cent to 5.6Mt from 6.6Mt, while sales of ready-mix declined to 2.1Mm3, down 27.7 per cent from 2.9Mm3 in the 1Q19.
The region's performance was impacted by the COVID-19 outbreak, with China significantly impacted in the 1Q20. There was strong profitability improvement in India despite lockdown measures towards the end of March. The market slowdown in Australia continued.
Europe
European cement sales for the group totalled 9.3Mt in the 1Q20, a drop of 2.3 per cent from 9.5Mt in 1Q19. Sales of aggregates reached 25.2Mt in the 1Q20, down three per cent from 26.2Mt in 1Q19. Ready-mix sales totalled 4.1Mm3 in 1Q20, representing a 10.5 per cent fall from 4.6Mm3 in 1Q19.
Europe delivered solid results despite disruptions in key markets, with good market growth in eastern Europe, and resilient performances in Switzerland and Germany. Volumes in France, the UK and Spain were impacted by COVID-19. Recurring EBIT improved on a like-for-like basis as a result of operational efficiencies.
Latin American market
Latin American cement sales for LafargeHolcim in the 1Q20 reached 5.6Mt, a fall of 5.9 per cent compared to 1Q19, when regional sales reached 5.9Mt. Sales of aggregates totalled 1.2Mt, up 34.9 per cent from 0.9Mt in the 1Q19. Ready-mix sales declined 16.5 per cent to 1Mm3in the 1Q20 from 1.2Mm3 in 1Q19.
Latin America delivered a resilient performance, led by a solid performance in Mexico. Brazil, Argentina, Ecuador and Colombia were impacted by COVID-19 lockdown measures since mid-March. The recurring EBIT margin was resilient thanks to effective price and cost management.
North America
North American cement sales grew to 3.6Mt in the 1Q20, up eight per cent from 3.4Mt in 1Q19. Aggregate sales also increased to 15.9Mt from 14.2Mt in the 1Q19, representing an increase of 11.5 per cent. Ready-mix sales in the 1Q20 reached 1.9Mm3, up 7.6 per cent from 1.8Mm3 in the 1Q19.
North America delivered improvement in volume growth across all business segments. The region showed a continuation of strong cement demand trends from 2019, further supported by favourable weather, while aggregate volume improvement of 12 per cent in the quarter was driven by megaprojects along the Mississippi River. The US and Canadian operations both delivered solid industrial performances, with only minor impact from COVID-19 in the quarter.
Middle East and Africa
Sales of cement in the Middle East and Africa fell by 4.8 per cent YoY to 8.4Mt in the 1Q20 from 8.8Mt in the 1Q19. Sales of aggregates saw a 43.6 per cent fall to 1Mt in the 1Q20 from 1.7Mt in the 1Q19. Ready-mix sales totalled 0.7Mm3, down 23.2 per cent from 1Mm3 in 1Q19.
Middle East and Africa delivered an over-proportional increase in recurring EBIT with turnaround initiatives offsetting COVID-19 impact in the region. Nigeria, Algeria and Iraq were solid contributors, while South Africa and Lebanon were impacted by lockdown measures.
Jan Jenisch, LafargeHolcim CEO, added: "We are confronting an unprecedented health crisis with COVID-19 that is changing how we live and how we work in many ways.... Our 1Q2020 results show how resilient we are as a business. With our significantly strengthened balance sheet, we are in a very strong position to weather this storm. We are currently successfully executing our action plan 'HEALTH, COST & CASH' in all countries, setting the company up for the recovery of our markets. I am confident that LafargeHolcim will emerge from this pandemic as an important contributor to economic recovery as building activity gets back to normal."
Outlook
LafargeHolcim says it is well-positioned to weather the crisis, supported by a strong balance sheet and having secured strong liquidity. The biggest impact from COVID-19 is expected in the 2Q20, but the full impact of the crisis on the company's 2020 results cannot be assessed at this point. Given the encouraging April data on the rebound of activity in China, the company looks forward with confidence.
