Lafarge: 2006 Annual Results.Strong Earnings Growth in 2006, with Earnings Per Share up 23% Good Fourth Quarter Favorable Trends for 2007 PARIS Paris, in Greek mythology Paris or Alexander, in Greek mythology, son of Priam and Hecuba and brother of Hector. Because it was prophesied that he would cause the destruction of Troy, Paris was abandoned on Mt. -- In order to reflect the divestment divestment to strip one's investment from an entity. underway of our Roofing business, and in compliance with IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System principles, 2006 full year operating results are presented excluding Roofing. The net contribution of this activity to the different lines in the 2006 financial statement is presented on a specific line. Consequently, 2005 figures have been restated. The Board of Directors of Lafarge, chaired by Bertrand Collomb, met on February 22 2007 to approve the accounts for the year ending December 31 2006. [TABLE OMITTED] 2006 GROUP HIGHLIGHTS * Launch of the Excellence 2008 strategic plan, to ensure Lafarge long-term industry leadership. Far-reaching transformation of the Group's organization, cost reduction program of [euro]340 million by 2008 (excluding Roofing). * Launch of the Health & Safety roadmap. * Two major strategic transactions: Buy-out of the minority interests in Lafarge North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and divestment of the Roofing activity, while maintaining a significant 35% stake in the new entity (this operation will be finalized See finalization. during the first quarter of 2007). * Acceleration of our internal development program to take full advantage of the Group's potential. BRUNO LAFONT, CHIEF EXECUTIVE OFFICER OF LAFARGE, DECLARED: "2006 was a year of transformation for Lafarge, with the Lafarge North America minority buy-out, the Roofing divestment and the rapid roll-out of our strategic plan Excellence 2008. We saw a strong increase in our results, with positive trends in our markets, strong organic growth and tighter cost controls. Favorable trends continued in the fourth quarter, and our results should continue to improve in 2007. I am therefore particularly confident for the future, and we should exceed the objectives we announced in June 2006 of an average annual increase in earnings per share of 10% between 2005 and 2008 and an improvement in ROCE ROCE See: Return on capital employed to 10% by 2008. We propose to increase our dividend per share significantly, by 18% to 3[euro], and we will use our share buy-back authorization to launch a 500m EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. buy-back program in 2007." FOURTH QUARTER * In the fourth quarter, favorable pricing and volume trends continued overall. * Operating results continued to improve in the fourth quarter in all our activities, despite particularly high comparatives. Current operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was up 11% on a like-for-like basis, with a particularly strong increase in our Aggregates & Concrete business, where current operating income was up 30%. * In the fourth quarter, net income group share benefited from the positive effect of the LNA LNA Low-Noise Amplifier LNA Locked Nucleic Acid (Link Technologies Ltd.) LNA Linolenic Acid LNA Licensed Nursing Assistant LNA Launch Numerical Aperture LNA Ladies National Association LNA Leading National Advertisers, Inc. minorities buy-out and from the improvement in operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . As expected, it is down 15%, impacted by the return to a more normal tax rate of 31% after an exceptionally low rate in Q4 2005. Excluding the tax effect, it improved by 23%. [TABLE OMITTED] [TABLE OMITTED] FULL-YEAR 2006 HIGHLIGHTS BY BUSINESS Cement * Sales up 16.0% to [euro]9,641 million (up 9.0% to [euro]2,379 million in the fourth quarter) * Current operating income up 18.8% to [euro]2,103 million (up 7.7% to [euro]557 million in the fourth quarter) * Increase in operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: to 21.8%, compared to 21.3% in 2005 * Improvement in the return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). to 10.3%, compared to 9.7% in 2005 * Favorable volume trends on the back of growth in most of our markets * Price increases in most of our markets, in an environment marked by a steep rise in costs * Launch of Excellence 2008 and improvement in cost controls * Acceleration of our capacity expansion program in growth markets, with the successful start-up in 2006 of 5 million tons of new cement capacity in Mexico, Morocco, Bangladesh, China and Vietnam. Aggregates & Concrete * Sales up 19.6% to [euro]6,449 million (up 11.0% to [euro]1,622 million in the fourth quarter) * Current operating income up 41.7% to [euro]564 million (up 25.9% to [euro]141 million in the fourth quarter) * Significant increase in operating margin to 8.7%, compared to 7.4% in 2005 * Strong improvement in the return on capital employed to 9.7%, compared to 8.1% in 2005 * Price increases, in an environment marked by a steep rise in costs * Tight cost controls * Selective acquisitions in Arizona, the Chicago region and Poland, to consolidate our positions in aggregates * Increased contribution from value-added concrete products: volumes posted for the Agilia[R] self-placing and self-leveling concrete range grew by 36%, and those of the Artevia[R] decorative concrete Decorative concrete involves utilizing concrete in roles that are not strictly related to its functional elements. Concrete is known for its great strength, especially when combined with steel rebar. range rose 35% over the year. Gypsum gypsum (jĭp`səm), mineral composed of calcium sulfate (calcium, sulfur, and oxygen) with two molecules of water, CaSO4·2H2O. It is the most common sulfate mineral, occurring in many places in a variety of forms. * Sales up 10.3% to [euro]1,632 million (up 4.4% to [euro]403 million in the fourth quarter) * Current operating income up 31.1% to [euro]198 million (up 5.3% to [euro]40 million in the fourth quarter) * Increase in operating margin to 12.1%, compared to 10.2% in 2005 * Improvement in the return on capital employed to 11.7%, compared to 10.2% in 2005 * Inauguration of new production lines in Vietnam and Morocco. Successful start-up of the Buchanan plant near New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of following modernization and a doubling of capacity, thereby strengthening Lafarge's position as a high-quality, low-cost producer in each of its North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. markets. ROOFING TREATED AS DISCONTINUED OPERATIONS Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. * Roofing sales up 7.3% to [euro]1,624 million in 2006, compared to [euro]1,514 million in 2005. * Current operating income up 33.6% to [euro]131 million, compared to [euro]98 million in 2005. * The turnaround plan is being implemented vigorously and rapid progress is being made toward the Ebitda target of [euro]350 million in 2008. In 2006, Ebitda was [euro]250 million, compared to [euro]222 million in 2005. * Divestment process to be finalized during the first quarter 2007. CAPITAL EXPENDITURE AND DISPOSALS * Investments amounted to [euro]4,814 million, compared to [euro]1,715 million in 2005.
