Sales volumes of aggregates and ready-mix concrete increased by 4% and 5%, respectively, while construction services revenues were up 2%. Reflecting softening demand in our U.S. markets, sales volumes of cementitious materials decreased by approximately 8% compared to the same 2006 period.

Gross profit decreased by $2.3 million to $88.7 million compared to the 2006 second quarter. This decrease is attributable to lower sales of cementitious materials, increases in energy, distribution and maintenance costs as well as significantly higher costs of cement imported into the U.S., partly offset by higher selling prices of all construction materials.

Selling and administrative expenses were stable at $25.7 million compared to $25.5 million for the second quarter last year. Depreciation expenses increased by $1.2 million to $15.6 million compared to the same period last year as a result of higher capital spending, including business acquisitions in the current period, as well as the impact of completed projects put into service in the period.

Consequently, operating profit decreased to $47.4 million compared to $51.1 million for the second quarter of 2006.

Other expenses were $0.7 million higher compared to the second quarter of 2006. The increase is mainly due to the write-down of certain investments to their net realizable value in the current period.

Financial expenses amounted to $3.7 million compared to $5.6 million for the second quarter last year. The decrease is mainly due to the recognition of a foreign exchange gain in the period (compared to a foreign exchange loss for the same period last year) offset by higher interest expenses due to increased debt levels and higher interest rates compared to the same period in 2006.

Net earnings for the quarter were $26.5 million ($0.63 basic earnings per share) compared to $35.0 million ($0.83 basic earnings per share) for the second quarter of 2006. The decrease is mainly attributable to Other Specified Items described below.

Other specified items (“OSI”)

Fees related to Holcim offer

An unusual expense of $0.7 million ($0.5 million after-tax) was recorded in the 2007 second quarter for fees incurred in connection with Holcim’s offer to acquire the minority shareholders’ interests in the Company.

Beauport class action suit

In the fourth quarter of 2006 the Company recorded an unusual expense of $13.8 million ($9.3 million after-tax or $0.22 basic earnings per share), the estimated amount awarded by the Québec Court of Appeal to plaintiffs in a class action against the Company. On May 3, 2007 the Company received notification that it has been granted leave to appeal the case to the Supreme Court of Canada and had not paid the amount of the award as of July 31, 2007. The Company recorded additional unusual expenses for the three and six-month periods ended June 30, 2007 of $0.2 million ($0.1 million after-tax) and $0.5 million ($0.3 million after-tax), respectively, representing accrued interest costs relating to the judgment rendered in October 2006 as well as additional legal expenses incurred in relation to this claim.

Reduction in tax rates

In the second quarter of 2007 the Company recorded a reduction of $1.5 million in future income tax expenses to reflect the impact of the 0.5% decrease in the Canadian federal income tax rate on future income tax liabilities. Excluding this adjustment the effective tax rate for the second quarter was 39.7%.

In the second quarter of 2006 the Company recorded a reduction of $8.0 million in future income tax expenses to reflect the impact of the 3% decrease in the Canadian federal income tax rate on future income tax liabilities. Excluding this adjustment the effective tax rate for the second quarter of 2006 was 39.3%.

Net earnings before OSI were $25.6 million ($0.61 basic earnings per share) compared to $27.0 million ($0.64 basic earnings per share) for the second quarter of 2006.

Year-to-date results

For the first six months of 2007, sales decreased 4.5% to $518.5 million compared to $542.8 million for the same period last year. Excluding the negative translation impact resulting from the year-over-year appreciation of the Canadian dollar, sales decreased by 4.3%. The decrease is due to lower sales in the first quarter of 2007 compared to the same 2006 period. It should be noted that the sales volumes in the first quarter of 2006 were higher than usual (based on historical first quarter averages), reflecting the exceptionally early start to the construction season as a result of the good weather conditions last year.

Gross profit decreased by $19.4 million to $96.6 million compared to the same period in 2006. This decrease is attributable to lower sales of cementitious materials, increases in energy, distribution and maintenance costs as well as significantly higher costs of cement imported into the U.S., partly offset by higher selling prices of all construction materials.

