First half results continued to reflect the full force of the global recession this week, with Lafarge reporting sales down by 12 per cent to €7991m, while operating profit dropped steeply by 30 per cent to €1131m. The company saw some increased free cash flow, which rose by €746m, and the latest round of refinancing improved the group’s debt maturity profile and net debt was trimmed back by some €2292m.
Trading conditions differed markedly between regions, with developed markets most exposed to the global recession continuing to experience significant declines. Overall cement volumes fell 10 per cent to 70Mt in the first half, of which developed market volumes declined by 33 per cent to 16.9Mt, a trend particularly affecting Western Europe and North America. Emerging market volumes increased slightly by one per cent to 53.1Mt, with growth notable in China, the Middle East and Africa, offsetting a weak performance in Russia and Eastern Europe.
Interestingly, the company maintained capital expenditures for the building of new capacity, which amounted to €682m in the first half, slightly higher than the year before, and reflecting major cement capacity expansions in the expanding markets of India, China, Morocco, Uganda and Nigeria.
As for the rest of 2009, Lafarge has updated its outlook on volumes after the second quarter performance. The company expects the rate of decline to slow in the second half of the year compared to the first half with annual cement volumes to fall by between four per cent and eight per cent overal