Lafarge

Lafarge has been given clearance by the Indian Supreme Court to resume limestone production in Meghalaya, which feeds the joint-venture cement works at Chhatak in Bangladesh.

Lafarge has now received the necessary permits for the expansion and modernisation of the Ravena cement works in New York state. An investment of in excess of US$300m will see the replacement of two wet kilns with a single dry kiln and the cement capacity of the plant will be increased from the current 1.7Mta to 2.8Mta. A completion date was not yet been announced, but this is likely to be some time in 2014.

Lafarge is in negotiation with Etex to sell its European and South American gypsum interests to Etex for around €850m plus a 20% stake in the combined European and South American gypsum business. Etex is already in joint venture with Lafarge in a number of South American countries, while Etex withdrew from the then over-crowded European plasterboard market in 2002, selling its plants to BPB, which had to sell on the Gyproc Benelux assets in Germany and Central Europe to Lafarge to secure European Commission approval. It now looks like the Hartershofen plant in Germany will come back to Etex it the proposed deal goes ahead. Gypsum activities could then account for about one-third of the enlarged Etex Group's turnover. The current arrangement for South America between Lafarge and Etex dates back to 1996.

The Lafarge first-half turnover improved by 3.4% to €7973m, but EBITDA declined by 10.0% to €1485m and the trading profit was down by 13.6% to €926m. A €67m gain was taken on the sale of emission permits and the full-year contribution from this source should match last year's number. The net attributable profit, excluding the exceptional gain on the sale of the Cimpor shareholding last year, did improve by 11.6% to €260m. Net debt at the end of June was 7.7% lower at €13,993m and the gearing declined further, from 81.4% a year ago to 76.8%, helped by disposals. Capital expenditure was reduced by a further 25.2% to €498m, but spending on acquisitions rose by 71.2% to €89m, still a historically-modest amount.

Cement deliveries recovered by 8% to 70.6Mt and the turnover from cement improved by 3.5% to €5134m, but the corresponding EBITDA declined by 9.6% to €1273m. The turnover from aggregates and concrete improved by an identical 3.5% to €2401m, but the reduction in the EBITDA was a more modest 5.3% to €144m. In plasterboard, Lafarge's global volumes improved by 4.9% to 361Mm² and the turnover was up by 5.1% to €762m and the EBITDA advanced by 6.6% to €81m, with the improvement being essentially all in western Europe, and North America continuing to lose money.

European cement deliveries recovered by 4% to 15.6Mt and the turnover by 4.3% to €1335m, with central and eastern Europe showing a 15.8% improvement compared with a 0.9% decline in a western Europe that was pulled down by Spain and Greece. The EBITDA declined by 3.1% to €376m. In France, cement volumes rose by 4.2%, while in Great Britain they rose by 9%. In Spain, cement shipments fell by a further 7.7% and in Greece there was a far more serious situation, with volumes dropping by 31%, having already fallen by 20% in the first half of last year. Poland, which had a very difficult half last year, managed to improve tonnages by 38.6%, but in Romania the volume improvement was just 1.4%. Serbian tonnages improved by 5.2%, while in Russia volumes rose by 10.2% and a strong improvement in prices saw jump by 45%.

The Middle East & Africa region experienced a 10.4% increase in cement volumes to 22.2Mt. Turnover was hit by currency weakness, notably in Egypt and Iraq, and rose by just 0.8% to €1794m and the EBITDA declined by 7.8% to  €554m. Notable tonnage increases were seen in Algeria and Nigeria at 25.3% and 20.6% respectively, but in Jordan the domestic volume dropped by a further 26.8%. While Egyptian quantities declined by 7.4%, there was a 7.8% improvement in Iraq. South Africa was a difficult market, with cement volumes being down by 3.1%. The new works currently being built in Saudi Arabia has been suffering some delays.

Asian cement turnover improved by 0.4% to €1039m, but the EBITDA dropped by 25.9% to €200m. Cement shipments advanced by 5.7% to 20.9Mt. Chinese volumes rose by 23.3% on slightly weaker pricing, while in Indonesia the volume increase reached 10.8%. Lafarge's one weak market is the Philippines, where shipments fell by 9.7% and weaker prices helped to reduce the turnover by 18%. Malaysian volumes and prices both improved, while a 4.1% quantity improvement was entirely negated by continued price weakness. The 8.1% increase in Indian ready-mixed concrete volume was not matched on the cement side, where volume rose by just 1.5% and prices weakened.

The total North American turnover declined by 4.7% to €1323m and the cement turnover was down by 5.4% to €539m with the EBITDA dropping by 41.5% to €31m and the trading loss just over doubling to €31m. Cement shipments slipped by 1.7%, with a 1.7% improvement in Canada being more than offset by the 2.9% reduction in the United States. Cement prices eased by 0.6% in Canada and fell by an average 4.3% in the USA. In Latin America, group turnover rose by 41.2% to €528m and the cement turnover by 43.3% to €427m, reflecting the initial consolidation of the assets acquired from Votorantim as part of the Cimpor deal. At the underlying level, the cement turnover was up by some 11%. Cement deliveries were some 39% higher at 5Mt and the EBITDA advanced by 21.7% to €112m. Brazilian cement volumes rose by 5.6% and other effects were positive, giving an activity increase of 9.3%. Ecuador, the second biggest market for Lafarge in Latin America, saw cement volumes rise by 14.2%.