In the second quarter of 2017, LafargeHolcim delivered the fifth consecutive quarter of like-for-like Operating EBITDA Adjusted growth. The Middle East Africa, Latin America and North America regions all contributed to earnings momentum with the U.S., Nigeria and Mexico among notable performers. Despite positive results in India – which continued its recovery post-demonetization – the Asia Pacific region was weighed down by persistent challenging market conditions in Indonesia, Malaysia and the Philippines. Earnings in Europe were marginally down for Q2, though underlying trends are positive.
Despite the effect of fewer working days in the period, like-for-like cement volumes were up slightly compared to the prior year. Globally, cement prices improved by 5.5 percent compared to the prior year on a like-for-like basis. Sequentially, prices were 2.3 percent higher than in Q1 2017.
Beat Hess, LafargeHolcim chairman, said: “LafargeHolcim delivered positive earnings growth for the fifth consecutive quarter supported by favorable pricing, cost discipline and synergies. The unique strengths of our balanced portfolio are once again evident in our results with key countries such as the U.S., India, Nigeria and, notably this quarter, Mexico making significant contributions to earnings, more than offsetting headwinds in some of our markets. On that basis, and with our performance to date, we remain confident that we will achieve our full year guidance and our 2018 targets.”
“In addition, our continued efforts to transform our commercial capability and improve our cost base put us in a strong position to fully capitalize on market growth,” Hess added.
Latin America delivered growth in Operating EBITDA Adjusted of 25.6 percent in the quarter supported by a strong overall regional performance, notably in Mexico and Argentina.
Mexico delivered strong earnings and solid margins as the business continues to deliver its commercial strategy and realize cost savings. Overall, the Mexican market remains resilient.
In Argentina, good results were boosted by commercial excellence initiatives in a stabilizing economy. While market challenges in Brazil remain acute as cement demand continues to fall year on year and industry over-capacity is high, the first benefits of the turnaround plan implemented by local management were visible in business performance for the quarter.
Operating EBITDA Adjusted for Ecuador was down compared to the prior year period affected by pre-election uncertainty as well as heavy rain. Colombia had another difficult quarter as market and competitive pressures in key areas of the country contributed to earnings decline.
North America made a strong contribution to Operating EBITDA Adjusted growth – up 16.5 percent on a like-for-like basis – despite the effect of heavy rain on volumes of cement and aggregates in parts of the U.S. and Canada. In both markets cost savings in logistics and manufacturing contributed to positive results, while the U.S. continued to benefit from favorable pricing.
Cement volumes in the U.S. for Q2 were down on the prior year. Aggregates in the U.S. were also impacted by unfavorable weather conditions which constrained deliveries for a period during the quarter. Operational enhancements undertaken in the second quarter should further benefit earnings going forward.
Despite lower volumes, performance in Canada remained stable in the second quarter thanks to cost efficiency measures, notably in the west of the country. Western Canada saw a modest recovery while volumes in Eastern Canada were negatively impacted by weather and operational challenges.