Lafarge to triple capacity at plasterboard factory

French company Lafarge has announced plans to triple plasterboard production at its plant in Romania at a time of rapid growth in consumption on the domestic market.

The move will see Lafarge enter into direct competition with another international giant of the same field, the British company BPB, over the top spot in the Romanian plasterboard business, put at 40m euros in 2004.

The French company has announced a 300m-euro investment plan for the expansion of their plasterboard unit, which includes their plant close to Bucharest, the only domestic producer of plasterboard.

Lafarge officials did not disclose the value of investment. However, according to market sources, the investment could be between 10 and 20 million euros. Capacity at Lafarge Arcom Gips, Lafarge”s Romanian plant, is expected to triple within a year and a half, say sources close to the project.

Until two years ago, the plasterboard businesses in Romania did not encourage the development of additional facilities. As of last summer, however, BPB and Lafarge have been engaged in a race to construct new facilities.

Lafarge has a production capacity of around 3.5m square metres per year, though domestic demand is still largely covered by imports. Consumption for 2004 was estimated at 20-22 million square metres.

The growth in plasterboard consumption in Romania last year was estimated at close to 25%, clearly above the average on the constructions market and that of the overall economy of around 8%.

Last summer BPB announced it would be earmarking 30m euros for the construction of a plasterboard plant in Turda with a capacity in the region of 13 million square metres.

BPB works in Romania through Rigips Romania. Other market players include Knauf Romania (owned by a powerful family business in Germany), Norgips (Norway) and ABS (Turkey).

Lafarge entered plasterboard production in Romanian by acquiring 50% of the shares owned by Arcom Bucuresti in its plant close to Bucharest. Subsequently they raised their participation to 90% (Arcom has a further 10% in Lafarge Arcom Gips). The two deals cost Lafarge a total of 8.1-8.5million euros.

Lafarge Arcom Gips derived net profits of 486,000 euros in 2003 from a turnover of 9 million euros, according to the financial statement submitted to the Finance Ministry.