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Lafarge Posts Loss, Halves Dividend

2/17/2012 2:21 AM ET

French cement giant Lafarge SA (LFRGY.PK,LFGEF.PK) reported Friday a net loss for the fourth quarter, reflecting Greek charges, higher taxes and margin pressure. EBITDA, a key earnings metric, edged up 1 percent driven by higher sales volumes, pricing and cost cutting measures. The company cut its dividend by half.

Looking ahead, the world's biggest cement company projects higher cement demand in 2012 and estimates market growth of between 1 to 4 percent. While it expects solid market trends in most emerging countries and stabilization in North America, it sees a decline in Western Europe.

"Emerging markets are the main driver of demand growth and Lafarge benefits from its well balanced geographic spread of high quality assets," the company said.

In its fourth quarter, quarterly sales grew 5 percent and like-for-like sales increased 7 percent. Operating margin dropped 30 basis points to 14.1 percent.

Segment-wise, sales of its core cement business increased 6 percent reflecting volume improvements in emerging markets and favorable weather, partially offset by negative foreign exchange impact. Cement earnings and margins were hurt by higher cost inflation and foreign exchange, despite the cost reduction measures.

In aggregates & concrete division, sales grew 4 percent driven by higher aggregates volumes and overall higher pricing.

Regionally, North American results benefited from higher volumes and cost cutting, while Western Europe was hurt by steep volume declines in Greece and Spain offsetting positive volume trends in France and in the UK.

In Central and Eastern Europe, higher volumes and price gains helped the results, while Middle East and Africa earnings were impacted by higher cost inflation, adverse foreign exchange and significantly lower results in Egypt.

The company added that the strategic divestment of Gypsum assets helped it to successfully achieve its 2 billion euros net debt reduction target.

Lafarge plans to reach at least 400 million euros of cost savings in 2012. The company also plans to execute strategic divestments of more than 1 billion euros.

For the fourth quarter, the company reported a net loss of 3 million euros or 0.01 euros per share, compared to prior year's profit of 62 million euros or 0.22 euros per share.

The results benefited from a net gain of 466 million euros from the divestment of Gypsum assets, offset by a non-cash goodwill write-off of 285 million euros mainly in Greece as well as several one-off elements which increased the income tax.

Quarterly sales grew to 3.81 billion euros from 3.63 billion euros last year. The company will propose a reduction in dividend to 50 cents per share from prior year's 1 euros per share.

In Paris, Lafarge shares closed Thursday's regular trading session at 31.83 euros, up 0.14 euros or 0.44 percent.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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