Full year 2003 sales in line with expectations

28 January 2004

Euronext: LG, NYSE: LR

  • Sales down 6.5% to € 13,658 million from € 14,610 million
  • Underlying sales up : + 4.6%
  • Full year operating income on ordinary activities expected to be stable compared to 2002 before the impact of currency fluctuations


  • Sales as at December 31, 2003 were down 6.5% to € 13,658 million from € 14,610 million as at December 31, 2002
  • Significant negative foreign exchange variations impacted sales by 9%
  • Net scope effect on sales of -2.1% as a consequence of the divestments realized in 2002 and 2003
  • Underlying sales were up + 4.6% at the end of the year
  • Fourth quarter underlying sales grew by 9.6% compared to a particularly poor last quarter in 2002
  • Catch up required to offset the very weak first quarter has been achieved
  • Full year operating income on ordinary activities expected to be stable before the impact of currency fluctuations

    The sales report for each Division, excluding foreign exchange, scope effects, and before inter divisional sales elimination is as follows:

  • CEMENT: +5.3%
    Sales rose 5.3% for the full year 2003 (-3.4% in Quarter 1, +3.0% in Quarter 2, +7.7% in Quarter 3 and +11.4% in Quarter 4).

    The second half of 2003 saw a good level of sales across the Division. The fourth quarter was very strong at 11.4%, versus a particularly poor last quarter in 2002, with the majority of countries recording growth in volumes and many seeing pricing improvements. All geographical regions ended the year recording growth in sales.

    Despite a mixed picture in Western Europe an overall increase in sales was recorded. Greece showed a strong level of growth in the run up to the Olympic games coupled with a very buoyant residential housing market. Spain completed 2003 with solid growth in sales. After the severe price war impacting sales throughout the year, prices stabilized in Germany in the last quarter albeit at a low level. In France in a weak market the decline in volumes has been offset by a good level of pricing. In the UK, sales were down for the year with weaker volumes due to a slowdown in infrastructure spending and residential house building and with prices seeing some pressure from imports.

    Sales in North America continued to recover strongly in the fourth quarter resulting in an overall increase in sales for the full year 2003. Strong gains in sales were recorded across the United States in the last quarter. Prices however remained under some pressure and declined for the year as a whole particularly in the South and North East. In Canada demand was strong for the year overall, with the Western provinces showing the most favorable trends. An increase in prices was also achieved in Canada in the year.

    Good levels of sales growth were recorded in all other geographical regions:
    - In Central Europe strong growth was recorded in Romania.
    - In Asia, favorable market conditions allowed strong growth in domestic sales in South Korea, China and strong sales were also achieved in Malaysia after the very poor previous year. Positive pricing trends in India helped to offset lower volumes. In the Philippines a significant improvement in prices was achieved in the fourth quarter confirming the end to the price war experienced over the last twelve months.
    - In Morocco, Jordan and across much of Africa, strong sales were reported.
    - In Latin America, strong growth in sales were reported in Chile and positive pricing trends were seen in Brazil and Venezuela.

Sales rose 3.8% for the full year 2003 (-0.6% in Quarter 1, +3.3% in Quarter 2, +6.5% in Quarter 3 and 4.1% in Quarter 4).

In Western Europe sales rose for the full year driven by the UK and Spain. In the UK, sales growth came from good pricing in aggregates and from the asphalt and paving activities, which benefited from major contracts in progress, although there was a modest slowdown in the fourth quarter. Concrete sales in the UK also showed a good level of growth throughout the year. Spain continues to have record sales. In France, the overall aggregates and concrete market declined in 2003 with the exception of the South East.

In North America, aggregates and concrete sales ended the year higher than 2002 as a result of strong volumes in the fourth quarter, which offset the impact of poor weather conditions in the early part of the year and slower construction activity in the United States. Price increases in aggregates and concrete were achieved across Canada and in most markets in the United States.

ROOFING: +3.0%
Sales increased by 3.0% for the full year 2003 (-3.2% in Quarter 1, -0.6% in Quarter 2, +5.5% in Quarter 3 and +9.1% in Quarter 4).

Sales in Western Europe were marginally down for the full year for concrete tiles, but rose for clay tiles. The fourth quarter saw strong sales in most countries for both concrete and clay tiles. Good levels of sales growth were recorded in the UK, Italy, Czech Republic and Hungary for all products. France experienced a decline in sales of concrete tiles. In Germany concrete tile sales were down for the year, but with the weak start to the year being partially offset by favorable trends in the second half.

