- Huaxin to pay $215 million for plants, grinding stations
- Agreement follows sale of listed Chinese company Shuangma
LafargeHolcim Ltd., the world’s largest cement maker, agreed to sell some plants to Huaxin Cement Co. for 208 million Swiss francs ($215 million), the company’s second asset sale in China this week as Chief Executive Officer Eric Olsen cuts debt and tries to boost profitability.
The transaction with Huaxin includes most of the non-listed Chinese cement assets held by LafargeHolcim’s Lafarge China Cement Ltd. unit, the Jona, Switzerland-based company said in a statement Wednesday. Lafarge on Monday also agreed to sell a 56 percent stake in publicly traded Sichuan Shuangma Cement Co. to Tianjin Circle Enterprise for 507 million Swiss francs.
More than a year after the cement maker was forged from France’s Lafarge and Switzerland’s Holcim, Olsen is trying to deliver on profitability that was the underlying rationale for the merger after a global recession curbed demand for building materials. Delays in asset disposals and high-profile executive departures have eroded investor confidence at a time when competitors such as HeidelbergCement AG are benefiting from improved demand in North America and Europe.
Olsen’s target is to sell as much as $3.6 billion in assets this year. The announced sales this week, together with an earlier sale of assets in India to soap maker Nirma for $1.4 billion and cement assets in Korea for $547 million, means the CEO has agreed to divest more than $2.6 billion in assets since the start of the year.
The sale to Huaxin of the 13 cement plans and four grinding stations will allow LafargeHolcim to cut net debt by 376 million francs, according to the statement. The Swiss company, which reports second-quarter earnings on Friday, owns about 42 percent of Huaxin.
Shares in LafargeHolcim fell 0.5 percent to 43.88 francs at 3:05 p.m. in Zurich. They have tumbled 39 percent since they began trading on Zurich’s SIX Swiss Exchange on July 14, 2015, giving the company a market capitalization of 26.6 billion francs.