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Lafarge, Vicat Shares Fall as Egypt Turmoil Threatens Profits

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Jan. 26 (Bloomberg) -- Lafarge SA, the world’s largest cement maker, dropped in Paris trading on concern that protests in Tunisia and Egypt may curtail profit from North Africa, where Lafarge got 42 percent of cement income in the past nine months.

Lafarge fell as much as 1.8 euros, or 3.7 percent, to 45.72 euros in Paris, and traded at 45.93 euros as of 4:02 p.m. in Paris. Competitor Ciments Vicat fell 2.3 percent in Paris, while Bergamo-based Italcementi shares were down 3.6 percent in Milan.

“If the situation in Tunisia were to spread in neighboring countries, particularly in Algeria and Egypt, it would have very serious consequences for Lafarge, Italcementi, Ciments Francais and Vicat,” Gregoire Thibault and Rafic El Haddad, two analysts at Natixis in Paris, wrote in a research note today.

Egyptian authorities banned protests after thousands of people took to the streets of Cairo and major cities yesterday to denounce President Hosni Mubarak, inspired by the revolt that toppled Tunisia’s leader Zine El Abidine Ben Ali on Jan. 14. Demonstrations continue in Tunisia, where riot police today clashed with protesters in the capital.

Paris-based Lafarge generated 733 million euros in operating profit for its cement business in the Middle East and Africa in the first nine months. Total sales in the region, including concrete, aggregates and gypsum, accounted for 2.97 billion euros, or 24 percent of total revenue. Lafarge made a $15 billion acquisition in North Africa in early 2008.

“We remain somewhat concerned about capacity additions in Africa and the ability to pass on higher input costs,” UBS analysts including Gregor Kuglitsch said in a Jan. 24 report.

Vicat had 334 million euros of revenue in Africa and the Middle East in the first nine months of 2010, representing 22 percent of total sales. Italcementi had sales of 611 million euros in Egypt in the period, representing 17 percent of total sales, and earnings before interest and taxes in the North African country represented 43 percent of total Ebit.

To contact the reporter on this story: Francois de Beaupuy in Paris at

To contact the editor responsible for this story: Benedikt Kammel at

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