Orascom boosts Lafarge’s Middle Eastern & African cement sales

Orascom boosts Lafarge’s Middle Eastern & African cement sales
Published: 08 May 2008

Lafarge’s turnover increased by 8.3% in the first quarter to EUR4,000m, helped by the consolidation of Orascom from the 23rd of January.  The EBITDA advanced more markedly by 33.0% to EUR765m and the running profit before tax rose by 65.1% to EUR279m, while the net attributable profit more than doubled from EUR150m to EUR362m.  Net debt at the end of March was up by 91.2% to EUR16,135m, to give a gearing level of 115.5%.  Capital expenditure rose by 35.4% to EUR409m, while 98.8% of the EUR8435m spent on acquisitions was related to the purchase of Orascom.
 
Cement shipments in the quarter rose by 19.1% to 34.9Mt, an increase of 9.7%, with the underlying increase being in the region of 2%.  Turnover from cement rose by 16.4% to EUR2554m, representing 63.9% of the group total.  In terms of EBITDA, 82.7% came from cement in the period.  The aggregates tonnage was down by 5.0% to 45.9Mt, generating a turnover of EUR464m and an EBITDA of EUR47m.
 
The European cement turnover improved by 4.2% to EUR1,824m, with the EBITDA rising by 22.1% to EUR249m, with the strongest growth coming from central and eastern Europe.  Cement shipments declined by just under 3% to some 10.1Mt.  In France, cement volumes improved by 3.2% and average prices moved ahead by 5.0%.  British cement shipments declined by 7.8% but positive pricing still led to a 0.9% improvement in turnover.  In Spain and Greece, better prices were insufficient to make up for the fall in volumes, which reached 21.1% in Spain and 14.0% in Greece.  German volumes rose by 11.7% and prices continued to recover.  Poland continued its strong recovery, with cement volumes rising by 10.4% and prices improving by close to 17%, while in Romania the rate of volume growth fell back to 5.3%, with turnover rising by 8.0%.  In Serbia, Lafarge’s volumes declined by 3.6%, but higher prices still led to a sales growth of 13.9%.  In Russia, where Lafarge is supplementing domestic production with imports, cement deliveries rose by 12.7% and prices shot up by around 63.5%.  
 
North American cement turnover declined by 15.8% to EUR266m and while the EBITDA was unchanged at EUR13m, there was the usual seasonal loss at he trading level. Cement shipments rose by 6.8% in Canada, but fell by 14.7% in the United States.  Cement price increases are generally introduced in the second quarter, with the possibility of a further increase later in the year if need be. The ability to push through price increases show considerable regional variations. 

The Middle and Near East cement operations were considerably expanded through the addition of Orascom, with the turnover jumping from EUR87m to EUR223m, while the underlying sales growth was some 16%.  The EBITDA advanced from EUR25m to EUR93m and 4.2Mt of cement were sold.  With the exception of Turkey, pricing was generally strong and underlying volumes tended to be ahead.  African turnover grew by 41.0% to EUR574m, with an underlying growth rate of around 13%, while at the EBITDA level actual growth was 50.5% to EUR140m and the underlying rate was 22%. Volumes grew by 11.5% in South Africa, by 10.3% in Morocco, by 8.0% in Nigeria and by 3.2% in Kenya. Total African cement volumes were 38% higher at 5.5Mt.
 
Asian cement shipments increased by around 19% to 9.3Mt, with turnover growing by 16.7% to EUR385m and the EBITDA advancing by 28.4% to EUR86m.  There were volume reductions of 12.9% in China, because of weather effects, and of 5.2% in The Philippines, while elsewhere volume trends were positive, from a more modest growth rate of 1.9% in Indonesia to 14% in Malaysia, 17.8% in South Korea and 18.2% in India. Positive pricing trends are being seen particularly in Indonesia and in China, where old, inefficient plants are being forced to close.  Volumes in China and The Philippines are expected to improve as the year progresses.