LafargeHolcim Launches New Strategy After Sliding to 4Q Loss -- Update
By Brian Blackstone and Nathan Allen
LafargeHolcim Ltd. (LHN.EB) said Friday that it will launch a new five-year strategic plan focused on boosting revenue and earnings, as the company slid to a fourth-quarter loss that prompted a fall in its share price.
The Swiss-based building-materials giant said it posted a net loss of 3.2 billion Swiss francs ($3.39 billion) for the quarter compared with a net profit of CHF564 million a year earlier, while sales rose 2.7% to CHF6.70 billion. The loss is due largely to a CHF3.83 billion non-cash impairment relating to goodwill and the revaluation of assets, following a detailed review of the group's portfolio, LafargeHolcim said.
"Two-thirds of the impairments were concentrated in Algeria, Malaysia, Iraq, Brazil, Indonesia and Egypt," the company said. For 2017 as a whole, the company posted a loss of CHF1.7 billion. It said Friday that it would cancel a share-buyback program, and kept the dividend unchanged at CHF2 per share.
The company's shares were down 4.6% at 1030 GMT.
Still, there were some nuggets of good news in the report despite the negative market reaction. Net sales grew 6.2% on a like-for-like basis last quarter compared with one year earlier, a bigger rise than analysts had expected.
The company said it will implement a long-awaited strategic plan, known as 'Building for Growth', which is focused on simplifying the business to drive earnings and sales growth.
Under the new five-year plan, LafargeHolcim said it expects annual sales growth of between 3% and 5%, and annual growth of at least 5% in adjusted earnings before interest, taxes, depreciation and amortization.
Chief Executive Jan Jenisch, who took up his position in September after serving as chief executive of Sika AG (SIK.EB), said the company had already started to decentralize some of its operations, giving more autonomy to country managers. The company said that it will close offices in Miami and Singapore as part of a cost-saving program.
It said it will divest at least CHF2 billion in assets next year, and that it will keep capital spending below CHF2 billion per year.
Mr. Jenisch earned CHF8.7 million in total compensation last year for his four months on the job, a number he said primarily reflected long-term incentives that are tied to the company's future performance.
"While the number I fully agree is horrible, big, and my wife is complaining why this has to be out in the public, it's for the long term," Mr. Jenisch said.
"The number will not be the same next year, unfortunately," he said.
(END) Dow Jones Newswires
March 02, 2018 05:55 ET (10:55 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.