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Financial policy & debt

Lafarge’s financial policy

The financial policy of Lafarge is defined by the Group's Management and is monitored on a regular basis. It is designed to optimize the cost of capital and ensure a high degree of stability and a strong financial structure.

 

The policy is based around 4 key elements:

  • the maximum level of leverage targeted by the Group. This is based on a special coverage ratio which takes account of the cash flow generated by the Group and its net debt (consolidated debt minus available liquidity),
  • the average due date of financial liabilities and their dispersion. This ensures that debt repayments are appropriately distributed over a given period,
  • the need for committed credit lines over the medium term. These credit lines provide Lafarge with the option of refinancing its short-term debts at any time. They guarantee the Group's liquidity and allow it to respond to fluctuations in the financial markets,
  • the need for an appropriate balance between debt at variable rates and debt at fixed rates. By achieving the correct balance, the Group can limit its exposure to fluctuations in exchange rates.
  • Members of the Executive Committee
  • Financial reports

An action plan to enhance Lafarge’s financial structure

In February 2009, in a difficult financial and economic environment, the Group announced an action plan to strongly enhance its financial structure.
One year later, its goals are exceeded:

  • Cost reduction: 230 million euro in structural savings.
  • Capital expenditure reduced by over 1 billion euro to 1.6 billion euro.
  • Divestments: 919 million euro.
  • Working capital reduced by more than 1 billion euro.
The press release about the 2009 annual results

Operating cash flow

Operating cash flow, or cash flow from operations, (after interests and income tax paid) is the net cash provided by operating activities from continuing operations, before changes in operating working capital items, excluding financial expenses and income taxes.

Glossary

Net worth

Net worth, or shareholder's equity, is the amount of money contributed by shareholders at the company's creation (or afterwards), or the funds remaining at the company's disposal in the form of profits not distributed as dividends.

Glossary

Subsidiaries’ debt

Lafarge is subject to limited foreign exchange risks as a result of its subsidiaries' transactions in currencies other than their operating currencies.

The general policy is for subsidiaries to borrow and invest excess cash in the same currency as their functionnal currency. However, Lafarge encourages the investment of excess cash balances in US dollars or euros in emerging markets.

Typically, a portion of the subsidiaries' debt funding is borrowed at the parent company level in forreign currencies or in euros, and then converted into foreign currencies through currency swaps.

Subsidiaries & holdings

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Agenda

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Stock Price

07/29/10

Paris
17:35:00

Price
43.49€

D/D-1
+1.22%

Details
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