Innovation and performance
actions to generate at least €1,750 Million EBITDA for the four years from 2012
through 2015
Reinforce financial structure
by reducing net debt to below €10 Billion as soon as
possible in 2013
Following the implementation of its new organization,
the Group today announced its 2012 to 2015 plan to drive growth in sales, cash
generation, and return on capital employed through innovation, performance
actions, and dynamic portfolio management. This plan fully supports the Group's short-term objectives to
significantly reduce debt and reinforce its financial structure. The actions also further drive the Group's industry
leadership position for customer solutions and operational performance.
The guidance already announced for 2012 for market
volume growth, pricing, cost savings, capital expenditures, and divestments remains
unchanged.
Plan
Highlights
- Cost savings of €1,300 million over four years,
2012 to 2015, of which at least €400 million in 2012 and at least €350 million
in 2013.
- Sales growth and higher margins generating EBITDA
improvement of at least €450 million by extracting more value from existing
locations through innovative products and solutions, deeper penetration into
specific market segments, services, and commercial excellence.
- Net debt targeted to fall below €10 billion as soon
as possible in 2013 through cash generation measures and dynamic portfolio management. No later than 2015, the Group plans to achieve
a ratio of cash flows from operations to net debt of 28% to 30%.
- Our innovation and cost savings actions, combined with less intensive
capital expenditures, and dynamic portfolio management with no major
acquisitions, is targeted to increase Return on Capital Employed after tax to above
8 percent in 2015.
Bruno
Lafont, Chairman and Chief Executive Officer of Lafarge, 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.
Our main growth avenue in the coming years will
clearly be to extract maximum value from our current asset positions. During the recent past we have built a
balanced portfolio of high quality assets weighted to growth markets. We will penetrate these markets more deeply by
addressing the changing needs of customers by introducing new innovative
products, new construction solutions, and higher levels of service. Also, through productivity improvements and
less intensive capital expenditures, we expect to generate higher returns from
these existing positions.
While we anticipate a demanding economic environment,
we are confident that the actions we are taking will help drive sales, cash
flows and returns."
A €1,300 million cost reduction program from
2012 through 2015
We have undertaken a detailed review to identify areas
for additional cost reductions over the next several years. The new management structure of the Group
creates a more efficient organization and allows us to build on our past
knowledge and successes to accelerate future cost savings. Higher energy savings through alternative
fuels, increased savings from new programs to manage electricity, and
productivity improvements represent some of the areas of acceleration. We have targeted a cumulative €1,300 million in savings for
the four years from 2012 through 2015. Of the total, at least €400 million of
savings are planned for 2012 and at least €350 million for 2013.
An innovation program to generate at least €450
million additional EBITDA from 2012 through 2015
Our sales growth will come from extracting more value
from our existing markets. Given the
evolving needs of construction today due to rapid urbanization, sustainable
development concerns, and climate change, Lafarge is accelerating the introduction
of innovative products, solutions, and services to meet these needs. With the new innovation function, we will
extend our offerings in our current markets to capture higher margins and
volumes. The program is targeted to add at
least €450 million cumulative additional EBITDA for the four years from 2012
through 2015.
Less
intensive capital spending
Since the beginning of 2006 the Group has strengthened
its local positions through 40 million tons of internal development in growth
markets. In 2008 it entered the highly profitable markets in the Middle East
and Africa. The Group's portfolio today
is spread across the right growth locations to follow market growth with less
capital intensity.
Accelerated performance productivity actions and
higher use of cementitious products are expected to bring an additional 13 to
15 million tons of additional output from existing plants with minimal capital
expenditures. Our positions also allow
us to create growth through more capital efficient brownfield projects.
A strong financial structure
Lafarge is determined to rapidly grow returns and reinforce
its financial structure. Our first
priority as to capital allocation is to reduce debt in order to strengthen our
financial ratios and we target net debt to be below 10 billion euros as soon as
possible in 2013. All our actions will contribute to higher cash generation,
improved returns, and cash flow from operations to net debt of 28% to 30% no
later than 2015.
Increasing
returns on capital employed after tax above 8% in 2015
These actions, along with our dynamic portfolio
management, will serve as the foundation for achieving a targeted Return on
Capital Employed after tax of above 8% in 2015. This return assumes that the economic environment remains challenging
and that improvement comes only from our actions.
Notes
to editors
Located in 64 countries with 68,000
employees, Lafarge is a world leader
in building materials, with top-ranking positions in its Cement, Aggregates
& Concrete businesses. In 2011, Lafarge posted sales of 15.3 billion
euros.
For the second year in a row, Lafarge ranked amongst
the top-10 of 500 companies evaluated by the "Carbon Disclosure Project" in
recognition of their strategy and actions against global warming. With the world's leading building materials
research facility, Lafarge places innovation at the heart of its priorities,
working for sustainable construction and architectural creativity.
Important
disclaimer - forward-looking statements:
This document contains forward-looking statements.
Such forward-looking statements do not constitute forecasts regarding results
or any other performance indicator, but rather trends or targets, as the case
may be, including with
respect to plans, initiatives, events, products, solutions and services, their
development and potential. Although Lafarge
believes that the expectations reflected in such forward-looking statements are
based on reasonable assumptions as at the time of publishing this document, investors are
cautioned that these statements are not guarantees of future performance.
Actual results may differ materially from the forward-looking statements as a
result of a number of risks and uncertainties, many of which are difficult to predict and generally beyond the control of Lafarge, including but not limited to the risks described in
the Lafarge's annual report available on its Internet website (www.lafarge.com) and uncertainties related to the market conditions
and the implementation of our plans. Accordingly, we caution you against relying on forward
looking statements. Lafarge does not undertake to provide updates of these
forward-looking statements.
More comprehensive information about Lafarge may be
obtained on its Internet website (www.lafarge.com), including under
"Regulated Information" section.
This document does not constitute an offer to sell, or
a solicitation of an offer to buy Lafarge shares.
