French materials giants both turn to investors for cash boost following sharp downturn in markets
Materials giants Saint-Gobain and Lafarge both plan to raise €1.5bn (£1.3bn) each in rights issues, following a sharp decline in their European and US markets.
Saint-Gobain said that the UK and Spanish markets were worst affected by the downturn, with all sectors of its business hit. The firm revealed that it shed 8,000 jobs in 2008 and planned to make further costs savings of €600m in 2009.
The firm's flat glass division, covering the construction and car industries, fell 8.8% in the last quarter of 2008 and in the construction products division sales slipped 3.3% in Q4. Other divisions related to construction markets in Europe were hit, with building distribution suffering a 7.7% fall in sales in the past quarter.
Lafarge announced its €1.5bn rights issue as part of a €4.5bn plan to shore up its balance sheet following a slump in profit in the last quarter of 2008 in the wake of the construction downturn.
The firm reported an 8% increase in sales to €19bn for the whole of 2008, with operating income up 9% to €3.5bn, but said that operating income in the final quarter slumped 6% to €753m.
Lafarge also announced that it had obtained a new €1bn banking facility for two years.
The Saint-Gobain rights issue is scheduled for 23 March, while Lafarge's is subject to authorisation by shareholders at an EGM on 31 March.