UPDATE 2-Lafarge Q1 sales down on weather, shares sag

* Q1 sales down 10 percent, broadly in line

* Net profit 64 mln euro vs Reuters avg 44 mln

* Keeps 2010 outlook for pick-up in cement demand

* Shares down 2.7 pct, sector (SXOP: ) sheds 0.7 pct

(Adds CEO comments, details, shares)

By Michel Rose

PARIS, May 5 (BestGrowthStock) – France’s Lafarge (LAFP.PA: ), the
world’s largest cement maker, reported a 10 percent drop in
first-quarter sales on Wednesday as tepid economic growth and a
harsh winter slowed construction work, sending its shares down.

But the group kept its outlook unchanged for 2010,
forecasting a rise of up to 5 percent in global cement demand in
its markets, and said it expected demand to start to recover in
developed countries in the second half of the year.

“The first quarter is traditionally a small one for Lafarge,
this one was even smaller but is not significant for the rest of
the year,” Chief Executive Bruno Lafont told a conference call.

“Over the last two years, we have lost more than 3 billion
euros in sales, which corresponds to the slowdown in
construction in developed countries. These 3 billion euros now
represent a potential for rebound,” he added.

Lafarge shares shed 2.7 percent to 51.45 euros by 0715 GMT,
lagging both the European construction and building materials
sector (.SXOP: ) and France’s CAC 40 (.FCHI: ) blue chip index.

“Lafarge has reported results slightly lower than forecast
at the operating level…The main disappointments come from the
Africa, Middle East and Eastern European zones,” a trader said.

Sales for the quarter to March 31 were down to 3.28 billion
euros ($4.36 billion), coming slightly below a Reuters analyst
poll for revenue of 3.33 billion. [ID:nLDE6431JU]

The operating result was down 30 percent to 236 million
euros, hit by unfavourable weather conditions and the still
sluggish construction sector in recession-hit developed

“Very poor weather and the lower economic activity in
developed countries and Eastern Europe negatively impacted
volumes and margins,” Lafarge said in a statement.

But the cement maker swung back to a net profit of 64
million euros, after a net loss of 17 million a year ago, helped
by a one-off capital gain of 137 million on the disposal of its
investment interest in Portuguese group Cimpor (CPR.LS: ).

The results come a day after Swiss rival Holcim (HOLN.VX: )
posted a narrower first-quarter net loss than expected but
warned the outlook for Europe and North America was still
uncertain after heavy snowfalls in early 2010. [ID:nLDE6420OB]

Lafarge said it expected its energy costs to remain stable
over the full year and forecast that pricing would remain solid
in 2010 despite lower prices in a certain number of markets.

Its net debt fell to 14.6 billion euros at the end of the
quarter from 17.7 billion at the same time of last year.

Lafont said Lafarge would still seek to “control, and if
necessary reduce” its debt level swollen by the acquisition of
Orascom Cement in 2007.

Investing Advice

($1=.7508 Euro)
(Additional reporting by Blaise Robinson; Editing by Marie
Maitre and Jon Loades-Carter)

UPDATE 2-Lafarge Q1 sales down on weather, shares sag