France: Multinational buildings materials producer Lafarge has shown signs of improved profitability in 2012 as its operating income rose by 12% to Euro2.44bn. Chairman and CEO Bruno Lafont has attributed the turnaround in the group's fortune's to cost reduction measures and continued growth in emerging markets. However the group's net income continue to fall in 2012, by 27% to Euro432m in 2012 from Euro593m in 2011.
"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% of our sales," said Lafont.
Sales rose by 3% to Euro15.8bn from Euro15.3bn. Earnings before interest, taxes, depreciation and amortisation (EBIDTA) rose by 7% to Euro3.45bn from Euro 3.22bn. The group reduced its net debt 5% to Euro11.3bn.
The overall volume of cement made by Lafarge fell by 3% in 2012 to 141Mt compared to 145Mt in 2011. Lafarge attributed this to the continued construction slowdown in Europe, increased local supply in Egypt, the current situation in Syria and the impact of the US divestments, mitigated by growth in Asia, Latin America and most countries of Middle East and Africa. EBIDTA for Lafarge's cement business rose by 6% to Euro2.96bn from Euro2.73bn. Overall results for the fourth quarter of 2012 were broadly similar to the year although both volumes and sales of cement fell suggesting that Lafarge's recovery remains fragile.
By region, in North America volumes of cement fell by 5% to 12.8Mt in 2012 from 13.5Mt in 2011. However volumes were down by 7% to 3Mt in the fourth quarter of 2012 due to tornadoes and bad weather.
In Western Europe cement volumes fell by 11% to 16.4Mt in 2012 from 18.4Mt in 2011. Notably sales volumes fell significantly in Spain and Greece, by 26% and 37% respectively. In Central and Eastern Europe cement volumes fell by 6% to 13.2Mt from 14.1Mt. Poland was singled out in this region, where sales volumes fell by 21% in 2012, following the completion of construction projects for the European Cup games in June and lower EU funding.
In the Middle East and Africa cement volumes fell by 3% to 45.2Mt from 48Mt. Sub-Saharan Africa, Algeria and Iraq were singled out for strong performance. Egypt's volume sales of cement fell by 5% and Syria reported 'sharp' declines. In Latin America cement volumes rose by 4% to 9.2Mt from 8.8Mt, led by Brazil, Honduras and Ecuador. In Asia cement volumes rose by 4% to 44.3Mt from 42.5Mt, led by strong gains in India, Indonesia, the Philippines and South Korea.
In its outlook Lafarge stated that it expects to see cement demand continue to rise by 1-4% in 2013 driven by emerging markets. The group also plans to reduce its net debt below Euro10bn as soon as possible in 2013.
