Lafarge posts 17 per cent increase in earnings to €403 million

France's Lafarge, which is merging with Swiss rival Holcim to form the world's largest cement maker, reported first-quarter profit that beat analyst estimates.

Earnings before interest, taxes, depreciation and amortisation climbed 17 per cent to €403 million, the Paris-based company said Thursday in a statement.

Earnings exceeded an average of analysts’ estimates of €368 million. Lafarge also reported a net loss of €96 million in the quarter.

"The strong start this year confirms that our teams are fully focused on achieving our objectives," chief executive officer Bruno Lafont said in the statement."

“In regards to our planned merger to create LafargeHolcim, we have successfully completed many significant steps. We are now entering the final stage of this transaction which is on track with our announced ambitious timeline.”

Holcim and Lafarge have predicted the merger, which needs to be approved by Holcim shareholders on May 8, will lead to cost savings of €1.4 billion annually and help lift earnings as a construction slump in southern Europe lingers and competition in emerging markets strengthens.

The proposed deal got a boost yesterday as Eurocement Holding, Holcim's second- largest shareholder, said it will back the transaction.

The companies tweaked the original merger agreement in recent weeks to win over Holcim investors who were unhappy about the performance of Lafarge since the deal was agreed last year.

The Swiss company will now have a bigger stake in the new entity, and the cement makers also appointed Eric Olsen to lead their combined operation after Holcim shareholders opposed Lafarge CEO Bruno Lafont as head of the new group.

Lafarge reiterated today that its Ebitda, excluding the impact of the planned merger with Holcim, will be in a range of €3 billion to €3.2 billion in 2015 as cost inflation slows and exchange rates are more favorable. Net debt should fall to within a range of €8.5 billion and €9 billion.

Demand for cement will probably rise 2 per cent to 5 per cent this year in countries where the company operates, mainly led by emerging markets, Lafarge said.

Bloomberg