Record earnings over the first 9 months: Excellence 2008 targets will be reached



The Board of Directors of Lafarge, chaired by Bruno Lafont, met on November 7, 2007 to approve the accounts for the period to September 30, 2007.


  • Sales up 4% to €13,279 million
  • Current operating income up 18% to €2,442 million
  • Net income Group share up 40% to €1,534 million
  • Earnings per share up 41% to €8.86


  • Sales up 5% to €4,894 million
  • Current operating income up 15% to €1,082 million
  • Net income Group share up 9% to €600 million
  • Earnings per share up 11% to €3.48


"The contribution of emerging markets to our earnings has increased remarkably, with results taking off in Eastern Europe and Asia in particular. Simultaneously, the Group is posting higher results in North America.
Our strategic plan is delivering the expected results. We will have achieved 60% of our 2006-2008 cost reduction target at the end of this year.
Our Group is in good form to move on to 2008, reach all our targets and make the difference."


  • Strong organic growth driven by the dynamism of emerging markets and positive pricing trends: +8% in sales (+7% in the 3rd quarter); up 22% in current operating income (+20% in the 3rd quarter).
  • Strong contribution from emerging markets, which posted an 11% increase in sales and a 30% increase in current operating income. During the first nine months of the year, emerging markets accounted for 45% of the Group's current operating income.
  • Excellent performance of our Cement and Aggregates & Concrete operations in North America, in spite of the slowdown in the US residential market: current operating income was up 21% and 31% respectively in USD over the first nine months, in spite of lower volumes.
  • Strong increase in the Group's operating margin: from 16.3% to 18.4%.
  • Pursuit of the program to construct 45 million tonnes of new cement capacity, 80% of which is located in emerging markets: progress made with the building of new plants in Indonesia, China, India, South Africa, Zambia and Ecuador; launch of the construction of new plants in Uganda, Egypt, China, and India.
  • €500 million share buyback program completed through the acquisition of 4.4 million shares.


Consolidated financial statements as of 30 September 2007
In M€ 9 months Q3
2006 2007 Variation 2006 2007 Variation
Sales 12,710 13,279 +4% 4,656 4,894 +5%
Current operating income 2,075 2,442 +18% 941 1,082 +15%
Operating margin in % 16,3% 18,4% +210 bp 20.2% 22.1% +190 bp
Net income Group share 1,096 1,534 +40% 548 600 +9%
Earnings per share in € 6.28€ 8.86€ +41% 3.14€ 3.48€ +11%
Cash flow from operations* 2,150 2,311 +7% 986 1,001 +2%
Excluding exceptionals 2,090 2,440 +17% 926 1,001 +8%
Group net debt 10,261 9,103 -11%

* Cash flow from operations includes an exceptional contribution of €129 million to the UK pension fund in Q1 2007 and 60m€ one-off litigation settlements in Q3 2006.


Current operating income as of 30 September 2007
In M€ 9 months Q3
2006 2007 Variation 2006 2007 Variation
Cement 1,546 1,860 +20% 675 790 +17%
Aggregates & Concrete 423 531 +26% 235 287 +22%
Gypsum 158 97 -39% 62 15 -69%
Other (52) (46) (17) (10)
TOTAL 2,075 2,442 +18% 941 1,082 +15%



  • Sales up: +7% to €7,744 million in the first nine months; +6% to €2,770 million in the 3rd quarter.
  • Current operating income up: +20% to €1,860 million in the first nine months; +17% to €790 million in the 3rd quarter.
  • Positive impact of the cost reduction program across all regions.
  • Very strong increase in operating margin: 24.0% compared to 21.3% for the same period in 2006.
  • Positive pricing and volume trends in most of our markets, against a backdrop of higher energy and transportation costs.
  • Strong contribution from emerging markets, with a 28% increase in current operating income over the period, primarily driven by Eastern Europe and Asia. At September 30, emerging markets represented 52% of the Cement business's earnings (i.e. close to €1 billion).
  • 14% increase in current operating income at our operations in North America, in spite of the decline in the residential market. The increase came to 21% in USD, reflecting the positive effects of the streamlining of our organization following the buyout of the minority interests, the implementation of the cost reduction plan and lower imports. The operating margin in North America is up 360 basis points to 20.8%.


