LafargeHolcim optimistic about 2020 building industry

By John Revill

ZURICH (Reuters) - LafargeHolcim <LHN.S> expects the construction industry to remain buoyant next year despite the downturn dragging on other sectors of the global economy.

The outlook for 2020 remained good despite problems seen by manufacturers, intensified by the trade war between the United States and China, Jan Jenisch, the chief executive of the world's largest cement maker, said on Friday.

Other problems, like Britain's protracted exit from the European Union, could even help by stimulating British spending on infrastructure projects, he said as LafargeHolcim reported results in line with expectations.

"Many industries at the moment are reporting negative volumes, most prominently in the automotive sector, we don't have that," Jenisch told reporters.

"For 2020 we have no evidence that our trend is going negative," he said. "We are very resilient in our market and we look forward to a good 2020, as it stands at the moment, with nothing negative to report."

LafargeHolcim turned slightly more cautious about Europe and Africa for the remainder of 2019, but saw positive signs in North America and Asia.

Mega trends like increased population growth and urbanisation are leading to a greater demand for cement and aggregates. By 2050, 2.5 billion more people are expected to live in cities, according to U.N. forecasts. Spending will need to rise to provide new roads, railways and power plants.

LafargeHolcim is trimming its operations to focus more on Europe and North America. The Swiss company was cagey on whether it would be interested in buying BASF's construction chemicals business, which was put up for sale last year.

During its third quarter, LafargeHolcim's sales fell 3% to 7.14 billion Swiss francs (£5.61 billion). Analysts had forecast 7.21 billion, according to Refinitiv data.

When the effect of the company's exit from markets in southeast Asia and other divestments were taken into account, its sales rose by 4.9%.

Recurring operating profit before depreciation and amortisation rose 0.8% to 1.88 billion francs, ahead of forecasts for 1.81 billion francs.

Jenisch said LafargeHolcim was on track to achieve all its 2019 targets as it confirmed its outlook for like-for-like sales growth of 3-5% and recurring EBITDA growth of at least 5%.

The company's stock were trading at 1.8% after the results.

"The company is now very well on track to achieve its FY19 targets and actually has become more confident to increase cash generation this year," said Bernd Pomrehn at Bank Vontobel.

Jenisch said it likely the company would retain the same targets in 2020.

"I will not confirm it, but that is the framework in which we operate. Depending on the economy, we will adjust, but as it looks at the moment we have good demand and no reason not to put these targets out."

ADVERTISEMENT

(Reporting by John Revill; Editing by Michael Shields)