Lafarge 2003 sales slip but beat forecasts

The world’s leading cement maker, Lafarge posted a 6.5 per cent fall in 2003 sales on Wednesday, hurt by dollar weakness, likely to be stable year-on-year.  Sales fell to 13.658 billion euros ($17.1 billion), from 14.610 billion a year earlier, slightly ahead of the analysts’ consensus forecast of 13.492 billion euros.  Closely-watched underlying sales, which strip out currency fluctuations, divestments and acquisitions, rose 4.6 percent, with a 9.6 percent gain in the fourth quarter, the company said in a statement. Lafarge reiterated that it expected full-year operating income, before currency effects, to be flat compared with the 2.13 billion euros it made in 2002.

Analysts welcomed the sales numbers, particularly the stronger-than-expected performance in the fourth quarter and the confirmation that full-year operating profit would meet expectations.  "What’s particularly important is that Lafarge is confirming that they will have flat underlying operating profit for the full year, so we will not move our earnings estimates," an industry analyst said.

Last week Lafarge Chief Executive Bernard Kasriel said that a one cent rise in the euro against the dollar equalled about 10 million euros off the group’s operating profits.  About half the group’s sales are generated in foreign currencies, including the greenback, the Canadian dollar, sterling and the Malaysian ringgit.  The group’s key cement unit showed a 5.3 percent rise in sales on an underlying basis, with strong fourth-quarter growth of 11.4 percent, helped by rising demand in Greece in the run-up to the 2006 Olympics coupled with a buoyant residential market.

Spain too ended 2003 with solid sales growth, while prices stabilised in Germany in the last quarter after a severe pricing war, which hit sales throughout the year, Lafarge said.  Cement sales in North America continued to recover strongly in the fourth quarter, translating to an overall increase in sales for the full year. Prices, however, remained under some pressure and declined for the year as a whole.  Underlying sales for aggregates and concrete rose 3.8 percent, with strong growth in Western Europe led by demand in the UK and Spain.