Highlights from Lafarge’s 2Q14 and 1H14 results

1H14 results

• Sales declined 4% to €6 billion, but grew by 6% like-for-like.
• EBITDA improved by 13% on a like-for-like basis, but was down 1% to €1.155 billion.
• Current operating income came in at €755 million, up 2% or 20% like-for-like.
• On a regional basis, EBITDA improved by 23%, 58% and 9% in Western Europe, Central and Eastern Europe and Middle East and North Africa, respectively. In North America, Latin America and Asia, EBITDA declined by 9%, 40% and 18%, respectively.

2Q14 results

• Sales fell by 5% to €3.367 billion, but increased by 3% on a like-for-like basis.
• EBITDA came in at €812 million, down 2% but up 9% on a like-for-like basis.
• Operating income remained stable at €609 million.
• EBITDA fell by 4% in Western Europe, 51% in Latin America and 18% in Asia. However, EBITDA increased in North America (+27%), Central and Eastern Europe (+10%) and Middle East and Africa (+3%).

Net debt, divestments and investments

• 2Q14 net debt fell by €1.1 billion compared to 2Q13.
• Since the start of 2014, Lafarge has secured €1.1 billion of divestments, €423 million of which was received in the first six months of this year.
• In 2Q14, €75 million in cash for divestments was received.
• Around €205 million worth of investments was made in the second quarter of 2014. Sustainable capital expenditures came in at €67 million and development investments totalled €138 million during the quarter.

Cement, concrete and aggregates

In 2Q14, cement sales volumes rose by 4% like-for-like to reach 31.1 million t. The increase was boosted by export sales, higher volumes in Egypt, growth in the US, as well as the start-up of the group’s new cement plant in Rajasthan. This helped to offset weaker construction activity in France, lower number of trading days in Brazil, and issues with cement transportation in Iraq in June.

Ready-mix concrete volumes dropped 4% like-for-like, falling from 7.2 million m³ to 7.1 million m³. Sales volumes of pure aggregates came in at 43 million t in 2Q14, compared to 44.3 million t in the corresponding period in 2013.

Cement sales volumes increased from 54.5 million t in 1H13 to 57 million t in 1H14. Pure aggregates volumes fell very slightly, down from 70.7 million t in 1H13 to 69.9 million t in 1H14. The same was true for ready-mix concrete, which declined from 13 million m³ to 12.8 million m³ in the first half of this year.

Merger update

Following Lafarge and Holcim’s April 2014 announcement that they plan to create a ‘merger of equals’ to be known as LafargeHolcim, in July the groups released a list of which assets they propose to divest. The planned divestments, which are detailed here, are aimed at preventing any potential competition issues with regulatory bodies.

In line with the announcement of assets planned for disposal, Lafarge signed an agreement with Anglo American Plc, which would see it acquire Anglo American’s 50% interest in the UK-based Lafarge Tarmac.

Comment

“We have experienced another quarter of solid organic growth. Our margin improvement reflects our success in reducing costs and promoting our innovative products and solutions. We remain fully mobilised on achieving our 2014 objective to generate more than €600 million thanks to our cost cutting and innovation actions and aim at reducing our net debt below €9 billion by the end of the year,” said Bruno Lafont, Lafarge Chairman and CEO. “We confirm our outlook of cement demand growth in our markets of between 2 to 5% in 2014: North America is improving, growth continues in emerging markets, and we see the first signs of recovery in Europe. At the same time, our planned merger to create LafargeHolcim is well on track and we confirm our expectation to complete it in the first half of 2015.”

Adapted from press release by Louise Fordham

Read the article online at: https://www.worldcement.com/europe-cis/25072014/lafarge-group-announces-2q14-1h14-results-175/