Lafarge, Holcim merge

HARARE - Cement manufacturer Lafarge and Holcim Limited on Wednesday officially launched their new combined building materials company, LafargeHolcim, after overcoming a series of regulatory hurdles and challenges over the terms of the merger, which was first announced a year ago.

LafargeHolcim chief executive, Eric Olsen (pictured)  said the company remained committed to delivering annual savings of $1,54 billion within three years and would also concentrate on integrating the two companies, reducing capital spending, and creating new products and services.

“This event marks our entry into a new era. We are now clearly the leader of the building materials industry,” he said.

The new company has combined sales of 33 billion francs and operations in 90 countries, dwarfing rival cement-makers such as Germany’s HeidelbergCement AG and Mexico’s Cemex SAB de CV.

Olsen said LafargeHolcim had overcome what seemed like “insurmountable” obstacles to complete its merger that was in doubt earlier this year following a disagreement over the exchange ratio and the leadership of the combined company.

“Now as LafargeHolcim, we will step into the next phase of our transformation to become the leader in every respect — a company that has a positive impact on the world and can make a real difference for its customers, its employees, its shareholders and society,” he said.

LafargeHolcim has been established to pivot the two companies away from developed markets toward faster growing economies in Africa and Asia where demand for cement is growing faster.

Olsen noted that the new company would have around 60 percent of its sales in emerging markets, but expected the proportion to rise in future.

The wider global spread would enable the LafargeHolcim to weather downturns in individual markets such as China.

The combined company has also begun looking where it can reduce costs, particularly in procurement. Both companies combined spend roughly $17,4 billion a year on fuel, raw materials and equipment, a bill it is aiming to reduce by $370 million.

“A team of 200 experts has begun working to see how the cement plants can become more efficient. The first results of the merger will be seen within 300 days,” Olsen said.

Holcim and Lafarge will present their half-year earnings as stand-alone companies later this month and report their first results as a combined company at the nine-month stage later this year.

 

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