First quarter 2006 sales

2 May 2006
 
Record first quarter sales, up to 28.1% to € 3,772 million


Sales were up 28.1% to € 3,772 million as at March 31, 2006.
This compares to a weak first quarter in 2005.
Volume trends were favorable, reflecting overall good weather conditions and growth in those businesses and markets where the Group is present.
Significant price increases were successfully implemented in an environment of high energy and transportation costs.
The net scope effect was +2.2%.
Foreign exchange variations positively impacted sales by 6.7%.

Bruno Lafont, Chief Executive Officer of the Group, said:
“This strong level of sales confirms the favorable trends for 2006 presented earlier this year. Our management team is focused on implementing our strategic plan, aimed at increasing the profitability of our future growth, streamlining our organization and reducing costs, in order to achieve the best performance levels in our industry, for the benefits of our shareholders."

Consolidated sales as of 31 March 2006
  March 31, 2006
€ Million
March 31, 2005
€ Million
Variation At constant scope and foreign exchange At constant scope and foreign exchange, before inter divisional sales elimination
Cement 1,822 1,419 +28.4% +19.5% +19.7%
Aggregates & Concrete 1,238 908 +36.3% +23.5% +23.5%
Roofing 304 268 +13.4% +10.2% +10.3%
Gypsum 404 344 +17.4% +14.9% +15.3%
TOTAL 3,772 2,945 +28.1% +19.2% NA


CEMENT: €1,822 MILLION (+28.4%)
This very strong growth in cement was achieved through solid volumes favored by robust construction activity in most markets -amplified in Europe and North America by more favorable weather conditions than in 2005- and through significant price increases successfully implemented.

In Western Europe, sales were up overall with good growth in France, Spain and Greece. Volume increases were more limited in Germany and in the UK. Good pricing trends were seen across the region.

Strong demand and favorable weather in North America led to a very significant increase in sales. Average prices increased significantly in both the United States and Canada.

Central and Eastern Europe recorded high levels of activity in most countries, with the exception of Poland, impacted by bad winter conditions.

Strong sales growth was recorded in the Mediterranean Basin, with a solid construction sector and good pricing trends in Jordan, Turkey, Egypt and Morocco.

In Africa, sales increased strongly, benefiting from favorable volume trends across the region, particularly in Nigeria. Prices were up in all markets.

In Asia, sales were up throughout the region. In Malaysia, prices increased strongly from the low level seen in the first quarter of 2005, while volumes declined slightly. India and South Korea continued to enjoy strong growth in volumes. Prices are stabilizing in South Korea. In the Philippines, demand was impacted by a slow construction sector. In China, volumes were substantially up, benefiting from our new plant in Chongqing.

In Latin America, sales were up overall, but with contrasting performance across the region. Very strong volume growth was recorded in Venezuela and Brazil, boosted by a high level of activity in the construction sector, while Chile remained sound. Prices in Brazil fell sharply year on year, leading to a significant decline in sales, and no price improvement is anticipated in the short term.

AGGREGATES & CONCRETE: €1,238 MILLION (+36.3%)
In Aggregates, the first quarter of 2006 continued to show positive trends in our markets. Strong sales growth was seen across Western Europe, driven by solid volumes compared to a contrasted first quarter in 2005, and by successful implementation of solid price increases. Good volume trends were experienced in Aggregates across North America, together with favorable pricing. Other countries posted generally strong levels of volume growth.

In ready-mixed concrete, strong increase in sales was recorded across most of our markets, driven by continued favorable trends in volumes in Western Europe, North America and our emerging markets, together with solid price increases to cover aggregates and cement high costs and mix improvement, driven by the further development of our value-added products.

ROOFING: €304 MILLION (+13.4%)
The Roofing business recorded an increase in sales year on year. In Western Europe, sales were up, with positive trends in most markets.
Strong momentum was maintained in the United States.

GYPSUM: €404 MILLION (+17.4%)
Sales growth was largely driven by significantly higher prices in North America, where volumes also continued to grow.
Sales in Europe were up, driven by increased volumes in all countries. Sales increased in Asia, especially in Thailand, while in South Korea, the construction market is slowly recovering.
 

STRONG POSITIVE FOREIGN EXCHANGE IMPACT OF +6.7% AMOUNTING TO € 164 MILLION

The positive foreign currency translation impact on sales was generated mainly from the strong appreciation of the US Dollar (€ 47 million), the Canadian Dollar (€ 28 million), the Brazilian Real (€ 12 million), the Chilean Peso (€ 11 million) and the South Korean Won (€ 9 million).
 

SCOPE CHANGES OF +2.2% AMOUNTING TO € 70 MILLION

Sales from acquisitions amounted to a positive scope effect of € 35 million, largely due to the acquisition of Ritchie in Aggregates & Concrete in the United States (Q4 2005) and to the acquisition of the grinding station of La Esfera in Spain (mid 2005). The positive impact of the termination of the joint venture in Aggregates & Concrete in Spain and Portugal amounted to € 31 million and the creation of the Group's joint venture with Shui On in Cement in China generated a positive impact of € 9 million. The reduction in sales due to negative scope effects was marginal (€ 5 million).



Lafarge is the world leader in building materials, with top-ranking positions in all four of its businesses: Cement, Aggregates & Concrete, Roofing and Gypsum. With 80,000 employees in 76 countries, Lafarge posted sales of Euros 16 billion in 2005.
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. Lafarge is the only company in the construction materials sector to be listed in the 2006 ‘100 Global Most Sustainable Corporations in the World'. 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.

For release worldwide with simultaneous release in the United States.


Statements made in this press release that are not historical facts, including statements regarding 2006 favorable trends, enhanced returns to shareholders and performance levels, 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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