Lafarge SA — Q4 2013 Earnings Presentation
55 slides from Lafarge SA's earnings presentation, Feb 19, 2014
Slide 1: 2013 Fourth Quarter Results
Charles Plumey-Faye - Rudy Ricciotti (architect) Copyright: © Library Lafarge - 2013 Fourth Quarter Results Bruno Lafont and Jean-Jacques Gauthier France, Marseille – Mucem (Museum of European & Mediterranean Civilizations) February 19, 2014
Slide 2: Disclaimer
Disclaimer 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
Slide 3: Bruno Lafont, Chairman and CEO
Charles Plumey-Faye - Rudy Ricciotti (architect) Copyright: © Library Lafarge - Bruno Lafont Chairman and CEO France, Marseille – Mucem (Museum of European & Mediterranean Civilizations)
Slide 4: Operational Trends Continued to Improve in Q4
Operational Trends Continued to Improve in Q4 Volumes improving and prices remaining firm Cost reduction and innovation objectives achieved €670M delivered in 2013 >€600M objective for 2014 Net debt reduced by €1 bn in 2013 Target to reduce net debt below €9 bn in 2014 is confirmed Dividend of €1 pe
Slide 5: Differentiate through Innovation
Differentiate through Innovation Additional EBITDA > €200M in 2014; €500M in 2015-2016 Provide Solutions and Services to Contribute to… More Housing More Compact Better Connected More Durable More Beautiful 5
Slide 6: Innovative construction projects and solutions
Copyright: © Library Lafarge - Jacek Kadaj - Orco Property Group - Daniel Libeskind (Architect) Copyright: © Library Lafarge - Billy Milimbo (architect/SSB Specialist) Zlota 44 Tower, Poland Cement mixed with soil DuraBric Cement, Malawi The highest housing tower in Europe Copyright: © Library Lafar
Slide 7: Execute Cost Savings and Focus on Prices
Execute Cost Savings and Focus on Prices Cost Savings of more than €400M in 2014; €600M in 2015-2016 Focused on execution Full accountability for each action with alignment of the bonus scheme Actions launched in 2013 will increasingly deliver in 2014 and beyond 7
Slide 8: Three Organic Growth Drivers
Three Organic Growth Drivers All Levers Will Contribute in 2014 Continuing growth in emerging countries Accelerating growth through innovation Progressive recovery in developed economies Leverage our portfolio to take full advantage of these drivers 8
Slide 9: Leverage our Portfolio
Leverage our Portfolio A Well Balanced Exposure; Organic Development Continues Russia 2.1mT Q2 2014 Algeria 0.8mT Q2 2013 Philippines Brazil 0.5mT 0.5mT Q2 2013 Q1 2014 India 2.6mT New clinker line Q3 2013 Debottlenecking investments Construction growth continues in emerging markets where the underl
Slide 10: A Significant Exposure to the North American Rebound
A Significant Exposure to the North American Rebound A Network of Integrated Positions Across the US and Canada 2013 Revenues 11 MT of capacity in the United States North America €3.1Bn and 6 MT in Canada Refocus on stronghold positions largely completed 75% utilization rate; significant operating l
Slide 11: A Proven Track Record in Sub-Saharan Africa
A Proven Track Record in Sub-Saharan Africa > 10MT of Additional Capacity Planned in the Coming 4 Years 2013 Lafarge Capacity & development plan Revenues >30 Sub Saharan Africa €1.8Bn 20 6 3 1990 2000 2013 2017 > 8.5MT of new capacity from mostly brownfield projects Nigeria, Tanzania and Zambia 1.5M
Slide 12: Driving Growth and Value Creation
