TALK:  Wolfgang Reitzle, left, chairman of LafargeHolcim, and CEO Eric Olsen. It has to sell the Lafarge side of the India business. Picture: REUTERS/ARND WIEGMANN
TALK: Wolfgang Reitzle, left, chairman of LafargeHolcim, and CEO Eric Olsen. It has to sell the Lafarge side of the India business. Picture: REUTERS/ARND WIEGMANN

ZURICH — Lafargeholcim is attracting strong interest for capacity that it is forced to sell in India following a merger that has created the world’s largest cement maker, CE Eric Olsen said.

Emerging from the combination last year of France’s Lafarge and the Swiss Holcim, the firm based in Jona, Switzerland, now has to divest 11-million tonnes of capacity, or one sixth of the total in a market Mr Olsen described as its "number one country".

"We see a wide range of interest, both financial and strategic," Mr Olsen said. "We expect to get a very attractive price overall."

India offers growth in demand for construction materials not seen in some other emerging markets. Yet LafargeHolcim has ended up having to sell almost double the capacity initially anticipated for antitrust reasons. The additional demands from regulators, which will result in the sale of the entire Lafarge side of the India business, stem from changes in Indian rules on mining.

LafargeHolcim is facing a slowdown in markets from China to Brazil and upheaval within the ranks of top management.

Investors have sent shares down 27% since the start of the year, more than twice the drop in the broader STOXX 600 Construction & Materials index of companies.

The stock rose as much as 4.9% yesterday before paring gains. It traded 3.2% higher to 36.46 Swiss francs in Zurich.

Last week, the company announced the departure of chairman Wolfgang Reitzle, who helped steer the merger and will move to Linde. His exit comes a little more than two months after the arrival of chief financial officer Ron Wirahadiraksa from Royal Philips.

For Mr Olsen, who joined Lafarge in 1999 and became CE in July, LafargeHolcim has "very clear governance" and change at the top "is a normal evolution".

For some analysts includingUte Haibach at J Safra Sarasin, the shuffle may not be straightforward. "The news suggests that governance will be complicated within the company in the short term, with the CEO being in charge only since July 2015," Mrs Haibach wrote in a note last week.

Proceeds from the sale of assets in India will be put towards meeting LafargeHolcim’s target to sell Sf3.5bn ($3.6bn) worth this year, Mr Olsen said.

A key promise to push the merger through was also the delivery of €1.4bn in annual savings within three years, as the company expects its industry-topping size to help overcome a slowdown.

"We are moving forward with this divestment and several others as quickly as possible," Mr Olsen said. "We have plans in place to meet and exceed our synergy commitments," he added.

The CEO’s response to shareholders unhappy with the share price is that LafargeHolcim has "plenty of pockets of market strength" within its portfolio and that the "mid-term commitments we made in December remain absolutely deliverable".

Bloomberg