Industry

LafargeHolcim’s new CEO writes off more than $4 billion

Cementing growth: CEO Jan Jenisch expects building materials to grow 2% to 3%.

Cementing growth: CEO Jan Jenisch expects building materials to grow 2% to 3%.   | Photo Credit: ARND WIEGMANN

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LafargeHolcim’s new chief executive set out his plan to revive the company’s fortunes by cutting costs, selling assets and focusing on fewer markets as the world’s biggest cement maker announced a $4 billion write off. CEO Jan Jenisch took over in September to get the company back on track after a difficult marriage between France’s Lafarge and Switzerland’s Holcim in 2015.

‘Goals lack ambition’

The stock fell more than 7% after the strategy was revealed. Analysts said the new goals lacked ambition.

LafargeHolcim also reported a 3.1 billion Swiss franc ($3.3 billion) net loss during its fourth quarter, hit by the impairment charge as Mr. Jenisch cleared the decks for his overhaul.

Previous CEO Eric Olsen left after the company admitted paying armed groups in Syria to keep a plant running. Mr. Jenisch now has a five-year plan targeting annual sales growth of 3 to 5%, recurring EBITDA growth of at least 5%, improvement in free cash flow to over 40% of EBITDA, and boosting the return on invested capital to more than 8%. “The merger is now behind us..it was quite an exercise and not an easy one. Building materials is a market that is growing above GDP globally, so would we would expect building materials to grow 2 to 3%,” he told reporters.

The revamp would include a focus on fewer markets to concentrate on the United States, Latin America, India and Africa.

“While the strategy looks sensible and more realistic than previous targets, it probably implies a reduction in consensus expectations,” UBS analysts said in a research note.

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Printable version | Jan 28, 2020 9:18:49 PM | https://www.thehindu.com/business/Industry/lafargeholcims-new-ceo-writes-off-more-than-4-billion/article22920340.ece

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