Emerging markets lift Lafarge as the US, Spain and Great Britain decline

Emerging markets lift Lafarge as the US, Spain and Great Britain decline
Published: 01 August 2008

Lafarge increased first half turnover by 8.2% to EUR9,069m, with the EBITDA rising by 15.8% to EUR2116m and the trading profit advancing by 18.5% to EUR1611m, with the numbers reflecting the consolidation of Orascom from the January 23 2008.  Net debt at the end of June was virtually doubled (+99.5%) to EUR17,323m, giving a gearing of 124.6%.  Capital expenditure was 40.1% higher at EUR1,016m, and of the EUR8,712m spent on acquisitions, 95.7% was accounted for by the acquisition of Orascom.
 
Cement deliveries were 18.6% higher at 77.9Mt, an increase of 9.7%, with the underlying increase being some 2%.  Turnover from cement rose by 15.2% to EUR5,730m, or 63.2% of the group total, while the EBITDA advanced by 25.7% to EUR1,707m.  Aggregates and concrete generated a turnover 2.3% lower at EUR2,933m, with the EBITDA declining by 3.7% to EUR358m.  The aggregates tonnage was 4.1% lower at 113.8Mt, of which western Europe represented 42.1Mt, producing a turnover 3.6% lower at €1,119m and an EBITDA that was 9.7% down at EUR204m.
 
European cement turnover rose by 6.7% to EUR2,01m, with all of the growth coming from central and eastern Europe, with western European turnover declining by 2.2% to EUR1,484m.  Margins improved and the EBITDA advanced by 15.9% to EUR752m, while cement shipments improved by 2.1% to 24.7Mt.  In France, cement deliveries improved by 1.8% and prices advanced by 4.6%.  In Spain, cement shipments fell by 18.3% on the back of the drop in housebuilding activity and while prices increased by 2.6%, the mix showed some deterioration.  In the United Kingdom and Greece, volumes declined by 6.2% and 6.7% respectively, while prices improved.  German volumes improved by 8.8% and prices were ahead, while in Poland, prices rose strongly though volumes were 1.1% lower.  The strongest volume growth was seen in Romania with an 18.4% advance and turnover rose by 27.8%. 
 
In North America, cement turnover declined by 16.8% to EUR698m as US cement shipments declined by 12.7% while there was a 1.9% improvement in Canada. Overall cement deliveries were 9.8% lower at 8.8Mt and the EBITDA fell by 30.7% to EUR133m.  Cement prices rose by an average 4.6%, but were subject to considerable regional variations.  

The Latin American cement turnover emerged 14.0% higher at EUR375m and the EBITDA improved by 21.7% to €101m on volumes that were about 7% higher at 4.5Mt.  In Brazil, prices continued to recover and rose by some 35%, while volumes grew by 14.0%, while in Chile volumes improved by 11.5%.
 
Underlying volumes in the Middle and Near East cement operations were some 2% higher but the addition of Orascom led to volumes jumping from 3.6Mt to 9.6Mt and the turnover more than doubled to EUR534m, with an the underlying sales growth of some 22%.  The EBITDA shot ahead from EUR68m to EUR221m though the underlying improvement was just 3%.  With the exception of Turkey, pricing was strong on the back of higher energy costs.  African turnover grew by 35.5% to EUR1,173m, helped in particular be the addition of Orascom’s Algerian business, while the underlying growth was of around 18%.