Charges hit Lafarge profits

By Chris Sleight20 February 2013

Bruno Lafont, chairman and CEO of Lafarge.

Bruno Lafont, chairman and CEO of Lafarge.

Lafarge had revenues of € 15.8 billion (US$ 21.1 billion) last year, a +3% improvement on 2011. However, its sales in terms of the volume of cement, aggregates and ready-mixed concrete fell, and profits were hit by a series of charges. The company’s net profit was down -27% to € 432 million (US$ 575 million).

Lafarge took a series of charges in 2012, due to write-downs on its Greek and Western European and several business restructurings. These more than offset the one-off gains it achieved from the sale of businesses. In fact, if it were not for the € 466 million (US$ 620 million) gain from the sale of its gypsum businesses last year, the company would have made a net loss.

Cement volumes were down -3% to 141 million tonnes, while aggregate sales fell -2% to 188 million tonnes, and ready mixed concrete dropped -6% to 31.8 million m3. However, the company said that price increases helped drive an increase in revenues.

It also added that its operating profit grew +7% over the course of 2012, despite a slowdown in Europe. According to Lafarge, the company generated more than 75% of its profits outside Europe last year.

Commenting on the results, Lafarge chairman and CEO Bruno Lafont stressed the company’s drive to reduce debt and increase cost savings.

“I am convinced that we will deliver most of our 2012-2015 plan to generate € 1.75 billion (US$ 2.33 billion) additional (earnings before interest, tax, depreciation and amortisation) EBITDA through cost reduction and innovation measures by the end of 2014, close to one year ahead of our initial objective. We target to deliver € 650 million (US$ 865 million) additional EBITDA from these measures in 2013.

“While we adopt a cautious stance on the current market environment, our actions will drive net debt reduction to below € 10 billion (US$ 13 billion) as soon as possible in 2013,” he said.

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