Cement giant LafargeHolcim decided to sell off operations in Brazil – Economy

The French-Swiss multinational company LafargeHolcim The Brazilian subsidiary informed earlier this week that it would sell its domestic operations, Estadaw. If concluded, the deal will make a big difference to the sector, as LafargeHolcim is the third largest producer in Country, behind Futurantium e InterventionIn terms of installed capacity, according to 2017 data, the bank Itaú BBA He was hired to make the sale.

According to a source, leaving the company in Brazil might not be easy for two reasons. The first is that the sector is highly concentrated, which could lead to The Administrative Council for Economic Defense (KID) To prevent a deal if it is closed with a major competitor. The second is that small firms, without a competitive hurdle, do not have the financial momentum to acquire.

LafargeHolcim is a global group in the building materials sector, which has nearly 70,000 employees in nearly 70 countries. In Brazil, today there are about 1,400 workers, working in cement, concrete and aggregates, in addition to the administrative region. The group is a world leader and Lafarge and Holcim merged in 2014.

The sale of local operations in LafargeHolcim’s plans was not the global giant’s first step toward reducing its exposure to the Brazilian market. In 2015, the Franco-Swiss group sold assets valued at around $ 350 million to Irish group CRH – which has dramatically reduced its size in Brazil.

At that time, the sales package included three cement plants (Matosinhos and Arcos Jazida, by Lafarge, and Cantagallo, by Holcim), Two grinding stations (Arcos Cidad and Santa Luzia from Lafarge(And ready-made cement industry)Boso Alegre, by Holcim). To close the deal and avoid problems with competition authorities, the giants sold more than $ 7 billion in assets, nearly six years ago.

At the end of last year, the Irish company CRH sold the assets previously owned by LafargeHolcim to National Cement Company (CNC), A partnership between the Italian group Bazy And bra Brenand. The deal was valued at $ 218 million.

The group will be leaving despite the fact that the civilian construction market is experiencing a positive moment in Brazil. to me National Federation of Cement Industry (SNIC)The material production increased by 19% from January to March 2021, to 15.3 million tons, compared to the same period of the previous year. In the pre-pandemic period, production was hampered by a period of torrential rains. The increase in March was 34.6% to 5.5 million tons compared to 2020.

SNIC’s latest report notes that while there is some good news on the horizon – such as infrastructure concessions, which are helping to accelerate cement consumption – there are also negative signals for the country’s economy, such as distributing “leaner” aid to the emergency service. The unemployment rate is very high, above 14%. However, property sales remain strong, driven by the single-digit base rate.

If the exit is confirmed, LafargeHolcim will join the group of multinational companies that have announced plant closures in Brazil this year. In January, Ford said it would end production in the country, after more than 100 years in operation and with 5,000 people expelled. In March, it was Sony’s turn to shut down its factory in Japan Manaus Free Zone48 years later. 300 vacancies are expected to be cut.

Endeavored, LafargeHolcim’s press office said it would not comment on the movement outside of Brazil.