6 - Vicat

BUSINESS OVERVIEW6 6.2. GROUP STRENGTHS AND STRATEGYobjectives from its own resources, thereby supportingthe creation of value for shareholders.These strengths allow the Group to respond to strongcompetitive pressure in certain of its markets and toposition itself effectively on markets experiencingsustained growth by rapidly increasing its industrialproduction capacities or by acquisitions while at thesame time pursuing its dual objective of improvingits operating margins and actively managing the environmentalaspects of its operations.6.2.2. Development strategy by business6.2.2.1. CementCement is the Group’s main business, forming thebase of its development and profitability. Growth inthis business rests on three pillars :• dynamic internal growth ;• external growth targeting markets with high developmentpotential and construction of greenfield sites.(a) Internal growth sustained by industrialinvestmentIn the markets where it operates, the Group maintainsa constant industrial investment effort intendedto do the following :• first, to modernize its production facilities to improveefficiency and economic performance of itsfactories and thus have the industrial capacity torespond to intense competition ;• second, to increase its production capacity to keepin step with its markets and to consolidate or increaseits positions as regional leader.The Group embarked in 2006 on investments whichenabled it to increase its production capacity by 50 %while improving the productivity of its industrial equipment(the Group’s investments are shown in detailin Section 5.2. “Investments” of this RegistrationDocument) :• in France, increasing the capacity of the Montalieufactory between 2005 and 2008 ;• in Turkey, construction of a new kiln for the Bastasfactory, close to Ankara, which was commissionedat year end 2007, to meet demand growth inthe Turkish market ;• in Egypt, during the second half of 2008, doublingthe production capacity of the factory to allowSinai Cement to respond to the strong growth ofthe domestic market ;• in Senegal, large investment project from 2006 to2009 intended both to reduce production costsfor Sococim Industries and to increase its capacityto meet the needs of West African markets. Anew firing line was brought on stream in October2009 ;• in Switzerland, accelerating investments to meetstrong demand because of clinker under-capacityat the Reuchenette cement factory. Therefore, theincrease in capacity of 200,000 tonnes of cementper year, which was initially planned for year-end2010, was brought forward to the end of the firsthalf of 2009 ;• in the United States, delaying the investmentsplanned for the South East region to take the currentdepressed market situation into account.The Group also wants to continue the industrial developmentof its businesses in general, and of itsCement business in particular, while also activelymanaging environmental aspects.(b) External growth• Acquisitions targeting new marketswith considerable potentialThe Group's strategy is to continue the industrialdevelopment of its businesses in general, and of itsCement business in particular, while also activelymanaging environmental aspects :- location near a significant market having attractivegrowth potential ;- long-term management of geological reserves (objectiveof 100 years for cement) and securing itsoperating licenses ;- net contribution by the project to the Group’s resultsin the short term.The Group’s record of growth over the past 30 yearsillustrates the success of this policy to date.• Construction of “greenfield sites”As was achieved in Kazakhstan in 2007, the Groupmay also seize opportunities to enter new developingmarkets by constructing new factories on so-called“greenfield sites”. Such projects are examined veryselectively and must comply with the Group’s abovementioned external growth criteria.In this connection, the Group is engaged in theconstruction of a factory at the Mynaral site inKazakhstan, scheduled to come on stream at the2009 registration document - VICAT 31