Investor Relations Jay Bachmann Danièle Daouphars

Transcription

1 Investor Document Investor Relations Jay Bachmann Granulats et Béton - Afrique du Sud, stade Moses Mabhida Danièle Daouphars daniele.daouphars@lafarge.com Analyst Relations Laurence Le Gouguec laurence.legouguec@lafarge.com May 2011

2 Lafarge s Leadership in Construction Materials Global and Local Leadership in Three Product Lines Cement Aggregates & Concrete Gypsum World Leader 9.7Bn in Sales 3.0Bn in EBITDA Top 3 position in 80% of our country markets Top 3 Worldwide 5.1Bn in Sales 0.5Bn in EBITDA Top 3 position in most local markets and vertically integrated with cement Top 3 Worldwide 1.4Bn in Sales 0.1Bn in EBITDA Top 3 position in Europe and Asia A well balanced geographic portfolio to capture growth 53% of 16.2Bn revenues for 2010 from emerging markets with not one emerging market more than 4% of total revenues 75% of cement capacities in growing emerging markets Strong asset base in mature markets that returned to earnings growth in 2010 Leveraging the strength of a global organization in local markets Innovation through top-in-class research and development to benefit top-line growth Cost savings through shared operational excellence and global standards Note: Figures presented are for the year ended December 31,2010 2

3 Emerging Market Construction Demand Driven by Population, Urbanization and Economic Growth Compound annual construction growth rate % through 2020 Middle East & North Africa 4.8% 6.0% Asia Pacific Emerging Markets 7.9% 7.3% 1.5% 0.9% Population GDP Construction Population GDP Construction Sub Saharan Africa 5.9% 4.5% 1.7% Population GDP Construction Eastern Europe 6.5% 4.4% 0% Population GDP Construction Increasing need for housing and infrastructure due to population growth and urbanization Greater ability to fund this growth due to economic development and, for key countries, profitable natural resources Source: United Nations, Global Construction Perspectives and Oxford Economics 3

4 Long-term Growth Requires a Presence in Emerging Markets Emerging markets 55% Developed markets 45% Global cement consumption (million tons) %/yr on average Emerging markets 90% Developed markets 10% Lafarge Sales Volumes: Emerging markets 39MT 57% 102MT 75% Mature markets 29MT 43% 34MT 25% Total 68MT 100% 136MT 100% Development in Emerging Markets a Key Growth Factor for Lafarge (1) Source: Cembureau, Lafarge estimates, Jefferies 4

5 A Well Diversified Portfolio in Place to Capture the Growth of Our Markets Central and Eastern Europe Western Europe 21MT 7% 55% 37MT 2% North America 55% 21MT 6% 65% Asia 71MT 8% Latin America 12MT 5% 75% Middle East and Africa 55MT 6% 80% 75% Total Capacity end 2010 Construction Growth Forecast through 2020* Utilization rates for 2010 Capacity already in place to capture growth as developed markets recover and emerging markets continue to grow * Source: Global Construction 2020 report prepared by Global Construction Perspectives and Oxford Economics 5

6 Further Development of 11 million tons for 2011 Poland 0.5 MT Algeria 0.5 MT Hungary 1 MT Nigeria 2.2 MT Iraq 0.4 MT Saudi 2 MT India 1 MT China 3 MT Brazil 0.4 MT Diverse geographic portfolio of capacity additions to generate solid returns 6

7 Non-cash Deals Strengthen Our Local Positions: Example of Brazil Non-cash swap of an equity investment for assets in a growing Brazil market 8% to 11% estimated cement market demand growth in 2011 Key construction drivers for Brazil remain strong Expanding economy with large natural resources 5th largest population in world, increasing at 1% per annum Significant infrastructure and housing needs Planned government investment of $526Bn through 2014 as part of the Growth Acceleration Plan World Cup and Olympics Total Population 195,400,000 2,348,600 1,236,400 Capacities: Lafarge positions 4MT Acquired positions 3MT Combined 7MT GOIÂNA BRASILIA BELO HORIZONTE RIO DE JANEIRO 6,093,472 2,891,400 SALVADOR 2,412,937 STATE CAPITAL ACQUIRED ASSETS LAFARGE ASSETS 7

