Lafarge: cost-savings in the mix Cement companies have a reputation for moving as a pack - witness the numerous cartel investigations that have dogged this industry. Still, not all imitation is unwelcome. Cost-cutting plans unveiled by France's Lafarge on Tuesday follow a similar announcement at Switzerland's Holcim last month. Like its larger rival, Lafarge promises to secure improvements over the next four years via efficiency improvements and energy cost reductions, and to push up margins through more innovative materials and products. The headline commitment is €1.3bn in cost savings between 2012 and 2015, plus €450m in cumulative additional earnings (before interest, tax, depreciation and amortisation) from the innovation programme. While welcoming the intent, investors should remain sceptical. For a start, this is incremental news. Last November, Lafarge announced a €500m cost-savings programme, with the bulk of the benefits (€400m-plus) falling this year. Consensus ebitda estimates for 2012 - which stand at €3.4bn, or 5 per cent higher than the €3.2bn delivered last year - already factor this in. So the "new" news relates to 2013 onwards. That makes delivery correspondingly uncertain. Moreover, unlike Holcim, Lafarge has not provided any estimate for upfront costs of implementing the post-2013 measures. That said, Lafarge's cost focus has been accompanied by a welcome deleveraging of the business. Net debt was reduced by €2bn to €12bn - or two-thirds of shareholder funds - last year. Now the plan is to cut this to under €10bn in 2013. Given the economic uncertainties in many markets - notably western Europe, which accounted for 22 per cent of sales last year - this comes not a moment too soon. Cement prices may have firmed, but cost inflation is still a worry, especially in some emerging markets. Expect more peers to join the slimming club.