LafargeHolcim Dials Up Capital Spending Plans for 2017, Lauds Trump's Infrastructure Push

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Researched by Industrial Info Resources (Sugar Land, Texas)--LafargeHolcim Limited (Jona, Switzerland) is upbeat about its prospects in North America. Although the company's annual results were overshadowed by potentially damaging revelations about the company's former operations in Syria, executives tried to maintain a positive outlook, citing major opportunities in infrastructure spending recently proposed by President Donald Trump. Industrial Info is tracking nearly $8 billion in active projects involving LafargeHolcim.

The company's results were overshadowed by an admission that management at Lafarge's Jalabiyeh plant in northern Syria paid third parties to make arrangements with armed groups to keep the facility open amid the violent, seemingly unending civil conflict. The payments are said to have begun in 2013, roughly one year before the plant was evacuated and closed. LafargeHolcim said that it could not determine "with certainty" which groups ultimately received the funds, and it is unclear how the PR black eye will affect the company going forward.

Operating profits increased 13% from the previous year to about $5.8 billion, despite an 8.7% decline in net sales to $26.9 billion. LafargeHolcim's 2016 performance was helped by cost reductions and the absence of impairment charges that weighed on the combined performance of Lafarge and Holcim before they merged in 2015.

Capital expenditures fell from $2.6 billion in 2015 to slightly more than $1.6 billion in 2016; they are expected to come in at less than $1.8 billion in 2017.

Executives maintained a rosy outlook on U.S.-based projects, citing Trump's proposed boost to infrastructure spending. Along with new housing, the company expects stronger investment from the government will help the U.S. cement market surpass 100 million tons in 2018, after hitting a low point in consumption per capita in 2010.

"We are expecting growth of 1% to 3% in 2017 in the U.S.," said Eric Olsen, the chief executive officer of LafargeHolcim, in a quarterly earnings conference call. "Beyond 2017, we expect further upside from government infrastructure spending. We saw an announcement this week of $1 trillion investment in infrastructure spending in the U.S. to be spent over the next five years."

Currently, North America accounts for roughly 1.5% of active projects by investment value, according to Industrial Info's project platform. These include the $30 million addition of a waste heat-recovery cogeneration unit and the $10 million addition of a low-carbon alternative fuel system at a quarry and cement facility in Bath, Ontario, and the $6 million expansion of a crushed limestone facility in Lockport, New York.

As designed, the Ontario projects would add 6 to 8 megawatts and process 135,000 tons per year of low-carbon fuel at the 1 million-ton-per-year Bath plant; the Lockport project, now in its engineering phase, would add a 4,000-foot conveyor system to the 2 million-ton-per-year quarry. Most other U.S. projects tracked are maintenance-related. For more information, see Industrial Info's project reports on the cogeneration unit and the low-carbon unit at Bath, and the limestone facility addition in Lockport.

Two of the company's highest-valued cement projects have been proposed for India: the $450 million cement plant in Guntur, Andhra Pradesh, and the $350 million cement plant in Satna, Madhya Pradesh, both of which have faced several delays in the permitting process. As currently designed, the plants would produce 5.5 million and 3.5 million tons per year of cement, respectively. For more details, including contact information and specifications, see Industrial Info's project reports on the Guntur and Satna projects.

"India offers undisputed growth potential among our large emerging markets, with a low cement consumption per capita at around 215 kilograms per person, a sustained population growth, fast urbanization, and an improving GDP per capita in the medium- to long-term," Olsen said.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.