Syria woes mar LafargeHolcim’s solid fourth quarter results
Internal inquiry reveals plant provided funding to armed groups to continue operations
Eric Olsen, chief executive officer of LafargeHolcim. Photograph: Michele Limina/Bloomberg
LafargeHolcim said an internal investigation had revealed a plant in Syria provided funding to armed groups in the war-torn country, taking the shine off better-than-expected results and its forecast for higher earnings growth this year.
The former Lafarge cement plant had engaged in dealings with certain armed groups and with sanctioned parties during 2013 until the plant was ultimately evacuated in September 2014, the world’s biggest cement maker said on Thursday.
“It appears from the investigation that the local company provided funds to third parties to work out arrangements with a number of these armed groups, including sanctioned parties, in order to maintain operations and ensure safe passage of employees and supplies to and from the plant,” it said.
The investigation could not establish with certainty who the ultimate recipients of the funds were, it said, adding: “In hindsight, the measures required to continue operations at the plant were unacceptable.”
It said it did not expect a big hit to earnings from the news, and its shares were indicated 1.1 per cent higher in pre-market activity.
The disclosure came as it posted better-than-expected core earnings during its fourth quarter, helping the Swiss group hit one of its main targets.
Adjusted earnings before interest, tax, depreciation and amortisation of (EBITDA) 1.61 billion Swiss francs (€1.5 billion) beat the average analyst estimate of 1.52 billion francs in a Reuters poll.
The performance meant the company met its target of increasing full-year operating EBITDA by at least a high single-digit rate.