LafargeHolcim Ltd. · Reconciliation Related Criteria APRIL 11, 2018 1. ... LafargeHolcim is the...

LafargeHolcim Ltd.

Primary Credit Analyst:

Renato Panichi, Milan (39) 02-72111-215; [email protected]

Secondary Contact:

David Matthews, London (44) 20-7176-3611; [email protected]

Table Of Contents

Rationale

Outlook

Our Base-Case Scenario

Company Description

Business Risk

Financial Risk

Liquidity

Covenant Analysis

Other Credit Considerations

Issue Ratings--Subordination Risk Analysis

Ratings Score Snapshot

Reconciliation

Related Criteria

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 11, 2018 1

LafargeHolcim Ltd.

Business Risk: STRONG

Vulnerable Excellent

Financial Risk: SIGNIFICANT

Highly leveraged Minimal

bbb bbb bbb

Anchor Modifiers Group/Gov't

CORPORATE CREDIT RATING

BBB/Negative/A-2

Rationale

Business Risk: Strong Financial Risk: Significant

• Strong competitive positions in virtually all key

markets, with a few exceptions.

• Extensive geographic diversification.

• Cost-efficient operations.

• The heavy building materials' industry is cyclical,

seasonal, and highly capital- and energy-intensive.

• Some operations in countries with a very

fragmented offer, with limited pricing flexibility.

• Superior access to global debt markets.

• New top management's disciplined approach to

value creation.

• Ability to generate operating cash flow consistently

over the business cycle.

• Poor working capital trend in 2016-2017 in some

key countries

• Strong liquidity.


Outlook: Negative

The negative outlook on global producer of heavy building materials, LafargeHolcim Ltd., reflects S&P Global

Ratings' view that the key credit metric, funds from operations (FFO) to debt, although expected to improve, may

not reach a level comfortably above 22% in 2018, due to persistent weak operating cash flow generation, while at

the same time the group may maintain investments and shareholder remuneration.

Downside scenario

We could lower the rating if FFO to debt does not significantly improve in 2018 and instead is below 22%. This

would most likely happen if LafargeHolcim were to post continued weak metrics in some of its key countries in

Asia and Africa, or if its operating performance were to deteriorate suddenly in those regions currently supporting

the group's profitability, such as the U.S. and India, while the group maintained its shareholder remuneration

policy.

Upside scenario

We would revise the outlook to stable if LafargeHolcim's operating performance in 2018 were stronger than we

expect, leading to an FFO-to-debt ratio comfortably above 22%. This would most likely happen if some regions

such as Asia and Africa were to perform better than in our base-case scenario, if the group were to further cut

costs, and if it were able to successfully reverse the negative working capital path we have observed in 2016-2017.

A moderation of the group's shareholder remuneration in next few years would also support a revision of the

outlook to stable, if it were to result in FFO to debt comfortably above 22%.

Our Base-Case Scenario


LafargeHolcim Ltd.

Assumptions Key Metrics

• Modest volume growth of 1%-3% in 2018 and 2019.

Steady performance in key regions, such as North

America where we expect GDP growth of 2.8% in

2018 and 2.2% in 2019, and India, where we expect

GDP will advance by 7.6% in 2018 and 7.7% in

2019. Performance in some countries in North Africa

and South-East Asia will remain tough, reflecting

overcapacity, a weak economy, or cost inflation.

• Revenues increasing by 2%-5% annually in 2018 and

2019, on a like-for-like basis.

• Our adjusted EBITDA increasing by around 5%-8%

annually for 2018 and 2019, on a like-for-like basis.

• Ongoing working capital outflow in 2018 and 2019,

although progressively lower than in 2017.

• Capital expenditures (capex) of below Swiss franc

(CHF)2 billion in both 2018 and 2019.

• Disposal of about CHF2 billion of assets by 2019,

whose proceeds we anticipate would be used to

both reduce debt and finance acquisitions.

• Stable dividend payout compared with 2017, and no

share buybacks.

2017 2018e 2019e

EBITDA margin* (%) 22.3 22.5-23.5 23.5-24.5

FFO to debt*(%) 22.4 23-25 25-28

Debt to EBITDA* (x) 3.0 2.8-3.0 2.4-2.7

e--Estimate.*Including S&P Global Ratings'

adjustments. FFO--Funds from operations.

