ZURICH (Reuters) - LafargeHolcim (LHN.S) expects a speedy recovery for the construction sector after a difficult second quarter hampered by the coronavirus and its attendant shutdowns, the world’s biggest cement maker said on Thursday.
The Swiss company reported a drop in sales and profit during its first quarter as the global pandemic closed building sites around the world.
Chief Executive Jan Jenisch expects a recovery after restrictions to halt the spread of the virus start to be relaxed in April and May.
“Then we expect a recovery or business back to normal in most of our key markets,” Jenisch told reporters.
“We see it recovers fast. We have seen that in China, we also see that in Switzerland and Germany. We see it (the market) being very resilient in the U.S.”
LafargeHolcim has seen no cancellations of building projects, he said, and in the longer term the construction industry is likely to benefit from stimulus schemes launched to tackle recessions triggered by the pandemic.
“I expect all the projects to resume when the health (situation) is under control. We are positive for the second half of the year, the recovery will come,” Jenisch said.
China, the first country affected by the outbreak, was already back to full production, with the company expecting cement volumes during the second quarter to be close to 2019 levels.
Still, LafargeHolcim - which has already ditched its profit target for the year - said the full impact had not yet materialised.
“The biggest impact from COVID-19 is expected in Q2. The full impact of the crisis on the company’s 2020 results cannot be assessed at this point,” it said.
During the first quarter its sales fell 11.2% to 5.29 billion Swiss francs ($5.42 billion), from 5.96 billion francs a year earlier. The figure slightly beat analysts’ forecasts for 5.25 billion francs in a company-gathered consensus.
Recurring operating profit also fell, down 14.1% to 262 million francs, beating forecasts for 215 million francs.
On a comparable basis, which cuts out the impact of its sales of operations in South-East Asia last year, sales were down 3.3% and recurring operating profit down 2.6%.
Analysts called the results “resilient”, while the company’s stock was flat in early trading.
Geberit (GEBN.S), another Swiss building materials supplier, said the coronavirus pandemic had started to affect “practically all markets” from the second half of March as it reported a decline in first-quarter operating profit on Thursday.
LafargeHolcim tapped the markets this month for 750 million francs by issuing two bonds, and had 8 billion francs in cash and unused credit lines to overcome the downturn.
The company has also pledged to reduce costs by 700 million francs this year, although no job cuts were planned from its 70,000 workforce.
Reporting by John Revill; Editing by Jan Harvey