France: Lafarge has released its financial results for the second quarter and first half of 2011 which show strong cement volume growth. The group's sales were stable in the second quarter of 2011 at Euro4.42bn but current operating income was down by 16% on the year to Euro702m. For the first half of 2011, sales were up by 3% to Euro8.0bn but current operating income was down by 14% to Euro926m.
Sales increased on a like for like basis in all product lines for both the quarter and first half of 2011, thanks to strong volume growth driven by continued strength in emerging markets. Cement prices moved progressively higher from the fourth quarter of 2010 to the second quarter 2011, but were slightly down compared to the first-half of 2010.
Lafarge achieved Euro50m of structural cost savings in the quarter and has achieved Euro100m of savings in 2011 to date and has agreed to sell its Australian, South American and European gypsum wallboard assets.
Bruno Lafont, Chairman and CEO of Lafarge, said, "While I am encouraged by the return to cement volume growth for the last several quarters, the impact of high inflation and a slow recovery in mature markets has weighed on the cement sector. The group is focused on its priorities, including price actions in response to a high-cost environment and strategic moves with its asset portfolio, to support profitability and reduce debt by at least Euro2bn in 2011. The business will continue to benefit from volume growth thanks to our continued development in emerging markets."
Lafarge expects to see cement demand continuing to move higher and estimates market growth of 2-5% in 2011 compared to 2010. Emerging markets continue to be the main driver of demand and Lafarge benefits from its well balanced geographic spread of high quality assets.
Cement sales were stable in the second quarter (up by 3% like for like) and up 3% in the first-half (up by 3% like for like), reflecting volume improvements in emerging markets and new capacities acquired in Brazil offset by the negative impact of foreign exchange.
Volumes increased by 9% in the quarter (up by 6% like for like) and by 8% in the first-half (up by 5% like for like), with growth driven by the Middle East, Africa and other emerging markets. Despite the Group's cost reduction program, higher cost inflation and foreign exchange put pressure on results and margins.
