November 18, 2016/LafargeHolcim
- LafargeHolcim on track and delivering
- 2018 targets adjusted for scope and currency effects
- Adjusted operating EBITDA target upgraded to CHF 7 billion including CHF 200 million additional cost savings
- CHF 5 per share operating Free Cash Flow
- Returning cash to shareholders within strict capital allocation discipline
- Dividend of CHF 2 per share proposed at next AGM
- Up to CHF 1 billion share buybacks over the next two years
Eric Olsen, CEO of LafargeHolcim said: “LafargeHolcim has hit its stride. The Group is on track and the momentum of earnings and cash flow growth is accelerating. We re-affirm our commitment to a solid investment grade rating. Our potential to grow, benefiting from our unique portfolio, operational leverage, ability to differentiate our offer, and optimization of our cost base, underpins our 2018 targets. The result for shareholders is that, within our strict capital allocation discipline, we will deliver significant cash returns including the first tangible measures announced today.”
Medium term Group targets adjusted and upgraded
Our 2018 targets have been adjusted to accurately reflect the adjusted scope1 of the Group and to take into account the evolution of exchange rates2. We have identified and initiated CHF 200 million of additional cost savings, which enables us to upgrade our 2018 adjusted operating EBITDA target to CHF 7 billion3, taking into account these adjustments. This translates into a 2018 run rate operating Free Cash Flow range of CHF 2.8 – 3.3 billion, or CHF 5 per share. We now expect a cumulated operating Free Cash Flow of CHF 7.5 billion over 2016-18.
We maintain our commitment to a 2018 run rate capex of less than CHF 2 billion and ROIC improvement of 300bps in 2018 vs. 2015 level.
1Scope takes account of the changes in Group scale and size as a result of divestments and restructuring
2As of 1 November 2016
3Targets assume current scope adjusted for the entire CHF 5 billion disposal program and foreign exchange at 1 November 2016.
Cash returns to shareholders within strict capital allocation discipline
Consistent with our strict capital allocation discipline and commensurate with maintaining a solid investment grade credit rating, we will sustain an attractive dividend policy.
Therefore, we will propose a dividend per share of CHF 2, up from CHF 1.50 for the previous year, to shareholders at the May 2017 Annual General Meeting. We expect to grow the dividend from a minimum of CHF 2 per share targeting an average payout ratio of 50% through the cycle.
Reflecting our confidence in the strength of our portfolio and our ability to generate cash, we also intend to buy back up to CHF 1 billion of our shares over the next two years.
As the improvement of our operating performance crystallizes, we intend to return excess cash to shareholders, notably through special dividends.
