Lafarge’s Q2 profits surge as volumes are down

725 Lafarge’s second-quarter figures show a surge in profit in the absence of the Greek impairment charges of last year, although operating income and EBITDA were down on last year after a fall in sales and volumes were affected by adverse weather conditions.

The company says it aims to achieve additional EBITDA of €650 million in the year through its performance and innovation measures, and it also expects to reduce net debt to below €10 billion in 2013, and below €9 billion in 2014.

“Our results in the second quarter resisted in an environment which was marked by a conjunction of unfavourable circumstances. We increased prices and performance and innovation results are in line with our 2013 €650 million additional EBITDA target.

“Taking into account first-half volumes, we foresee a cement demand growth in our markets of between 0 to 3% in 2013, which implies more positive trends in the second half.

“We are fully mobilised to deliver on our strategy which objective is to create sustainable value for our shareholders. This means focusing on actions within our control, including through performance and innovation. Creating value also means we will continue the utmost discipline in terms of capital allocation as well as pursuing our portfolio optimisation,” says Bruno Lafont, chairman and chief executive officer.

cent in 2013, factoring in low volumes in the first-half, but implies more positive trends in the second half. The company noted that the emerging markets continue to be the main driver of demand and that it will benefit from its well-balanced geographic spread of high quality assets.

Second-quarter net income surged to €201 compared to €39 million in Q2, 2012, which was affected by a pre-tax impairment of €200 million recorded on Greek assets.

Current operating income dropped 11% to €667 million and EBITDA fell 8% to €922 million.

Quarterly sales reached €4.11 billion, down 3% last year's €4.26 billion, hit by adverse foreign exchange. At constant exchange rates, sales were stable, as increased prices across all of its product lines to address cost inflation offset the impact of lower volumes.

Cement volumes fell 5% on a reported basis and 3% on like-for-like basis to 36.5 million tonnes, mainly reflecting continuing adverse weather. Temporary fuel shortage in Egypt also put some pressure on volumes. Volumes of pure aggregates remained flat with last year, while ready-mix concrete dropped 4%.