Swiss cement company LafargeHolcim has sold its 80% stake in its PT Holcim Indonesia arm to Semen Indonesia, valuing Holcim Indonesia at $1.75 billion. The divestment comes as part of the Franco-Swiss group’s drive to boost sales by focusing on fewer markets and cutting costs.
The sale comes eight months after Jens Jenisch, chief executive of LafargeHolcim, outlined a five-year restructuring after the company announced a $4 billion write-off. Around two-thirds of that impairment charge was concentrated in Indonesia, Brazil, Malaysia and the Middle East.
Semen Indonesia, which is 51% owned by the Indonesian government, is understood to have outbid several other buyers including Japan’s Taiheiyo Cement, and HeidelbergCement of Germany, according to people familiar with the situation.
The acquisition will significantly strengthen Semen Indonesia’s domestic footprint and allow the Jakarta-based company to add to its product offering. The deal should also allow it to benefit from lower distribution and raw-material costs. Semen is also planning to apply a waste fuel technology developed by Holcim to generate further cost savings.
Shares in LafargeHolcim
, the world’s largest cement maker, have lagged the Swiss exchange in recent years, and are down 15.3% in 2018. The company was created in 2015 out of a merger between France’s Lafarge and Swiss rival Holcim, but the combined group got off to a rocky start. Eric Olsen, the former chief executive, resigned after the company admitted paying armed guards to keep a factory open in war-torn Syria.
Jenisch, who joined LafargeHolcim from Sika, said in March that the company was targeting annual sales growth of 3% to 5%, recurring EBITDA growth of at least 5% and increasing the return on invested capital by more than 8%. He also said the group would focus on growth markets including Europe, the U.S., Latin America, India and Africa.
However, in October, LafargeHolcim revised its forward guidance on recurring EBITDA growth to between 3 and 5%.
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