Lafarge's 2012 consolidated sales rise on higher prices, emerging markets

Lafarge's 2012 consolidated sales rise on higher prices, emerging markets
Published: 20 February 2013


Lafarge reported a 3.5 per cent rise in consolidated sales for 2012 driven by price increases across all product lines, higher cement volumes in Latin America and Asia and favourable foreign exchange effects. For this year it sees growth in cement demand with emerging markets continuing to lead the way.

The group achieved cost savings of EUR410m in the year, delivering on its cost savings target as its savings plan is gathering pace generating EUR80m of EBITDA in 2012.

EBITDA and current operating income rose seven per cent during the year despite the continued slowdown in Europe. Operations outside of Europe generated more than 75 per cent of the Group’s EBITDA and rose 19 per cent in the year-to-date. Group EBITDA margin improved 130 basis points when excluding carbon credits.

Net profit for the year reached EUR432m for the year, down 27 per cent mainly because of one-time EUR466m gain related to gypsum divestments in 2011. Excluding one-off items, net income improved 70 per cent year-to-date to EUR772m.

Net debt declined EUR0.9bn in the fourth quarter dropping to EUR11.3.bn. The group secured close to EUR900m of divestments, of which EUR474m were received in 2012, and this will soon exceed its objective of securing EUR1bn.

Commenting on its 2012 performance, Bruno Lafont, chairman and chief executive officer of Lafarge said: “We have delivered on our objectives for 2012 and our results grew for the fifth consecutive quarter, driven by strong operational performance and growth in emerging markets which generated close to 60 per cent of our sales.

"We are progressing fast and I am convinced that we will deliver most of our 2012-2015 plan to generate EUR1.75bn additional EBITDA through cost reduction and innovation measures by the end of 2014, close to one year ahead of our initial objective. We target to deliver EUR650m additional EBITDA from these measures in 2013. Whilst we adopt a cautious stance on the current market environment, our actions will drive net debt reduction to below EUR10bn as soon as possible in 2013.”

Lafarge further added that capital expenditure will be limited initially to EUR800m in 2013. Additional divestments beyond the current target of EUR1bn from the beginning of 2012 may, however, lead to an increase of this expenditure level while maintaining the debt reduction objective, it noted.

Sales development

EBITDA improved by seven per cent through the year supported by growth in the Middle East and Africa, Latin America, Asia and North America and favourable foreign exchange. Declines were seen in Western and Central and Eastern Europe due to poor weather conditions in the first and final quarter of the year, EUR78m of lower proceeds fromt eh sale of carbon credits year-to-date and a “challenging economic enviroment,” the group said.

On its outlook, the group sees cement demand growth of between 1-4 per cent YoY with emerging markets continuing to be the main drivers of demand.

The group also expects higher pricing for the year and that cost inflation will continue albeit at a slower rate than in 2012.