French cement producer Lafarge on Friday reported a net profit drop of nearly one-third for 2011. Net profit fell by 28 percent to 593 million euros ($780 million) in 2011, well below analysts' expectations of 783.8 million euros.

The drop came despite a 3 percent sales rise, which reached15.28 million euros.

Lafarge, which is the main rival of Germany's HeidelbergCement, gave a rather gloomy forecast for growth of demand for cement for the home, property and infrastructure markets.

"We want to go into 2012 with caution as demand on our cement markets is likely to be between 1 and 4 percent," the company's chief executive, Bruno Lafont, told journalists on Friday.

Lafont added that demand in industrialized nations would continue to be particularly weak, contracting by up to 1 percent in North America and shrinking by between 5 percent and 8 percent in western Europe.

Building boom in developing world

By contrast, demand in developing countries looks set to rise further. Lafarge has long targeted emerging markets. Last year, the firm achieved 57 percent of its total sales in rapidly industrializing nations, up from just 32 percent in 2005.

The French cement maker announced it intended to raise more than one billion euros from asset sales to reduce its 11.97 billion euro debt load.

In addition, 500 million euros more are to be saved due to a number of cost-cutting measures in the course of this year. This would entail closing one factory in the United States and one in France, Lafarge said in statement.

Lafont noted the company had already successfully refocused its business on cement, granulates and concrete by completely withdrawing from the market for plaster products.

Author: Hardy Graupner (AFP, Reuters)
Editor: Sean Sinico