Lafarge 2004 Annual Results : Excellent 2004 Performance Drives Net
Income Increase of 19% PARIS, February 24 /PRNewswire-FirstCall/ --
The Board of Directors of Lafarge, meeting on February 23, 2005,
approved the accounts for the year ending December 31, 2004. A full
report was given to the directors of the Board on the dramatic
consequences of the Tsunami on our Aceh cement plant in Indonesia.
They were informed about all measures taken by both local and
corporate teams and they expressed their deep sympathy for all
affected employees. KEY FIGURES - Like for like sales up 7.7% -
Cash flow from operations up 17.5% - Operating income on - Cash
flow to net debt ratio a like-for-like basis up 12.8% increased to
32.5% from 25.5% in 2003 - Gearing down to 59% - Dividend up to
EUR2.40 per share from 67% at the end of 2003 (+4.3% from EUR2.30
in 2003), subject to Annual General Meeting approval GROUP
HIGHLIGHTS - Solid organic growth and strong increase in operating
income. - Improvement across all divisions. - Clear benefits of the
Group's unique business mix and geographical spread. - Balance
sheet strengthened ahead of schedule, giving financial flexibility
to pursue the strategy of the Group. - Operational improvements,
particularly in plant performance, pricing and cost management,
have driven up margins and Return on capital employed after tax. -
The Group is carrying out a large number of capacity expansions,
with 6 plants under construction in Cement, 4 in Gypsum and 3 in
Roofing, that will support organic growth going forward. Bernard
Kasriel, Chief Executive Officer of Lafarge, said: "We are
delighted with the widespread upturn in our results during 2004,
reflecting healthy demand and strong performance management across
all our divisions. We are particularly pleased with the strong
increase of the return on capital employed and the net income,
reflecting this strong performance. We enter 2005 well placed to
leverage the overall favorable market environment and to increase
prices. We will also benefit from the continuous performance
improvement in all our businesses and from our unique business mix
and geographical portfolio. Furthermore, our financial flexibility
will enable us to pursue our growth strategy. We will have to
manage some challenges: high energy and energy related cost
increases as well as the expected weakness of the German, South
Korean markets and of Brazil. In this context, we expect a 6 to 8%
like for like growth of our operating income on ordinary activities
for 2005." Consolidated accounts as at December 31, 2004 December
31, 2004 December 31, Variation 2003 EUR Million EUR Million Sales
14,436 13,658 + 5.7% Operating income on 2,124 1,934 + 9.8%
ordinary activities Net income 868 728 + 19.2% Net income per share
in EUR EUR5.16 EUR4.92 + 4.9% Cash flow from operations 2,113 1,799
+ 17.5% Group net debt 6,499 7,061 - 8% Group operating highlights
by division Operating income December 31, December Variation Like
for like on ordinary 2004 31, 2003 activities EUR Million Cement
1,567 1,466 +6.9% +10.6% Aggregates and 337 283 +19.1% +18.3%
Concrete Roofing 150 142 +5.6% +5.7% Gypsum 129 84 +53.6% +50%
Other (59) (41) NA NA TOTAL 2,124 1,934 +9.8% +12.8% (In the text
below, all % variances are expressed on a like-for-like basis)
Cement - Sales up 9.2%. Operating income up 10.6% - The Cement
division's operating income growth has been driven by good pricing
trends in the context of sharp increases in energy and freight
costs, good volume growth overall and strong performance
management. - Overall, the operating margin for the division was
stable at 21.2%, illustrating the ability of our cement operations
to contain the impact of sharp rises in energy and freight costs.
Return on capital employed after tax went up to 9.5% from 8.4% in
2003. - The increase of Cement operating income was driven by a
growth of 17.5% in North America, 2.6% in Western Europe reflecting
mixed performance across the region, and 16.3% in growth markets.