Consequently, operating profit was $19.8 million compared to $39.0 million for the first six months of 2006.

Selling and administrative expenses were $48.1 million, or $1.2 million lower than for the first six months of 2006. The decrease is mainly explained by severance payments included in the 2006 amount as well as lower pension expenses for the first six months of 2007 compared with the same 2006 period.

Depreciation amounted to $28.7 million compared to $27.7 million for the first six months of 2006. The increase is mainly due to the increased capital spending (including business acquisitions) of $22.9 million in the current year.

Other expenses amounted to $3.1 million compared to $1.2 million for the same 2006 period. The increase is mainly due to the write-down of certain investments to their net realizable value in the current period as well as the reversal of certain provisions that were deemed no longer payable by the Company in the first six months of 2006.

Financial expenses for the first six months of 2007 amounted to $7.6 million compared to $8.9 million for the same 2006 period. The decrease is mainly due to the recognition of a foreign exchange gain in the second quarter of 2007, partly offset by higher interest expenses due to the increased debt levels and higher interest rates compared to the same period in 2006.

Net earnings amounted to $7.0 million ($0.17 basic earnings per share) compared to $25.7 million ($0.61 basic earnings per share) for the first six months of 2006.

Net earnings before OSI were $6.3 million ($0.15 basic earnings per share) compared to $17.7 million ($0.42 basic earnings per share) for the first six months of 2006.

Non-GAAP measures

The term “earnings before Other Specified Items or OSI” does not have any standardized meaning under Canadian Generally Accepted Accounting Principles and is therefore unlikely to be comparable to similar measures presented by other companies. The Company presents earnings before “OSI” as a measure of operating performance of the ongoing business without the effects of unusual items or the impact of tax changes. OSI are excluded because they affect the comparability of the financial results between periods and could potentially distort the analysis of trends in business performance.

Results by segment

The Ontario division reported sales of $205.9 million for the second quarter compared to $206.9 million for the same period last year. This decrease is mainly due to a 7% reduction in construction services revenues in the period resulting from poor weather conditions in the month of April which delayed the start of the construction season. Sales volumes for aggregates increased by 5% as a result of strong demand in the latter part of the quarter while sales volumes for cementitious materials and ready-mix concrete decreased by 6% and 1%, respectively, due to poor weather conditions in the month of April as well as labour strikes in the construction industry in the month of June. Operating profit was $32.9 million compared to $29.5 million for the same 2006 period, an increase of 11.5%, resulting from the lower proportion of construction services revenues (which typically generate lower margins than sales of construction materials) and increased selling prices for construction materials. For the first six months of 2007, sales amounted to $289.4 million compared to $296.9 million in 2006, a decrease of $7.5 million resulting from the exceptionally strong start to the construction season in the prior year, while operating profit was $1.6 million higher.

The Quebec and Atlantic division sales increased by $13.1 million to $89.9 million for the second quarter mainly as a result of a 184% increase in construction services revenues. The construction segment, thanks to major contract work signed in 2007 in addition to the contribution from asphalt plants acquired in 2006, is recovering following a challenging year in 2006. Sales volumes of ready-mix concrete, bolstered by acquisitions in the quarter, increased by 18% while sales volumes of cementitious materials decreased by 1% compared to the second quarter of last year. Aggregates volumes for the quarter were in line with those of the prior year. Operating profit was $16.7 million compared to $15.3 million, an increase of 9.1%. For the first six months of 2007 sales reached $116.0 million, an increase of $6.6 million while operating profit was $0.5 million higher.

During the second quarter, the Quebec and Atlantic division completed the acquisition of ready-mix concrete operations in Terrebonne from Béton Lunick and ready-mix concrete and aggregate assets in the Greater Montreal Area from Béton Grilli. The Béton Grilli acquisition was completed through a newly created subsidiary, Demix Services, held 70% by the Company and 30% by the former shareholders of Béton Grilli. These acquisitions expand the Company’s network of ready-mix concrete and aggregate positions in the Greater Montreal Area, reinforcing the coverage and service offered to its customers. These acquisitions are expected to have a greater impact on sales and operating profit in the second half of the year.

