Harsh weather hits Lafarge

Harsh weather conditions hit first quarter results at Lafarge, although the group claimed to have continued successfully to implement price increases to address cost inflation.

It said these price increase actions had gained pace during the quarter and would fully deliver in the coming months.

As well as the first quarter results being affected by lower volumes reflecting the overall difficult weather conditions, Lafarge said that temporary production limitations in Algeria and Egypt and two working days less in the quarter represented a third of the volume decline.

It said that performance and innovation measures continued to deliver results, generating €60 million and €40 million EBITDA (earnings before interest, taxes, depreciation and amortization) in the quarter respectively – despite the low volumes.

The group claimed to be on track to achieve its target of generating incremental EBITDA of €650 million from performance and innovation actions in 2013.

Net debt at the end of March was reported to have decreased by €600 million compared to the first quarter of 2012. It said it had moved slightly higher in comparison to the 2013 year-end because of normal seasonal working capital needs.

The group is said to be continuing to progress towards its debt reduction target. With the most recent divestment of its plant in Ukraine, it claimed to have secured €1 billion of disposals since the start of 2012.

Bruno Lafont, chairman and CEO, said, "The first quarter traditionally represents a small proportion of our results and is not indicative of full-year trends. Our outlook remains unchanged and we expect to see cement demand growth in our markets of between 1 and 4% in 2013.

“I am confident that by the end of 2014, we will have delivered most of our 2012 to 2015 plan to generate €1.75 billion additional EBITDA through performance and innovation measures, close to one year ahead of our initial objective. We will also reduce net debt to below €10 billion as soon as possible in 2013."

Overall the group continues to see cement demand increasing for the full year, and estimates market growth of between 1 to 4% in 2013 over 2012. Emerging markets continue to be the main driver of demand and Lafarge said it would benefit from its well-balanced geographic spread of high quality assets.