While construction materials markets have been more resilient than many others, LafargeHolcim reports that it is now experiencing disruptions in operations in various countries.
In China, the recovery of the construction sector has started and all its plants outside of Hubei Province are operating. The company forecasts the market demand to further recover and to supply 70 percent of last year’s volume in April 2020.
In most of the other key markets, however, the construction sector is disrupted, and it forecasts significant volume declines in April and May, with a significant negative impact on its business in the second quarter.
“Currently the development of the Coronavirus pandemic and its implications for the business are volatile and very different from country to country,” the company said in a press release. “In order to mitigate the financial impact of the situation, we have launched the action plan ‘HEALTH, COST & CASH’ for immediate execution in all countries.”
Key objectives include the following:
- Reduction of CAPEX by at least $416 million compared to 2019;
- Reduction in fixed cost by $312 million in 2020;
- Realization 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 a significantly strengthened balance sheet, LafargeHolcim has liquidity of $8.3 billion as of March 26, 2020.
“Due to the impact of the Coronavirus pandemic, the guidance for 2020 is no longer valid,” it notes. “While the implementation of the action plan ‘HEALTH, COST & CASH’ is in full execution, the dynamic, volatile development of the Coronavirus pandemic makes it currently no longer possible to fully evaluate its impact on the performance of LafargeHolcim in 2020. We will provide a more comprehensive business update at the first quarter 2020 results release on April 30, 2020.”