Among these, Central and Eastern Europe reported a 20.9% increase,
the Mediterranean Basin a 34.5% increase, and Africa and the Indian
Ocean a 41.9% increase. These results were mitigated by a slight
decline in Latin America due to Brazil and in Asia, due to a
slowdown in the South Korean and Malaysian markets. Aggregates and
Concrete - Sales up 7.6%. Operating income up 18.3%. - The
Aggregates and Concrete division's operating income growth was
essentially driven by strong volumes in North America, in France
and in growth markets, overall solid pricing gains and increased
volumes of value-added concrete products in France, the UK and
North America. Difficult trading conditions were experienced in
Asphalt and Paving activities in the UK. - The operating margin
increased to 7.1% from 6.3%. Return on capital employed after tax
increased to 7.9% from 6.8%. - The division carried out two
significant acquisitions: The Concrete Company (TCC) in Georgia,
USA, and Hupfer Holdings in France and Switzerland. Roofing - Sales
down 1%. Operating income up 5.7% - The operating income rose by
7.5% in Western Europe, driven by strong sales in France and the
UK, despite another fall in Germany. Improved results were also
reported in North America, driven by a buoyant housing market. -
Operating margin increased to 10% from 9.4%, partly thanks to
further cost reductions in Germany. Return on capital employed
after tax increased to 5.5% from 4.8%. Gypsum - Sales up 12.2%.
Operating income up 50%. - The significant growth in operating
income was largely due to the sharp improvement in North America,
where our Gypsum US strategy is delivering. The US residential
housing and renovation work remained buoyant. Outputs from our
high-speed plants, Silver Grove and Palatka, increased during the
year, plant performance improved and prices were successfully
raised. Western Europe also contributed to the upturn in the Gypsum
division results, largely driven by performance in France. -
Operating margin for the division sharply increased to 9.6% from
7.0%. Return on capital employed after tax strongly increased to
9.5% from 6.3%. CAPITAL EXPENDITURES AND DISPOSALS Further progress
in strengthening the Group's financial structure was achieved.
Capital expenditures increased to about EUR1.5 billion in 2004. The
debt reduction came from strong cash flow from operations and
sizeable disposals. EUR783 million in sustaining capital
expenditure - Sustaining capital expenditure totaled EUR783
million, focused on continuous upgrading of existing industrial
operations around the world. EUR350 million investments in organic
growth aimed at capacity increases and performance improvements -
Selective capacity expansion projects continued, mostly in cement
with the building of a new production line in Tula, Mexico, in
Ewekoro, Nigeria, in Bouskoura, Morocco and in Chongqing, China, to
meet the very strong growth of the local market, and the building
of a new plant in Bangladesh. EUR420 million on high potential
acquisitions - Main acquisitions were Cementos Selva Alegre in
Ecuador for EUR98 million, the cement and ready-mix concrete assets
of The Concrete Company (TCC) in Georgia, USA, for EUR87 million;
Hupfer Holdings, an aggregate and concrete ready-mix producer in
France and Switzerland for EUR69 million; a 10.2% stake in Lafarge
Halla Cement in South Korea; and a 14% stake in Lafarge Boral
Gypsum in Asia for EUR34 million. - All acquisitions were selected
for their synergies with existing operations or for their potential
as platforms for further growth in attractive and profitable
markets. EUR574 million disposals of non-core assets - The Group
realized EUR574 million from disposals, the most significant ones
being the disposal of a 40.9% stake in Molins, Spain, for EUR265
million and a 40% stake in Carmeuse North America BV for EUR98
million. IFRS: transition completed - The main impact of the
transition to IFRS on the 2004 financial statements is due to the
accounting treatment of pension plans and goodwill. - Net Income
increases to EUR1,046 million mainly as a consequence of the end to
the amortization of goodwill and of pension related prior actuarial
losses. - Total equity at year end is reduced to EUR9,901 million,
principally as a result of the charge to equity of EUR766 million
of after tax prior actuarial losses on pension plans. - Net debt at
year end increases to EUR6,958 million, mainly as a consequence of
the inclusion of the amount of the receivable securitization
programme and of the sale options of subsidiary shares granted to
minority shareholders. - Our financial ratios under IFRS at the end
of 2004 remain solid, with gearing at 70% and cashflow to net debt
at 30.4%. 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 EUR14.4 billion
in 2004. Additional information is available on the web site at
http://www.lafarge.com/. An interview with Bernard Kasriel, Chief