In the United States, sales continued to grow driven by a strong housing market. In Asia strong sales were recorded in Malaysia and a positive improvement was achieved in Japan.

Sales of roofing components increased by 3.9% now representing 17% of the Division's sales. Chimney sales rose by 6%.

GYPSUM: +6.6%
Sales rose 6.6% for the full year 2003 (+1.9% in Quarter 1, +1.6% in Quarter 2, +9.5% in Quarter 3 and +14.1% in Quarter 4).

Sales increased in all regions after a particularly strong fourth quarter.

In Western Europe, strong sales growth was recorded in the UK thanks to a very buoyant wallboard market throughout the year. Good growth was seen in France and an improvement was recorded in Germany despite a declining market.

In the USA, the strong end to the year confirmed the recovery seen in the third quarter with good demand from residential construction and a further improvement in prices in December, resulting in an annual average of 97USD per thousand square feet versus 96USD in 2002.

In Asia, all markets showed sustained growth.

The effect of foreign currency fluctuations on 2003 sales was significant and particularly the weakness of the US Dollar. Major translation impacts on sales were generated in the following currencies: US Dollar (€ 570 million), Pound Sterling (€ 134 million), Canadian Dollar (€ 84 million), Malaysian Ringgit (€ 71 million), and the Brazilian Real (€ 50 million).

Sales from acquisitions in 2003 amounted to a positive scope effect of € 156 million. The reduction in sales due to negative scope totaled € 411 million with the divestment of Andalousian cement operations in 2002 accounting for €115 million and the Florida operations in 2003 for €30 million.


Consolidated sales as of 31 December 2003
December 31, 2003 (M€) December 31, 2002 (M€) Variation At constant scope and foreign exchange At constant scope and foreign exchange, before inter divisional sales elimination
Cement 6,383 6,948 -8.1% +5.1% +5.3%
Aggregates & Concrete 4,465 4,768 -6.4% +3.8% +3.8%
Roofing 1,510 1,538 -1.8% +3.0% +3.0%
Gypsum 1,194 1,146 +4.2% +6.4% +6.6%
Others 106 210 -49.5% +9.3%
TOTAL 13,658 14,61 -6.5% +4.6% NA

Lafarge is the world leader in building materials, and employs 77,000 people in 75 countries. The Group holds top-ranking positions in all four of its Divisions: Cement, Aggregates & Concrete, Roofing and Gypsum.

Lafarge's next financial publication - 2003 full year financial results - will be on February 26, 2004 (before the Euronext stock market opens.)

For release worldwide with simultaneous release in the United States.

Press Contacts Investor Relations
Véronique Doux
33-1 44 34 19 47
James Palmer
33-1 44 34 92 93
Brunswick Stéphanie Tessier 33-1 53-96-83-79 stessier@brunswickgroup.com Danièle Daouphars
33-1 44 34 92 93

Statements made in this press release that are not historical facts, including statements regarding our expected operating income, 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 Commission des Opérations de Bourse and the US Securities and Exchange Commission including its Reference Document COB number D03-0375 as updated on June 5, 2003 and November 17, 2003 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.

Conference Call on Full Year Sales to December 31, 2003
Following the release of Lafarge's sales to December 31, 2003, a conference call will be held on:
January 28th, 2004 at 15:30 French time, in English
(14:30 UK time; 09:30AM EDT in North America)
The speakers will be:
Jean-Jacques Gauthier – Executive Vice President, Finance
James Palmer - Vice-President Investor Relations
Danièle Daouphars – Manager Investor Relations

If you wish to participate in the conference call, please dial:
From France +33 (0) 1 70 99 32 98
From UK +44 (0) 20 8400 6302
From UK toll free 0 800 358 2342
From USA +1 303 205 0066
From USA toll free +1 800 219 6110
Conference call name: “Lafarge conference call

A replay of the conference call will be available from January 28th, 2004 at 7.30 pm CET to February 5th, 2004 at 7.30 pm CET at the following numbers:
From France ++33 (0) 1 70 99 32 94 Access code: 132273#
From UK +44 (0) 20 8797 2499 Access code: 965276#
From USA +1 303 590 3000 Access code: 566807#

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