Vicat Cuts Maintenance on French Cement Plants to Avoid Closures

Vicat SA, a French cement maker, is cutting spending on maintenance and other costs at its domestic plants as it seeks to hold onto market share when construction demand rebounds in 2014 or 2015.

“Year-to-date, Vicat’s deliveries in France are about flat versus last year, when February was a disaster because of the cold weather,” Vicat Chief Operating Officer Raoul de Parisot said in a Feb. 12 interview. “We’re expecting French cement consumption to decline by 5 percent to 7 percent this year, because housing starts have dropped very sharply.”

“We don’t have any plan to close plants but we’re reducing costs and maintenance expenditure,” the COO of the company based in La Defense near Paris also said. “We need our production capacities to maintain market share when demand picks up, probably not in 2013 and maybe not in 2014, but hopefully in 2015.”

The move contrasts with peers Lafarge SA and Holcim, which have both announced they will close a cement plant in France to reduce overcapacity arising from a building slump exacerbated by increased imports from countries like Turkey.

Production Capacity

Cement demand in France will fall by about 9 percent this year after dropping 6.7 percent to 20 million tons in 2012, when imports rose 5.2 percent to 2 million tons, the French federation of cement makers said Feb. 11. The combined production capacity in France of its members Lafarge, Holcim, Vicat, Kerneos and Italcementi Spa’s Calcia, amounts to 27.5 million tons, according to the federation.

“In France, the rate use of Vicat’s plant ranges from a bit less than 60 percent to 70 percent,” the Vicat COO said. He urged operators of French ports to limit their capacity to import cement and clinker from countries with looser social and environmental rules, saying it’s threatening jobs in France.

Vicat said on Feb. 5 that sales in France fell 6.3 percent last year to 879 million euros ($1.17 billion), representing 38 percent of the group’s 2012 revenue. Total sales rose 1.2 percent.

At 452 million euros, the average estimate for Vicat’s 2012 earnings before interest, taxes, depreciation and amortization is “probably slightly too high,” Stephane Bisseuil, an investor relations officer at Vicat, said on a Feb. 6 conference call with analysts. “Regarding 2013, at this stage we are I would say happy with the current consensus.”

Vicat shares closed up 0.1 percent at 46 euros in Paris, paring this year’s loss to 2.5 percent.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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