Company Description

LafargeHolcim is among the world's largest producers of heavy building materials, including cement (271 cement

plants and grinding plants with capacity of 318.4 million tonnes at end-2017); aggregates (600 plants at end-2017); and

ready-mix and other construction materials (1,500 plants at end-2017). The group has extensive geographic and asset

diversification, with more than 2,300 production sites in about 80 countries, and operates with a high level of vertical

integration. In 2017, the company generated CHF26.1 billion in total revenue, resulting in recurring EBITDA of CHF6

billion and reported total debt of CHF18.6 billion. Revenue was fairly evenly split by geography (see chart).


LafargeHolcim Ltd.

Chart

Based on 2017 data, cement accounted for about 60% of sales with a recurring EBITDA margin of 28%, ready-mix

concrete for about 18% of sales with a recurring EBITDA margin of 3%, aggregates for about 14% of sales with a

recurring EBITDA margin of 19%, and solutions and products for about 7% of sales with a recurring EBITDA margin of

13%.

LafargeHolcim products are used in various projects and applications, including infrastructure projects, such as

transport, roads, energy, and sports and cultural facilities, as well as in the mining industry; and building projects

comprising individual housing, collective housing, office buildings, industrial and commercial buildings, and

institutional buildings.

The company is the result of the merger by incorporation in July 2015 of France-based Lafarge S.A. into

Switzerland-based Holcim Ltd., which was renamed LafargeHolcim Ltd. Following the completion of a squeeze-out in

November 2015, Lafarge S.A. was delisted. LafargeHolcim Ltd. is headquartered in Jona, Switzerland. Two and a half

years into the merger, at the end of 2017, the company assessed an impairment of CHF3.8 billion relating to goodwill

and revaluation of assets, following a detailed review of the group's portfolio under the new top management.

Business Risk: Strong

Global diversified operations, with key positions in both developed and emerging countries

LafargeHolcim is the largest cement producer in the world, with 210 million tons of cement sales and generating

CHF26.1 billion of total revenues in 2017. It has an unrivalled asset portfolio in terms of size and geographic diversity;

a strong competitive position in virtually all its key markets, with a few exceptions, for instance, China; and

cost-efficient operations. Similarly, we believe that LafargeHolcim's portfolio of about 80 countries, with about half of

sales coming from developing economies, helps reduce the seasonality and cyclicality that characterizes the building


LafargeHolcim Ltd.

materials industry, and allows for better capacity utilization.

However, our assessment also reflects some key risks, such as the high capital and energy intensity of the heavy

building materials industry, and LafargeHolcim's operation in a competitive and fragmented industry with limited

pricing flexibility. In addition, LafargeHolcim's operations in emerging markets expose the group to potential monetary

and political risks and heightened economic volatility.

We view LafargeHolcim's high degree of vertical integration as a key asset, given the scarcity of well-located quarries,

and because the demand for aggregates depends mainly on public sector spending, which may prove countercyclical

to private-sector construction. The group's scale and extensive production and distribution network, and track record

of effective cost management contribute to support robust operating margins.

LafargeHolcim's 2017 operating performance was broadly in line with our expectations, and we anticipate that

profitability will improve moderately in 2018 and 2019 on a like-for-like basis. The group's S&P Global

Ratings-adjusted 2017 EBITDA margin of about 22% is average for the cement manufacturing sector through the

business cycle. Currently, positive momentum in the U.S., Europe, and India is offsetting weak trends in some parts of

South-East Asia and Africa. We believe that the EBITDA margin will show rather limited progress in 2018-2019

because cost- efficiency measures and somewhat increasing operating leverage will likely offset moderate cost

inflation in most countries.

At the same time, we believe that LafargeHolcim's operating cash flow will likely remain subdued in 2018. Based on

the 2017 reported data, free operating cash flow represented a limited 28% of recurring EBITDA, and we expect this

ratio will remain below 30% in 2018. This mainly reflects our view that working capital will continue draining cash this

year, although less than in 2017. In this respect, we view as positive top management's commitment to improving the

cash conversion cycle and focus on day-sales outstanding in a few countries where they worsened significantly in

2017.

