Lafarge

Lafarge's first-quarter turnover improved by 8.6% to €3557m, having declined by 9.7% a year earlier, and the EBITDA edged ahead by 0.4% to €514m, while the running profit declined by 5.1% to €224m. Underlying net interest costs were 15.9% lower at €185m and there was a pre-tax profit of €9m compared with a €22m pre-tax loss last year, excluding the Cimpor deal, and a net attributable loss of €29m. Net debt at the end of March was 2.4% lower at €14,240m, giving a gearing level of 83.1%, slightly higher than the 81.4% shown a year ago. Capital expenditure was reduced by 31.5% to €248m, but maintenance capital spending was still only €53m compared with €165m three years ago. Capital expenditure for the full year should amount to approximately €1000m. The €750m divestment target for the year remains in place and this figure does not include any major deals.

Cement shipments in the quarter increased by 7.2% to 31.1Mt and turnover from cement improved by 7.6% to €2300m, though the corresponding EBITDA declined by 3.3% to €469m. The aggregates tonnage recovered by 6.4% to 34.7Mt, with the turnover improving by 18.3% to €401m and providing a €7m profit at the EBITDA level. The ready-mixed concrete volume recovered by 4.1% to 7.6Mm³, producing a turnover 8.6% ahead at €635m and an EBITDA of €8m. Lafarge's global gypsum volumes advanced by 4.8% to 176Mm² as turnover improved by 9% to €375m and the EBITDA rose by 25.8% at €39m.

Total European turnover improved by 12.3% to €1239m and the cement turnover recovered by 10.5% to €547m and the cement EBITDA by 47.1% to €100m, with the Eastern European operations still trading at a loss in the winter quarter. Cement shipments improved by 12.5% to 6.3Mt. French cement volumes recovered by 12%, but the price/mix effect was a negative 0.3%. British cement shipments improved by 14% and prices by 2.9%. Spanish volumes were off by 2.9% and prices and mix accounted for a further 3.2% reduction in sales. Greek volumes dropped by 28.7% on top of reductions of 19.5% and 29.6% in the previous two first quarters, with the price/mix effect adding a negative 3.5%. In Poland, strong demand and better weather combined to give a 55.5% rise in cement volumes. Romanian volumes recovered by a modest 4.7% after the 42.3% drop a year ago. The Serbian volumes continued to decline and were off by a further 9.7%. Russian volumes rose by 17.4% and prices by 19%, helped further by positive mix effects.

North American turnover improved by 6.4% to €479m of which cement accounted for €200m, an 8.1% advance and the cement loss at the EBITDA level was 24% higher at €31m. Cement shipments were 5.2% higher in the United States and ahead by 10.5% in Canada, giving a North American volume 6.7% better at 2Mt. Prices were lower in the USA but higher in Canada. In Latin America turnover rose by 44.8% to €252m, helped by last year's acquisitions in Brazil. In cement, turnover advanced by 52.2% to €207m and the EBITDA was 29.3% higher at €53m. Cement deliveries rose by one-third to 2.4Mt. In Brazil, underlying volumes were 0.7% lower because of a technical problem, but rose substantially in actual terms thanks to the Votorantim deal. In Ecuador, volumes rose by 22.6% and turnover by 24.8%.

Africa and the Middle and Near East generated sales that were 1% lower at €930m because of the unrest in Egypt during the quarter. That market now appears to have stabilised. Cement turnover improved by 0.9% to €858m, but the EBITDA was down by 6% to €265m. Cement shipments were 4% higher at 10.3Mt. Volumes were off by 25.7% in Jordan and by 23% in Egypt, but rose by 29.3% in Algeria, by 2.3% in Morocco and by 0.5% in Iraq. In Nigeria, volumes advanced by 15.2% and in Kenya the increase was 8%. Cement prices in southern Nigeria improved by some 3%. South African demand fell back, with cement volumes declining by 11.4%.

In Asia, regional turnover advanced by 7.7% to €657m while the Asian cement turnover was 3.6% higher at €488m, though the corresponding EBITDA fell by 31.1% to €82m because of raised energy costs and weak pricing in several countries. Cement shipments were some 3% up at 10.1Mt. In China, domestic deliveries advanced by 17.7%, but pricing was weak in many areas, which hurt profitability. South Korean volumes improved by 8.5% but profitability suffered because of a sharp drop in prices, which cost Lafarge some €6m in the period. In India, cement volumes were just 0.7% higher and prices softened. Indonesian volumes were ahead by 9.7% and that market is now supplied by the completely rebuilt works. The Philippines, which had been strong a year ago, suffered an 11.9% volume decline and some price pressures as public sector demand softened.

Lafarge is reducing its US exposure by agreeing to sell two integrated cement plants and one grinding centre to Cementos Argos, an important cement producer in Colombia and Central America. The assets acquired have an enterprise value of US$760m (€533m) and generated a turnover of US$240m (€168m) last year. Two integrated cement works, at Harleyville in South Carolina and at Roberta in Alabama, are involved in the deal as is the former integrated works at Atlanta, Georgia, now operated as a grinding centre. These three plants, which have a total grinding capacity approaching 2.5Mta, all came to Lafarge through the acquisition of Blue Circle Industries in 2001. The deal also covers five rail terminals and one marine terminal. The sale will leave Lafarge with 21 cement plants, including grinding units, in North America with a total capacity of some 19Mta.