- Sales increased for the full year and quarter, helped by improved cement and aggregates volume trends, favourable foreign exchange, and new capacities in Brazil.
- Structural cost savings exceeded target, reaching €220 million for the year, of which €50 million in the fourth quarter.
- Current operating income slightly down for the year but rose for the quarter as higher sales volumes, favorable foreign exchange and cost cutting offset higher energy costs.
- Secured over €500 million of divestments, meeting target for the year.
- Significant cash flow generation in 2010 helped by strong results on working capital.
- Strong cash and liquidity position maintained.
- Lower cost base, new capacities, and actions to mitigate higher cost inflation are in place to drive earnings growth in 2011 as volumes recover.
Bruno Lafont, Chairman and Chief Executive Officer of Lafarge, said: “While 2010 was a tough year for the cement sector as a whole, I am encouraged by the return to cement volume growth in the fourth quarter and the successful cash generation accomplishments of our operating teams in the last two years. The steps we have taken in 2010, ranging from structural cost savings to strategic investments in growing markets such as Brazil, will provide the foundation for further improvement and growth as we enter 2011. It will also allow the Group to accelerate deleveraging and reduce its debt by at least €2 billion in 2011. We will get the full benefits from volume growth thanks to our new cement capacities and the overall quality and strength of our portfolio of assets."
The Group estimates cement demand in its markets to grow between 3 to 6% in 2011 versus 2010. Emerging markets continue to be the main driver of demand and Lafarge benefits from its well-balanced geographic spread of high quality assets. For developed markets, the Group expects that demand will continue to slowly recover.
Overall pricing is expected to move higher for the year, although levels of pricing movements will vary by market.
Business Highlights: Cement
- Sales were up 10% in the quarter and up 2% for the year, reflecting the impact of recovering volumes and foreign exchange.
- Volumes increased 2% in the quarter and were down 4% year-to-date, with volume growth in North America and Latin America helping to partially offset declines in other regions.
- Pricing remained resilient in the face of difficult market conditions.
- Costs in the fourth quarter benefited from the reversal of a regulatory fee on past purchases of raw materials in Egypt.
- Cost reduction program strongly benefited all regions.
- Current operating income down 1% in the quarter and down 5% year-to-date due to the inflationary impact of energy and other costs.
INVESTMENTS, DIVESTMENTS AND LIQUIDITY
- Investments totaled €1.4 billion for 2010, compared to €1.7 billion in 2009.
- Sustaining capital expenditures decreased by 3% to €359 million in 2010.
- Internal development capital expenditures were down 23% to €950 million in 2010.
- Acquisitions were €84 million in 2010, down from last year.
- Lafarge received €364 million in cash for divestments in 2010 of the €550 million secured as of year-end.
- As of 31 December 2010, the Group had €3.8 billion in committed credit lines with an average maturity of around 3 years in addition to €3.3 billion of cash on hand. There are no financial covenants on debt at the Lafarge SA level.
Read the article online at: https://www.worldcement.com/europe-cis/18022011/lafarge-reports_increased_sales_for_2010/