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Lafarge releases its 1Q13 results

World Cement,

Lafarge has released its results for 1Q13. Total sales fell by 6% to €3136 million. On a like-for-like basis, sales were down by 4%, with declining volumes partially offset by price increases designed to address cost inflation. Operating income dropped by 26% to €380 million. Compared to 1Q12, net debt had decreased by €0.6 billion by the end of March 2013.

Cement volumes declined from 31.3 million t in 1Q12 to 28.7 million t in 1Q13. Sales volumes of aggregates also suffered, dropping from 33.2 million t to 32.9 million t. Ready-mix concrete sales volumes decreased from 7.1 million m3 to 6.7 million m3 this year. Sales were impacted by poor weather conditions in Europe and North America. In Algeria, a 10-day interruption to production occurred in March, which has now been resolved. Solutions to a gas shortage problem in Egypt are also being developed.

Overall, EBITDA fell by 26% (19% on a like-for-like basis). Despite low sales volumes, performance measures generated €60 million EBITDA and innovation measures delivered €40 million EBITDA in 1Q13. On a regional level, EBITDA increased by 71% in North America and by 15% in Asia. However, it declined in Western Europe, Middle East and Africa, and Latin America by 94%, 22% and 14%, respectively.

Lafarge expects cement demand to rise in 2013, with the emerging markets continuing to drive demand. The company plans to cut net debt to less than €10 billion as soon as is possible in 2013.

“The first quarter traditionally represents a small proportion of our results and is not indicative of full year trends. Our outlook remains unchanged and we expect to see cement demand growth in our markets of between 1 to 4% in 2013,” said Bruno Lafont, Chairman and Chief Executive Officer of Lafarge. “ We continued to be fully focused on actions within our control. Price increases have been actively implemented in most markets and we will reap the full benefit as the year unfolds. Our performance and innovation actions delivered €100 million EBITDA in the quarter, on track with our 2013 target of €650 million. I am confident that by the end of 2014 we will have delivered most of our 2012 – 2015 plan to generate €1.75 billion additional EBITDA through performance and innovation measures, close to one year ahead of our initial objective. We will also reduce net debt to below €10 billion as soon as possible in 2013.”

Adapted from press release by Louise Fordham.

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