Our base-case operating scenario:

• For 2018-2020, we expect overall moderate growth of construction activity in most regions, supported by the U.S.,

Europe, and some emerging markets, as well as some modest recovery in cement prices across Europe and

emerging markets. At the same time, performance in some countries in North Africa and South-East Asia will

remain tough, reflecting overcapacity, a weak economy, or cost inflation.

• We expect sales growth in the 2%-5% range for full-year 2018 and 2019. We anticipate a better volume trend in

2018 compared with 2017, particularly in India, where we expect infrastructure development to gain momentum.

• We forecast modest progress in the EBITDA margin for 2018 and 2019. This is because we believe that cost

inflation, including energy costs, should largely offset any improvement in operating leverage. The 2017 S&P Global

Ratings'-adjusted EBITDA margin for the company improved to 22.3% from 21.1% in 2016, mainly reflecting the

benefits of operational synergies and positive pricing developments.

• We believe that LafargeHolcim's performance in 2018 will continue to differ across regions, as it did in past few

years. The group's operations in emerging markets heighten economic volatility, but we expect comparatively better

prospects in some emerging markets in 2018 than in 2017, particularly Asia-Pacific.


LafargeHolcim Ltd.

Peer comparison

We compare LafargeHolcim with both companies that operate largely in the cement business, such as

HeidelbergCement AG, and companies that operate in a different building material subsector, including building

materials distribution. LafargeHolcim displays higher EBITDA margin than peers, which reflects the company's

presence in emerging markets, where cement margins are higher, and the capital-intensive nature of the cement

business versus building materials distributors. At the same time, return on capital is lower than peers'.

LafargeHolcim's leverage metrics in 2017 were worse than most peers, though we expect them to progressively

recover.

Table 1

LafargeHolcim Ltd. -- Peer Comparison

Industry Sector: Building Materials & Products

LafargeHolcim Ltd. CRH plc

Compagnie de

Saint-Gobain

HeidelbergCement

AG

Wuerth GmbH &

Co. KG Adolf

BBB/Negative/A-2 BBB+/Negative/A-2 BBB/Stable/A-2 BBB-/Stable/A-3 A/Stable/A-1

--Fiscal year ended Dec. 31, 2017--

--Fiscal year ended

Dec. 31, 2016--

(Mil. CHF)

Revenues 26,129.0 29,511.4 47,754.1 20,204.0 12,622.9

EBITDA 5,831.0 4,192.3 5,282.8 3,926.6 1,273.5

Funds from operations

(FFO)

3,982.9 3,335.3 4,115.2 2,998.4 1,005.7

Net income from cont.

oper.

(1,675) 2,092.2 1,832.5 1,133.3 484.0

Cash flow from

operations

3,325.9 3,032.2 3,943.2 2,665.9 1,135.2

Capital expenditures 1,848.0 1,221.6 2,015.0 1,209.4 512.0

Free operating cash

flow

1,477.9 1,810.6 1,928.2 1,456.6 623.1

Discretionary cash

flow

28.9 1,252.4 1,085.7 837.8 516.7

Cash and short-term

investments

4,217.0 2,474.9 3,842.8 2,479.4 899.9

Debt 17,746.1 9,654.2 12,868.4 13,361.2 2,161.2

Equity 30,967.8 17,525.4 22,062.1 18,800.0 4,620.1

Adjusted ratios

EBITDA margin (%) 22.3 14.3 11.1 19.5 10.1

Return on capital (%) 5.6 9.0 9.1 7.2 11.2

EBITDA interest

coverage (x)

6.6 8.3 8.4 7.3 9.1

FFO cash int. cov. (X) 5.2 10.4 13.3 5.5 30.8

Debt/EBITDA (x) 3.0 2.3 2.4 3.4 1.7

FFO/debt (%) 22.4 34.7 32.2 22.5 46.5

Cash flow from

operations/debt (%)

18.7 31.6 30.9 20.0 52.5

Free operating cash

flow/debt (%)

8.3 18.9 15.2 11.0 28.8


LafargeHolcim Ltd.

Table 1

LafargeHolcim Ltd. -- Peer Comparison (cont.)


