Lafarge results as of June 30, 2008

• 
• 6th September 2008
• Materials Handling
 

 

SECOND QUARTER OPERATING RESULTS RISE STRONGLY: UP 44% IN EMERGING MARKETS
THE ORASCOM ACQUISITION AND OUR STRONG POSITIONS IN EMERGING MARKETS MAINTAIN THE GROUP'S GROWTH DYNAMIC DESPITE A VOLUME SLOWDOWN IN SOME DEVELOPED MARKETS

The Board of Directors of Lafarge, chaired by Bruno Lafont, met on July 31, 2008 to approve the accounts for the period ended June 30, 2008. The Board congratulated the Group for the very fast recovery of its activities in Sichuan province, China, following the May 12 earthquake and for the strong support Lafarge has provided to employees and local communities. 300 houses were inaugurated recently to help affected employees resume normal life as quickly as possible.

FIRST-HALF KEY FIGURES

_ Sales

up 8% to €9,069 million

up 14% at constant exchange rate

_ Current operating income

up 18% to €1,611 million

up 24% at constant exchange rate

_ Strong improvement in operating margin,

to 17.8% from 16.2% in 2007

_ Net income Group share up 15% to €773 M

excluding one-off items(1)

_ Net earnings per share up 4% to €4.03

excluding one-off items (1)

SECOND-QUARTER KEY FIGURES

_ Sales

up 8% to €5,069 million

up 15% at constant exchange rate

_ Current operating income

up 8% to €1,099 million

up 14% at constant exchange rate

_ Net income Group share up 9% to €623 M

excluding one-off items (1)

_ Net earnings per share down 2% to €3.24

excluding one-off items (1)

(1) Excluding the impact in 2007 of the disposal of the Roofing business and our Cement and Aggregates & Concrete operations in Central Anatolia,

Turkey, and in 2008 the disposal of the Lafarge Titan joint venture in Egypt and the Gypsum provision adjustment.

BRUNO LAFONT, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF LAFARGE, DECLARED:

"The Group's very good operational performance was achieved thanks to our strong positions in emerging markets and the well managed integration of Orascom. The Group continued to accelerate its cost reductions across all operations and we are already responding to the stronger than expected volumes slowdown in some developed markets. The acquisition of Orascom's highly performing assets, the 15 million tonnes of new cement capacity which come on stream in 2008 in fast growing markets, our next cost reduction plan and continuing progress in our sales of innovative products will allow us to meet our 2010 targets."

OUTLOOK FOR 2008

_ We maintain our positive market outlook for the full year, with continued growth in emerging markets and a stronger than expected volume slowdown in some developed markets (United States, Spain, UK).

_ The fundamentals of our sector remain sound. There are considerable construction and infrastructure needs in  emerging markets. We anticipate further growth in the world demand for cement. Lafarge is well armed to make the difference in 2008.

_ We foresee another year of growth in our Aggregates & Concrete business.

_ In light of further inflation in energy and transport, we continue to take all necessary steps to preserve our margins.

_ Additionally, the cost reduction program will continue to generate substantial savings in 2008. The initial target of €340 million will be exceeded to reach more than €400 million by the end of 2008.

_ We expect another increase in our earnings in 2008.

_ We confirm our 2010 targets of earnings per share of more than €15, ROCE after tax of more than 12% and free cash flow of more than €3.5 billion.

GROUP HIGHLIGHTS

_ Strong contribution from emerging markets, with current operating income up 53% in the first half and 44% in the second quarter (+63% and +54% respectively, at constant exchange rate). Emerging markets accounted for 67% of earnings in our Cement business in the first half, 62% in the second quarter.

_ Continuing resilience of our operations in developed markets thanks to cost-cutting, strong pricing, improvements in industrial performance and the benefits of our innovation strategy.

_ Growth in current operating income affected by significant currency effect. At constant exchange rate, current operating income increased by 24% in the first half and 14% in the second quarter.

_ Solid pricing in a context of higher input costs.

_ Strong increase in operating margin - up 160 basis points in the first half to 17.8% - despite significant increase in energy and transport costs, underscoring the benefits of our cost reduction program.

_ Benefits of the Orascom acquisition, finalized at the end of January, which contributed to earnings growth. The integration process was completed at the end of June.

_ Continuation of our program to build new cement production capacity to meet strong demand for construction and infrastructure in emerging markets. 15 MT of new cement capacity to start in 2008.

_ With the L&T acquisition, announced on May 14, Lafarge will be the leader in concrete in India. As part of its divestment program, Lafarge announced on May 6 the disposal of its 50% stake in the Lafarge Titan joint venture in Egypt.

http://www.lafarge.com/