Lafarge Swot

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Lafarge SwotLafarge S.A.

COMPANY OVERVIEW

Lafarge produces and sells building materials primarily cement, aggregates, ready mix, concrete, gypsum wallboard, and related products primarily under the “Lafarge” brand. The company primarily operates in Western Europe, North America, Asia and Latin America. It is headquartered in Paris, France and employs about 77,994 people.

The company recorded revenues of $23,327 million during the financial year ended December 2010 (FY2010), an increase of 2% compared to 2009. Sales were negatively impacted by lower volumes, foreign exchange and the scope of operations as some of the businesses were divested. The EBITDA of the company was $5,214 million in FY2010, an increase of 0.4% compared to 2009. The net income was $1,607 million in FY2010, an increase of 6.5% compared to 2009.

SWOT ANALYSIS

Lafarge produces and sells building materials primarily cement, aggregates, ready mix, concrete, gypsum wallboard, and related products primarily under the “Lafarge” brand. Being a large player in fragmented and local markets and a strong market share position gives significant competitive advantages enabling the company to participate effectively in high growth markets as well as in developed markets as and when the economies recover.

Strengths
Leading company across the business segments
Geographically well-positioned company
Strong research and development base

Weaknesses
Non-compliance with environment regulations led to huge penalties and will tarnish brand image
High unionization might have a negative impact on the employee related costs

Threats
The US and European construction markets continue to remain sluggish
Rising energy costs will impact margins negatively

Opportunities
Strong growth of sustainable construction materials market
Exposure to high growth markets will boost revenues
Spending for sporting events to drive construction

Strengths

Leading company across the business segments

Lafarge is a globally leading company across its business segment. The company is the leader in cement taking into various parameters such as account sales, production capacity, geographical positions, technological development and quality of service. Similarly, Lafarge is the second largest producer of aggregates and concrete and third largest producer of gypsum. Being a large company and a global player offers some key competitive advantages for the company. Most of the business segments it operates in are fragmented with very few large players to compete with. The global cement industry has been fragmented, with most markets served by local producers. Presently, there are just a handful of multinational cement companies, Lafarge being one of them. Cement production is capital intensive and being a large company Lafarge enjoys sufficient financial clout to enter new markets easily and effectively and at the same time sustain the competition. In case of aggregates and concrete industry also, the industry is just beginning to consolidate and Lafarge primarily faces competition from the independent players. Environmental and planning laws in many countries restrict new quarry development. In addition, excluding the cost of land and mineral rights, the plant and equipment costs for a new quarry range from around E 2 million ($2.9 million) to E 4 million ($5.6 million) for a small quarry to over E 45 million ($62.8 million) for a very large quarry. In...
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