6 - Vicat

6BUSINESS OVERVIEW6.3. DESCRIPTION OF THE BUSINESSES AND INTRODUCTION TO THE MARKETSCement is marketed in France in bulk or in bags :• bulk, which represents approximately 78 % (1) ofconsumption, is used by the manufacturers ofready-mixed concrete (55 %) and of prefabricatedconcrete parts (17 %) and by the public constructioncompanies, which only account for 6 % as directsupplies (2) ;• bags, which account for approximately 22 % of consumptionin France, are distributed mainly via thetrade and to a lesser extent through DIY stores tousers, craftsmen, firms and private individuals (3) .The French cement industry is concentrated. Fourgroups account for approximately 97 % of the market(4) : Lafarge, Ciments Français (Italcementi group),Vicat and Holcim. The Group is the third largestFrench cement manufacturer, with approximately16 % of the market share and cement production of3.2 million tonnes in 2009.The Group operates five artificial cement factoriesand two other factories where various productscontaining natural quick-setting cement are manufactured.Because of the geographical positioningof its sites, the Group is market leader in the southeast(three factories : Montalieu, Saint-Égrève andLa Grave-de-Peille, and three depots : Lyon portÉdouard-Herriot, Décines and Chambéry). Its twoother factories in Auvergne (Créchy) and in Lorraine(Xeuilley) and the Chelles depot in Île-de-France allowthe Group to supply the rest of the country. TheGroup’s factories also have the advantage of beinglocated near large cities : Nancy, Lyon, Grenoble,Clermont-Ferrand and Nice.The Group also exports part of its artificial cementproduction :(in thousands of tonnes) 2009 2008 Difference (%)Domestic 2,824 3,414 - 17.3Export 268 266 + 0.8Total 3,093 3,680 - 16.0Export sales remained stable in 2009, in line with thepattern of development of the sector. The commercialdepartment for France, based in L’Isle-d’Abeau,combines administration of sales, marketing, logisticsand the advertising/specification departmentresponsible for promoting innovative constructionapplications with the housing segment and the publicworks sector. Some fifty staff, spread across six regionaldepartments, network the sales territory thatis economically accessible from the Group’s factories.Technical staff from the regional sales departmentsare responsible for answering questions from customersand prospective customers.One of the strengths of the Group’s cement businessin France is its industrial equipment. This is becausethe Group maintains its production facilities at a highperformance level by investing regularly in its industrialequipment. For example, modernization of theMontalieu factory in the preceding years has resultedin competitive production costs.Production costs have been maintained at a satisfactorylevel by :• giving priority to the most economic productionfacilities, with the poorest performing parts of theplant being temporarily mothballed ;• constant switching between energy sources dependingon their overall financial impact ;• strict control of operating costs.(b) United StatesContraction in the construction business, which startedin the housing market in 2007, spread to all constructionmarkets in 2008 due to the increasing repercussionsof the financial crisis, with the non-housing sectorwhich had previously held its position, suffering inits turn a fall of some 19 % over the course of 2009.The Federal economic stimulus plan has not, at thispoint, had any noticeable effect on the building andpublic works sector.The American cement market, which reached morethan 127 million tonnes in 2005 and 2006, has experiencedaverage annual fall of approximately -11 %since 2004 and -18.6 % since 2006 (5) . Domestic consumptionis estimated at 71 million tonnes in 2009 (6) .Annual consumption per capita fell to approximately317 kg (7) per capita in 2008.(1) (2) (3) Source : SFIC, 2008.(4)Source : J.P. Morgan “Building Materials” study,September 2009.(5) (6)Source : USGS, 2009.(7)Source : J.P. Morgan “Building Materials” study,September 2009.40 VICAT - 2009 registration document