Reuters: Financial Services and Real Estate: UPDATE 2-Lafarge sees higher pricing in 2012

Reuters: Financial Services and Real Estate Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 2-Lafarge sees higher pricing in 2012 May 4th 2012, 09:27 Fri May 4, 2012 5:27am EDT * Q1 EBITDA up 8 pct at 516 mln eur * Q1 sales up 5 pct to 3.35 bln eur * Q1 net loss widened to 44 mln eur, hit by restructuring * Sees cement market up 1-4 pct in 2012 * Sees higher pricing for 2012 By Elena Berton PARIS, May 4 (Reuters) - Lafarge said it expected to hike prices further in 2012 after sales and operating profits rose in the first quarter, lifted by price increases and stronger demand for cement in emerging markets. Like its smaller peers, the world's largest cement maker has been passing on to customers the higher costs of energy-intensive cement manufacture. It aims to charge higher prices in 2012, but sees cost inflation rising at a slower rate than in 2011. "The success of price increases at the start of the year is supportive of our positive price outlook for the full year," Chief Financial Officer Jean-Jacques Gauthier told analysts. Lafarge has predicted that energy costs would increase 7 percent this year, adding an extra euro to the cost of producing each tonne of cement. The manufacture of cement, the most heavily used substance on earth, requires considerable amounts of fuel such as coal and natural gas, as well as electricity, as its ingredients have to be crushed and burned. Lafarge's German peer HeidelbergCement and Mexico's Cemex have also opted to charge customers higher prices to offset rising costs. At the same time, the company is forecasting higher demand for cement, with emerging markets the main driver for growth. "Overall the group continues to see cement demand moving higher and maintains its estimated market growth of between 1 to 4 percent in 2012 versus 2011," Lafarge said in a statement. Earnings before interest, tax, depreciation and amortisation in the three months to March 31 rose 8 percent to 516 million euros ($678.67 million), while sales increased 5 percent to 3.35 billion euros, slightly beating an average of 3.34 billion from a Reuters poll of eight analysts. But net losses widened to 44 million euros from 29 million in the same quarter a year earlier due to restructuring charges as the company continued to slash costs as part of a 500 million euro savings plan. "Margins improved year-on-year and the headline (EBITDA) beat will be positively received, we believe, especially given recent pressure on the shares," Goldman Sachs analysts said in a note to investors. Shares in Lafarge, which have lost around 7 percent of their value in the last month, were the third-best performers on the CAC 40 index at 0926 GMT, trading 2.9 percent higher at 30.84 euros, while the index was down 0.9 percent. DEBT SHRINKS Net debt decreased by 13 percent to 12.36 billion at the end of the quarter, compared with the same period in 2011, but rose slightly from December due to seasonal working capital changes. Lafarge has been selling non-core assets - among them the European and South American gypsum assets - and refocusing on its core cement and concrete business after losing its investment grade last year. The French company became heavily indebted after paying 10.2 billion for Orascom Cement, the largest cement maker in the Middle East, in 2007. It pledged in February to cut its 12 billion euro debt pile further this year with asset disposals worth more than 1 billion euros, capital expenditure cuts and cost savings of at least 400 million in 2012. Lafarge will also have to sell a number of assets to win British clearance for a tie-up of its building materials business with miner Anglo American. Link this Share this Digg this Email Reprints

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