ZURICH (Reuters) - LafargeHolcim expects to shake off a “massive slowdown” in China caused by the coronavirus with a rebound in Chinese demand later in the year and strong sales in other regions, the world’s largest cement maker said on Thursday.
“What we are experiencing at the moment is a massive slowdown in China, however most of our cement plants are running again in China,” CEO Jan Jenisch told reporters.
Infrastructure and other building projects in China may have been postponed, Jenisch said, but he expected that to bump demand to later in the year.
“According to the World Health Organization we expect a recovery starting in May in the China market,” he said.
Operations in other countries have not been affected by the spread of the virus, he said.
“At the moment construction sites and infrastructure as well as our plants are fully running everywhere in Europe, in North America, Latin America, India and Africa,” Jenisch said.
The building materials maker on Thursday reported 2019 net income up nearly 50% to 2.25 billion Swiss francs ($2.30 billion), just ahead of estimates for 2.21 billion francs, Refinitiv Eikon data showed.
Its shares opened 1.8% higher in a lower market for Swiss blue chips.
The profit increase was driven by lower restructuring costs, lower financial expenses and a reduced tax rate, LafargeHolcim said.
Stripped of impairment charges and gains from divestments, net profit was up 32% to 2.07 billion francs, the highest since the company was formed in 2015.
Sales fell 2.7% to 26.72 billion francs versus analyst forecasts of 26.79 billion.
This year it expects sales to rise by 3%-5% and set its recurring operating profit growth target at at least 7%.
LafargeHolcim’s operations in China do not supply other countries and although the company has taken precautions such as travel controls it did not expect the downturn to affect its overall figures for the year.
“We have had a great start to the year in all our five regions, we have no indications of a slowdown at this point in time, we have full order books.”
“Despite a challenging situation in several emerging markets and continued currency headwinds, management delivered strong results and an encouraging outlook,” said Bernd Pomrehn, an analyst at Bank Vontobel.
($1 = 0.9763 Swiss francs)
Reporting by John Revill, editing by Silke Koltrowitz and Jason Neely
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