First Half Results for the six months ended June 30, 2006

08.02.2006
 
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Euronext: LG, NYSE: LR

VERY STRONG EARNINGS GROWTH
CONFIRMATION OF FAVORABLE TRENDS FOR 2006

STRONG INCREASE OF ALL KEY FIGURES IN H1 2006

  • Sales up 21%
  • Current operating income up 41%
  • Cash flow from operations up 55%
  • Earnings per share up 48% to €3.14

GROUP HIGHLIGHTS

  • Very strong earnings growth in all our businesses in H1 2006.
  • Strong organic growth (+15% in sales and +39% in current operating income), fuelled by the Group's solid positions.
  • Price increases exceed higher costs.
  • Strong increase in earnings per share (+48%).
  • Acquisition of minority interests in Lafarge North America completed on May 16, 2006. New organization in place in North America, to accelerate decision-making and cost reductions.
  • Successful start-up of a new cement plant in Mexico (Tula) and of a grinding plant in Vietnam. Construction of new capacity launched to respond to market growth and consolidate our positions (cement and gypsum in fast-growing markets).
  • Launch of divestment program.
  • Confirmation of favorable trends for the year.

 

BRUNO LAFONT, CHIEF EXECUTIVE OF LAFARGE, STATED:

“We are in line with our targets. The Group has demonstrated its ability to take advantage of its positions and of favorable trends in its markets, to increase prices and control costs.
These results allow us to confirm our confidence for 2006.
Focused on its priorities and equipped with a more efficient organization, the Group is today fully committed to the implementation of its Excellence 2008 strategic plan unveiled on June 22.”

CONSOLIDATED ACCOUNTS AS AT JUNE 30, 2006


Consolidated financial statements as of 30 June 2006
June 30, 2006
(€ million)
June 30,2005
(€ million)
Variation
(%)
Sales 8,759 7,220 + 21%
Current operating income 1,177 837 + 41%
Net income 548 359 + 53%
Net income per share in € 3.14€ 2.12€ + 48%
Cash flow from operations 1,239 798 + 55%
Group net debt 10,610 7,863 + 35%

 

CURRENT OPERATING INCOME AT JUNE 30, 2006


Current operating income as of 30 June 2006
June 30, 2006
(€ million)
June 30, 2005
(€ million)
Variation
(%)
Cement 871 652 + 34%
Aggregates and Concrete 188 108 + 74%
Roofing 37 24 + 54%
Gypsum 110 79 + 39%
Other -29 -26 -12%
TOTAL 1,177 837 + 41%

 

OUTLOOK FOR 2006

  • Earnings growth should continue in the second half of 2006, though at a more moderate pace compared to the strong level of activity in H2 2005.
  • We expect our markets to remain favorable. Price increases should exceed cost increases overall over the year. Continuing rises in energy and transportation costs should be mitigated by the impact of our cost-reduction programs.
  • The increase in activity and the full effect of the acquisition of minority interests in Lafarge North America should have a positive impact on earnings per share in the second half of 2006. However, the tax rate in the second half of 2006 should be significantly higher than the particularly favorable level in H2 2005.

H1 2006 HIGHLIGHTS BY BUSINESS

CEMENT

  • Sales up 22% to €4,641 million
  • Current operating income up 34% to €871 million
  • Increase in operating margin to 18.8%, compared to 17.2% in H1 2005
  • Higher volumes in an environment marked by strong market growth
  • Price increases in most of our markets, exceeding the strong rise in energy and transport costs overall.

AGGREGATES AND CONCRETE

  • Sales up 27% to €2,973 million
  • Current operating income up 74% to €188 million
  • Significant increase in operating margin to 6.3%, from 4.6% in H1 2005
  • Volume growth in most of our markets
  • Significant price increases in a context of sharply rising costs
  • Improvement in product mix thanks to the ongoing success of new value-added concrete products.

ROOFING

  • Sales up 7% to €726 million
  • Current operating income up 54% to €37 million
  • Increase in operating margin to 5.1%, from 3.5% in H1 2005
  • Improvement in Western Europe, thanks to performance progress
  • Results in line with turnaround target.

