SHARES IN Lafarge rose yesterday, as the French building materials group fleshed out the latest details of its debt reduction plan and reported rising sales in its full-year results.

The world’s second largest cement company by revenue pledged last year it would slash its debt pile by shedding assets and cutting costs after losing its investment-grade credit rating.

While net income for 2011 dropped 28 per cent to €593 million, net debt fell 14 per cent to €11.97 billion, after the group fulfilled its promise to cut debt by €2 billion in the period.

Like-for-like sales rose 5 per cent to €15.28 billion.

Revenues were boosted by demand from emerging markets and slightly higher pricing, but the negative impact of foreign exchange and higher cost inflation weighed on margins.

Net earnings per share fell 28 per cent to €2.07.

Lafarge said debt will be trimmed further in the coming months by divestments totalling at least €1 billion and by cutting its dividend to €0.50 per share.

The group is also aiming to cut its costs by €500 million, as it grapples with rising raw material and energy prices, and will reduce capital expenditure to €800 million.

Disposals made last year meant the group was now focused on its core cement and concrete businesses, said Bruno Lafont, chairman and chief executive.

The market reacted warmly to the announcement, with the shares rising more than 7 per cent to €34.08 by midday.

Lafarge became indebted after paying €10.2 billion for Orascom Cement, the Middle East’s largest cement maker, in 2007.

Its credit rating was downgraded to junk by Standard Poor’s, the rating agency, for the first time in March last year.

Lafarge said it was selling its European and South American gypsum assets to Etex, the Belgian building materials group for €850 million last July.

It will retain a 20 per cent stake in the business. It also sold some of its US cement and concrete assets to Cementos Argos of Colombia for $760 million last year. – (Copyright The Financial Times Limited2012)