Lafarge sales and profits rise

Lafarge reported 2008 sales of € 19 billion, up +8% on the € 17,6 billion reported in 2007. Operating profit for the year also increased by +9% from € 3,2 billion in 2007 to € 3,5 billion last year.

Cement operating profits in 2008 rose +19% to € 2,9 billion, up from € 2,4 billion the previous year. Operating profits from the company's aggregate and concrete business fell -14% from € 721 million in 2007 to € 623 million last year, while profits from gypsum fell -69% to € 36 million, down from € 116 million in 2007.

"In our cement business we enjoyed solid growth from a balanced geographic portfolio of assets," said chairman and CEO Bruno Lafont. "A strong contribution from Orascom Cement - consolidated since the end of January 2008 - was supported by strong market growth. We also benefitted from improved pricing at a time of higher energy and transport costs, while our cost-cutting program in all regions had a positive impact.

"Sales in our aggregates and concrete business were flat over the year with volumes down in the developed markets. There was an increase in sales of our value-added concrete products, which in 2008 accounted for 24% of the volumes, up from 20% in 2007. This improvement contributed to mitigate the impact of overall volume slowdown," said Mr Lafont.

"Extremely difficult trading conditions in the US, following the downturn in the housing market, combined with some slowing of Western European markets impacted negatively on our gypsum business," confirmed Mr Lafont.

"Despite the deterioration of our markets in the fourth quarter, Lafarge achieved a strong operational performance in 2008 and outperformed the sector," said Mr Lafont. "Our organisation continues to be proactive and has already implemented forceful actions to manage costs and capital spending, with a strong focus on cash flow generation."

Rights issue

In order to strengthen its financial structure in 2009, Lafarge has announced that it will call an extraordinary general meeting (EGM) on 31 March 2009 to approve a € 1,5 billion rights issue and a € 400 million reduction in dividend.

Groupe Bruxelles Lambert and NNS Holding, Lafarge's two major shareholders, have both committed to subscribe their prorate shares, which represents € 500 million.