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Lafarge announces Q1 results

World Cement,

Group highlights

  • First quarter results reflect seasonality, traditionally leading to low net results, and historically have not been indicative of activity in other quarters or the full year.
  • Very poor weather and the lower economic activity in developed countries and Eastern Europe negatively impacted volumes and margins.
  • Earnings stabilising in Aggregates and Concrete.
  • Disposal of the investment interest in Cimpor in exchange for cement assets in Brazil, the fastest growing market in Latin America, to be received in the third quarter 2010.
  • Cost savings on target, achieving more than €50 million in structural savings for the quarter.
  • Free cash flow improved, helped by strong working capital actions and lower capital expenditures.

Overall, the Group maintains its previous estimate that cement volumes in its markets will increase between 0 to 5 percent in 2010 as compared to 2009. We expect demand to start to recover in developed countries during the second half of the year with emerging markets showing strength overall. Pricing is expected to remain solid for the year, despite lower prices in a certain number of markets. Overall energy costs are forecasted to be stable on a full year basis.

The Board of Directors of Lafarge, chaired by Bruno Lafont, met on May 4, 2010 to approve the accounts for the period ended March 31, 2010.

Highlights by business

  • Sales were down 8%, primarily resulting from the impact of adverse weather conditions in both developed and emerging markets along with the continued lower economic activity in North America, Western Europe, and Central and Eastern Europe.
  • Current operating income was down 22%, driven by lower volumes.
  • Pricing remained solid overall with most prices remaining firm or increasing compared to fourth quarter 2009 prices.
  • Strong impact of the cost reduction programme in all regions.

Aggregates & Concrete

  • Sales were down 16%, impacted by adverse weather and difficult market conditions in Europe and North America.
  • Current operating loss of €72 million reflected the large presence in developed markets where volumes declined and results are traditionally lower due to seasonality.
  • Despite volume declines, results stabilised compared to last year thanks to strong cost reduction measures.
  • Sales were down 1% as volumes stabilised but prices were lower compared to last year first quarter.
  • Current operating income declined €7 million as compared to last year.
  • Strong impact of the cost reduction programme in all regions.

Investments and divestments

  • Investments totaled €384 million in 2010, compared to €424 million in 2009.
  • Sustaining capital expenditures decreased by 40% to €45 million in 2010.
  • Internal development capital expenditures were about stable at €317 million in 2010.
  • Acquisitions were €22 million in 2010, slightly lower than last year.
    • During the quarter, Lafarge achieved divestments of €36 million.

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