LafargeHolcim Ltd. CRH plc

Compagnie de

Saint-Gobain

HeidelbergCement

AG

Wuerth GmbH &

Co. KG Adolf

Discretionary cash

flow/debt (%)

0.2 13.1 8.6 6.3 23.8

Financial Risk: Significant

Willingness to protect credit metrics is a key support to the ratings

The willingness of LafargeHolcim's new top management to protect credit metrics through measures such as reduced

capital spending, moderation in shareholder remuneration, and asset disposals is a key support for the ratings. In our

view, LafargeHolcim's new strategic priorities and financial discipline announced in March 2018 by the new CEO may

support a swift recovery of our credit metrics by 2019. Additionally, we will continue monitoring the company's

progress in improving its operating cash flow generation over 2018, with particular reference to working capital, which

was disappointing in 2017.

On March 2, 2018, LafargeHolcim's new top management updated the company's business and financial targets for the

period 2018-2022, including like-for-like net sales growth of 3%-5% and at least a 5% increase of recurring EBITDA at

constant foreign exchange rates. The company's strategy has shifted to improving revenues and profits, with bolt-on

acquisitions and selected investments in all its four business segments, which we understand it plans to fund through

asset disposals and cash flow generation. This compares with the previous strategy that focused more on the

distribution of excess free cash flow to shareholders. In addition, the company has proposed a disciplined approach to

value creation, with a commitment to keeping the investment-grade rating, by keeping capital spending at less than

CHF2 billion per year. LafargeHolcim also decided to discontinue its share buyback program, with CHF581 million

completed so far. Furthermore, the company stated that it would complete a review of its asset portfolio in 2018 to

identify CHF2 billion of divestments, part of which we understand would be used to reduce its financial debt.

LafargeHolcim's leverage metrics are partly exposed to currency depreciation in emerging countries, as most of its

financial debt is in hard currencies. For 2017, the currency impact on debt was about CHF378 million mainly due to

euro appreciation. Conversely, debt denomination in hard currencies and the financial liability management the group

pursued during the year allowed LafargeHolcim to limit interest expenses in 2017 and to keep average debt maturity at

6.3 years, which we view as credit positive.

The cement industry's capital intensity is a structural constraint on financial risk, because it translates into hefty capex

and large seasonal working capital swings, with a risk of build-up in working capital depending on industry conditions.

However, LafargeHolcim has a track record of resilient free operating cash flow generation over the business cycle.

Furthermore, heavy materials producers typically see working capital contraction when revenues decline organically.

In our base-case cash flow and capital structure scenario, we assume:

• Ongoing working capital outflow in 2018 and 2019, although progressively lower than in 2017.


LafargeHolcim Ltd.

• Capex below CHF2 billion annually in 2018 and 2019.

• Disposal of about CHF2 billion of assets in 2019, with the proceeds used to fund both debt reduction and

acquisitions.

• Stable dividend payments compared with 2017, and no share buy-backs

• A progressive recovery of the group leverage metrics in 2018-2019. We expect FFO to debt of 23%-25% in 2018

and 25%-28% in 2019, compared with 22.4% in 2017.

• We also expect: debt to EBITDA of 2.8x-3.0x in 2018 and 2.4x-2.7x in 2019, compared with 3.0x in 2017;

discretionary cash flow to debt to progressively increase to mid-single digits over 2018-2019, compared with 0.2%

in 2017.

Our adjusted debt figure is higher than the company's reported debt figure, because we deduct cash that we believe is

not immediately available for debt repayment, mainly cash held by minority shareholders in India.

Furthermore, we add about CHF1.3 billion related to operating-lease commitments, CHF0.6 billion related to

asset-retirement obligations, and CHF1.1 billion related to pension liabilities. However, we exclude about CHF207

million of purchase price allocation on Lafarge's debt.

We do not adjust our debt number for the provisions on litigation, as we understand that disbursement is currently

uncertain. At the end of 2017, the reported litigation provisions totaled CHF633 million; as such, in case of adverse

outcomes, a significant disbursement would result in higher debt and thus possibly put pressure on the ratings.

We continue to monitor the potential implications on the group's financials of the French investigation of the group's

Syrian plant, as regards its operations during the civil war. We understand that there is so far no evidence that the

investigation's findings will likely materially hurt the group financially. However, we believe that a significant

disbursement, in case of an adverse outcome, would result in higher debt and thus possibly further put pressure on the

ratings.