8 Global Organization Leverages Innovation for Top-Line Growth Lafarge operates the largest research facility of its kind Innovation combines scientific knowledge with customer needs Lowers labor or other materials costs for customers Creates products with structural / aesthetic advantages for architects Fills the demand for sustainable construction products Products are able to be deployed on a global basis Artevia concrete launched in 20 countries over 5 years 8

9 Higher Volumes to Drive 2011 Earnings Growth High quality plants to capture volume growth in emerging markets Fundamental drivers of construction remain strong Market expansion is absorbing new capacities Lafarge s strategically placed 80 MT of capacity additions between 2006 and 2011 will drive growth New Brazilian assets significantly contributing to results Lower cost base in place as volumes improve in developed markets Large room for recovery Significant operating leverage potential as volumes return Taking further action to offset the impact of higher inflation Price increase announcements made / being planned Cost cutting actions continue to be significant A return to growth 9

10 2 Billion Debt Reduction in 2011 Actions secure a minimum of 1Bn debt reduction Reduction of capex by 400M Reduction of dividend by 50% to 1 per share Reduction of costs and working capital Use divestments as an accelerator of this process 200 million from divestments secured in 2010 At least 750 million of new divestments in 2011 Higher cash flows from operations provide upside A significantly improved financial structure 10

11 Conclusion Volume improvement to underpin earnings growth Lafarge s diverse portfolio of geographic assets a strength Capture growth in emerging markets Benefit from recovery of mature markets Sufficient capacity already in place to grow with the markets Significant debt reduction to strengthen Group s financial structure Done through operational cash flows and divestments Leveraging power of a global organization for local market advantage Non-cash deals to improve local positions Innovation as a driver of differentiation and top-line growth Cost reduction measures to create the best competitive operations Strong Potential for the Future 11

12 Appendix Granulats et Béton - Afrique du Sud, stade Moses Mabhida

13 First Quarter Highlights Strong volume and revenue growth in Q1 accelerated compared to positive trend already seen in Q4 Reflect improved economic conditions and better weather Volume progressed in all cement regions and all product lines Egypt EBITDA down 30M due to recent events Results impacted by higher inflationary environment Cement prices slightly down compared to last year but moved higher between Q and Q On-going cost reduction achieved 50M of structural cost savings for the quarter Strict Working capital improved 8 days versus Q

14 Key Figures 12 months 1 sr Quarter m Variation lfl Variation lfl Sales 15,884 16,169 2% -3% 3,276 3,557 9% 4% EBITDA 3,600 3, % % Current Operating Income 2,477 2,441-1% -8% % -12% Operating Margin 15.6% 15.1% -50bp 7.2% 6.3% -90bp Net income Group share (1) % 64 (29) nm Earnings per share (in ) % 0.22 (0.10) nm Net dividend (in ) (2) ROCE (3) 6.0% 5.8% Free cash flow 2,834 2,151 (4) -24% (86) (322) nm Net debt 13,795 13,993 1% 14,582 14,240-2% Note: First quarter results reflect seasonality, traditionally leading to lower net results relative to other quarters in the year, and historically have not been indicative of activity for the full year. (1) Net income attributable to the owners of the parent company. (2) Subject to approval of Annual General Meeting (3) After tax, using the effective tax rate (4) Excluding the 338m one-time payment for the Gypsum competition fine paid in the third quarter

