Holcim announced details on the future development of the Holcim Leadership Journey as well as 2015 guidance as part of its Investor and Analyst Day 2014. Based on its defined strategic priorities, the company aims for continuous performance enhancement continuing the mindset established as part of the Holcim Leadership Journey. It also plans to strongly focus on creating value from its existing asset base with ROIC after tax as the key performance measure and strong cash flow generation as a result.
The Holcim Leadership Journey, launched across the group in 2012, has become a major success for Holcim and all its aspects – cost reductions and change in mindset toward increased customer excellence – have been embedded in the organization. Total contributions of about $1.776 billion have already been achieved three months ahead of the 2014 year-end target and well in excess of the original goal of a contribution to operating profit of $1.567 billion. Holcim launched more than 6,000 initiatives at all levels of the organization which impacted these positive financial contributions.
CEO Bernard Fontana said: “The success of the Holcim Leadership Journey is a broad-based achievement with all cost streams outperforming our original ambition. Customer excellence is now firmly planted in our group’s culture, serving as the sustainable base for future benefits.”
The Holcim Leadership Journey will continue on several levels beyond 2014 as ongoing cost inflation and challenging market conditions require continuous performance improvement.
Holcim expects 2015 to be a solid year for the group with the objective of achieving substantial improvements of its results. Benefiting from the group companies in India, Indonesia, United States, Mexico and the UK as the main growth drivers, like-for-like operating profit excluding merger related costs is expected to be in the range of $2.82 billion to $3.03 billion. Operating profit margin will be higher as higher volumes, better pricing and continued cost savings are expected to more than offset cost inflation.
In 2015, Holcim will also conclude its extensive expansion strategy, allowing the group to sustainably create value from its existing asset base. As a result Holcim plans to reduce its capital expenditures to $1.567 billion for 2015. Increasing the capacity utilization of existing plants coupled with continued cost reductions are expected to result in a further improvement of ROIC after taxes toward 8 percent.
“Holcim is the best positioned company in its industry to capture both the recovery in mature as well as the opportunities in emerging countries,” said CFO Thomas Aebischer. “Our current footprint will allow us to grow for several years without significant expansion needs, creating higher returns for our shareholders.”