Strong increase in first quarter earnings
Net income up 49% excluding 2007 capital gains (1)
Results up 70% in emerging markets
Key figures up sharply
- Sales up 8% to €4,000 million
- Current operating income up 48% to €512 million
- Strong increase in operating margin to 12.8%, compared to 9.3% in 2007
- Net income Group share (excluding 2007 capital gains(1)) up 49% to €150 million
- Earnings per share (excluding 2007 capital gains(1)) up 36% to €0.79
(1) Disposals in the 1st quarter of 2007 of the Roofing business and our Cement and Aggregates & Concrete operations in Central Anatolia, Turkey.
Highlights for the first quarter of 2008
- Strong contribution from emerging markets, where trends are very positive overall. 70% increase in current operating income in emerging markets in the first quarter.
- Increase in our results in developed markets, despite the slowdown in the US and Spain.
- Very strong cost reductions, producing results in all countries and businesses.
- The Orascom Cement acquisition, effective since January 23 2008, contributed to the strong increase in earnings. The merger with Orascom Cement is progressing fast and well.
- At the end of March, the Group's balance sheet reflects the financing of the Orascom Cement acquisition.
- We maintain our positive overall market outlook for the full year.
- The fundamentals of our sector remain sound, and Lafarge is well armed to make the difference in 2008. There are considerable construction and infrastructure needs in emerging markets. We anticipate further growth in world demand for cement, driven by growth in emerging markets, despite weak demand in the US and the slowdown in Spain.
- We foresee another year of growth in our Aggregates & Concrete business, with a strong increase in emerging markets in particular.
- We anticipate further increases in energy and transportation costs.
- The cost reduction program will continue to generate substantial savings in 2008. The initial target of €340 million will be exceeded and should reach €400 million by the end of 2008.
- We expect another increase in our earnings in 2008, a significant step in the achievement of our 2010 targets of earnings per share of more than €15, return on capital employed after tax of more than 12% and free cash flow of more than €3.5 billion.
Consolidated financial statements as at March 31, 2008
Lafarge for the first quarter of 2008, with an indication of their progression compared with the first quarter of 2007.
|Current operating income||345||512||+48%|
|Operating margin (%)||9.3%||12.8%||+350bp|
|Net income Group share||362||150||none|
Net income Group share
Before 2007 capital gains(1)
|Earnings per share (€)||2.07||0.79||none|
Earnings per share (€)
Before 2007 capital gains(1)
|Cash flow from operations||208||391||+88%|
|Group net debt||8,440||16,135||+91%|
(1) Excluding the impact in 2007 of the disposal of the Roofing business and our Cement and Aggregates & Concrete operations in Central Anatolia, Turkey, for 261 M€.
Current operating income as at March 31, 2008
|Aggregates & Concrete||18||26||+ 44%|
|Gypsum||46||20||- 57 %|
|TOTAL||345||512||+ 48 %|
Highlights by business
- Sales up: +16% to €2,554 million (+9% at constant scope and exchange rates)
- Current operating income up strongly: +57% to €469 million (+32% at constant scope and exchange rates)
- Solid growth in emerging markets, which generated 75% of the business's income, with particularly remarkable growth in Central and Eastern Europe and Asia, and the contribution of Orascom Cement's operations
- Very positive pricing trends in a climate of rising energy costs
- Positive impact of the cost reduction program in all regions
- Resilience of our operations in North America despite lower volumes in the US.
- Solid contribution from Orascom Cement operations, consolidated as from end-January 2008.
Aggregates & Concrete
- Sales slightly down: -3% to €1,234 million
- Current operating income up: +44% to €26 million
- Growth in operating income driven by price increases and cost reductions, despite lower volumes in the first quarter due to the slowdown in the US and poor weather conditions in certain markets.
- Continuing development of value-added concrete products, which accounted for 23% of volumes in the first quarter of 2008, compared to 20% over the same period in 2007.
- Sales down: -4% to €398 million
- Current operating income down: -57% to €20 million, affected by the slowdown in the US residential market.
- Elsewhere, higher energy costs offset by price increases.
Investments and divestments
- Sustaining capital expenditure was stable at €165 million in the first quarter of 2008.
- Development capital expenditure to increase production capacity totaled €244 million. These investments were related in particular to the construction of new cement capacity in Morocco, China, Zambia, Indonesia, India, Ecuador, the US, South Africa, Chile, Cameroon, Russia and Poland, as well as in those countries where Orascom Cement is present.
- Acquisitions consisted mainly of the acquisition of Orascom Cement, effective as of January 23 2008. The total acquisition price amounted to 8,3 billion euros and was financed through the issuance of 22.5 million shares for 2.5 billion euros and a syndicated credit facility.
- Disposals amounted to €21 million, compared to €2,345 million in 2007 (sale of the Roofing business and Cement and Aggregates & Concrete operations in Central Anatolia, Turkey).
Sale of stake in Lafarge Titan in Egypt
Lafarge announced yesterday the sale of its 50% stake in Lafarge Titan in Egypt to its joint venture partner Titan, for 330 million euros (including debt of around 20 million euros).
Notes to editors
Lafarge is the world leader in building materials, with top-ranking positions in all of its businesses: Cement, Aggregates & Concrete and Gypsum. With 90,000 employees in 76 countries, Lafarge posted sales of Euros 17.6 billion and net income of Euros 1.9 billion in 2007.
Lafarge is the only company in the construction materials sector to be listed in the 2008 ‘100 Global Most Sustainable Corporations in the World'. 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. 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.
This release may contain forward-looking statements. Such forward-looking statements do not constitute forecasts regarding the Company's results or any other performance indicator, but rather trends or targets, as the case may be. These statements are by their nature subject to risks and uncertainties as described in the Company's annual report available on its Internet website (www.Lafarge.com). These statements do not reflect future performance of the Company, which may materially differ. The Company does not undertake to provide updates of these statements.