French cement giant Lafarge SA (LFRGY.PK, LFGEF.PK) on Tuesday unveiled plans aimed at driving growth in sales, cash generation and return on capital through 2015, including cost savings of 1.30 billion euros ($1.62 billion) and EBITDA improvement of at least 450 million euros.
Bruno Lafont, CEO, said, "The plan we are presenting today will quickly drive higher returns for our shareholders, significantly strengthen our financial structure, and shows our clear leadership ambition...While we anticipate a demanding economic environment, we are confident that the actions we are taking will help drive sales, cash flows and returns."
The world's biggest cement company plans cost savings of 1.30 billion euros over four years from 2012 to 2015. At least 400 million euros of this is expected in 2012 and at least 350 million euros in 2013.
The company said in order to accelerate future cost savings, higher energy savings are expected through alternative fuels and increased savings from new programs to manage electricity as well as productivity improvements.
The firm expects EBITDA improvement of at least 450 million euros through sales growth and higher margins. Enhanced performance productivity actions and higher use of cementitious products are expected to bring an additional 13 to 15 million tons of output from existing plants with minimal capital expenditures.
It targets net debt to fall below 10 billion euros as soon as possible in 2013 through cash generation measures and dynamic portfolio management. The group plans to achieve a ratio of cash flows from operations to net debt of 28 percent to 30 percent before the end of 2015.
Return on Capital Employed after tax is expected to be above 8 percent in 2015 owing to innovation and cost savings actions, less intensive capital expenditures and dynamic portfolio management with no major acquisitions.
Lafarge said this return assumes that the economic environment remains challenging and that improvement comes only from its actions.
In November 2011, the company had launched a cost savings program of 500 million euros for 2012, planning to realize most of the savings in the following year.
Lafarge said today its guidance for 2012 for market volume growth, pricing, cost savings, capital expenditures, and divestments remains unchanged.
The stock settled nearly flat in Paris on Monday at 30.65 euros on a volume of 1.34 million shares.
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