Domestic cement volumes are up 1% in Q1, comparing to a strong first quarter 2014, notably in Europe. Solid trends in many emerging markets and in Canada added to the impact of our new plants in Russia and India. These positive trends more than offset the impact of a mild market and high comparables in France and Brazil, adverse weather conditions in the United States and in Algeria and on-going transportation limitations in Iraq.
EBITDA in the first quarter rose 17% with a 14% like for like increase supported by cost reduction and innovation actions. The Group generated €125 million (€85 million from cost cutting and €40 million from innovation). Cement prices are up 0.6% year on year and are sequentially up 2.7% quarter on quarter with price improvement in most countries.
Group EBITDA margin improved 180 basis points like for like for the quarter, with improvements in all regions but Latin America.
As usual first quarter results reflect seasonality and are always lower relative to the other quarters. The resulting net loss in the quarter has however been significantly reduced thanks to solid operational performance and lower net financial costs. This was achieved despite pre-tax €38 million of merger-related costs and €33 million one-off costs related to a plant mothballing in Slovenia.
Cash flow from operations excluding merger costs significantly increased compared to Q1 2014, bolstered by higher EBITDA and lower cash tax. At €9.8 billion, net debt was affected by the usual seasonality of our working capital in the first quarter amplified by a particularly strong growth in March sales and by a €184 million adverse impact of exchange rates versus the year-end net debt level. €0.2 billion of additional cash proceeds from divestments secured in 2014 were received in April 2015 and will contribute to further reduce net debt.
Bruno Lafont, Chairman and Chief Executive Officer of Lafarge commented on the performance of the company in the first quarter:
"The strong start this year confirms that our teams are fully focused on achieving our objectives.
Our markets are developing in line with our expectations and growth shall accelerate gradually in the coming quarters. We reaffirm our expectation of cement volume growth of 2 to 5% in our markets in 2015. We also confirm our target to significantly grow our operational results with an expected underlying EBITDA, excluding the impact of the planned merger with Holcim, of between 3 - 3.2 billion euros in 2015.
These perspectives underline the strength of our asset portfolio, the quality of our teams, our rigorous action plans to maximise cash flows and the relevance of a strategy focused on self-help measures.
In regards to our planned merger to create LafargeHolcim, we have successfully completed many significant steps and our teams can be proud of what has been achieved. We are now entering the final stage of this transaction which is on track with our announced ambitious timeline, thanks to our unique and proactive approach to making it happen. This project is a once-in-a-generation opportunity to transform our industry. The new group will have the most diversified footprint in the sector, limiting the traditional volatility of our activities. Building a new business model, we will promote innovation as a primary differentiating factor, be less capital-intensive and maximise free cash flow through an optimised cost base, the melding of best practices from the two groups and a very disciplined capital allocation. LafargeHolcim is designed to deliver superior returns to shareholders and we are committed to deliver on this objective."
Adapted from press release by Joseph Green
Read the article online at: https://www.worldcement.com/europe-cis/30042015/lafarge-announce-results-first-quarter-769/