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+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange Regulated and

LSE: IIR authorised by

Lafarge S.A. 07 July 2008

Company News Alert

Significant common stock price decline since our previous update report

Common BUY Lafarge S.A.’s (Lafarge) common stock has depreciated by 21.3% since our 4Q 07 and FY 2007
update access
report, driven to the fullmarket
by negative report freetoof
reaction charge
soaring at and weakness in the US and
oil prices
Spanish real estate and construction sectors. However, we believe that the company’s expansion into
emerging markets will partially offset the negative impact of downturn in the US and Spain. Although
Ticker: LAFP.PA we expect to reduce our estimates and target price in our next full update report, in our view, the
Target price: €132.20 common stock remains an attractive investment opportunity.
Current price: €88.311

Price change
since last report: We will reassess our common stock rating for Lafarge in our next full update report.

ADR BUY Although we now expect a negative currency impact on the ADR, and intend to revise our target price
downwards, based on our fundamental outlook, we maintain our BUY rating for the ADR. We expect to
revert to a 6-24 month investment horizon to value the company in our next full update report, as we
no longer anticipate a significant currency impact on the ADR over the medium term2.
Ticker: LFRGY.PK
Target price: US$55.52
Current price: US$35.201
Price change
(21.8%) We will reassess our ADR (4 ADR = 1 common share) rating for Lafarge in our next full update report.
since last report:

Supervisor: Shilpen Shah Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
Analyst: Jayant Saboo report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
Editor: Heloise Capon short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
Global Research Director: readers with a shorter trading horizon. These are available online only at
Satish Betadpur, CFA

Next news due: In our 4Q 07 and FY 2007 update report dated 17 April 2008, we reiterated the Lafarge common
2Q 08 results, 01 August 2008 stock a BUY on fundamental grounds with a target price of €132.20, indicating a potential upside of
18%. However, the Lafarge common stock has since depreciated 21.3%, closing at €88.31 on 04 July
2008. Rising oil prices and surging inflation are viewed as the next big threats to the health of the
global economy, following the subprime mortgage crisis in the US and the ensuing credit crunch. With
oil prices expected to rise further, stock markets around the world have suffered increased volatility.
The Euronext Paris CAC Industrials Index has declined by 15.4% since our update report to close at
1.039.69 on 04 July 2008. The downward pressure on the Lafarge common stock has been
compounded by renewed fears about the condition of the US and major European economies,
particularly their respective real estate and construction sectors. However, we believe that a decline in
revenues from these sectors will be partially offset by robust growth in revenues from the company’s
other markets. Going forward, we expect the company’s increasing exposure to emerging markets
such as Asia, Central and Eastern Europe and the Sub-Saharan Africa will be accretive to revenue
growth. Therefore, we continue to view the Lafarge common stock as a good investment opportunity.


1 We have taken the closing price for the common stock from 04 July 2008, while the ADR price has been taken from 03 July 2008 as US

markets were closed on 04 July 2008 in observation of a public holiday.

2After a short term appreciation, we now expect the Euro to depreciate against the US dollar to trade at €1.50 over 12 months and €1.35
over 24 months. In order to capture the long term currency impact we expect to introduce a 6-24 month investment horizon to value this
stock in our next update report.

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