Strong earnings growth over the first 9 months of the year

11.09.2006
 
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Euronext: LG, NYSE: LR

STRONG EARNINGS GROWTH OVER THE FIRST NINE MONTHS OF THE YEAR
FURTHER IMPROVEMENT DURING THE THIRD QUARTER IN SPITE OF HIGH COMPARATIVES
CONFIRMATION OF FAVORABLE TRENDS FOR 2006

STRONG INCREASE OF KEY FIGURES FOR THE FIRST NINE MONTHS

  • Sales up 18%
  • Current operating income up 29%
  • Cash flow from operations up 50%
  • Earnings per share up 39% to €6.28

    FURTHER IMPROVEMENT DURING THE THIRD QUARTER IN SPITE OF HIGH COMPARATIVES

  • Sales up 12%
  • Current operating income up 18%
  • Cash flow from operations up 44%
  • Earnings per share up 30%

    GROUP HIGHLIGHTS FOR THE FIRST NINE MONTHS

  • Strong earnings growth in all our businesses over the first nine months.
  • Strong organic growth (+14% in sales and +28% in current operating income), fueled by the Group's solid positions.
  • Price increases in excess of cost increases, resulting from vigorous efforts at local level in all our activities.
  • Continued control of our costs.
  • Improvement in Group operating margin (15.7% compared with 14.3% in 2005) visible across all our businesses.
  • Strong increase in earnings per share (+39%).
  • Strong increase in cash flow from operations (+50%) and in free cash flow, up from €243 million to €811 million.
  • Reorganization in North America and implementation of the synergies.
  • Acceleration of our capacity expansion program to respond to market growth, consolidate our positions and move into new markets.

BRUNO LAFONT, CHIEF EXECUTIVE OFFICER OF LAFARGE, STATED:

“These very good results demonstrate the Group's ability to reap the benefits of its great potential around the globe.
We are looking ahead to 2007 with confidence.”

CONSOLIDATED FINANCIAL STATEMENTS AT SEPTEMBER 30, 2006


Consolidated financial statements as of 30 September 2006
€ m Nine months
2005 2006 Variation (%)
Sales 11,759 13,863 +18%
Current operating income 1,687 2,181 +29%
Net income Group share 773 1,096 +42%
Net income per share in € 4.53€ 6.28€ +39%
Cash flow from operations 1,543 2,309 +50%
Group net debt 7,529 10,261 +36%

 


Consolidated financial statements as of 30 September 2006
€ m Third quarter
2005 2006 Variation (%)
Sales 4,539 5,104 +12%
Current operating income 850 1,004 +18%
Net income Group share 414 548 +32%
Net income per share in € 2.41€ 3.14€ +30%
Cash flow from operations 745 1,070 +44%

 

CURRENT OPERATING INCOME AT SEPTEMBER 30, 2006


Current operating income as of 30 September 2006
€ m Nine months
2005 2006 Variation (%)
Cement 1,253 1,546 +23%
Aggregates and Concrete 286 423 +48%
Roofing 73 96 +32%
Gypsum 113 158 +40%
Other (38) (42) -
TOTAL 1,687 2,181 +29%

 


Current operating income as of 30 September 2006
€ m Third quarter
2005 2006 Variation (%)
Cement 601 675 +12%
Aggregates and Concrete 178 235 +32%
Roofing 49 59 +20%
Gypsum 34 48 +41%
Other (12) (13) -
TOTAL 850 1,004 +18%

 

OUTLOOK FOR 2006

  • We expect our markets to remain favorable, despite the slowdown in certain North American markets. 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 growth in our operating income is expected to continue during the final quarter of 2006, albeit at a more moderate pace owing to the very strong level of activity recorded during the fourth quarter of 2005.

NINE-MONTH HIGHLIGHTS BY BUSINESS

Cement

  • Sales up 18.4% to €7,262 million (up 12.2% to €2,621 million in the third quarter)
  • Current operating income up 23.4% to €1,546 million (up 12.3% to €675 million in the third quarter)
  • Increase in operating margin to 21.3%, compared to 20.4% for the same period in 2005
  • Favorable volume trends on the back of growth in most of our markets
  • Significant price increases implemented successfully in most of our markets in an environment marked by a steep increase in energy and transportation costs
  • Acceleration of our capacity expansion program in growth markets.

Aggregates and Concrete

  • Sales up 22.8% to €4,827 million (up 16.3% to €1,854 million in the third quarter)
  • Current operating income up 47.9% to €423 million (up 32.0% to €235 million in the third quarter)
  • Increase in operating margin to 8.8%, compared to 7.3% in 2005
  • Favorable conditions in most of our markets
  • Significant price increases introduced successfully in an environment marked by a steep rise in costs
  • Selective acquisitions in Arizona and the Chicago region to consolidate our positions in aggregates
  • Stronger contribution from value-added concrete products: volumes posted by the Agilia® range (self-placing and self-leveling concrete) grew by 37% during the first nine months of the year.

Roofing

  • Sales up 7.4% to €1,190 million (up 8.7% to €464 million in the third quarter)
  • Current operating income up 31.5% to €96 million (up 20.4% to €59 million in the third quarter)
  • Increase in operating margin to 8.1%, compared to 6.6% in the same period of 2005
  • Germany showing signs of recovery in the 3rd quarter.
  • The turnaround plan is being implemented vigorously and making rapid progress
  • Selective acquisitions in North America and Europe to consolidate our positions.

Gypsum

  • Sales up 12.4% to €1,229 million (up 8.4% to €399 million in the third quarter)
  • Current operating income up 39.8% to €158 million (up 41.2% to €48 million in the third quarter)
  • Increase in operating margin to 12.9%, compared to 10.3% in 2005
  • Inauguration of a new production line in Morocco
  • Successful start-up of the Buchanan plant near New York following modernization and a doubling of capacity, thereby strengthening Lafarge's position as a high-quality and low-cost producer in each of its North American markets.

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

Following the release of Lafarge's Results at September 30, 2006, there will be an analyst presentation at 11.00 CET at Lafarge Headquarters (61 rue des Belles Feuilles, 75016 Paris). The presentation will be made in English with simultaneous French translation and may be followed via a live web cast on the Lafarge website (www.lafarge.com) as well as via teleconference:
- Dial in (France): +33 (0)1 70 99 43 00
- US Toll free: +1 718 354 1390
- International dial in number: +44(0)20 7806 1966
Conference call name: “Lafarge”

Please note that in addition to the web cast replay, a conference call playback will be available from November 9, 2006, 19.30CET, to November 18, 2006 online through www.lafarge.com or at the following numbers:
- France playback number: +33 (0)1 71 23 02 48 (pin code: 8358564)
- US toll free number: +1 718 354 1112 (pin code: 8358564)
- International dial in number: +44 (0)20 7806 1970 (pin code: 8358564)

Statements made in this press release that are not historical facts, including statements regarding our expectations on market trends, price increases, energy costs, cost reduction and growth in our results, 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, 138.09 KB)
  • The management report as of September 30, 2006 (pdf, 406.54 KB)
  • Listen to the interview with Bruno Lafont on BFM (in french) (mp3, 5.79 MB)
  • The printing of the interview (in french) (pdf, 19.05 KB)
  • The presentation slides for the analysts (pdf, 738.21 KB)