Lafarge forecasts 2012 growth

Cement producer Lafarge is optimistic that cement demand will continue to move higher in 2012 after reporting a rise in sales but a dip in volumes at the half-year point.

Lafarge said sales were up 5% year-on-year for the first six months of 2012 to €7.6 billion, while operating income jumped 15% to €1 billion.

Despite this, volumes were down year-on-year. Lafarge sold 69.7 million tonnes of cement during the first half, down 1% on last year, while 84.2 million tonnes of aggregates were sold, down 2% compared to the first half of 2011. Ready mixed concrete sales fell 7% to 15.7 million tonnes.

Lafarge said it had responded to the increased cost of raw materials with price rises across all its product lines. It said sales volumes had declined primarily in Western, Central and Eastern Europe, offset to some extent by improvements in North America and Asia.

The producer is also aiming to streamline its operations, and reported achieving €170 million of cost savings in the first-half. It said it was on track to reach at least €400 million in cost savings for the year.

But the group also paid out €148 million in restructuring charges during the first half in order to implement its cost-saving initiatives. In addition, Lafarge recorded a non-recurring charge of €200 million in the second quarter reflecting impairments on its Greek assets.

Challenging conditions

Lafarge chairman and CEO Bruno Lafont 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."

Mr Lafont said Lafarge also aimed to sell at least €1 billion in assets this year as part of its strategy to improve its balance sheet.

The group forecast year-on-year cement and aggregates market growth of between 1% and 4% in 2012, with emerging markets continuing to be the main driver of demand. Lafarge also expects cost inflation to increase, albeit at a lower rate than in 2011.