Lafarge report 2011 results

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Company’s consolidated net sales up 3% for the full year but current operating income down by 9%

LAFARGE have announced that consolidated net sales increased by 3% to approximately €15.3 billion during the year-ended 31 December 2011, compared with 2010, while EBITDA declined by 8% to €3.2 billion and operating income decreased by 9% to €2.2 billion.

The company blamed higher cost inflation and the negative impact of foreign exchange for lowered overall results, but said the Group had achieved its €2 billion net debt reduction target and further strengthened its liquidity. The strategic divestment of the majority of the company’s gypsum assets generated a net gain of €466 million.

Looking ahead, Lafarge see cement demand moving higher and estimate market growth of between 1 and 4% in 2012 versus 2011, with emerging markets being the main driver of demand growth. The company also expects higher pricing for the year and that cost inflation will increase at a lower rate than in 2011.

Bruno Lafont (pictured), chairman and chief executive of Lafarge, said: ‘In 2011 the Group met its debt reduction target of €2 billion despite a very challenging environment. Additional debt reduction will come in 2012 as the Group maximizes its operational cash flows. We will drive a €500 million cost-reduction programme, implement price actions as a response to cost inflation, further reduce capital expenditures to €800 million, execute strategic divestments of more than €1 billion, and propose a reduction of the dividend to 50 cents per share.

‘Further to the divestment of a majority of the gypsum assets and the fundamental changes to the management structure, the Group has fully refocused on its core businesses of cement, aggregates and concrete. This strategic shift will accelerate growth and innovation.’