Financial summaryTable 2

LafargeHolcim Ltd. -- Financial Summary


--Fiscal year ended Dec. 31--

(Mil. CHF)2017 2016 2015 2014 2013

Revenues 26,129.0 26,904.0 23,584.0 19,110.0 19,719.0

EBITDA 5,831.0 5,678.0 3,992.5 3,930.5 4,159.0

Funds from operations (FFO) 3,982.9 3,816.5 2,324.0 2,854.4 2,801.1

Net income from continuing operations (1,675) 1,748.0 (1,573) 1,287.0 1,272.0

Cash flow from operations 3,325.9 3,583.5 2,598.0 2,529.4 2,845.1

Capital expenditures 1,848.0 2,141.0 2,509.0 2,199.0 2,430.0

Free operating cash flow 1,477.9 1,442.5 89.0 330.4 415.1

Discretionary cash flow 28.9 284.5 (207.0) (390.6) (160.9)

Cash and short-term investments 4,217.0 4,922.0 4,393.0 2,149.0 2,244.0


LafargeHolcim Ltd.

Table 2

LafargeHolcim Ltd. -- Financial Summary (cont.)


--Fiscal year ended Dec. 31--

(Mil. CHF)2017 2016 2015 2014 2013

Debt 17,746.1 17,933.7 20,497.9 11,593.2 11,267.6

Equity 30,967.8 34,630.4 35,619.0 20,112.7 18,677.7

Adjusted ratios

EBITDA margin (%) 22.3 21.1 16.9 20.6 21.1

Return on capital (%) 5.6 5.6 (0.2) 8.6 8.8

EBITDA interest coverage (x) 6.6 5.5 4.7 6.4 6.1

FFO cash int. cov. (x) 5.2 4.0 2.8 5.3 5.0

Debt/EBITDA (x) 3.0 3.2 5.1 2.9 2.7

FFO/debt (%) 22.4 21.3 11.3 24.6 24.9

Cash flow from operations/debt (%) 18.7 20.0 12.7 21.8 25.2

Free operating cash flow/debt (%) 8.3 8.0 0.4 2.9 3.7

Discretionary cash flow/debt (%) 0.2 1.6 (1.0) (3.4) (1.4)

Liquidity: Strong

We view LafargeHolcim's liquidity as strong. The ratio of liquidity sources to uses exceeds 1.5x over the 12 months

started Jan. 1, 2018, underpinned by sizable cash balances and committed undrawn lines, solid relationship with

banks, and prudent risk management.

Principal Liquidity Sources Principal Liquidity Uses

• An available cash balance exceeding CHF4.2 billion

on Dec. 31, 2017;

• Committed, undrawn lines totaling about CHF6.2

billion, maturing beyond one year;

• Our forecast of unadjusted FFO of about CHF4.3

billion-CHF4.5 billion in 2018.

• Short-term debt maturities of about CHF3.8 billion;

• Capex of about CHF2 billion;

• Working capital outflow of about CHF0.5 billion-0.7

billion;

• Seasonal working capital requirement of about

CHF0.9 billion; and

• Dividend payments of about CHF1.5 billion

including minority shareholders.

Debt maturities


LafargeHolcim Ltd.

Table 3

LafargeHolcim Debt Maturities

On Dec. 31, 2017 (mil. CHF)

Current portion of long-term debt 3,843

Debt due in 2nd year 2,213




Debt due after year 5 7,829

Total debt 18,622

Covenant Analysis

To our knowledge, outstanding corporate debt and committed bank lines are currently free of rating triggers, financial

maintenance covenants, and material adverse change clauses.

Other Credit Considerations

Our assessment of management and governance as strong, which is neutral for the ratings on LafargeHolcim, reflects

new top management's cautious balancing of fixed-income and equity investors' interests, together with a disciplined

approach to value creation and a solid track record of achieving cost efficiencies.

We align the ratings on Lafarge S.A. and its subsidiary Lafarge North America with those on LafargeHolcim Ltd. This

reflects our view that Lafarge S.A. and Lafarge North America are core subsidiaries of LafargeHolcim. Lafarge S.A. is a

sub-holding company that owns operating subsidiaries representing nearly one-half of group assets and revenues.

We also align the ratings on the group financial vehicles (see list in the "Ratings Details" section) with those on

LafargeHolcim Ltd. This reflects our view that those vehicles are core subsidiaries of the LafargeHolcim group, as they

are legal entities created for the purpose of raising debt on the group's behalf.