Driving Growth and Value Creation We will increasingly benefit from three organic growth drivers This potential will be captured thanks to our competitive edge in innovation and our high-quality well spread portfolio of assets We will continue to apply the utmost discipline in terms of capital alloc
Slide 13: Jean-Jacques Gauthier, Chief Financial Officer
Charles Plumey-Faye - Rudy Ricciotti (architect) Copyright: © Library Lafarge - Jean-Jacques Gauthier Chief Financial Officer France, Marseille – Mucem (Museum of European & Mediterranean Civilizations)
Slide 14: Q4 Highlights
Q4 Highlights Like for like EBITDA growth in all regions, with solid performance in North America and Middle East and Africa Volumes continued to improve overall and prices were firm, sequentially stable from Q3 to Q4 and up 2.6% vs. Q4 2012 EBITDA up 14% on a like for like basis despite a €20M impa
Slide 15: Key Figures
Key Figures 12 Months 4th Quarter 2013 2012 Variation lfl (2) 2013 2012 Variation lfl (2) Volumes Cement (MT) 136.8 141.1 -3% - 34.9 34.8 - 3% Pure aggregates (MT) 192.8 188.3 2% - 49.2 47.1 4% 2% Ready-Mix Concrete (Mm3) 30.7 31.8 -3% -1% 7.5 7.8 -4% -2% Sales 15,198 15,816 -4% 2% 3,714 3,809 -2% 5
Slide 16: Operational Review
Copyright © LibraryLafarge - Ignus Gerber Operational Review Everyday life in Brazil - urban planning and street atmosphere in Rio de Janeiro
Slide 17: Overview of EBITDA by Geographical Area
Overview of EBITDA by Geographical Area 12 Months 4th Quarter By geographical zone 2013 2012 Variation lfl (2) 2013 2012 Variation lfl (2) North America 560 558 - 18% 143 160 -11% 26% Western Europe (1) 354 507 -30% -16% 94 106 -11% 8% Central & Eastern Europe (1) 201 256 -21% -14% 50 42 19% 65% Mid
Slide 18: North America
North America Visible Operating Leverage in H2 and Strong Cost Reductions 12 Months 4th Quarter Volumes 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) Cement (MT) 11.3 12.8 -12% -3% 2.9 3.0 -6% 3% Pure aggregates (MT) 92.3 97.2 -5% 1% 23.5 24.7 -5% 1% Ready-Mix Concrete (Mm3) 6.2 6.5 -4% 2%
Slide 19: Western Europe
Western Europe Cost-Cutting in a Challenging Environment; Improving Situation in Q4 12 Months 4th Quarter Volumes 2013 2012 Variation lfl (2) 2013 2012 Variation lfl (2) Cement (MT) 14.0 16.4 -14% -3% 3.4 3.9 -12% -1% Pure aggregates (MT) 59.4 50.9 17% -3% 14.9 12.2 22% 1% Ready-Mix Concrete (Mm3) 9
Slide 20: Central and Eastern Europe
Central and Eastern Europe Limited Infrastructure Spending Weighed on Volumes in H1 12 Months 4th Quarter Volumes 2013 2012 Variation lfl (2) 2013 2012 Variation lfl (2) Cement (MT) 12.5 13.2 -6% -5% 2.7 2.8 -5% -1% Pure aggregates (MT) 20.7 22.3 -7% -8% 5.6 5.7 -3% -3% Ready-Mix Concrete (Mm3) 1.6
Slide 21: Middle East and Africa
Middle East and Africa Robust Performance with Higher Pricing and Self-Help Measures 12 Months 4th Quarter Volumes 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) (2) Cement (MT) 44.4 45.2 -2% -4% 11.8 11.0 8% 3% (2) Pure aggregates (MT) 8.9 8.6 4% 6% 2.2 2.0 12% 14% Ready-Mix Concrete (Mm3)
Slide 22: Latin America
Latin America Moderate Market Growth in a Strong Inflation Environment 12 Months 4th Quarter Volumes 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) Cement (MT) 8.8 9.2 -4% 1% 2.0 2.3 -14% - Pure aggregates (MT) 2.8 2.7 2% 2% 0.8 0.6 27% 27% Ready-Mix Concrete (Mm3) 1.2 1.1 10% 10% 0.3 0.3 1
