LafargeHolcim says China construction market is recovering

Cement manufacturing giant LafargeHolcim says the Chinese construction sector has started to recover in the wake of the COVID-19 pandemic.

As North America continues to shut down in the face of the virus crisis, LafargeHolcim says that all of its Chinese plants outside of Hubei Province are now operating.

LafargeHolcim forecasts market demand in China to further recover and expects to supply 70% of last year’s volume in April 2020.

While the construction sector and construction sites are generally more resilient than other sectors, LafargeHolcim says that it is now experiencing disruptions in operations in various countries. The company says the construction sector is disrupted in most of its key markets outside China and it forecasts significant volume declines in April and May.

While demand in Q1 was solid overall, the company expects a significant negative impact on its business in Q2.

Most of the company’s 2,000 plants globally are still operating fully, according to Reuters.

LafargeHolcim has implemented its action plan in response to COVID-19. Since the beginning of the pandemic, the company says it has taken the necessary measures to protect the health of its employees, customers, suppliers and other stakeholders. It adds that it is closely monitoring all markets according to the evolving situation and to the guidance provided by the authorities in each country.

Currently the development of the Coronavirus pandemic and its implications for the business are volatile and very different from country to country. In order to mitigate the financial impact of the situation, LafargeHolcim has launched the action plan “HEALTH, COST & CASH” for immediate execution in all countries.

The plan’s targets are reduction of CAPEX by at least CHF400m (€377.58m) compared to 2019; reduction in fixed cost by CHF300m (€283.19m) in 2020; realisation of reduction of energy prices and full review of all third party products and services; and reduction of net working capital at least in line with level of activity.

Based on the significantly strengthened balance sheet, LafargeHolcim says it has strong liquidity of CHF8bn (€7.5m) as of March 26, 2020.

Due to the impact of the Coronavirus pandemic, the company says its guidance for 2020 is no longer valid. While the implementation of the action plan is in full execution, the dynamic, volatile development of the Coronavirus pandemic makes it impossible to fully evaluate its impact on the performance of LafargeHolcim in 2020. The company says it will provide a more comprehensive business update at the first quarter 2020 results release on April 30, 2020.

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