-- Sustaining capital expenditure (ongoing upgrades and
modernization of existing facilities) totaled [euro]978
million in 2006 ([euro]864 million in 2005).
-- Development capital expenditure to increase production
capacity totaled [euro]549 million in 2006 ([euro]340 million
in 2005). These investments include in particular the
construction of new cement capacity in Mexico, Bangladesh,
Morocco, China, Zambia, Indonesia, India, Ecuador and
Vietnam, as well as the modernization of the Buchanan
plasterboard plant near New York and the capacity expansion
at the Silver Grove plasterboard plant in the United
States.
-- Acquisitions amounted to [euro]3,287 million, the most
significant being the buyout of the minority interests in
Lafarge North America for [euro]2,884 million, as well as the
acquisition of aggregates assets in North America ([euro]134
million).
-- Disposal of non-core assets in 2006 amounted to [euro]180
million, including in particular the sale of our stake in
Materis.
* The disposals of our Roofing activity and of our activities in Central Anatolia (Turkey) are not recognized in our 2006 financial statements. OUTLOOK * Based on recent trends, our markets are expected to remain favorable overall in 2007. * In Cement, we anticipate strong demand and prices overall. In North America, we anticipate a slight slowdown in our markets. * In Aggregates & Concrete, we expect another year of growth in 2007, with strong growth in emerging markets in particular. * In Gypsum, 2007 should be favorable in terms of volumes and prices in Western and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , but with a slowdown in the residential sector in North America. * After increases in energy and logistics costs in recent years, we expect further increases in 2007. * The cost-cutting plans launched in all our activities and countries as part of Excellence 2008 should generate significant cost reductions in 2007. NOTES TO EDITORS Lafarge is the world leader in building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . , 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 Euros 17 billion in 2006. Lafarge has been committed to sustainable development Sustainable development is a socio-ecological process characterized by the fulfilment of human needs while maintaining the quality of the natural environment indefinitely. The linkage between environment and development was globally recognized in 1980, when the International Union 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 conservation of natural resources, the wise use of the earth's resources by humanity. The term conservation came into use in the late 19th cent. and referred to the management, mainly for economic reasons, of such valuable natural resources as timber, fish, and energy. Lafarge is the only company in the construction materials sector to be listed in the 2007 '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. Additional information is available on the web site at www.lafarge.com. Practical information for Analysts' meeting There will be an analyst presentation at 10:00 CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr at Le Pavillon Le Pavillon was a New York City restaurant that defined French food in the United States from 1941 to 1966. The restaurant started as the Le Restaurant du Pavillon de France at the 1939 New York World's Fair run by Henri Soule. Gabriel, 5 avenue Gabriel, 75008 Paris. The presentation will be made in English with simultaneous French translation based on slides that can be downloaded from the Lafarge website (www.lafarge.com). The presentation may be followed via a live web cast on the Lafarge website as well as via teleconference: - Dial in (France): +33 (0) 1 70 99 42 99 - UK Toll free: 0 800 028 1277 - US Toll free: 888 935 4577 - International dial in number: +44 (0)20 7806 1955 Please note that in addition to the web cast replay, a conference call playback will be available from February 23, 2007 to March 1st, 2007 online through www.lafarge.com or at the following numbers: - France playback number: +33 (0)1 71 23 02 48 (pin code: 2374361#) - UK toll free number: 0800 559 3271 (pin code: 6914121#) - US toll free number: 866 239 0765 (pin code: 6914121#) - International: +44(0) 207 806 1970 (code : 6914121#) 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. 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 Construction Spending An economic indicator that measures the amount of spending towards new construction. Released monthly by the U.S. Department of Commerce's Census Bureau, it looks at residential and non-residential construction in the private sector, and state and federal at 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. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion