Lafarge 9M12 sales increase, reduces Western Europe outlook
Lafarge reported a sales rise for the third quarter and year-to-date, driven by successful price increases across product lines and by growth in many emerging markets. The company has maintained its outlook for full-year market growth but lowered its outlook for Western Europe.
In the third quarter alone, consolidated sales were up four per cent to €4393m while EBITDA rose six per cent to €1071m. Current operating income up 9 per cent to € 815m.
Over the first nine months of 2012, consolidated sales rose five per cent to €12,007m. EBITDA increased seven per cent to €2,594m and current operating income by 12 per cent to €1837m despite a slowdown in Europe. Operations outside of Europe generated three-quarters of the Group’s EBITDA and rose 16 per cent in the quarter and 20 per cent year-to-date.
EBITDA margins improved 50 basis points in both periods presented to 24.4 per cent for the quarter and 21.6 per cent year-to-date, up 130 basis points year-to-date and 140 in the quarter when excluding carbon credit sales.
Cement sales for the nine month period are down two per cent YoY to 106.3Mt and for the third quarter they declined four per cent to 36.6Mt.
The group achieved €290m of cost savings through end of September, €120m in the third quarter, and is on track to reach at least €400m for the full year.
Net income Group share declined due to restructuring charges, an impairment recorded in second quarter 2012, and a higher base comparison due to a one-off gain in the third quarter 2011. Excluding these items, net income Group share improved 14 per cent year-to-date.
Net debt declined €2.1bn from September 30, 2011 and €350m in the quarter. Close to €500m of divestments have been secured to date and the Group remains committed to securing €1bn of divestments before year-end.
“Our actions to generate sales growth and cash, reduce debt, and improve returns, led to a fourth consecutive quarter of positive trends even in a lower growth volume environment. These actions will accelerate as we implement €550 million of innovation and cost savings initiatives in 2013 of our four year, €1.75bn additional EBITDA plan. We will also extract more out of the potential of our assets with strict capital discipline. Economic conditions are still challenging. We continue to be prudent on our market outlook and we remain committed to reducing debt below €10 billion as soon as possible in 2013.”
Overall the Group continues to see cement demand moving higher and maintains its estimated market growth of between 1 to 4 percent in 2012 versus 2011. Its forecasts are unchanged at +4 per cent to +7 per cent for North America, Middle East & Africa, Latin America and Asia, and at between -2 per cent and +1 per cent for Central & Eastern Europe. However, Lafarge has lowered its forecasts for Western Europe from between -11 per cent and -14 per cent to between -12 per cent and -15 per cent.
It expects higher pricing for the year and that cost inflation will increase at a lower rate than in 2011. The group maintains its target of reducing net debt to below €10bn as soon as possible for 2013. Capital expenditures will be limited initially to €800m in 2013. Additional divestments beyond the current €1bn 2012 target may lead to an increase of this expenditures level.
