By Natalie Huet and Gilles Guillaume
PARIS (Reuters) - Cement maker Lafarge, which is preparing to merge with Swiss peer Holcim, stuck to its full-year targets on Friday and said it was seeing the first signs of recovery in Europe.
In a statement, the Paris-listed group posted another drop in quarterly sales and profit, mainly due to adverse exchange rates and its shrinking scale as it sheds assets to trim debt.
It said its planned tie-up with Holcim was well on track and that its banks would give detailed information "in the coming days" to potential buyers regarding the assets it plans to sell to appease competition regulators' concern over the mega-merger.
Lafarge and Holcim are working on a merger that would create the world's top cement group with $44 billion in annual sales and would be the industry's biggest tie-up.
The move would help the pair slash costs, trim debt and better cope with the rising energy prices and sluggish demand that have hurt the sector since the 2008 economic crisis. The pair hope to close the deal by the first half of 2015 and have kicked off a multi-billion series of asset sales to win approval from competition regulators.
Lafarge was already on a drive to shed assets to trim debt after an acquisition spree in the past decade earned it "junk" credit ratings.
Lafarge aims to bring debt below 9 billion euros this year and confirmed it expected cement demand to grow between 2 to 5 percent in its main markets.
"The situation in North America is improving, growth continues in emerging markets, and we see the first signs of recovery in Europe," Lafarge Chief Executive Bruno Lafont told reporters on a conference call.
He cited Poland, Britain and Greece as countries showing improvement. However, the construction sector remains subdued in France, weighing on aggregates and ready-mix volumes.
Lafarge's earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 2 percent to 812 million euros ($1.09 billion) in the second quarter as sales fell 5 percent to 3.37 billion. Analysts polled by Reuters had on average expected quarterly EBITDA of 827 million euros on sales of 3.47 billion.
Lafarge said it expected a smaller impact from adverse foreign exchange rates on its performance in the second half, after a 7 percent drag on both sales and EBITDA in the second quarter.
(Reporting by Natalie Huet; Editing by Andrew Callus)