Slide 23: Asia
Asia Positive Market Trends; Earnings Growth in 2013 despite Negative FX 12 Months 4th Quarter Volumes 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) Cement (MT) 45.8 44.3 3% 3% 12.1 11.8 3% 3% Pure aggregates (MT) 8.7 6.6 32% 30% 2.2 1.9 19% 16% Ready-Mix Concrete (Mm3) 5.7 5.9 -4% -1% 1.3
Slide 24: Net Income
Copyright: © Library Lafarge - Thomas Deron Architects Rocheteau - Saillard France – Extension to a villa in La Baule – Rocheteau-Saillard Architects Net Income
Slide 25: Net Income
Net Income Significant Gains on Disposals Offsetting Adverse FX Impacts 12 Months 4th Quarter €m 2013 2012 2013 2012 EBITDA 3,102 3,423 793 844 Depreciation (1,027) (1,010) (264) (253) Current Operating Income 2,075 2,413 529 591 Other income (expenses) (55) (493) 48 (106) Net financial costs (1,041
Slide 26: Cash Flow and Debt Highlights
Charles Plumey-Faye - Rudy Ricciotti (architect) Copyright: © Library Lafarge - Cash Flow and Debt France, Jean Bouin Stadium in Paris, a Ductal project designed by Rudy Ricciotti, architect Highlights
Slide 27: Cash Flow
Cash Flow Net Debt Reduced by 1 Billion Euros over the Year 12 Months 4th Quarter €m 2013 2012 2013 2012 Cash flow from operations 1,291 1,580 221 257 Change in working capital (36) (304) 455 626 Sustaining capex (391) (392) (172) (210) Free cash flow 864 884 504 673 Development investments (1) (678
Slide 28: Outlook 2014
© Médiathèque Lafarge Outlook 2014 Canada - Port Mann Bridge with ten lanes of traffic, a cable-stay bridge spanning the Fraser River and connecting the towns of Coquitlam and Surrey
Slide 29: 2014 Outlook – Market Overview
2014 Outlook – Market (1) Overview Cement Volumes (%) Price Highlights Market growth, notably supported by North America 4 to 7 + positive trends in the US residential an commercial sectors Overall stabilization at a low level. Growth Western Europe -2 to 1 =/+ expected in the UK, supported by the r
Slide 30: 2014 Outlook – Other Elements
2014 Outlook – Other Elements 2% energy cost inflation (0.3 euro per tonne) Continuous Focus on our Cost reduction and Innovation plan: Cost reduction: > €400M Innovation: > €200M Cost of debt (gross): ~6% Tax rate: 31% Capital expenditures: €1.1Bn We will continue to pursue further value creative d
Slide 31: Conclusion
Charles Plumey-Faye - Rudy Ricciotti (architect) Copyright: © Library Lafarge - France, Marseille – Mucem (Museum of European & Mediterranean Civilizations) Conclusion
Slide 32: I. Other Information: Outlook 2014 – Market Overview
© Médiathèque Lafarge I. Other Information Outlook 2014 – Market Overview Canada - Port Mann Bridge with ten lanes of traffic, a cable-stay bridge spanning the Fraser River and connecting the towns of Coquitlam and Surrey
Slide 33: 2014 Outlook – Market overview
2014 Outlook – Market (1) overview Cement Market Volumes Market Volumes (%) (%) North America 4 to 7 Middle East and Africa 4 to 7 United States (1) 5 to 8 Algeria 5 to 8 Canada 2 to 5 Egypt 4 to 7 Iraq 5 to 8 Western Europe -2 to 1 Kenya 4 to 7 France -5 to -2 Morocco 0 to 3 United Kingdom 4 to 7 N
Slide 34: 2014 Outlook – Market overview: Aggregates and Concrete
2014 Outlook – Market overview Aggregates and Concrete Main markets North America: Market growth, notably supported by positive trends in the US residential and commercial sectors, and some projects in Canada. Western Europe: Overall stabilization at a low level. Growth expected in the UK, supported
