Lafarge SA Thursday reported a better-than-expected 39% rise in 2007 net profit on cost cutting and higher sales and margins, and said it expects earnings growth in 2008 despite weakness in the U.S. and Spain, two of its key markets.

The company also reiterated its 2010 targets for earnings per share of more than EUR15 and free cash flow of EUR3.5bn. Its EPS in 2007 rose 41% to EUR11.05 and free cash flow rose 23% to EUR1.7bn.

Net profit for the full calendar year rose 39% to EUR1.91bn, from EUR1.37bn in 2006, above analysts’ expectations for EUR1.8bn. Revenue rose 4% to EUR17.61 billion from EUR16.91bn, just short of analyst’s expectations of EUR17.64bn.

In a statement, the company said it will substantially exceed its cost cutting targets for 2008 - reaching EUR400 million instead of the planned EUR340 million. It said it will boost earnings this year thanks to the addition of new capacity in fast-growing markets and the acquisition of Orascom Cement.

"We anticipate further growth in world demand in spite of weak demand in the U.S. and the slowdown in Spain," it said.
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