Highlights from the Lafarge Group’s 2013 results

Lafarge has released its results for the final quarter of 2013 and for full-year 2013. Highlights from the report are detailed below.

4Q13 results

• EBITDA increased by 14% like-for-like, boosted by higher volumes, in addition to cost reduction and innovation measures.
• The recovery of the US residential construction market, along with continued growth in the Middle East, Africa and Asia, helped to drive volume growth.
• Consolidated sales were up 5% on a like-for-like basis but fell 2% to €3.714 billion due to unfavourable foreign exchange rates.
• Cement sales volumes rose from 34.8 million t in 4Q12 to 34.9 million t in 4Q13. Ready-mix concrete sales came in at 7.5 million m³, down from 7.8 million m³ in the corresponding period in 2012. Aggregates volumes increased by 2% like-for-like to reach 49.2 million t.
• EBITDA improved across all of Lafarge’s geographical markets on a like-for-like basis. The biggest improvements were in Central and Eastern Europe and in North America, which experienced growth of 65% and 26%, respectively. The smallest like-for-like growth was seen in Latin America, where EBITDA improved by 2%.

Full-year 2013 results

• Approximately 136.8 million t of cement was sold in 2013, compared to 141.1 million t in 2012. Aggregates volumes increased from 188.3 million t to 192.8 million t. Ready-mix concrete sales volumes were down 1% like-for-like, dropping from 31.8 million m³ in 2012 to 30.7 million m³ in 2013.
• EBITDA fell by 9% to €3.102 billion, but increased by 2% like-for-like.
• On a like-for-like basis, EBITDA fell by 16% in Western Europe and by 14% in Central and Eastern Europe. However, EBITDA was up by 13% in Asia and by 18% in Northern America.
• Sales declined by 4% to €15.198 billion. However, on a like-for-like basis sales increased by 2% in 2013.
• The group reduced net debt by €1 billion in 2013. At the close of the year, net debt stood at €10.3 billion.

Investments and divestments

• Lafarge invested €306 million in 4Q13, with development investments totalling €135 million.
• Projects include upgrade and expansion work at the Exshaw plant in Canada and at the Ravena plant in New York, USA.
• New plant projects include those in Kaluga, Russia, and Rajasthan, India. The Rajasthan plant, which has a production capacity of 2.6 million t, began operating in October 2013.
• Plans to increase capacity at plants in the Philippines, Brazil and Algeria are also underway.
• Lafarge completed the sale of its assets in Honduras in 4Q13.
• Other divestments include the sale of some aggregates quarries and gypsum operations in the US, and cement facilities in Ukraine.

Aims

• Lafarge expects the cement markets in which it operates to grow by 2 – 5% in 2014 compared to 2013. The increase will be aided by the improving situation in the US, continued growth in emerging markets and stabilisation in Europe.
• It plans to achieve an additional EBITDA of over €600 million, €400 million of which would be generated from cost saving measures and the remaining €200 million from innovation initiatives.
• In 2015 – 2016, the Group intends to create an additional EBITDA of €1.1 billion, €500 million from innovation and €600 million from cost reductions.
• Lafarge aims to reduce net debt to under €9 billion this year.

Bruno Lafont, Chairman and Chief Executive Officer of Lafarge, stated: "In the fourth quarter we saw much more positive operational trends, accelerating compared to the third quarter, while exchange rates continued to be adverse. The Group implemented targeted actions to promote innovation and reduce costs and debt. These measures continue to gain momentum and I am confident that we are particularly well positioned to succeed and deliver on our objectives in 2014 and beyond".

"Looking at 2014, we are determined and confident, and we expect an overall growth in our markets of between 2 to 5 percent. In this improving environment, the Group will take full advantage of its three organic growth drivers: emerging markets, where construction trends continue to be very favorable, accelerated growth through innovation and the progressive recovery of developed economies, starting with North America."

"We will continue to apply the utmost discipline in capital allocation and our aim is to return to an investment grade profile this year. In line with this objective and targeting a step-improvement in our return on capital employed, we will pursue the development of our most promising positions through selective organic investments. We notably plan to add more than 10 million tonnes of cement capacity in existing locations in the coming four years in Sub-Saharan Africa, to further reinforce our leadership position in this region and benefit from accelerated growth," added Lafont.

Adapted from press release by Louise Fordham

Read the article online at: https://www.worldcement.com/europe-cis/19022014/lafarge_2013_results_766/