* Q2 sales 3.37 bln eur, EBITDA 812 mln eur
* Lafarge confirms 2014 targets, says forex hit to lessen
* Says sees signs of recovery in Poland, Britain, Greece
* Shares rise 0.7 pct
(Adds detail on Holcim merger plan, improved business in
By Natalie Huet and Gilles Guillaume
PARIS, July 25 Cement maker Lafarge
said on Friday it was well on track for its planned merger with
Swiss peer Holcim and was seeing the first signs of
recovery in Europe.
In a statement, the Paris-listed group posted another drop
in quarterly sales and profit, mainly due to the strength of the
euro against emerging market currencies and the Canadian
dollar, and the company's shrinking scale as it sheds assets to
However, the results were roughly in line with analysts'
expectations and the cement maker stuck to its full-year goals.
Lafarge shares rose after the group said it was confident of
completing its deal with Holcim in the first half of 2015.
The Lafarge-Holcim merger, unveiled in April, would create
the world's top cement group with $44 billion in annual sales
and would be the industry's biggest ever tie-up.
The move would help the pair slash costs, trim debt and
better cope with the rising energy prices and sluggish demand
that have hurt the sector since the 2008 economic crisis. The
pair have kicked off a multi-billion series of asset sales to
win approval from competition regulators.
"Discussions with antitrust authorities are going on in a
constructive way, and we do not expect that this discussion
would put some difficulties on the expected timing (of the
merger)" Chief Financial Officer Jean-Jacques Gauthier told
analysts on a conference call.
The divestments announced so far - which account for around
3.5 billion euros ($4.7 billion) in annual sales - had been
thought out before the merger was announced and will not harm
the synergies expected from the deal, Gauthier said.
Lafarge and Holcim are seeking buyers for Holcim's French
activities, Lafarge's German ones and other operations in
Austria, Hungary, Romania, Serbia, Britain, Canada, the
Philippines, Mauritius and Brazil.
Lafarge said it would select buyers based on how quickly the
sell-off could be wrapped up and how much value it could
generate. Lafarge's banks will send detailed information on the
assets to potential buyers "in the coming days", Chief Executive
Bruno Lafont told reporters.
Holcim CEO Bernard Fontana told reporters this week that the
companies had received over 100 expressions of interest from
rivals and private equity firms, with several parties indicating
a desire to buy the entire portfolio of assets.
IMPROVEMENT IN GREECE
Lafarge was already on a drive to cut costs and shed assets
to trim debt after an acquisition spree in the past decade
earned it "junk" credit ratings.
Lafarge aims to bring debt below 9 billion euros this year
and confirmed it expected cement demand to grow between 2 to 5
percent in its main markets.
"The situation in North America is improving, growth
continues in emerging markets, and we see the first signs of
recovery in Europe," Lafont told reporters.
He said stronger demand was most noticeable in Poland,
Britain and Greece. In Greece, where public works are
restarting, Lafarge now sees cement volumes growing 7 to 10
percent this year, up from the 0-3 percent growth previously
expected. However, the construction sector remains subdued in
France, weighing on aggregates and ready-mix volumes.
Lafarge's earnings before interest, taxation, depreciation
and amortization (EBITDA) fell 2 percent to 812 million euros
in the second quarter as sales fell 5 percent to 3.37 billion.
Lafarge said it expected a smaller hit from currency rates
in the second half, after a 7 percent drag on both sales and
EBITDA in the second quarter, largely because the currency
comparison with the second half of 2013 will be less drastic.
Lafarge shares were 0.45 percent higher by 1024 GMT,
outperforming the French blue-chip index, down 0.76
($1 = 0.7437 Euros)
(Editing by Andrew Callus/Ruth Pitchford)