Lafarge profits up, debts down ahead of merger

PARIS: French cement giant Lafarge, set to merge with Swiss rival Holcim, announced on Friday an increase in second-quarter net profit, off the back of successful cost-cutting and a strong showing in Asian and South American emerging markets.

Lafarge and Holcim, both of which have international activities, intend to create a giant materials group with their merger, due to be completed in the first half of 2015.

The Lafarge group posted a net profit of 205 million euros ($275m) in the second quarter, up 2.0 per cent from the equivalent figure last year, but over the first six months it plunged by 16.6pc to 70m euros.

Hampered by the relative strength of the euro compared to emerging market currencies, Lafarge’s first-quarter sales slumped 4pc to 6 billion euros, which at constant exchange rates represented a 6pc increase.

Underlying operating profit as measured by earnings before interest, tax, depreciation and amortisation (Ebitda) fell by 1pc in the first quarter to 1.1bn euros, a gain of 13pc on a comparable basis.

Lafarge also said that its profit margin on operations had improved reflecting “our success in reducing costs and promoting our innovative products and solutions. “CEO Bruno Lafont said: “North America is improving, growth continues in emerging markets, and we see the first signs of recovery in Europe. “The French group last year reduced its debt to nearly 10bn euros to regain investor confidence that would grant greater access to capital markets.

It confirmed its targets for 2014, aiming to cut its debt to below 9bn euros — a year ahead of schedule — and make an additional 600m euros (Ebitda).

The group also confirmed its outlook of cement demand growth of 2.0 to 5pc this year.

Published in Dawn, July 26th, 2014