  • Sales up: +3% to €4,966 million in the first nine months; +6% to €1,964 million in the 3rd quarter.
  • Current operating income up: +26% to €531 million in the first nine months; +22% to €287 million in the 3rd quarter.
  • Positive impact of the cost reduction program.
  • Strong increase in operating margin, to 10.7% from 8.8% over the same period of 2006.
  • Favorable pricing trends.
  • Strong increase of 48% in the contribution made by emerging markets to the current operating income of the Aggregates & Concrete business, driven by the solid performance posted in Central and Eastern Europe and in South Africa. Emerging markets represented 20% of the business's earnings.
  • Higher contribution from value-added concrete products, which accounted for 20% of volumes, compared to 18% over the same period in 2006.
  • In spite of a decline in volumes in the United States, the current operating income posted in North America increased by 31% in USD, reflecting the solid pricing environment and the impact of the cost reduction program.


  • Sales down: -2% to €1,208 million in the first nine months; -4% to €382 million in the 3rd quarter.
  • Current operating income down: -39% to €97 million in the first nine months; -69% to €15 million in the 3rd quarter.
  • Decrease in operating margin, to 8% from 12.9% over the same period in 2006 owing to the slowdown in the US residential market.
  • The other markets posted a solid improvement, with current operating income moving up 23% over the period, driven in particular by strong performance in Western and Central Europe.


  • Lafarge has launched the construction of a new production line at its Hima cement plant in Uganda. This project, which represents a total investment of around €77 million, will increase the plant's capacity from 350,000 tonnes to 830,000 tonnes. The new line will start up in the first quarter of 2010.
  • In Egypt, the Group has received the authorization to build a new production line of 1.3 million tonnes per year. This project, which is being carried out as a joint venture with Titan, represents an investment of around €75 million for Lafarge.
  • Lafarge announces the launch of a project to modernize its Joppa (Illinois) cement plant in the United States. This 2 million tonne plant, which will start up at the end of 2010, is part of the Group's major emphasis on cost reductions and should generate an additional $75M in Ebitda per year. This modernization will also help to enhance the plant's environmental performance significantly in terms of alternative fuels and emission control. The project represents an investment of around €285 million.


  • The trends observed in the first 9 months confirm our positive outlook for 2007.
  • The fundamentals of our industry are good and Lafarge is well armed to make the difference in 2008.
  • We should exceed the objectives of an average annual increase in earnings per share of 10% between 2005 and 2008 and an improvement in ROCE to 10% by 2008.


Lafarge is the world leader in building materials, with top-ranking positions in all of its businesses: Cement, Aggregates & Concrete and Gypsum. With 71,000 employees in over 70 countries, Lafarge posted sales of €17 billion and net income of €1.4 billion in 2006.

Lafarge is the only company in the construction materials sector to be listed in the 2007 ‘100 Global Most Sustainable Corporations in the World'. 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. 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.

Practical information:

There will be an analyst presentation at 9:00 local time at Lafarge Headquarters, 61 rue des Belles Feuilles, 75016 Paris. The presentation will be made in English with simultaneous French translation based on slides that can be downloaded from this website.

The presentation may be followed via a live web cast on the Lafarge website as well as via teleconference:
- Dial in number (France): +33 (0)1 70 99 43 03
- US dial in number: +1 718 354 1390
- International dial in number: +44 (0)20 7806 1968

Please note that in addition to the web cast replay, a conference call playback will be available from November 8, 2007 to November 16th, 2007 online through this website or at the following numbers:
- France playback number: +33 (0)1 71 23 02 48 (code: 4410493#)
- US playback number: +1 718 354 1112 (code: 4410493#)
- International playback number: +44 (0)20 7806 1970 (code: 4410493#)

Statements made in this press release that are not historical facts, including statements regarding our expectations on market trends, price increases, energy costs, cost reduction and growth in our results, 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. 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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