GYPSUM

  • Sales up 14% to €830 million
  • Current operating income up 39% to €110 million
  • Increase in operating margin to 13.3%, from 10.9% in 2005
    § Continuing strong performance in North America and stable performance in other markets, in an environment marked by a strong increase in costs.


Note to Editors

Lafarge is the world leader in building materials, with top-ranking positions in all four of its businesses: Cement, Aggregates & Concrete, Roofing and Gypsum. With 80,000 employees in 76 countries, Lafarge posted sales of Euros 16 billion in 2005.
Lafarge has been committed to sustainable development for many years, pursuing a strategy that combines industrial know-how with performance, value creation, respect for employees and local cultures, environmental protection and the conservation of natural resources and energy. Lafarge is the only company in the construction materials sector to be listed in the 2006 ‘100 Global Most Sustainable Corporations in the World'. To make advances in building materials, Lafarge places the customer at the heart of its concerns. It offers the construction industry and the general public innovative solutions bringing greater safety, comfort and quality to their everyday surroundings.

Contacts
Communications Investor Relations
Stéphanie Tessier
33-1 44-34-92-32 stephanie.tessier@lafarge.com
Yvon Brind'Amour
33-1 44-34-11-26
yvon.brindamour@lafarge.com
Louisa Pearce-Smith
33-1 44-34-18-18
louisa.pearce-smith@lafarge.com
Danièle Daouphars
33-1 44-34-11-51
daniele.daouphars@lafarge.com
Lucy Wadge
33-1 44-34-19-47
lucy.wadge@lafarge.com
Stéphanie Billet
33-1 44-34-94-59
stephanie.billet@lafarge.com

Practical information:
Analysts conference call on First Half Results to June 30, 2006

Following the release of Lafarge's First Half Results to June 30, 2006, a conference call will be held on:
August 2nd, 2006 at 11:30 French time, in English
(10:30 AM UK time; 05:30AM EDT in North America)
Hosted by Bruno Lafont, Chief Executive Officer and Jean-Jacques Gauthier, Chief Financial Officer.

If you wish to participate in the conference call, please dial:
From France: +33 (0) 1 72 26 01 85
From USA, toll free (US only): +1 866 793 42 80
International dial in number: +44 (0) 161 601 89 20
Conference call name: “Lafarge”

Please note that a conference call playback will be available online through www.lafarge.com from 15:00, French time.
You may also access it until August 16, at the following numbers, from 19:30, French time.
From France: +33 (0)1 72 28 01 39
From USA, toll free (US only): +1 866 828 2261
International dial in number: +44 (0)207 075 3214
Pin code for all numbers: 183865#

Statements made in this press release that are not historical facts, including statements regarding volume trends and pricing environment in the second half, demand for our products, energy costs, the increase in earnings per share and other developments in our markets are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions ("Factors"), which are difficult to predict. Some of the Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: the cyclical nature of the Company's business; national and regional economic conditions in the countries in which the Group does business; currency fluctuations; seasonal nature of the Company's operations; levels of construction spending in major markets; supply/demand structure of the industry; competition from new or existing competitors; unfavorable weather conditions during peak construction periods; changes in and implementation of environmental and other governmental regulations; our ability to successfully identify, complete and efficiently integrate acquisitions; our ability to successfully penetrate new markets; and other Factors disclosed in the Company's public filings with the French Autorité des Marchés Financiers and the US Securities and Exchange Commission including its Reference Document and annual report on Form 20-F. In general, the Company is subject to the risks and uncertainties of the construction industry and of doing business throughout the world. The forward-looking statements are made as of this date and the Company undertakes no obligation to update them, whether as a result of new information, future events or otherwise.

 
  • The press release (pdf, 80.64 KB)
  • The half-year report 2006 (pdf, 452.29 KB)
  • The presentation slides for the analysts (pdf, 818.78 KB)
  • The presentation slides for the press conference (pdf, 980.08 KB)