The Excellence 2008 plan seeks to leverage all of the Group's potential and to create additional value.
It clarifies Lafarge's strategy and builds on clear priorities:
- ensuring the safety of the employees and targeting zero accidents,
- developing the potential of the men and women in the Group,
- reducing costs by almost 340 million euros from 2006 to 2008,
- accelerating the development, primarily through the development of the Cement Business in fast-growing markets and through innovation, particularly in concrete,
- reaffirming the essential values of the Group: respect, care, rigor and a clear ambition to be one of the leading international groups with regard to human health and safety, environmental respect, social responsibility and corporate governance.
This plan incorporates targets for value creation for our shareholders:
- increase net earnings per share by an average of 10% per year for the period 2006-2008,
- increase return on capital employed to 10% by 2008.
In 2007, Lafarge announced that it would exceed these targets.
In a deteriorating business environment and given the economic consequences of the financial crisis, the Group's priority in the short term is to focus on free cash flow generation, cost reductions and deleveraging.
During the announcement of its 2008 third quarter results and building on the success of its Excellence 2008 program, Lafarge presented the key actions to respond to the environment:
- Cost reduction by €120 million by the end of 2009, as part of a new €400 million cost cutting program to be achieved over a 3 year period from 2009 to 2011. This follows Lafarge's successful cost reduction program carried out from 2006 to 2008 that will exceed €400 million at the end of 2008.
- Total capital expenditure limitation in 2009 to approximately €2 billion.
- Divestment program expansion beyond the €1 billion target set for 2008-2009, in order to provide additional financial flexibility.
