Lafarge posts profit recovery, sees cement demand rallying

French cement giant Lafarge on Wednesday reported a recovery of net profit last year and said that demand for its products for the construction industry was picking up. But the net figure was helped by asset sales, and underlying operating profit fell on unfavourable exchange rates. Lafarge, as a world leader in construction materials is a barometer of the health of building and civil engineering activity. Net profit amounted to 601 million euros ($827 million), boosted by asset sales. That was an increase of 65.0 percent from 365 million euros in 2012 but short of analysts' expectations of 644 million euros. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 9.0 percent to 3.1 billion euros, although excluding the effects of exchange rates it rose by 2.0 percent. The price of shares in the group rose by 4.39 percent to 54.91 euros in morning trading. One analyst in Paris who decline to be named commented that "sales are down as was expected, hit hard by currency factors" but the results had been "saved by cost-cutting." Sales fell by 4.0 percent to 15.2 billion euros. Lafarge said that this figure was particularly undermined by the strength of the euro against the dollar and by the fall of many emerging market currencies. Currency factors reduced sales by 6.0 percent, it said. The group slightly overshot its target of reducing debt to less than 10.0 billion euros, reporting a figure of 10.3 billion euros But it intended to reduce this to 9.0 billion euros this year. Chief executive Bruno Lafont said in a results statement: "Looking at 2014, we are determined and confident, and we expect an overall growth in our markets of between 2.0 to 5.0 percent." The group would take full advantage of opportunities in "emerging markets, where construction trends continue to be very favourable, accelerating growth through innovation and the progressive recovery of developed economies, starting with North America." Lafarge expected markets in Europe to stabilise which would mark "enormous" progress from conditions in recent years, Lafont said. At Global Equities in Paris, stockbroker Xavier de Villepion said that "they are behind in reducing their debt" and that "in 2014, Lafarge must show its ability to emerge from the period of transition and translate cost-cutting into markedly strong results."