Headline sales in the first quarter 2003 declined 14.4% to € 2,691 million from € 3,145 million with underlying sales slipping by 2.3% and a significant foreign currency fluctuation impacting sales by 10.1%. The net scope effect on sales amounted to -2% largely as a consequence of the divestments realized in 2002.
Commenting on these sales Bertrand Collomb Chairman and CEO stressed that:
"The seasonal nature of our businesses often leads to variations in sales in the first quarter of the year, as market demand is reliant on clement weather conditions. In the first quarter of 2002, we reported strong sales due to record mild temperatures, while winter conditions in 2003 were extreme in many countries. We remain therefore cautious at the beginning of the year about establishing any trends for sales for the remainder of the year."
He also outlined that: "In an economic environment which is still uncertain, our priority for 2003 remains to focus on our performance improvement programs, to return to a 2000-like financial structure, and to reduce our debt by € 1 billion, excluding foreign exchange variations."
The sales report for each Division, excluding foreign exchange, scope effects, and before inter divisional sales elimination is as follows:
Compared to the record first quarter achieved in 2002, lower sales were reported in several markets mostly due to reduced volumes in the first quarter 2003. Severe winter weather conditions had a major impact on the construction market in a number of countries, particularly in the northern hemisphere, with volumes being significantly lower in France, Greece, North America, Poland and Romania.
Strong growth in volumes was recorded in Spain, Morocco and Kenya.
Difficult macroeconomic conditions and political situations affected sales in Venezuela, Turkey and Nigeria.
Overall prices were stable across the Division. Brazil improved significantly due to favorable pricing trends. Prices increased in many of our African operations. Favorable trends were achieved in South Korea and India. Very weak areas for prices remain Egypt, the Philippines and Germany where severe price competition compounded by the poor construction market continues to impact sales.
AGGREGATES & CONCRETE: -0.6%
The slight decline in sales was largely attributable to the winter weather conditions experienced in France and North America.
Pricing trends were favorable in both aggregates and concrete across the Division.
Sales in Western Europe suffered from the harsh winter, but also from a weaker level of demand in France and in Germany for concrete tiles in particular. Sales in the UK, Scandinavia and Italy recorded positive trends. In the United States sales continued to grow strongly with favorable conditions in many markets. Sales of roofing components continued to increase.
The increase in sales was due to overall positive growth in Western Europe and Asia. In North America, after record sales in the first quarter of 2002, sales were down in North America due to winter conditions, also impacting production in the North East. Pricing in North America was 2% up compared to the same period of last year.
NEGATIVE FOREIGN EXCHANGE IMPACT OF -10.1% AMOUNTING TO € 332 MILLION
The effect of foreign currency fluctuations on the first quarter 2003 sales was particularly significant. The strong appreciation of the euro in the second half of 2002 and further in the first quarter of 2003 has had a material translation impact on sales generated in the following currencies: US Dollar (€ 124 million), Canadian dollar (€ 23 million), Brazilian real (€ 34million), Sterling Pound (€ 29million), and the Malaysian ringgit (€ 23 million).
SCOPE CHANGES OF -2% AMOUNTING TO € 59 MILLION
The sales in the first quarter resulting from acquisitions amounted to € 50 million. Divestments and the change in consolidation method of Morocco resulted in a reduction in sales of € 109 million.
March 31, 2002
|Variation||At constant scope and foreign exchange||At constant scope and foreign exchange, before inter divisional sales elimination|
|Aggregates & Concrete||796||911||-12.7%||-0.5%||-0.6%|
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 posted sales of €14.6 billion in 2002. More information is available on: www.lafarge.com Lafarge's next financial publication - 2003 half year sales - will be on July 24 2003 (before the Euronext stock market opens). For release worldwide with contemporaneous release in the United States.
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 Reference Document COB number R03-0375 and on Form 20-F filed with the Securities and Exchange Commission in the USA. 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.