Lafarge reiterates 2014 demand growth rate

Lafarge has confirmed its 2014 sales volumes target for the year with an improving US outlook and signs of recovery in Europe, although emerging markets continue to be the main driver of growth.

First half turnover came off by 3.8 per cent to EUR6000m and the EBITDA was one per cent lower at EUR1155m, while the trading profit eased by just 0.3 per cent to EUR609m. The net attributable profit did improve by three per cent to EUR205m.

Net debt at the end of June was 15 per cent lower at EUR10,104m and the gearing level eased marginally from the 70.5 per cent reported this time last year to 70.4 per cent. Capital expenditure declined by 8.8 per cent to EUR443m and is expected to amount to around EUR1,100m for the full year.

Cement deliveries recovered by 4.6 per cent to 57Mt but the turnover from cement declined by 2.6 per cent to EUR4,339m and the corresponding EBITDA eased by 2.1 per cent to EUR1051m. Including joint ventures there was a 4.8 per cent increase to 68.3Mt. The turnover in declined by four per cent to EUR807m, but  EBITDA staged a 37 per cent recovery to EUR85m though the aggregates tonnage was 1.1 per cent lower at 69.9Mt. In ready-mixed concrete, turnover was 5.3 per cent lower at EUR1098m and the EBITDA fell by 35 per cent to EUR22m as deliveries declined by about one per cent to 12.8Mm³.

Europe
European cement deliveries in the still consolidated activities remained unchanged at 11.3Mt while the turnover eased by 1.3 per cent to EUR1568m, with central and eastern Europe showing a 0.2 per cent decline compared with a two per cent reduction in western Europe.  EBITDA, however, did improve by 32.3 per cent to EUR217m, with improvements of 23 per cent in the west and of 58 per cent in the east.

Under the new accounting rules adopted, the British joint-venture is no longer proportionately consolidated, but its volumes improved by 4.9 per cent in cement, by seven per cent in aggregates and by 10.8 per cent in ready-mixed concrete. In France, volumes declined by five per cent in cement and by 5.8 per cent in ready-mixed concrete while in aggregates there was a two per cent increase. In Spain, cement shipments recovered by 0.5 per cent, though prices declined, and Greek domestic volumes staged an 11.7 per cent recovery from a very low base. Polish cement volumes recovered by 11.4 per cent while aggregates deliveries rose by 18.4 per cent. In Romania, cement volumes rose by 6.3 per cent while in Russia there was a 3.8 per cent volume improvement.  

Middle East & Africa
In the Middle East & Africa region cement deliveries improved by 10.8 per cent to 21.5Mt and turnover was three per cent ahead at EUR1854m and the EBITDA improved by 8.6 per cent to EUR529m. This performance was helped by the exclusion of Morocco, where cement deliveries were off 4.4 per cent. Lafarge's Egyptian volumes improved by 19.5 per cent, helped by the switch from gas to petcoke as principal kiln fuel and were increased substantially leading to a 38.1 per cent increase in turnover. Algerian domestic deliveries rose by 10.1 per cent while in Irak there was a 5.0 per cent increase in the volume of cement sold, but competitive pressure, mainly from imports, led to lower selling prices and in the final month the political situation dampened demand. Nigeria continued to provide a positive trading environment, with volumes increasing by 5.1 per cent and pricing improving. This year, Lafarge is expecting market growth of 7 per cent to 10 per cent in Nigeria. In Kenya, volumes improved by 5.3 per cent but there was some pressure on prices. South African has been disappointing, with cement deliveries falling by 8.5 per cent and ready-mixed concrete deliveries by 9.7 per cent. However, aggregates shipments did increase by 8.8 per cent to 4.8Mt.

Asia
The Asian turnover declined by 5.5 per cent to EUR1,096m, of which cement represented EUR987m, while the EBITDA fell by 17.5 per cent to EUR221m. Cement deliveries were 7.4 per cent higher at 16.0Mt and a major boost was provided by the new 2.3Mt per annum cement works in Rajasthan in India that contributed substantially to the 33 per cent volume increase in that country. The average price in India, however, showed a 12.1 per cent reduction, partially because of different geographical mix.

The Philippines showed a volume growth of 2.8 per cent, though Lafarge's volumes increased by four per cent during the second quarter in spite of Easter falling in April and expects 7 per cent to 10 per cent market growth this year. Volumes declined by 3.1 per cent in South Korea, by two per cent Indonesia and by one per cent in Malaysia. The joint venture in China registered a 4.9 per cent volume improvement in the six months. Aggregates shipments improved by some 4 per cent to 4.4Mt, but ready-mixed concrete deliveries dropped by 22 per cent to 2.3Mm³.

North America
In North American, turnover was affected by the weaker dollar that cost EUR15m and declined by 7.9 per cent to EUR1,138m, of which cement accounted for EUR497m. The EBITDA was 8.7 per cent lower at EUR115m overall, but did improve by EUR3m to EUR76m in cement. Cement shipments increased by 4.5 per cent to 4.6Mt and prices were increased both in the USA and in Canada. In the United States, cement deliveries improved by 6.1 per cent in spite of a harsh winter in some states disrupting sales in the first quarter. Canadian volumes were ahead by a more modest 1.1 per cent, with improvements in western Canada more than making up for the Weakness in Québec.

The North American aggregates operations saw volumes decline by 10.2 per cent to EUR32.4m, with underlying volume reductions of 3.9 per cent in the USA and of 3.6 per cent in Canada. The ready-mixed concrete volume was some 6 per cent lower at 2.3m m³ on the back of reductions of 5.8 per cent in the USA and of 5.9 per cent in Canada.

Latin America
In Latin America, turnover was again negatively affected by exchange rate movements but also by the de-consolidation of the operations in Honduras and Mexico. Turnover fell by 23.3 per cent to EUR350m, of which cement accounted for EUR295m. The group EBITDA fell by 40.2 per cent to EUR73m, with effectively all of it coming from the cement operations. Cement deliveries were down by some 19 per cent at 3.6Mt with Brazilian cement volumes being 0.3 per cent higher, while in Ecuador there was a 0.2 per cent reduction. Aggregates shipments were five per cent higher at 1.3Mt and deliveries of ready-mixed concrete rose by 24 per cent to 0.7Mm³.