Issue Ratings--Subordination Risk Analysis

Capital structure

The group's capital structure consists of several debt instruments: about 81% corporate bonds and commercial paper

issued in the capital markets, and the remaining 19% bank loans, based on accounts as of Dec. 31, 2017. The parent

LafargeHolcim and financial vehicles issued about 80% of the group's debt, while operating subsidiaries issued the

remaining 20%. The average remaining debt term is 6.3 years.

All notes are senior unsecured. Liquidity is supported by cash and cash equivalent instruments of CHF4.2 billion and

unused committed credit lines of CHF6.2 billion as of Dec. 31, 2017.


LafargeHolcim Ltd.

Analytical conclusions

With no material priority obligations ranking ahead of the senior unsecured obligations, we rate the group's senior

unsecured debt 'BBB' and 'A-2', the same as the issuer credit ratings.

Ratings Score Snapshot

Corporate Credit Rating

BBB/Negative/A-2

Business risk: Strong

• Country risk: Intermediate

• Industry risk: Intermediate

• Competitive position: Strong

Financial risk: Significant

• Cash flow/Leverage: Significant

Anchor: bbb

Modifiers

• Diversification/Portfolio effect: Neutral (no impact)

• Capital structure: Neutral (no impact)

• Financial policy: Neutral (no impact)

• Liquidity: Strong (no impact)

• Management and governance: Strong (no impact)

• Comparable rating analysis: Neutral (no impact)

Reconciliation

Table 4

Reconciliation Of LafargeHolcim Ltd. Reported Amounts With S&P Global Ratings' Adjusted Amounts (Mil.CHF)

--Fiscal year ended Dec. 31, 2017--

LafargeHolcim Ltd. reported amounts

Debt

Shareholders'

equity EBITDA

Operating

income

Interest

expense EBITDA

Cash flow

from

operations

Capital

expenditures

Reported 18,622.0 27,788.0 5,529.0 (478.0) 739.0 5,529.0 3,040.0 1,869.0

S&P Global Ratings' adjustments

Interest expense

(reported)

-- -- -- -- -- (739.0) -- --

Interest income

(reported)

-- -- -- -- -- 92.0 -- --


LafargeHolcim Ltd.

Table 4

Reconciliation Of LafargeHolcim Ltd. Reported Amounts With S&P Global Ratings' Adjusted Amounts (Mil.CHF) (cont.)

Current tax expense

(reported)

-- -- -- -- -- (1,042.0) -- --

Operating leases 1,265.9 -- 296.0 77.5 77.5 218.5 218.5 --

Postretirement benefit

obligations/deferred

compensation

1,076.6 2.8 (27.0) (27.0) 52.0 (90.9) 27.1 --

Surplus cash (3,659.0) -- -- -- -- -- -- --

Capitalized interest -- -- -- -- 21.0 (21.0) (21.0) (21.0)

Share-based

compensation expense

-- -- 16.0 -- -- 16.0 -- --

Dividends received from

equity investments

-- -- 303.0 -- -- 303.0 -- --

Asset retirement

obligations

636.6 -- -- -- -- 3.4 61.4 --

Non-operating income

(expense)

-- -- -- 25.0 -- -- -- --

Non-controlling

Interest/Minority

interest

-- 3,188.0 -- -- -- -- -- --

Debt - Guarantees 11.0 -- -- -- -- -- -- --

Debt - Other (207.0) -- -- -- -- -- -- --

Equity - Other -- (11.0) -- -- -- -- -- --

EBITDA - Income

(expense) of

unconsolidated

companies

-- -- (286.0) (286.0) -- (286.0) -- --

D&A - Impairment

charges/(reversals)

-- -- -- 3,708.0 -- -- -- --

Total adjustments (875.9) 3,179.8 302.0 3,497.5 150.5 (1,546.1) 285.9 (21.0)

S&P Global Ratings' adjusted amounts

Debt Equity EBITDA EBIT

Interest

expense

Funds from

operations

Cash flow

from

operations

Capital

expenditures

Adjusted 17,746.1 30,967.8 5,831.0 3,019.5 889.5 3,982.9 3,325.9 1,848.0

Related Criteria

• Criteria - Corporates - General: Reflecting Subordination Risk In Corporate Issue Ratings, Sept. 21, 2017

• General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017

• Criteria - Corporates - General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers,

Dec. 16, 2014

• Criteria - Corporates - Industrials: Key Credit Factors For The Building Materials Industry, Dec. 19, 2013

• General Criteria: Group Rating Methodology, Nov. 19, 2013

• Criteria - Corporates - General: Corporate Methodology: Ratios And Adjustments, Nov. 19, 2013


LafargeHolcim Ltd.

