Lafarge results: 'positive trends'
First publishedon www.AggBusiness.com
Lafarge's latest results show "positive trends" in fourth quarter after successfully achieving a net debt reduction target of €2billion with a €500million cost savings programme underway.
In the fourth quarter of 2011 sales were up 5% to €3,813million (+7% like for like) and the current operating income was up 3%to €538m (+1% like for like).
For the full year sales increased 3% to €15,284million (+5% like for like) but the current operating income fell 9% to €2,179million (-9% like for like) and the net income group share was down 28% to €593million.
The company points out that sales and current operating income are restated for 2011 and 2010 to reflect the reclassification of the gypsum activities to discontinued operations (the strategic divestment of gypsum assets generated a net gain of €466 million).
Cost savings accelerated at the end of 2011, with €100 million delivered in the fourth quarter achieving €250 million for the full year, well above the €200 million target.
As part of the announced programme to reduce costs by €500 million, the group plans to reach at least €400million of savings in 2012, and it will also implement in 2012 its new country-based organisation project to accelerate organic growth and innovation and reinforce efficiency.
Bruno Lafont, chairman and CEO of lafarge, said: "In 2011 the group met its debt reduction target of €2billion despite a very challenging environment. Additional debt reduction will come in 2012 as the group maximises its operational cash flows. We will drive a €500million cost reduction programme; implement price actions as a response to cost inflation; further reduce capital expenditures to €800million; execute strategic divestments of more than €1billion, and propose a reduction of the dividend to 50cents per share.
"Further to the divestment of a majority of the gypsum assets and the fundamental changes to the management structure, the group has fully refocused on its core businesses of cement, aggregates and concrete. This strategic shift will accelerate growth and innovation."
In the future, overall the group sees cement demand moving higher and estimates market growth of between 1-4% in 2012 versus 2011.
Emerging markets are the main driver of demand growth, and Lafarge says it benefits from its well-balanced geographic spread of high quality assets.
"We expect higher pricing for the year and that cost inflation will increase at a lower rate than in 2011."