Bloomberg News

Lafarge Jumps on Operating Profit, Cost-Cut Plan: Paris Mover

February 20, 2012

Feb. 17 (Bloomberg) -- Lafarge SA jumped as much as 4.5 percent, the most in about a month, after the company posted better-than-expected operating profit and unveiled a 400 million-euro cost-cutting plan for this year.

Shares of the world’s biggest cement maker rose to as much as 33.25 euros and traded 3.8 percent higher at 33.04 euros as of 9:20 a.m. in Paris. The stock was the biggest gainer on the benchmark CAC 40 Index.

Lafarge, based in Paris, posted a 3 percent increase in current operating income in the fourth quarter of 538 million euros.

“Lafarge reported an excellent operating profit,” Bryan Garnier & Co., a equities researcher, said in a note to investors. The profit and the cost-cutting plan “bolsters our ‘Buy’ case,” it said.

The shares rose even as the company posted an unexpected net loss for the quarter of 3 million euros. Chief Executive Officer Bruno Lafont is deepening cost cuts amid higher raw material prices as he seeks to repair a credit rating that has fallen below investment grade.

“We’re remaining cautious for 2012,” with a “contrasted situation” between growth in cement demand in emerging nations and a stabilization in developed nations, Lafont said on a conference call with journalists. “Debt will be significantly reduced” as Lafarge improves its cash flow, he said.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net


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