• Criteria - Corporates - General: Corporate Methodology, Nov. 19, 2013

• General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013

• General Criteria: Methodology: Industry Risk, Nov. 19, 2013

• General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities And Insurers,

Nov. 13, 2012

• General Criteria: Use Of CreditWatch And Outlooks, Sept. 14, 2009

Business And Financial Risk Matrix

Business Risk Profile

Financial Risk Profile

Minimal Modest Intermediate Significant Aggressive Highly leveraged

Excellent aaa/aa+ aa a+/a a- bbb bbb-/bb+

Strong aa/aa- a+/a a-/bbb+ bbb bb+ bb

Satisfactory a/a- bbb+ bbb/bbb- bbb-/bb+ bb b+

Fair bbb/bbb- bbb- bb+ bb bb- b

Weak bb+ bb+ bb bb- b+ b/b-

Vulnerable bb- bb- bb-/b+ b+ b b-

Ratings Detail (As Of April 11, 2018)

LafargeHolcim Ltd.

Corporate Credit Rating BBB/Negative/A-2

Senior Unsecured BBB

Corporate Credit Ratings History

03-Nov-2017 BBB/Negative/A-2

22-Jan-2009 BBB/Stable/A-2

22-Dec-2008 BBB+/Negative/A-2

Related Entities

Holcim Capital (Corporation) Ltd.

Issuer Credit Rating BBB/Negative/A-2

Holcim European Finance Ltd.


Holcim Finance (Australia) Pty Ltd


Holcim Finance (Belgium) S.A.


Holcim Finance (Canada) Inc.


Holcim Finance (Luxembourg) S.A.


Holcim GB Finance Ltd.



LafargeHolcim Ltd.

Ratings Detail (As Of April 11, 2018) (cont.)

Holcim Overseas Finance Ltd.


Holcim US Finance S.a r.l. & Cie S.C.S.


Holcim (U.S.) Inc.

Issuer Credit Rating BBB/Negative/--

LafargeHolcim Albion Finance Ltd.


LafargeHolcim Continental Finance Ltd.


LafargeHolcim Helvetia Finance Ltd.


LafargeHolcim International Finance Ltd.


LafargeHolcim Sterling Finance (Netherlands) B.V.


Lafarge North America Inc.


Lafarge S.A.


Commercial Paper

Local Currency A-2

Senior Unsecured BBB

Short-Term Debt A-2

*Unless otherwise noted, all ratings in this report are global scale ratings. S&P Global Ratings’ credit ratings on the global scale are comparable

across countries. S&P Global Ratings’ credit ratings on a national scale are relative to obligors or obligations within that specific country. Issue and

debt ratings could include debt guaranteed by another entity, and rated debt that an entity guarantees.

Additional Contact:

Industrial Ratings Europe; [email protected]


LafargeHolcim Ltd.


STANDARD & POOR’S, S&P and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminateits opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.comand www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additionalinformation about our ratings fees is available at www.standardandpoors.com/usratingsfees.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result,certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain theconfidentiality of certain non-public information received in connection with each analytical process.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&Preserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of theassignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact.S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make anyinvestment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. TheContent should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when makinginvestment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information fromsources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives.

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may bemodified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission ofStandard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-partyproviders, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness oravailability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the useof the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESSOR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOMFROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANYSOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive,special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused bynegligence) in connection with any use of the Content even if advised of the possibility of such damages.

Copyright © 2018 by Standard & Poor’s Financial Services LLC. All rights reserved.

LafargeHolcim Ltd. · Reconciliation Related Criteria APRIL 11, 2018 1. ... LafargeHolcim is the...

Documents

Transcript of LafargeHolcim Ltd. · Reconciliation Related Criteria APRIL 11, 2018 1. ... LafargeHolcim is the...