March 2, 2018 / 6:47 AM / 3 months ago

UPDATE 2-LafargeHolcim CEO launches overhaul, takes big Q4 charge

* New targets see outpacing overall market growth

* Big impairment charge triggers Q4 loss

* Shares fall 3.5 percent (Recasts with CEO comments, share price indication)

By John Revill

ZURICH, March 2 (Reuters) - LafargeHolcim aims to grow faster than the overall market and cut costs under a five-year plan set out by the new chief executive of the world’s biggest cement maker on Friday.

The strategy was launched as LafargeHolcim reported a 3.1 billion Swiss franc ($3.3 billion) net loss during its fourth quarter, hit by a 3.8 billion-franc impairment charge as CEO Jan Jenisch cleared the decks for his overhaul.

The stock fell 3.5 percent by 0830 GMT, adding to losses the company has suffered since the “merger of equals” between France’s Lafarge and Switzerland’s Holcim in 2015.

The new five-year strategy targets annual sales growth of 3 to 5 percent, recurring EBITDA growth of at least 5 percent, improvement in free cash flow to over 40 percent of EBITDA, and boosting the return on invested capital to more than 8 percent.

Jenisch, who joined the company last September, said that with the merger complete and an expanding construction materials market the time was right to focus on growth.

“The merger is now behind us..it was quite an exercise and not an easy one. Building materials is a market that is growing above GDP globally, so would we would expect building materials to grow 2 to 3 percent,” he told reporters.

“With our strong market positions we have to grow above the market,” he said.

The revamp would include a focus on fewer markets to concentrate on the United States, Latin America, India and Africa as the main opportunities.

“While the strategy looks sensible and more realistic than previous targets, it probably implies reduction in consensus expectations,” UBS analysts said in a research note.

President Donald Trump’s decision to impose hefty charges on imported steel and aluminum would not hurt U.S. LafargeHolcim’s business, Jenisch said.

“I am very bullish on the U.S., this is the best single building materials market in the world,” he said, adding the company produced all its products in the country.

ASSET SALES, COST CUTS

As part of its more focused approach, LafargeHolcim would sell assets worth around 2 billion francs and could also leave two or three countries.

Two thirds of the impairments were concentrated in Algeria, Malaysia, Iraq, Brazil, Indonesia and Egypt. The company said they followed an assessment of the value of a wide range of markets and of specific business units.

The company launched a cost savings drive of 400 million francs from its administration costs, saying it would close corporate office in Singapore and Miami.

It stopped its share buyback programme and kept its dividend steady while saying it would look at bolt-on acquisitions.

Last week it made its first deal under Jenisch when it bought Kendall Group, an aggregates and ready mix concrete maker in Britain.

The fourth-quarter charge pushed LafargeHolcim into a net loss of 3.12 billion Swiss francs. Without the charge, net profit fell 31 percent to 270 million francs. Analysts polled by Reuters poll had expected net profit of 604 million francs.

Revenue rose 2.7 percent to 6.7 billion francs, beating estimates of 6.47 billion francs. ($1 = 0.9400 Swiss francs) (Reporting by John Revill Editing by Michael Shields/Keith Weir)

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