Tuesday, June 12, 2012

EUROPE: Cement maker Lafarge to cut costs and debt

Lafarge, the world's biggest cement maker, unveiled plans to cut costs by 1.3 billion euros ($1.63 billion) over the next four years and bring its net debt pile below 10 billion euros as early as possible next year.

The group, whose debt totaled 12.4 billion euros at the end of March, is targeting savings of at least 400 million euros this year and at least 350 million in 2013, and it plans to shun major acquisitions in the period through 2015, it said on Tuesday.

"While we anticipate a demanding economic environment, we are confident that the actions we are taking will help drive sales, cash flows and returns," Chief Executive Bruno Lafont said in a statement released ahead of Lafarge's analyst day.


Lafarge sees continuing growth in demand for cement, driven mainly by emerging markets, and like German peer HeidelbergCement and Mexico's Cemex it is raising prices to cover the growing cost of the energy needed to produce the substance.

Lafarge said it wanted to achieve a ratio of cash flow from operations to net debt of 28-30 percent no later than 2015, when it also expects to reach a return on capital employed after tax of more than 8 percent, helped by less intensive capital expenditure.

The company expects earnings before interest, tax, depreciation and amortisation (EBITDA) to improve by at least 450 million euros over the four years of its new strategic plan through sales growth and higher margins.

The group also confirmed its 2012 targets.

Shares in Lafarge were 2.3 percent higher at 31.35 euros by 08:04 British Time (0704 GMT). The stock is up about 15 percent since the start of the year.

No comments: