The Warsaw Voice » Business » Monthly - November 3, 2015
Innovative Poland
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Building Better Cities
Federico Tonetti, Chief Executive Officer at LafargeHolcim Poland, talks to the Voice.

France’s Lafarge, the world’s second biggest producer of cement, merged with Swiss-based Holcim, the third biggest cement producer, in April to form global giant LafargeHolcim. What was the aim of the merger and how was it carried out?

Even before the merger, both Lafarge and Holcim were global players in the building materials industry. This merger enhances our ability to develop competitive solutions in our R&D centers, gain efficiency by sharing our purchasing as well as our support functions and leverage on a global scale. Both companies have their competitive advantages in terms of technology, geographical reach and expertise.

The merger was carried out after thorough preparations that started long before July 15, 2015. It requires integration on multiple levels and in diverse areas of business: production, logistics, financial performance, marketing and communication. There are hundreds of processes progressing globally now as we speak. All these synergy initiatives were developed to improve and accelerate our performance starting from the second half of 2015. We will continue to pursue full integration in many ways aligned with our strategy, vision and performance ambitions. Teaming up will allow us to have a potential edge over the competition. It is up to us to turn it into a sustainable competitive advantage and superior returns.

The two companies’ combined annual sales total 32 billion euros. What level of sales is the company shooting for after the merger?

We are planning to achieve a positive synergy effect in our financial performance, including sales. For the time being, we are focused and committed to delivering global synergies of 1.4 billion euros ($1.54 billion) within three years. I cannot reveal our expected financial results for next year.

The geographical reach of the two companies is a good fit. How do you aim to take advantage of this?

A broader geographic reach and greater diversification are unequivocally a great advantage for the LafargeHolcim Group. After the merger, we are operating a balanced portfolio of 90 countries with strong working relations with customers and stakeholders in each geographical area including emerging markets. This geographic diversity reflects our global and well-balanced footprint, which aims to provide our customers with the best solutions to local needs.

What kind of products are a priority for the company? How will you optimize your portfolio? Are you planning to introduce new services for customers?

By 2050, seventy percent of the world’s population will live in cities, twice as many as in 1970. Therefore our mission—Building Better Cities—is still up to date. Whether large, medium or small, whether in mature or emerging countries, cities are central to the challenges facing the planet. To improve urban lifestyles, we contribute—with our innovative and quality materials—to the construction of more compact, more durable, more beautiful, and better connected cities around the world. Our priorities regarding products have not changed. The LafargeHolcim Group will still focus on providing best-in-class quality building materials: cement, concrete and aggregates. However, starting from this year our strategy goes beyond products alone. We have introduced and are developing a number of additional services. We want to deliver complex solutions and advisory services. We want to accompany our clients at every stage of their business processes. We want to become a partner for our customers, not just a product producer and provider.

Sustainable development has been a priority for both companies. Lafarge has publicly said that one of its goals is people-friendly cities. Will this focus on sustainability be maintained?

Sustainable development has always been Lafarge’s priority and it remains the focus of the LafargeHolcim Group. We perceive sustainable development as making a positive contribution to society and to nature thanks to buildings that use less energy and are cheaper to maintain. We have implemented several initiatives to meet these objectives and we are making progress every day. Our products are certified with world-class environmental certifications such as LEED and BREEAM.