LafargeHolcim Ltd.

The stable outlook reflects our forecast that LafargeHolcim's adjusted funds from operations (FFO)-to-debt ratio will remain comfortably above 22% in the coming years, benefiting from demand for heavy building materials, notably in Europe and North America. We also factor in our understanding that LafargeHolcim will maintain a conservative financial policy, with a commitment to deleveraging and a balanced approach to investments, acquisitions, and dividends. We could lower the rating if LafargeHolcim deviated from its conservative financial policy, which we view as unlikely; for example, by pursuing larger acquisitions or dividends than we anticipate, or by resuming the share buyback program. A negative rating action could also result from a deterioration in operating performance without near-term recovery prospects, such as a

...Prudent financial policy and consistent efforts to deleverage show LafargeHolcim's commitment to the rating. LafargeHolcim is demonstrating a more conservative financial policy, through measures such as the cancellation in early March 2018 of its share buyback program; the introduction of a scrip dividend allowing greater flexibility in shareholder remuneration; the use of proceeds from the sale of participations in Asia for debt reduction; and the issuance of hybrid capital instruments. We understand that while the company may pursue targeted bolt-on acquisitions, these would be limited and financed by internally generated cash flows. If LafargeHolcim were to pursue more meaningful acquisitions, we assume that these would be financed prudently. We anticipate that LafargeHolcim's strategy will be focused on complementary growth, while maintaining financial discipline. We understand that potential acquisitions would be targeted according to their ability to complement and easily integrate...

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