Lafarge sees higher pricing in 2012

Lafarge said it expected higher pricing for 2012 after sales and operating profits rose in the first quarter, lifted by price increases for customers and stronger cement volumes in emerging markets.

But net losses widened due to restructuring charges as the company continued to slash costs as part of a €500m (US$657.63m) savings plan.

Earnings before interest, tax, depreciation and amortisation in the three months to 31 March rose 8% to €516m (US$678.67m), while sales increased 5% to €3.35bn.

Net loss widened to €44m from €29m in the same quarter a year ago.

"Overall the group continues to see cement demand moving higher and maintains its estimated market growth of between 1 to 4% in 2012 versus 2011," Lafarge said in a statement.

"We expect higher pricing for the year and that cost inflation will increase at a lower rate than in 2011."
Net debt decreased by 13% to €12.36bn at the end of the quarter, compared with the same period in 2011.

Lafarge has been selling non-core assets – among them the European and South American gypsum assets – and refocusing on its core cement and concrete business after losing its investment grade last year.

The French company became heavily indebted after paying €10.2bn for Orascom Cement, the largest cement maker in the Middle East, in 2007.

It pledged in February to cut its €12bn debt pile further this year with asset disposals worth more than €1bn, capital expenditure cuts and cost savings of at least €400m in 2012.

Lafarge will also have to sell a number of assets to win British clearance for a tie-up of its building materials business with miner Anglo American.