15 Cash Flow 12 months 1 st Quarter m Cash flow from operations Change in working capital Sustaining capex 2,177 1,029 (372) 2,156 (1) 354 (359) 244 (285) (45) 228 (497) (53) Free cash flow excluding non recurring payment 2,834 2,151 (1) (86) (322) Non-recurring payment (1) - (338) - - Free cash flow 2,834 1,813 (86) (322) Development investments (2) Divestments (2) (1,349) 919 (1,034) 364 (3) (339) 36 (249) 11 Cash flow after investments 2,404 1,143 (389) (560) Dividends Equity issuance (repurchase) Currency fluctuation impact Change in fair value Others (536) 1, (138) (122) (849) 26 (490) 41 (69) (20) 7 (349) - (36) Net debt reduction (increase) 3,089 (198) (787) (247) Net debt at the beginning of period 16,884 13,795 13,795 13,993 Net debt at period end 13,795 13,993 14,582 14,240 (26) (8) 65 (1) The 338m one-time payment for the Gypsum competition fine paid in the third quarter 2010 is excluded from the cash flow from operations and presented in a separate line to facilitate comparability of periods (2) Including debt acquired / Net of the debt disposed of, and including the non controlling interests share in capital increase of subsidiaries (mainly EBRD additional investment in our operations in Eastern Europe in Q and Q4 2010) (3) Including the divestment of a minority stake in Lafarge Malayan Cement Berhad for 141m in Q

16 Cement Highlights Strong Volume and Revenue Growth Across All Regions in a Higher Inflationary Environment 1 st quarter MT Variation lfl Volumes % 4% m Sales (1) 2,137 2,300 8% 2% EBITDA % -8% Current Operating Income % -14% Improved market trends and more favourable weather conditions led volumes and sales to increase in both developed and emerging markets. Cost savings actions helped partially mitigate the impact of significantly higher cost inflation. Pricing slightly down due to declines in some markets in 2010, but moved higher between Q and Q Egypt EBITDA down 30M due to recent events (1) Before elimination of inter divisional sales 16

17 Cement highlights Contrasted trends between regions By geographical zone Current Operating Income ( m) Western Europe North America Central and Eastern Europe Middle East and Africa Latin America Asia st quarter (57) (17) (63) (20) Western Europe benefited from more favourable market and weather conditions in France and in the UK and higher carbon credit sales, while Greece was still impacted by the economic environment. North America relatively stable in a higher cost environment. Central and Eastern Europe experienced noticeable positive volumes in Russia and Poland and positive pricing, but was negatively impacted by lower carbon credit sales and higher input costs. MEA was impacted by Egypt, but experienced improvements in most other countries, particularly Algeria. LATAM benefited from strong market trends and new Brazilian assets, in a cost inflationary context. In Asia, higher volumes could not offset the increasing costs and the negative price base effect, despite price improvements observed between Q and Q

18 Cement: YTD Like for Like Sales Variance (1) Cement Analysis by Region and in Major Markets as at March 31, 2011 Volume effect Other effects (2) Activity variation vs North America 6.7% (3) -1.9% (4) 4.8% Western Europe France United Kingdom Spain Greece 6.7% 12.0% 14.0% -2.9% -28.7% -1.5% -0.3% 2.9% -3.2% -3.5% 5.2% 11.7% 16.9% -6.1% -32.2% Central and Eastern Europe Poland Romania Russia Serbia 25.2% 55.5% 4.7% 17.4% -9.7% 4.2% -2.6% -1.1% 30.9% (5) 1.6% 29.4% 52.9% 3.6% 48.3% -8.1% Middle East and Africa Algeria Egypt Iraq Jordan Kenya Morocco Nigeria South Africa -0.6% 29.3% -23.0% 0.5% -25.7% 8.0% 2.3% 15.4% -11.4% 0.3% (6) 3.2% -4.7% -0.8% -1.7% -0.7% 1.3% -5.2% 4.2% -0.3% 32.5% -27.7% -0.3% -27.4% 7.3% 3.6% 10.2% -7.2% Latin America Brazil Ecuador Asia China India Indonesia Malaysia Philippines South Korea Cement domestic markets 5.2% -0.7% 22.6% 3.1% 17.7% 0.7% 9.7% 0.3% -11.9% 8.5% 3.8% 4.4% 5.2% 2.2% -4.2% -9.6% -4.4% -0.6% 12.4% -5.6% -22.0% -0.8% 9.6% 4.5% 24.8% -1.1% 8.1% -3.7% 9.1% 12.7% -17.5% -13.5% 3.0% (1) Variance on like for like sales on domestic markets before elimination of sales between Divisions (2) Other effects: including price effects, product and customer mix effects (3) Volumes in the United States: 5.2%; in Canada: 10.5% (4) Out of which Pure price in the United States: -5.5%; in Canada: -0.8% (5) Pure price effect: 19.0% (6) Out of which Pure price effect: -2.1%, and other effects (mostly country mix): 2.4% 18

