Greek problems for Lafarge
By Sandy Guthrie27 July 2012
A €200 million charge for the impairment of Greek assets affected second quarter figures from building materials firm Lafarge, although the group said its sales increased for the quarter and year-to-date, driven by "successful price actions across all product lines to respond to cost inflation".
The group claimed to have achieved €170 million of cost savings in the first-half, and €100 million in the second quarter, saying it was on track to reach at least €400 million for the year.
As well as the non-recurring charge of €200 million in the second quarter for the impairment of Greek assets, Lafarge recorded €148 million of restructuring charges in the first-half to implement its cost savings initiatives.
Its earnings before interest, tax, depreciation and amortization (EBITDA) and current operating income rose in the second quarter and year-to-date, driven by double digit growth in Middle East and Africa, Asia, Latin America, and North America.
Bruno Lafont, chairman and CEO of French-based Lafarge, said, "Economic conditions remain challenging for many parts of the world and we remain prudent on our outlook. But even in a lower growth volume environment, our actions to generate sales growth and cash, and to improve returns, led to a third consecutive quarter of positive trends."
He said these actions would continue as the group implemented the cost savings of at least €400 million in 2012, while also driving sales growth and higher margin products and services through innovation, and extracting more out of its assets with strict capital discipline.
"We confirm our objective to secure at least €1 billion of divestments this year as part of improving returns and reducing net debt to less than €10 billion as soon as possible in 2013," he said.
The Lafarge group said it continued to see cement demand moving higher and maintaining its estimated market growth of between 1% to 4% in 2012 versus 2011. Emerging markets continue to be the main driver of demand, it said.
It added that it expected higher pricing for the year and that cost inflation would increase at a lower rate than in 2011.