France: Lafarge intends to cut its costs by Euro1.3bn from 2012 to 2015. The French-company announced that it is speeding up cost-cutting measures, boosting sales revenue and cutting net debt over the next four years in a bid to improve its profitability.
At least Euro400m of cost savings are scheduled for 2012 and at least Euro350m are planned for 2013. The plan seeks to raise Euro450m from innovation and efficiency gains and boost earnings before interest, taxes, depreciation and amortization (EBITA) by Euro1.75bn. As a result of the higher EBITDA, Lafarge will cut its net debt below Euro10bn 'as soon as possible' in 2013.
The company seeks to boost return on capital employed to above 8% by 2015.
"All our actions will contribute to higher cash generation, improved returns, and cash flow from operations to net debt of 28% to 30% no later than 2015," Lafarge said in a statement.
Lafarge has struggled over the past few years from its heavy debt load and the global economic downturn. Its debt peaked at Euro17bn in 2008, following a series of acquisitions culminating in the Euro8.8bn takeover of Egyptian rival Orascom Cement. The company had already managed to reduce its debt to Euro12.36bn at the end of the first quarter of 2012.
Lafarge Chief Executive Bruno Lafont reiterated the company will raise Euro1bn in asset sales in 2012 and doesn't plan any major acquisition over the coming years. He added that the company's ultimate goal is to raise dividends and resume investing once its financial structure is stabilised.
