Research Update: LafargeHolcim 'BBB/A-2' Ratings Affirmed On Sustained Deleveraging And Ratings Headroom; Outlook Stable

We forecast that the credit metrics of Switzerland-headquartered building materials manufacturer LafargeHolcim Ltd. will remain resilient in 2020-2021, notwithstanding our forecast of a low-double-digit decline in like-for like revenues in 2020 due to the global recession resulting from the coronavirus pandemic. Thanks to LafargeHolcim's strong operating performance in 2019, the company already has reasonable rating headroom, with S&P Global Ratings-adjusted funds from operations (FFO) to debt of more than 36% in 2019, compared to the 30% that we view as commensurate with the ratings. We anticipate that this headroom will assist LafargeHolcim in maintaining its credit quality in 2020, with further support from the net proceeds from the disposal of Holcim Philippines. As such, we forecast adjusted FFO to debt

...- We forecast that the credit metrics of Switzerland-headquartered building materials manufacturer LafargeHolcim Ltd. will remain resilient in 2020-2021, notwithstanding our forecast of a low-double-digit decline in like-for like revenues in 2020 due to the global recession resulting from the coronavirus pandemic. - Thanks to LafargeHolcim's strong operating performance in 2019, the company already has reasonable rating headroom, with S&P Global Ratings-adjusted funds from operations (FFO) to debt of more than 36% in 2019, compared to the 30% that we view as commensurate with the ratings. - We anticipate that this headroom will assist LafargeHolcim in maintaining its credit quality in 2020, with further support from the net proceeds from the disposal of Holcim Philippines. As such, we forecast adjusted FFO to debt of about 30% at year-end 2020 and 35%-40% in 2021. - We are therefore affirming our '###/A-2' long- and short-term issuer credit ratings on LafargeHolcim. - The stable outlook...

Research Update