Lafarge 3Q net profit steady, announces new cost reduction and innovation targets
Lafarge reported a slight increase in the third-quarter profit with on the back of reduction initiatives, despite sales being impacted by negative currency movements.
Chairman and Chief Executive Officer Bruno Lafont said: "With improving volume trends and despite the adverse effect of exchange rates, we continued to progress in the third quarter on our strategic action plan. ...We have accelerated and will complete our 2012-2015 cost reduction and innovation plan one year ahead of our initial objective."
The company's third-quarter net profit was steady at EUR30m, while total revenue fell four per cent to EUR4.24bn. Sales declined four per cent to EUR4.24bn from last year's EUR4.39bn. The company noted that adverse exchange rates had a negative impact of seven per cent on sales. On a like-for-like basis at constant scope and exchange rates grew four per cent benefited by higher volumes and improved prices across all product lines to address cost inflation.
Net debt now stands at EUR10.9bn, a reduction of EUR1.3bn compared to the end of September last year. The group reiterated its objective to reduce net debt to below EUR10bn by year-end 2013 and below EUR9bn in 2014. To regain its investment grade, Lafarge has been shedding non-core assets. In the quarter, Lafarge received EUR0.9bn from divestments, including the sale of its gypsum operations in the US for EUR0.5bn and its cement operations in Ukraine for EUR0.1bn.
Cement volumes during the third quarter were 36.7Mt, compared with 36.6Mt a year ago. Volume on like-for-like basis grew three percent.
For the full year, Lafarge confirmed growth of up to three per cent, implying better trends in the second half of the year compared to the first. The group said the recovery is becoming evident in the US, growth in most emerging market continues and Europe is showing stabilisation, albeit a low levels.
The group expects higher pricing for the year. Cost inflation continues but a lower rate than in 2012, benefitting from positive trends in coal and petcoke prices and reduced general inflation in developed countries.
Lafarge confirmed its objective to deliver its 2012-15 cost reduction and innovation targets plan one year ahead of schedule with at least EUR600m of EBITDA coming from cost reduction and innovation measures in 2014. Beyond 2014, it announced that it plans to generate at least EUR1.1bn of additional EBITDA from its actins in 2015-15, of which EUR600m from cost reductions and EUR500m from innovations. This represents a minimum objective of EUR500m, the company highlighted.
