By Geraldine Amiel
Of DOW JONES NEWSWIRES
AIX-EN-PROVENCE, France -(Dow Jones)- The chief executive of French building material group Lafarge SA, Bruno Lafont, said Saturday he is "very cautious" on the company's outlook as "elements of uncertainty" remain.
In an interview with Dow Jones Newswires on the sidelines of an economics conference here in southern France, Lafont said the priority for the company remains its current plan to streamline activities, such as the EUR400 million cost savings plan for this year.
Even though the cost reduction program is in line with the schedule, Lafont said the company could further cut costs if need be.
"We'll do everything we need to do to remain the best," he said. "If to remain the best means that we'll need to do more, that's of course what we'll do."
Lafarge is also focused on "following growth in countries where we are implemented and that have great growth potentials," Lafont also said, noting that in 2010, some plants that are now under construction will start production, thus boosting Lafarge's sales.
Lafont didn't rule out acquisitions, even though current operations grant Lafarge a very large geographical presence, allowing some markets to compensate for those that slow. "We are monitoring everything," he said when asked about potential acquisitions.
In Iraq, Lafarge's cement production, with two plants located in the Iraqi Kurdistan, is near full-capacity, with one plant producing at maximum capacity while the other produces at 75% of its capacities, he said.
"Growth is very fast there, which means we might have to further invest to increase our capacities," which shouldn't take too much time, Lafont said, without elaborating on the amounts Lafarge could further invest in Iraq.
He said it was "too early" to say how much the company plans to invest Iraq over the next five years. The two Iraqi cement operations were acquired through Lafarge's merger with Egypt's Orascom Cement.
"It won't take us years" to increase capacities there, said Lafont, adding that total capacity for the two plants is 5 million tons, he said.
Lafont traveled to Iraq on Thursday.
Stimulus packages enacted by governments around the world will have "a very small impact" on Lafarge in 2009 but will support the company's activities next year, Lafont also told Dow Jones Newswires.
Asked about the second quarter that just ended, Lafont declined to make any comment as the company is to release its results for the quarter on July 31.
He also declined to say whether the group had reached the bottom or if the worst was still to come.
He noted that the first quarter of 2008 had provided a unfavorable basis for comparison for the first quarter's results this year. In the second quarter of 2008 though, "some Western European markets had started to weaken," such as Spain and the U.K., LaFont said.
At the end of the first quarter, Lafarge revised down its expectations in terms of cement activities for 2009, saying it forecast a drop of 2% to 5% from a previous forecast of cement sales that was stable to down 3%.
On July 31, Lafarge will disclose its assessment of the situation and the trend, Lafont said. "We will try to speak about the reality, without being too pessimistic nor too optimistic," he said, declining to elaborate.
Now that the group successfully completed a EUR1.5-billion rights issue and several bonds issues for around EUR1 billion, Lafarge has refinanced its debt and isn't facing any major reimbursement call before 2012.
Company Web site: www.lafarge.com
-By Geraldine Amiel, Dow Jones Newswires; + 33 1 4017140; geraldine.amiel@dowjones.com;
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Publié le 04 Juillet 2009 Copyright © 2009 Dowjones