Lafarge hit by winter weather and lack of carbon credit sales

Lafarge's first-half turnover eased by 4.8 per cent to EUR7248m (US$9628.3m) and the EBITDA declined by 14 per cent to EUR1302m, while the trading profit fell by 21.8 per cent to EUR791m. The gain from the sale of emission permits in the period was negligible compared with EUR46m a year ago. The net attributable profit amounted to EUR84m, compared with a EUR21m loss a year earlier. Net debt at the end of June was 5.3 per cent lower at EUR11,881m and the gearing level declined from the 77.4 per cent shown this time last year to 70.5 per cent. Capital expenditure, after a long period of decline, was increased by 76.5 per cent to EUR526m and is expected to amount to some EUR900m for the full year.

Cement deliveries came off by just under 6.5 per cent to 65.Mt and the turnover from cement declined by 6.5 per cent to EUR5044m, and the corresponding EBITDA fell by 13.9 per cent to EUR1181m. The turnover from aggregates did improve by 8.0 per cent to EUR1285m, but the EBITDA declined by 10.8 per cent to EUR74m as the aggregates tonnage was 0.5 per cent lower at 83.8Mt. In ready-mixed concrete, turnover was off by 4.1 per cent to EUR1372m and the EBITDA dropped by some 22 per cent to EUR40m as deliveries declined by 4.5 per cent to 15Mm³. 

European cement deliveries declined by 13.4 per cent to 12.3Mt and turnover by 7.3 per cent to EUR2090m, with central and eastern Europe showing an 8.5 per cent decline compared with a 16.9 per cent drop in western Europe that was affected by the continuing fall in Spain and the shift of the United Kingdom to associate status. The EBITDA dropped by some 43 per cent to EUR195m. In France, cement volumes declined by 4.4 per cent, while in the United Kingdom they were unchanged. In Spain, cement shipments came off by a further 8.6 per cent and Greek domestic volumes fell by a further 20.7 per cent on top of the 38.9 per cent drop a year earlier. Polish volumes came off by a further 13.5 per cent on top of the 17.9 per cent drop seen during the first half of last year and prices weakened. In Romania, volumes fell by 17.5 per cent following a six per cent rise a year ago, because of weather and weak demand and the full year reduction is likely to be rather more modest. Russian cement volumes were 9.5 per cent lower. Aggregates shipments were boosted by the proportionate consolidation of the British joint venture and the overall volume was six per cent ahead at 37Mt, while ready-mixed concrete deliveries declined by 10.5 per cent to 5.1Mm³.

The Middle East & Africa region registered an 8.6 per cent reduction in cement deliveries to 21.4Mt and the turnover was 8.2 per cent lower at EUR2017m while the EBITDA came down by 14.9 per cent to EUR550m. Lafarge's Egyptian volumes were again hit by limitations in gas supplies and increased competition and fell by 30.4 per cent. The dependence on gas has been reduced to 61 per cent as the use of heavy oil, pet-coke and alternative fuels has been increased. Moroccan volumes declined by 10.3 per cent in an increasingly competitive environment. Algerian domestic deliveries eased by 2.3 per cent while in Iraq the reduction was just 0.3 per cent in spite of increased import pressure. Nigeria provided the most positive picture with a 9.8 per cent volume increase, but Kenya suffered a 9.4 per cent reduction following the comparative period's 22.4 per cent advance. South African cement deliveries were 1.3 per cent ahead. Aggregates deliveries edged ahead by 1 per cent overall to 4.4Mt, while in ready-mixed concrete shipments were off by 1 per cent at 3.5m.

Asian turnover were 4.6 per cent ahead at EUR1426m, of which cement represented EUR1273m, a 4.8 per cent increase, and the EBITDA improved by 14.2 per cent to EUR306m. Cement provided all but EUR4m of the EBITDA. Cement deliveries were 3.2 per cent ahead at 22.6Mt. The volume growth was the strongest in the Philippines with a 12.2 per cent advance and prices also improved. Elsewhere volumes growth was more pedestrian at +4.2 per cent in Indonesia, +3.7 per cent in China, +2.1 per cent in India and +1.6 per cent in Malaysia, while in South Korea there was a 0.8 per cent volume reduction. Average prices were lower by 4.7 per cent in Malaysia and by 2.1 per cent in China, but were otherwise ahead and improved by eight per cent in India, which covered cost inflation. Aggregates shipments were notably higher, rising by some 52 per cent to 4.4Mt, but ready-mixed concrete deliveries were only one per cent ahead at 3.1Mm³. 

The North American turnover declined by 9.8 per cent to EUR1259m because of unfavourable weather and a very strong comparative figure. This was even more marked in cement, where turnover was off by 16.1 per cent to EUR512m. The EBITDA was one per cent higher at EUR129m overall, but fell by 7.6 per cent to EUR73m in cement. Actual cement shipments fell by some 22 per cent to 4.4Mt, but the underlying rate of decline was a more modest 13.1 per cent, adjusting for the sale of two works to Eagle Materials last year. A 16.9 per cent volume reduction in the United States compares with a more modest 7.6 per cent decline in Canada, where winter disruptions are more of a norm. The weather-related effects were primarily seen in the northeastern states, but price increases were still implemented across the US cement operations. Canadian prices were also ahead, but volumes eased in Québec. The North American aggregates operations generated a turnover 7.1 per cent lower at EUR419m, with most of the volume reduction attributable to disposals, and the three per cent reduction in the EBITDA entirely reflects disposals and at the underlying level there was a 13 per cent improvement. The ready-mixed concrete and concrete products turnover was unchanged at EUR353m and the EBITDA was also unchanged at EUR9m, but this implies underlying 17 per cent improvement. The ready-mixed concrete volume declined by 6 per cent to 2.7Mm³, though at the underlying level the reduction was just one per cent.

In Latin America, turnover was negatively affected by exchange rate movements and declined by 3.8 per cent to EUR456m, of which cement accounted for EUR405m. The group EBITDA declined by 5.4 per cent to EUR122m, with virtually all of the reduction coming in the downstream operations. Cement deliveries were one per cent ahead at 4.5Mt and Brazilian cement volumes were 0.7 per cent lower, while in Ecuador there was a 5.1 per cent increase. Aggregates shipments declined by six per cent to 1.2Mt, but deliveries of ready-mixed concrete did increase by eight per cent to 0.6Mm³.