Abstract
In December 2008, French President Nicolas Sarkozy announced a EUR26bn
(US$33bn) stimulus
package to boost the country' s economy. Under the
scheme, state-owned companies will increase
investment by EUR4bn
(US$5.1bn) in 2009 and the government will supplement this with a further
EUR4bn on high-speed rail projects, dams and canals, university campuses, road
maintenance amongst
other projects, in an effort to revive the stagnating
construction industry. Due to the global economic
difficulties experienced
throughout 2008, the French domestic infrastructure market has witnessed a
slowdown. BMI forecasts the construction industry value real growth will
decline in the coming years,
falling from an estimated 6.1% in 2008 to
0.9% in 2010.
Meanwhile, seismic changes are also happening in the freight
sector. In December 2008, it was
announced that France is preparing to
restructure its freight transport sector, with an emphasis on
increasing
the percentage carried by rail by transferring freight typically carried by
road onto rail. The
switch will be helped by the fact that France' s rail
freight sector has become more competitive since its
liberalisation in
2003, as new operators have entered the market, and the fact that France' s
rail freight
links to major trading partners have improved and are
continuing to do so. On the back of the Grenelle
Environment Forum in
November 2007, the French government has proposed legislation to increase
the
percentage of freight not carried by road from 14% to 25% by 2012.
The global slump in the construction industry is also impacting French
companies. Lafarge, the world' s
largest cement maker, announced on
November 4 that it is selling its operations in Italy to Sacci. The
Rome-based family owned company will pay EUR290mn (US$373.5mn) for Lafarge' s
two cement
plants, 13 ready-mix concrete plants, three aggregates quarries
and four cement terminals. Reported sales
from these activities in 2007
were EUR116mn, with EBITDA of EUR18mn. The deal, which is expected
to
close before year end, is part of Lafarge' s continued divestment plans.
On
a macroeconomic level, the cooling off of the French housing boom, coupled
with unprecedented
financial turmoil in international markets, has led BMI
to revise down our real GDP growth forecasts for
France to 0.7% in 2008,
with a 0.2% contraction forecast for 2009.
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