Slide 35: Scope and Foreign Exchange Effects
Copyright © LibraryLafarge - Ignus Gerber II. Other information Scope and Foreign Exchange Effects Everyday life in Brazil - urban planning and street atmosphere in Rio de Janeiro
Slide 36: Sales by Geographical Area
Sales by Geographical Area Scope and Foreign Exchange Effects 12 Months In million euros 2013 2012 Variation Scope FX effect lfl North America 3,137 3,375 -7% -7% -5% 5% Western Europe 3,256 3,181 2% 5% - -3% Central and Eastern Europe 1,145 1,270 -10% -1% -1% -8% Middle East and Africa 4,067 4,283
Slide 37: EBITDA by Geographical Area
EBITDA by Geographical Area Scope and Foreign Exchange Effects 12 Months Variation Impact of at lower constant carbon Like for 2013 2012 Variation Scope FX effect scope credit like and sales and variation(1) exchange and one In million euros rates offs North America 560 558 - -10% -7% 17% -1% 18% We
Slide 38: Information per Activity
© Médiathèque Lafarge II. Other information Information per Activity Everyday life in Brazil - urban planning and street atmosphere in Rio de Janeiro
Slide 39: Cement
Cement 12 Months 4th Quarter 2013 2012 Variation lfl (2) 2013 2012 Variation lfl (2) Volumes Cement (MT) 136.8 141.1 -3% - 34.9 34.8 - 3% EBITDA Margin 25.8% 26.9% -110bps 20bps 27.1% 28.0% -90bps 130bps 12 Months 4th Quarter By geographical zone 2013 2012 Variation lfl (2) 2013 2012 Variation lfl (
Slide 40: Aggregates and Concrete
Aggregates and Concrete 12 Months 4th Quarter 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) Volumes Pure Aggregates (MT) 192.8 188.3 2% - 49.2 47.1 4% 2% Volumes Ready-Mix (Mm3) 30.7 31.8 -3% -1% 7.5 7.8 -4% -2% Sales (€m) 5,469 5,367 2% 3% 1,353 1,316 3% 4% EBITDA 464 479 -3% 1% 140 143 -
Slide 41: Aggregates and Other Related Activities
Aggregates and Other Related Activities 12 Months 4th Quarter 2013 2012 Variation 2013 2012 Variation EBITDA Margin 10.9% 12.0% -110bps 12.4% 14.6% -220bps 12 Months 4th Quarter By geographical zone 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) Sales 3,015 2,777 9% 3% 759 678 12% 6% Out of
Slide 42: Ready-Mix Concrete and Concrete Products
Ready-Mix Concrete and Concrete Products 12 Months 4th Quarter 2013 2012 Variation 2013 2012 Variation l EBITDA Margin 4.8% 4.9% -10bps 6.8% 6.0% 80bps 12 Months 4th Quarter By geographical zone 2013 2012 Variation lfl (1) 2013 2012 Variation lfl (1) Sales 2,834 2,977 -5% 2% 681 734 -7% 1% Out of wh
Slide 43: Sales variances for a selection of countries
© Médiathèque Lafarge II. Other information Sales variances for a selection of countries Everyday life in Brazil - urban planning and street atmosphere in Rio de Janeiro
Slide 44: YTD Like-for-Like Sales Variance – Cement
YTD Like-for-Like Sales Variance – Cement Analysis by Region and Major Volume effect Other effects (1) Activity variation vs. 2012 Market as at Dec. 31, 2013 North America -2.6% 5.7% 3.1% United States -2.7% 5.1% 2.4% Canada -2.4% 5.3% 2.9% Western Europe -2.7% -2.2% -4.9% France -3.2%(2) -0.8%(2) -
Slide 45: YTD Like-for-Like Sales Variance – Aggregates and Concrete
YTD Like-for-Like Sales Variance Aggregates and Concrete Analysis by Major Market Activity variation Volume effect Other effects (1) as at Dec. 31, 2013 vs. 2012 Pure Aggregates 0.4% 0.5% 0.9% France -3.4% 1.7% -1.7% United Kingdom 19.1% -11.5% 7.6% Poland -9.4% -4.1% -13.5% United States 0.6% 1.3%
