Paris, France-October 25, 2001 - LAFARGE (Euronext-Paris: LG; NYSE: LR) sales totalled 9,769 M€ for the nine months to September 30, 2001, an increase of 6.3% when compared with the € 9,189 M realised in 2000 over the same period (2.2% on a like for like basis). Blue Circle, acquired on July 11th, 2001 is consolidated from this date.
The performance as of 30th September 2001 is explained as follows:
- The underlying activity excluding foreign exchange and scope effects grew by 2.2% for the first nine months of the year. (-1.2% in Quarter 1, +4.2% in Quarter 2, +2.7% in Quarter 3).
Cement: The Cement Division 's sales rose 3.9% for Quarter 3 and 5.2% for the first nine months of the year. Europe showed overall similar good levels of growth as in Quarter 2, in spite of the adverse situation in Germany, though some weakening of demand was experienced in September.
North America showed a favourable performance in the first two months of Quarter 3, while a decrease in volumes was experienced in September. Cumulatively sales were about stable for the first nine months of the year.
Overall, markets in emerging countries performed well during Quarter 3. Operations in South Korea, Jordan, Morocco, South Africa and Brasil showed significant growth. The main exceptions being Poland where the economic slowdown worsened and the Philippines where imports had a negative effect on the stability of the market, thus reversing the good progress made during the first half of the year 2001. Turkey continued to experience weak price levels.
Aggregates & Concrete:
The Aggregates and Concrete Division achieved sales growth of 6.9% in Quarter 3 and 4.6% for the first nine months of the year. Favourable price trends enabled significant growth in Aggregates sales in France and in the UK. In North America sales volumes remained strong in Quarter 3.
The Roofing Division's sales declined by 7.3% in Quarter 3 and by 8.1% for the first nine months of the year. The continuing weakness in the German construction markets impacted heavily the Division. In the rest of Europe, strong sales growth was experienced in Italy and sales remained at favourable levels in France. Highly competitive environments continued to impact sales in the Netherlands and Scandinavia.
Excluding scope and exchange rate impacts, the Gypsum Division's sales were flat in Quarter 3 and declined cumulatively by 2.7% for the first nine months of the year. Excluding North America, sales of the Gypsum Division grew by 5% over the first nine months of the year.
In the United States, after reaching their lowest levels in June, wallboard prices have recovered about 50% in Quarter 3 though still remaining significantly below 2000 levels.
The Asian markets were characterised by strong growth thus allowing the Group to benefit fully from the joint-venture with Boral. Europe continued to suffer from the weakness in German construction markets.
- The scope effect contributed to an increase of €370M of the Group's turnover (+3.8%)
Divestments of the majority of the Lafarge Specialty Products Division and of Road marking activities in Europe contributed to a negative variation of our sales amounting € 934 million. Newly acquired activities contributed to a positive variation of our sales amounting to €1,234 million. They included notably the ex Blue Circle operations, which were consolidated from July 11th and contributed € 678 million of additional sales. Other recent developments such as Warren Paving in Canada and Raymond Cement in India added € 357 million. The new Gypsum wallboard plants in the United States contributed € 51 million of additional sales.
- Positive foreign exchange impact of 0.3%.
The strength of the US dollar was largely offset by weakness in the Brazilian real.
Sept. 30, 2000
|Variation||Variation excluding Scope and Exchange Rate|
|Aggregates & Concrete||3,418||2,779||+22.9%||+4.6%|
(Including ex Blue Circle operations which are consolidated from July 11th, 2001)
Lafarge has reviewed the target for operational synergies and other improvements, which was initially estimated at the time of the offer at 100 M€ per year. Following the detailed assessment of opportunities done in the framework of the Blue Circle integration program, operational synergies increase to € 215 million by 2004 ; 35% of this revised target relates to reduction of overhead and corporate costs,20% to industrial restructuring opportunities and 45% to improvement of operations, logistics, and purchasing, beyond what Blue Circle could have done alone.
On this last point, Lafarge's assessment at the time of the 2000 offer seems to be justified. We had assumed that only 40 % of the published operating improvement program could be delivered with Blue Circle's own resources. In 2001, the achieved outcome is likely to be in line with this assumption.
We expect 50% of these synergies to be realised in 2002, 80% in 2003 and the full run rate to be reached in 2004.
According to Bertrand Collomb, Chairman & Chief Executive Officer of Lafarge:
"Whilst sales have held up well in the third quarter we have, however, experienced a certain degree a levelling off in demand. With regard to synergies, the potential for performance enhancement in Blue Circle remains a key benefit from the acquisition".