Executive Officer, will be available in video, audio and text from
7.00am CET on http://www.lafarge.com/. Lafarge's next financial
publication -Quarter1 2005 sales- will be on May 4, 2005 (before
the Euronext stock market opens). For release worldwide with
simultaneous release in the United States. Practical information:
There will be a French press conference at 09.00 CET at Lafarge (61
rue des Belles Feuilles - 75016 Paris). There will be an analyst
presentation at 11.30 CET at Lafarge at 61 rue des Belles Feuilles,
75116 Paris. The presentation will be in made in English with
simultaneous French translation. This presentation (including the
slides) will also be available through a webcast facility on
Lafarge website (http://www.lafarge.com/) or at the following
numbers: - Dial in from France: +33-(0)1-70-99-35-16 - Dial in from
the UK: +44(0)-208-515-2309 - Toll free from the UK:
+44(0)800-358-23-43 - Dial in from the US: +1-(0)-303-262-2211 -
Toll free from the US: +1-800-240-5318 Playback available online
through http://www.lafarge.com/ or by phone from February 24, 2005
to March 3rd, 2005 at the following numbers: - France playback
number: +33(0)1-70-99-32-94 (pin code 132970#) - UK playback
number: +44(0)208-515-2499 (pin code 638828#) - UK toll free number
: +44(0)800-026-0020 (pin code 638828#) - US toll free number:
+1-800-405-2236 (pin code 11023676#) There will be a question and
answer session at 17.00 UK time at The Lincoln Center, 18 Lincoln's
Inn Fields, London WC2A 3ED which may also be available through a
webcast facility on Lafarge website (http://www.lafarge.com/) or at
the following numbers: - Dial in number from UK:
+44(0)208-515-23-12 - Toll free (from the UK only):
+44(0)800-358-0857 - Dial in number from US: +1-303-262-2137 - Toll
free (from the US only): +1-800-240-6709 Playback facility
available online through http://www.lafarge.com/ or by phone from
February 24, 2005 to March 3rd, 2005 at the following numbers: UK
playback number: +44(0)208-515-2499 (code 638941#) Toll free from
the UK only: +44(0)800-026-0020 (code 638941#) US playback number:
+1-303-590-3000 (code 11023678#) Toll free from the US only:
+1-800-405-2236 (code 11023678#) 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 Autorite des Marches
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. Proposed new
terms and appointments to Lafarge Board of Directors The Lafarge
Board of Directors, meeting on February 23, 2005, announced that it
will submit for approval to the annual general meeting of Lafarge
Shareholders, the renewal of Director's term of Michel Bon,
Bertrand Collomb and Alain Joly. The Board will also propose the
appointment as Directors of Jean-Pierre Boisivon, Philippe
Charrier, Oscar Fanjul and Bruno Lafont, to replace Bernard
Isautier, who left the Board at the end of 2004, and Jean Keller,
Patrice Le Hodey, Robert Murdoch, whose terms are ending. Bertrand
Collomb, Chairman of the Board of Directors, said : "On behalf of
the Board, I wish to thank Bernard Isautier, Jean Keller, Patrice
Le Hodey and Robert Murdoch for their contributions to the work of
the Board and their care for corporate governance. We will be happy
to keep on relying on the experience and quality of Michel Bon and
Alain Joly, and we are pleased to welcome three new independent
Directors, highly recognized, Jean-Pierre Boisivon, Philippe
Charrier and Oscar Fanjul. Finally, the Board will be delighted to
welcome Bruno Lafont, who since May 2003, has joined the Direction
Generale of the Lafarge Group." - Jean-Pierre Boisivon is Chairman
of the Board of Directors of the Centre National d'Enseignement a
Distance (CNED), General Delegate at the Institut de l'Entreprise,
and Chairman of the Comite d'organisation des expositions du
travail "Un des Meilleurs Ouvriers de France". - Philippe Charrier
is Chairman and CEO of Procter & Gamble in France. He is
notably Director of Eco Emballages, of the Fondation HEC and of the
Institut de Liaisons et d'Etudes des Industries Economiques (ILEC).
He is also Vice Chairman of Entreprise et Progres. - Oscar Fanjul
is Honorary Chairman of Repsol SA and Vice Chairman of Omega
Capital company. He is notably Director of Unilever, of Marsh &
McLennan Companies and of the London Stock Exchange. He is a member
of the Supervisory Board of Carlyle Group in Europe and of Sviluppo
Italia. He is also an International Adviser to Goldman Sachs. -
Bruno Lafont has been Chief Operating Officer of the Lafarge Group
since May 2003. 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 Autorite des Marches 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. Euronext: LG, NYSE: LR Paris DATASOURCE: Lafarge
CONTACT: COMMUNICATION : Stéphanie Tessier: +33-1-44-34-92-32, ,
Amanda Jones: +33-1-44-34-19-47 ; RELATIONS INVESTISSEURS : James
Palmer: +33-1-44-34-92-93, , Danièle Daouphars: +33-1-44-34-92-93,
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