S&P lowers Lafarge outlook to negative

Standard & Poor's said it revised its outlook to negative from stable on Lafarge SA and lowered the short-term corporate credit rating to A-3 from A-2.

The long-term rating has been affirmed at BBB, the agency said, adding that the outlook revision reflects its belief that the group's performance for 2008 will be lower than we had previously anticipated.

Credit metrics will consequently be weak for the long-term rating this year, S&P said, noting that in addition, in spite of announced aggressive investment cuts, cost-cutting measures, and increased asset disposals, the group's financial profile could fail to meaningfully recover next year given a challenging economic and financial environment.

The agency added that the ratings reflect the group's large scale; very strong positions worldwide in cement, concrete, aggregates, and gypsum wallboards; competitive cost structure; considerable market diversity; as well as a few favorable industry characteristics, such as low substitution risks, high consolidation and unaffordable long-distance ground transportation.

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