Slide 46: Income statement
Copyright: © Library Lafarge - Thomas Deron Architects Rocheteau - Saillard VI. Other Information Income statement France – Extension to a villa in La Baule – Rocheteau-Saillard Architects
Slide 47: Other Income (Expenses)
Other Income (Expenses) 12 Months 4th Quarter €m 2013 2012 2013 2012 Net gains (losses) on disposals 295 53 204 12 Impairment of assets (125) (212) (70) (29) Restructuring (157) (204) (54) (40) Others (68) (130) (32) (49) Total (55) (493) 48 (106) 47
Slide 48: Finance Costs and Average Interest Rate
Finance Costs and Average Interest Rate 12 Months 4th Quarter €m 2013 2012 2013 2012 Financial charges on net debt (834) (889) (217) (226) Foreign exchange (52) (23) 13 (4) Others (155) (183) (45) (59) Total (1,041) (1,095) (249) (289) December 31, 2013 December 31, 2012 Average interest rate Intere
Slide 49: Statement of Financial Position & Cash Flow Statement
Charles Plumey-Faye - Rudy Ricciotti (architect) Copyright: © Library Lafarge - VI. Other Information Statement of Financial Position & Cash Flow Statement France, Jean Bouin Stadium in Paris, a Ductal project designed by Rudy Ricciotti, architect
Slide 50: Statement of Financial position
Statement of Financial position Dec. Dec. Dec. Dec. €m €m 31, 2013 31, 2012 31, 2013 31, 2012 Capital Employed 28,085 28,657 Equity 16,506 17,748 Out of which: Out of which: Goodwill 11,612 12,184 Equity attributable to Prop, plant & equip. 14,752 14,992 the owners of the parent company 14,555 15,66
Slide 51: Investments and Divestments
Investments and Divestments 12 Months 4th Quarter €m 2013 2012 2013 2012 Sustaining capital expenditures (391) (392) (172) (210) Development capital expenditures (655) (3) (364) (131) (59) Acquisitions (1) (23) (61) (3) (58) Capital expenditures (1,069) (3) (817) (306) (327) Divestments (2) 1,283 (3
Slide 52: Balanced Debt Maturity Schedule
Balanced Debt Maturity Schedule Average maturity of gross debt is 4 years and 1 month As at December 31, 2013 (1) In million euros 2200 Lafarge SA Commercial Paper and ST borrowings 2000 Lafarge SA Bonds & other MLT instruments 1800 Subsidiaries debt instruments Securitization programs 1600 1400 120
Slide 53: Gross Debt by Currency and by Source of Financing
Gross Debt (1) by Currency and by Source of Financing As at December 31, 2013 Split by source of financing Split by currency 9% 18% 4% 5% 7% 9% 73% 75% Debentures EUR USD Notes / private placements GBP CNY Banks and other Other Total Gross Debt (1): €13.7 Bn 53 (1) Excluding puts on shares and deriv
Slide 54: Strong Liquidity Backed by Well Balanced Committed Credit Lines
Strong Liquidity Backed by Well Balanced Committed Credit Lines Lafarge SA committed credit lines of 3.4 billion euros with average maturity of 2.8 years €bn, as at December 31, 2013 Amount 2014 2015 2016 2017 2018 Syndicated committed credit lines 1.2 - 1.2 - - - Bilateral committed credit lines 2.
Slide 55: Key definitions
Key definitions Amounts are generally given in million euros, and exceptions are mentioned. Variations are calculated based on amounts that include decimals, and may therefore not be totally consistent when calculated based on rounded disclosed figures. Volumes Volumes are shown by origin Group Sale