Lafarge

Lafarge continued to raise cash through disposals while maintaining control of strategic businesses. The sale of 11.2% in Lafarge Malayan Cement through a placing on the Malaysian stock exchange raised €141m. The move reduces the effective equity stake from 62.2% to 51.0%.

Lafarge's first half turnover declined by 3.5% to €7,712m, the EBITDA emerged 2.9% lower at €1,650m while the trading profit was reduced by 5.2% to €1,071m. The net attributable profit, excluding exceptional items, fell by 28.8% to €233m. Net debt at the end of June was 1.5% lower at €15,160m and the gearing came down from 97.0% a year ago to 81.4%. Capital expenditure was reduced by 18.5% to €666m, while spending on acquisitions declined by 22.4% to €52m.

Cement deliveries were 6.6% lower at 65.4m tonnes and the turnover from cement came off by 3.5% lower to €4,963m and the corresponding EBITDA declined by 3.7% to €1,408m.  The turnover from aggregates and concrete was 6.5% lower at €2,321m and the EBITDA declined by 5.6% to €152m. The aggregates tonnage came off by 3.0% to 86.9m tonnes, of which western Europe accounted for a 5.4% reduction to 31.4m tonnes, though the turnover in pure aggregates did increase by 2.8% to €916m and the EBITDA by 12.2% to €110m. Ready-mixed concrete volumes were down by 11.9% to 16.5m m³, of which 6.5m m³ were delivered in western Europe, which represented a reduction in turnover of 8.2% to €1,366m and the EBITDA fell by one third to €46m. In the largest European downstream markets, volumes were lower in France, but recovered in Great Britain. In plasterboard, Lafarge's global volumes improved by 5.5% to 344m m² and the turnover advanced by 4.2% to €725m and the EBITDA by a similar percentage to €76m, with all of the growth coming from developing markets and North American losses widened from €20m to €22m.

European cement deliveries declined by 10.2% to 15.0m tonnes and the turnover was off by 11.1% to €1,280m, with central and eastern Europe recording a 15.9% reduction compared with a 9.5% decline in western Europe. The EBITDA was off by 6.5% to €388m. In France, cement volumes were off by 5.5%, but prices did improve by 0.5%. In Spain, cement shipments fell by 16.6% after a 42.7% in the previous first half and prices and product mix deteriorated by a combined 10.9%. Volumes in Greece were even worse affected with a 20% drop, but pricing was much less affected. In the United Kingdom volumes did recover by 4.2%. German volumes recovered in the second quarter and were off by just 0.2% and prices were very slightly ahead. In neighbouring Poland, the winter effect was worse and was followed by flooding in May, leading to an 8.2% volume decline and weaker pricing. Weak markets and some flooding hit Romania, resulting in a 19.4% volume drop and turnover fell by 22.0%. In Serbia, volumes were off by 11.1%, but prices improved so the turnover was just 4.0% lower. Russian volumes fell by 20.0% and with weaker prices turnover dropped by 28.6%.  

The Middle East & Africa region saw cement volumes fall by 12.6% to 20.1m tonnes. Turnover declined by 6.4% to €1,780m and the EBITDA fell by 13.1% to €605m.  The volume declines of 48.1% in Jordan and of 23.5% in Kenya essentially reflect new capacity introduces by competitors, while the 11.5% reduction in Egypt is in response to earlier price increases than the competition and the 8.4% reduction in Algeria is the result of plant stoppages that are not expected to recur. The good volume growth in Irak and South Africa of 14.2% and 8.6% respectively is expected to continue in Irak, but South African downstream volumes have been particularly weak and cement demand is expected to soften in the second half. Nigeria suffered a 3.5% volume decline but if there are no further disruptions in electricity supplies, cement shipments could increase by around 10% for the full year.

Asian cement turnover improved by 10.3% to €1,035m while the EBITDA rose by a more modest 8.4% to €270m. Cement shipments rose by 1.0% to 20.9m tonnes. The best volume growth was seen in the Philippines with an increase of 9.6%, followed by India with a 5.2% increase. Malaysian volumes and prices were marginally higher China and South Korea both saw volumes and prices decline. The volume reduction was particularly significant in South Korea with a 20.9% drop. Full year volumes from China should still provide a double-digit increase, while the Korean volume reduction should be contained to a single digit. Both Malaysia and Indonesia are expected to grow cement volumes by some 4%.

North American cement turnover improved by 4.2% to €579m as cement shipments increased by 1.8% to 5.8m tonnes and the EBITDA rose by 265% to €53m, helped by lower costs and improving volumes, and the trading loss was reduced.  Prices improved in Canada, but were a little lower on average in the United States and Lafarge's volume expectations have been raised modestly. North American aggregates shipments improved by 8.2% to 40.6m tonnes and the turnover advanced by 17.3% to €373m. Ready-mixed concrete volumes, on the other hand, were off by 0.5% at 3.1m m³ though the turnover improved by 4.3% to €342m in spite of price pressures in some markets. In Latin America, cement turnover declined by 6.6% to €298m as deliveries were some 8% lower at 3.6m tonnes, but the EBITDA advanced by 12.2% to €92m. Brazil was the leading market, even before the Votorantim deal that became effective in July. Brazilian cement volumes rose by 5.1% and are expected to show a double-digit advance for the full year, with downstream volumes moving ahead strongly.