Strong sales growth and over-proportional profitability increase in Q4
Jan Jenisch, CEO: “Our momentum accelerated in the second half of 2018 during which we exceeded our sales targets while profitability increased over-proportionally. We completed a very successful 2018 with a double-digit EPS growth and progressed significantly towards our deleveraging target. I am very proud of the fast roll-out of Strategy 2022 – ‘Building for Growth’ and congratulate all employees and teams on the impressive results. We are well-positioned and I am expecting a further acceleration of our growth and earnings dynamic in 2019.”
Good progress on Strategy 2022 – “Building for Growth”
The global roll out of the new Strategy 2022 – “Building for Growth” has been successfully started. Strong progress was made in all four drivers of the strategy delivering results ahead of plan.
Switching gears to growth is the most fundamental principle of Strategy 2022. First results have been achieved and the growth momentum accelerated throughout the year with a strong sales increase of 5.1% LFL. All four business segments were contributing to this growth. Four bolt-on acquisitions were completed in 2018 in Europe and North America which drove Growth and added to the company’s presence in Ready-Mix
Concrete and Aggregates. These acquisitions had immediate impact on profitability and brought the company closer to its end-customers. Four more bolt-on acquisitions have been signed in 2019 in Europe, Australia and North America.
In terms of Simplification & Performance, the closure of four corporate offices in Singapore, Miami, Zurich and Paris has been completed. The 400 million SG&A savings program is executed successfully and delivering results ahead of target. Strong progress was made towards closing the gap to best-in-class performance in Aggregates and Ready Mix Concrete. Both businesses achieved significant improvements in profitability.
The strategy driver Financial Strength has led to improvements across all key performance indicators. More than CHF 1.5 billion was refinanced at attractive terms, thereby improving the company’s debt maturity profile and reducing financing costs. The sale of Indonesia contributes to the strengthening of the balance sheet. All initiatives resulted into a successful de-leveraging with the net financial debt / recurring EBITDA ratio improving to 2.2x (from 2.4x in 2017).
With regard to Vision & People, the new operating model and the leadership team have been effectively established. Globally leaders are empowered and the simplified performance management system and the corresponding incentive system was implemented in all countries. All initiatives are supported by the launch of the new LafargeHolcim Business School.