Lafarge SA Thursday said net profit for the third quarter was up 9%, supported by emerging markets growth and higher prices, and in spite of the slowdown in the U.S. residential market.
In a statement, Lafarge said net profit for the third quarter stood at EUR600 million, compared to EUR548 million a year earlier.
The figure was above expectations. Analysts polled by Dow Jones Newswires saw a 0.6% decline in third quarter net profit to EUR544.5 million.
Lafarge reported revenues for the third quarter of EUR4.89 billion compared to EUR4.66 billion a year earlier.
The figure was just below analysts’ expectations of EUR4.9 billion. They had cited a further fall in sales at the U.S. Gypsum division. Indeed, sales in Gypsum were down 4% in the third quarter owing to the slowdown in the U.S. residential market, Lafarge said in a statement.
For the first nine months of the year, the company said net profit rose 40% to EUR1.53 billion from EUR1.09 billion a year ago.
Cement, aggegrates and concrete were the driving businesses according to the company.
"The contribution of emerging markets to our earnings has increased remarkably, with results taking off in Eastern Europe and in Asia in particular," Lafarge said in a statement Thursday.
During the first nine months of the year, emerging markets accounted for 45% of the group’s operating income.
"The results for the third quarter and for the nine months are slightly above our expectations and the company’s outlook for 2007 and 2008 is very positive," said Credit Suisse.
Lafarge said the trends observed in the first nine months confirm the company’s positive outlook for 2007. It said it is confident it will reach all its targets for this year and in 2008.
"Our strategic plan is delivering expected results," Lafarge said. "We will have achieved 60% of our 2006-2008 cost reduction target at the end of the year."
Lafarge also said that, putting aside the Gypsum division, it has achieved higher results in North America, especially in cement, aggregates and concrete operations, despite the slowdown in construction.
Regarding further challenges lying ahead, Lafarge said, "the fundamentals of our industry are good and Lafarge is armed to make the difference in 2008." Since the beginning of the year, Lafarge shares have lost EUR3.34 or 3% due mainly to a poor performance of the stock in the past three months, reflecting a higher foreign exchange impact and rising energy costs. Wednesday, shares closed at EUR109.34.