- Holcim Leadership Journey to continue beyond 2014
- Return on invested capital key performance metric
- 2015 expected to be a solid year with an operating profit of between CHF 2.7 and 2.9 billion
- Reduced capex and capital allocation discipline result in better returns for shareholders
Holcim today announces details on the future development of the Holcim Leadership Journey as well as 2015 guidance as part of its Investor and Analyst Day 2014. Based on its defined strategic priorities and the success of the Holcim Leadership Journey, Holcim aims for continuous performance enhancement continuing the mindset established as part of the Holcim Leadership Journey. The Group plans to strongly focus on creating value from its existing asset base with ROIC after tax as the key performance measure and strong cash flow generation as a result.
Successful Holcim Leadership Journey to continue beyond 2014
The Holcim Leadership Journey, launched across the Group in 2012, has become a major success for Holcim and all its aspects – cost reductions and change in mindset towards increased Customer Excellence – have been embedded in the organization. Total contributions of about CHF 1.7 billion have already been achieved three months ahead of the 2014 year-end target and well in excess of the original goal of a contribution to operating profit of CHF 1.5 billion. Holcim launched more than 6,000 initiatives at all levels of the organization which impacted these positive financial contributions.
CEO Bernard Fontana says: “The success of the Holcim Leadership Journey is a broad based achievement with all cost streams outperforming our original ambition. Customer Excellence is now firmly planted in our Group’s culture, serving as the sustainable base for future benefits.”
The Holcim Leadership Journey will continue on several levels beyond 2014 as ongoing cost inflation and challenging market conditions require continuous performance improvement.
Guidance for 2015 and focus on operating profit and ROIC after tax
Building on the momentum of the Holcim Leadership Journey, Holcim expects 2015 to be a solid year for the Group with the objective of achieving substantial improvements of its results.
Benefiting from the Group companies in India, Indonesia, the USA, Mexico and the UK as the main growth drivers, like-for-like operating profit excluding merger related costs is expected to be in the range of CHF 2.7 to 2.9 billion. Operating profit margin will be higher as higher volumes, better pricing, and continued cost savings are expected to more than offset cost inflation.
In 2015 Holcim will also conclude its extensive expansion strategy, allowing the Group to sustainably create value from its existing asset base. As a result Holcim plans to reduce its capex to CHF 1.5 billion for 2015. Increasing the capacity utilization of existing plants coupled with continued cost reductions are expected to result in a further improvement of ROIC after taxes towards 8 percent.
CFO Thomas Aebischer says: “Holcim is the best positioned company in its industry to capture both the recovery in mature as well as the opportunities in emerging countries. Our current footprint will allow us to grow for several years without significant expansion needs, creating higher returns for our shareholders.”
India, South East Asia, and Sustainable Development
At the Investor and Analyst Day, Holcim will also give updates on its expectations in India and South East Asia. In India, the Group expects the recent favorable development under the new government to continue, leading to faster growing cement demand in the years 2015 and thereafter. Indonesia and the Philippines are expected to be the growth drivers in the South East Asia region, fueled by solid growth and attractive supply and demand balances.
Holcim will also provide insights into its Sustainable Development Ambition 2030 which as announced in June 2014 focuses on activities in the areas of climate, resources, and communities with an intention to significantly increase the portfolio of sustainability enhanced solutions.
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Holcim is one of the world's leading suppliers of cement and aggregates (crushed stone, gravel and sand) as well as further activities such as ready-mix concrete and asphalt including services. The Group holds majority and minority interests in around 70 countries on all continents.
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