Lafarge improves volumes and margins, investment plans in China

Lafarge improves volumes and margins, investment plans in China
Published: 03 August 2006

Lafarge’s turnover increased by 21.3% to EUR 8,759m and the EBITDA by 31.5% to EUR 1,699m. The trading profit before exceptional items pushed ahead by 40.6% to EUR 1,177m, while the net attributable profit advanced by 52.7% to EUR 548m. In part reflecting the buying out of the North American minority, the net debt rose by 34.9% to EUR 10,610m, while capital expenditure increased by 50.2% to EUR 691m.  Group cement deliveries increased by 7.3% to 62.6Mt, with ready-mixed concrete deliveries rising by 9.6% to 21.2m m³ and aggregates shipments by 4.7% to 118.6Mt.  Lafarge estimates additional energy costs this year at around EUR 1.10/t, or an increase of some 32%.
The European cement operations increased turnover by 14.7% to EUR 3,924m and trading profit by 21.6% to EUR 563m.  Cement shipments reached 22Mt, an increase of 1.8Mt or some nine per cent.  Of the more important markets, particularly strong growth in cement deliveries was seen in Poland and Romania at 25.5% and 21.4% respectively as well as in Greece, where a 20.8% advance more than made up for an 11.7% decline in the corresponding period last year.  In France and Spain cement shipments rose by 5.9% and seven per cent respectively but German deliveries declined by 1.2% and British shipments by 0.7%.
North American cement shipments were 1.9% higher, with lower tonnages in Michigan, Ontario and Québec being more than offset by higher volumes elsewhere.  Helped by higher prices, turnover increased by 15.7% and the trading profit moved ahead by 35.8% to some EUR 110m.  The downstream operations, which generally trade at a loss in the first half of the year, made a €30m profit this time, helped by volume increases of just over 7% to 61.6m tonnes of aggregates and 5.9Mm³ of ready-mixed concrete. 
Meanwhile, Lafarge has said it plans to double its investments in China over the coming years, the company’s chairman, reports local news. Bruno Lafont told Xinhua News Agency of China that Lafarge had settled in the country for 10 years and that half of the group’s cement production was made in China, which has exceeded the United States to become Lafarge’s biggest cement producer. 
Lafarge now operates in four provinces in southwest China; Sichuan, Chongqing, Yunnan and Guizhou, where Lafarge’s current cement production capacity amounts to 20Mt as against the region’s total annual production of 100Mt.  According to Mr. Lafont, the group plans to establish new factories in neighboring provinces in a bid to double its production capacity in five or six years.