LafargeHolcim Q2 profit beats forecasts, new CEO to join early

ZURICH: LafargeHolcim posted slightly better-than-expected second-quarter results and brought forward the start date for its new CEO as the world’s biggest cement maker sought to put a scandal over payments to armed groups in Syria behind it.

The Franco-Swiss company reported on Wednesday adjusted operating profit rose 10.1% on a like-for-like basis to 1.735 billion Swiss francs (US$1.82 billion) for the three months ended June 30, ahead of the average estimate of 1.714 billion in a Reuters poll.

This met its target of generating double-digit like-for-like growth in adjusted operating profit compared with 2016.

The cement maker said Jan Jenisch would start as chief executive on Sept 1. The former boss of high-flying Swiss construction chemicals maker Sika had been due to take the reins from Oct 16.

“We would like to have Jan Jenisch as quickly as possible and he agreed to advance the date,” chairman Beat Hess, who has been acting as interim CEO, told reporters.

Jenisch’s appointment would not affect the company’s 2017 and 2018 targets, which the company was ”well on track” to meeting, Hess said.

“The targets are the targets; our strategic roadmap stays in place. Of course once Jan Jenisch will have started in his position he will certainly have a look at all of that and have his own views.” 

The Jona, Switzerland-based company this year parted company with CEO Eric Olsen after it admitted paying armed groups to keep a plant operating in war-torn Syria. Olsen has been cleared of involvement in the affair by an internal investigation.

France has launched a judicial inquiry into the Syria affair, although this does not necessarily mean any person or company will be brought to trial.

Second-quarter revenues fell a headline 5.9% but rose 3.6% like-for-like to 6.85 billion francs, when sell-offs of assets like the company’s operations in Vietnam and Chile were taken into account.

It kept its 2017 guidance of achieving recurring earnings per share growth of more than 20% and a targeted net debt to operating profit ratio of around two times.

The group said the United States, India, Nigeria and Mexico made significant contributions to quarterly earnings, more than offsetting headwinds in some of other markets.

During the quarter, LafargeHolcim said operating profit had improved in three of its five regions, with Asia-Pacific remaining a laggard and Europe also a drag.

Overcapacity in Indonesia and Malaysia have weighed on pricing in the region which has also been hit by weak demand. - Reuters