First Half Results for the six months ended June 30, 2005

8 September 2005
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Euronext: LG, NYSE: LR

  • Current operating income down 9.3% on a like-for-like basis, against a very strong first half in 2004
  • The favorable trends of the second half should translate into a growth of like-for-like current operating income for the full year at the low end of a 6% to 8% range

Key figures

  • Like-for-like sales up 6.0%
  • Current operating income on a like-for-like basis down 9.3% against a 33% increase in 2004 compared to the previous year
  • Net income down 17.7%
  • Earnings per share of €2.12
  • Group net debt down 5.3%

Group highlights

  • Further sharp decline of the German market has particularly impacted our Roofing business, with a €31M fall of the German current operating income.
  • The Cement current operating income has been impacted by the severe price competition experienced in the first half in Brazil, Malaysia and South Korea, which translates into a €58M negative impact on its current operating income. The situation has now been reversed in Malaysia and is stabilizing in South Korea.
  • Excluding these few countries, successful price increase implementation in cement markets has overall offset sharp increases in energy and transportation costs.
  • Aggregates & Concrete and Gypsum delivered solid results.
  • Benefits from recent acquisitions and slightly positive foreign exchange impact.

Bernard Kasriel, Lafarge Chief Executive Officer, said:

“These results, weaker in comparison with a particularly strong first half 2004, derive from difficult market conditions experienced in the first half in Brazil, Malaysia, South Korea in Cement, and in Germany across all our businesses.

However, we expect a strong second half 2005, with favorable trends of our volumes overall, further price improvements in cement and aggregates, a return to a normal competitive environment in Malaysia and a stabilization of the situation in South Korea. We remain concerned with the continued, stronger than expected, deterioration of the German construction market. We therefore expect the growth of our full year like-for-like current operating income to be robust, at the low end of a 6 to 8% range previously stated.

Our unprecedented capacity expansion program is moving forward particularly in Cement and Gypsum to support market growth, and will start to deliver in 2006. Our recent move in China by partnering with Shui On is another step forward to capture high growth market opportunities.”

Consolidated accounts as at June 30, 2005

Consolidated financial statements as of 30 June 2005
June 30, 2005
€ Million
June 30, 2004
€ Million
Sales 7,220 6,794 +6.3%
Current operating income 837 903 -7.3%
Net income, Group share 359 436 -17.7%
Net income per share in € 2.12 2.64 -19.7%
Cash flow from operations 798 934 -14.6%
Group net debt 7,863 8,303 -5.3%

Current operating income as at June 30, 2005

Current operating income as of 30 June 2005
June 30, 2005
€ Million
June 30, 2004
€ Million
Variation % Like-for-like
Cement 652 670 -2.7% -4.7%
Aggregates and Concrete 108 99 +9.1% +4.9%
Roofing 24 67 -64.2% -63.9%
Gypsum 79 74 +6.8% +5.7%
Other -26 -7 - -
TOTAL 837 903 -7.3% -9.3%

Highlights by Division
(In the text below, all variances are expressed on a like-for-like basis)


  • Current operating income down 4.7%.
  • The Cement Division current operating income has been strongly impacted by the severe price competition experienced in the first half in Brazil, Malaysia and South Korea.
  • Excluding these markets, price increase implementation has overall successfully offset the very high increase in energy and transportation costs.
  • In some markets (North America, Spain), strong demand required additional imports in a context of very high sourcing costs, to support long-term relationship with customers.
  • In North America, the 28% growth in current operating income essentially reflects the significant improvement in the South East.
  • The 10% decline of current operating income in Western Europe derives from mixed situations across the region, with robust growth in France being more than offset by weakness in volumes in Germany, UK and Greece.

Aggregates and Concrete

  • Current operating income increased by 4.9%.
  • Strong volumes and price increases in Aggregates overall and good asphalt performance contributed to the growth.
  • Despite good volumes outside North America, Concrete results were impacted by sharp increases in transportation and raw materials costs.


  • Current operating income fell 63.9%.
  • The renewed decline in the German construction market resulted in a loss being recorded in the German operations despite the extensive restructuring, causing most of the sharp fall in the Division results.
  • France, UK and Malaysia saw slight declines while further growth was recorded in North America.


  • Current operating income grew 5.7%.
  • North America continued to improve significantly, benefiting from further price increase and high demand.
  • This growth was partly offset by France, where the price increase was insufficient, and a significant market slowdown in South Korea, Poland and Australia.


  • The second half of 2005 will compare with a less favorable second half of 2004.
  • Overall, further volume growth is expected.
  • Price increases will be ahead of cost increases in most markets. Cement prices are now back to their previous sustainable level in Malaysia and the cement situation has stabilized in South Korea.
  • However, no sign of stabilization of the German construction market is expected before the end of the year, and severe price competition is likely to continue in Brazil.
  • The favorable trends of the second half should translate into a growth of current operating income like-for-like for the full year at the low end of a 6% to 8% range.

Lafarge, the world leader in building materials, holds top-ranking positions in all four of its Divisions: Cement, Aggregates & Concrete, Roofing and Gypsum. Lafarge employs 77,000 people in 75 countries and posted sales of €14.4 billion in 2004.

Lafarge's next financial publication - 2005 9 months sales - will be on October 20, 2005 (before the Euronext stock market opens.)

For release worldwide with simultaneous release in the United States.

Communications Investor Relations
Stéphanie Tessier
33-1 44-34-92-32
James Palmer
33-1 44-34-92-93
Amanda Jones
33-1 44-34-19-47
Danièle Daouphars
33-1 44-34-92-93

Statements made in this press release that are not historical facts, 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.

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