Exane BNP downgrades Lafarge to “underperform”

Exane BNP downgrades Lafarge to “underperform”
24 January 2014

Exane BNP Paribas downgraded its opinion on Lafarge from “outperform” directly to “underperform”. However, the analysts raised the target price from EUR50.5 to EUR58.

 “Lafarge is exposed to structural problems, including in the Middle East and Africa, where the company has more than 40 per cent of its equity invested,” says Exane. The commissioning of new capacity in these always offers attractive returns, which leads to competition and creates downward price pressures. But Lafarge’s economic profitability in terms of ROCE is estimated at five per cent, which makes the company’s target of eight per cent rather “ambitious”, according to Exane.

The research house also warns that the France-based cement producer may have difficulty to offset this year’s cost increases through price hikes, particularly in Africa, the Middle East, Brazil and France – areas which represent around 42 per cent of its turnover.

Finally, Exane analysts also expect an EPS of EUR2.95 rather than the EUR3.60 concensus.

The group is expected to publish its annual results on 19 February.

Published under Cement News

Tagged Under: Lafarge Middle East Africa