S&P revises down Lafarge outlook to ‘negative’

Standard & Poor’s (S&P) has revised its outlook on Lafarge from ‘negative’ to ‘stable’ while keeping its BB+ long-term and B short-term credit ratings on the French cement producer. A revision to the outlook is possible, the ratings agency has said.

S&P stated that the group may not be able to improve credit metrics in 2012 from the very weak levels registered at the end of 2011. The agency noted that Lafarge’s earnings declined in 2011 due to a difficult operating environment which saw rising input costs, weak pricing and unfavourable foreign exchange movements. It noted that Lafarge’s business risk profile remains strong, while its financial risk profile is aggressive.

S&P said it may lower Lafarge’s ratings if the group’s credit ratios do not improve meaningfully in 2012. However, the outlook may be revised to “stable” if the group’s credit metrics recover towards the levels S&P considers commensurate with the BB+ rating in 2012.