Lafarge widens first half margins

On the back of a 7.0% increase in turnover to €6,794m, Lafarge increased the operating profit at the EBITDA level by 18.2% to €1,317m and the trading profit by 30.7% to €876m. Helped by a 28.5% reduction in the net interest charge, the running profit before tax emerged 79.3% higher at €660m.  The cement division improved its EBITDA by 13.2% to €917m, or 69.6% of the group total, on a turnover 8.1% higher at €3,275m on the back of a 13.6% increase in cement delvieries to 57.6Mt.  The trading profit from cement rose by 18.2% overall to €663m, with the strongest increwases coming from Eastrern Europe, the Asia-Pacific area and the emerging Mediterranbean countries, with increases of 60%, 55% and 50% respectively. 

On the back of the 60% improvement in the east and a 10% advance in the west, the total European cement profit was up by 14.3% at the trading level to €327m, with deliveries 8.5% higher at 20.4Mt.  Only in the United Kingdom did profits fall because of weaker volumes and prices.  German losses were reduced as prices began to recover, with Spanish profits moving ahead strongly as higher prices more than made up for a 2.1% decline in volume, while France had a major impact on the improvement thanks to deliverers rising by 7.5%.  Better volumes and, with the exception of Poland, prices were behind the strong profit improvement in eastern Europe, where volumes rose by 26.4% in Poland and prices by 30.4% in Russia and by 22.4% in Romania.

The underlying profit from the North American cement operations were some 38% higher, but the weaker dollar and the sale of the business in Florida translated in a trading profit increase of just 7% to €58m.  Although volumes and prices improved, the positive effect on margins was curtailed by the need to buy in cement as well as higher energy and pension costs. Central and South America was the only area to record a decline in trading profit, by some 6%, to €72m. The reduced trading profit was primarily the result of lower volumes and prices in Brazil that more than outweighed thew positive developments in the next two most important markets in the area, Chile and Venezuela, while exchange rate movements reduced the profit by around €4m.