LafargeHolcim to post weak results for Q3

Little respite ahead for recently merged building materials manufacturer

Eric Olsen, chief executive of  LafargeHolcim. Photograph: Arnd Wiegmann/Reuters

Eric Olsen, chief executive of LafargeHolcim. Photograph: Arnd Wiegmann/Reuters

 

Building materials giant LafargeHolcim is due to report third quarter earnings next Wednesday.

Davy Stockbrokers has said weak third-quarter results will not surprise an already cautious market.

Davy analyst Robert Gardiner said many of LafargeHolcim’s key end-markets have deteriorated further in the quarter, and Davy sees little respite ahead.

“Weaker demand and overcapacity are intensifying price pressure at a difficult time for the group. Merging the world’s two largest cement producers was never going to be easy, and macro headwinds make the process even more complex,” he said.

He added that losing a well-respected and capable chief financial officer at the same time was clearly unhelpful for LafargeHolcim.

“We have materially downgraded our forecasts following publication of the proforma results for 2014 and H1 2015. We have also lowered price and volume assumptions for 2016.”

He said the manufacturer of building materials was exposed to a large number of markets faced with weak demand, overcapacity and subsequent pricing pressure.

“Peer results suggest that these markets have deteriorated further in the third quarter and we see no potential rebound in the near term.”

In July, LafargeHolcim said it cut spending by at least 200 million Swiss francs (€188 million) over the rest of 2015, when compared to what both companies had planned to spend on a standalone basis. The company also predicted 100 million Swiss francs of cost savings in the period.

Irish building materials company CRH last week said integration of the businesses acquired from Lafarge and Holcim earlier this year was progressing well.

These businesses are forecast to contribute earnings of €0.34 billion before interest, taxes, depreciation, and amortisation to the group’s full-year results, before taking into account one-off transaction costs and accounting adjustments totalling €0.2 billion.