The U.S. division reported sales of $70.9 million for the second quarter compared to $81.0 million for the same period last year. Sales volumes for cementitious materials decreased by 13% as a result of softer demand as well as adverse weather conditions at the beginning of the quarter compared to the same 2006 period. Operating loss for the quarter amounted to $2.2 million compared to an operating profit of $6.3 million for the same period last year. The decrease in operating profit is due to increased energy, distribution and maintenance costs as well as significantly higher costs of imported cement compared to the same period last year. Price increases in our U.S. markets, originally intended for January 1, 2007, were delayed to April 1, 2007 as a result of market conditions. For the first six months of 2007 sales amounted to $113.1 million compared to $136.5 million, a decrease of 17.1%. Operating loss for the first six months of the year amounted to $9.1 million compared to an operating profit of $12.2 million for the corresponding 2006 period.

Liquidity and capital resources

Operating cash flow (which the Company defines as net cash provided by operations before changes in non-cash balances relating to operations) for the first six months of 2007 decreased by $10.1 million compared to last year, in line with the lower net earnings (when excluding the reduction in tax rates in both 2006 and 2007). Changes in non-cash balances relating to operations (which include working capital requirements) amounted to $123.0 million compared to $139.2 million for the same period last year. The $16.2 million decrease is explained by higher construction advances in the current period compared to the previous year. Net cash used for operations was $85.7 million compared to $91.8 million for the same period last year. As a result of the seasonal nature of our business, working capital requirements are variable throughout the year. Therefore, year-over-year comparisons of statements of cash flows and balance sheet items such as accounts receivable, inventories and accounts payable and accrued liabilities are generally more informative than with the previous quarter or year-end.

The Company ended the second quarter in a comfortable financial position with a ratio of long-term debt on total capitalization (which is defined as total long-term debt divided by the total of shareholders’ equity, long-term future income taxes liabilities, and total long-term debt) of 29:71 compared to 28:72 at the end of the second quarter of 2006. Total long-term debt as of June 30, 2007, including the current portion payable, amounted to $327.2 million compared to $300.6 million for the same 2006 period. The increase is mainly related to additional long-term financing of $14.5 million for the Béton Grilli acquisition as well as an increase in capital expenditures compared to last year. As at June 30, 2007, the Company held cash and cash equivalents of $0.8 million compared to $1.4 million at June 30, 2006.

Dividends

A quarterly dividend of $0.15 per share ($0.14 last year) was paid on May 1, 2007 to shareholders of record on April 15, 2007. In addition, a quarterly dividend of $0.15 per share has been declared for payment on August 1, 2007 to shareholders of record on June 22, 2007. Dividends paid by the Company to Canadian residents are eligible dividends as per the Income Tax Act (Canada).

Holcim completes acquisition of minority shareholders' interests in the Company

On July 31, 2007, Holcim announced that its offers to acquire all outstanding class “A” subordinate voting shares of the Company that Holcim did not already own for $43.50 cash per share and for all of the outstanding class “1” special shares of the Company for $43.50 cash per share had been successfully completed. Holcim announced that 94.48% of the class “A” subordinate voting shares held by minority shareholders and 100% of the class “1” special shares had been tendered to the offers. Upon taking up the tendered shares, Holcim will own 25,974,534 class “A” subordinate voting shares (representing approximately 96.89% of the outstanding class “A” subordinate voting shares) and 555,969 class “1” special shares (representing 100% of the outstanding class “1” special shares). Holcim announced that it intends to acquire all class “A” subordinate voting shares not tendered to the offer pursuant to the compulsory acquisition provisions of the Canada Business Corporations Act. Upon successful completion of the compulsory acquisition of the remaining class “A” subordinate voting shares, Holcim intends to de-list the class “A” subordinate voting shares from the Toronto Stock Exchange.

Outlook

Based on current market conditions the Company believes that net earnings in 2007 will be modestly below last year’s results excluding Other Specified Items.

St. Lawrence Cement Group is a leading producer and supplier of products and services for the construction industry, namely cement, concrete, aggregates and construction. The company operates in Canada and on the eastern seaboard of the United States, and employs a total of 3,400 people.