19 Aggregates & Concrete Highlights Stronger Volumes in Europe and North America Solid Cost Control and Favorable Prices 1 st quarter Variation lfl Volumes Pure Aggregates MT Ready-Mix Concrete Mm % 4% 7% 4% m Sales (1) 918 1,026 12% 8% EBITDA (9) 1 nm nm Current Operating Income (72) (58) 19% 15% Good market and weather conditions in mature markets bolstered volumes and sales. Favorable price trends overall. Higher sales and continuous cost containment resulted in a lower loss. Ready-Mix sales of Value Added Products improved at comparable scope and significantly contributed to earnings. (1) Before elimination of inter divisional sales 19

20 Gypsum Higher Operating Income and Margins from Improved Market Trends and Positive Pricing 1 st quarter Mm² Variation Volumes % m Sales (1) % EBITDA % Current Operating Income % Favorable volumes in most of our major regions. Higher pricing overall. Improvement in construction market activity and cost-cutting measures resulted in higher current operating income and margins. (1) Before elimination of inter divisional sales 20

21 Exceeded 2010 Cost-Cutting Target Driving permanent cost savings for the Group Leveraging industrial technical expertise, purchasing power, and knowledge sharing through the Group network Focus on energy efficiency, industrial productivity and SG&A Structural cost cuts (million ) ,4% * 1,4% 70 * 1,0% * 0,9% * 0,4% * *% of sales >200 Obj 2011 Achieving over 1Bn of structural cost savings since

22 Balanced Debt Maturity Schedule and Strong Liquidity Lafarge SA Commercial paper Subsidiaries debt instruments Securitization programs Lafarge SA Bonds & other MLT instruments Orascom acquisition facility (drawings) at December 31, 2010 ( m) (1) After 2019 Successfully refinanced 2.7Bn in 2010 with an average interest cost of 4.5% and average maturity of 6.5 years. Cash and cash equivalents of 2.3Bn and committed unused credit lines of 3.9Bn fully cover short-term obligations. No financial covenants at Lafarge SA level. (1) Excluding puts on shares and derivatives instruments: 0.3bn in 2010 and

23 2011 Outlook Market * Overview Volumes (%) Price North America 1 to 4 + Western Europe -5 to -2 =/+ Central and Eastern Europe 3 to 6 + Highlights Progressive recovery; prices improving in a challenging context Slowdown in Spain and Greece with modest improvement in France Solid market trends in Russia and Poland, with stabilization elsewhere; prices improving Middle East and Africa 3 to 6 =/+ (1) Solid market trends in most countries Latin America 7 to 10 + Solid market trends; prices improving Asia 5 to 8 + Solid market trends; prices improving Overall 2 to 5 + Solid market trends in most emerging countries and stabilization or slow recovery in mature markets * Market growth forecast at national level (1) Relative to year-end pricing; down at average pricing 23

24 2011 Outlook Other Elements +10% energy cost increase (1.30 euros per tonne) Structural cost reduction of a further 200 m in 2011 Cost of debt (gross): 6.0% Tax rate: 26% (1) Capital expenditures: - Sustaining: ~ 0.5 Bn - Development: ~ 0.5 Bn (1) Impacted by country mix 24

25 Disclaimer This document may contain forward-looking statements. Such forward-looking statements do not constitute forecasts regarding the Company s results or any other performance indicator, but rather trends or targets, as the case may be. These statements are by their nature subject to risks and uncertainties, many of which are outside our control, including, but not limited to the risks described in the Company s annual report available on its Internet website ( These statements do not reflect future performance of the Company, which may materially differ. The Company does not undertake to provide updates of these statements. More comprehensive information about Lafarge may be obtained on its Internet website ( This document does not constitute an offer to sell, or a solicitation of an offer to buy Lafarge shares. 25