Excellence 2008 Towards undisputed leadership. Analyst & Investor Day

Transcription

1 Excellence 2008 Towards undisputed leadership Analyst & Investor Day June 21, 2007

2 Analyst & Investor Day Agenda June 21, :00 8:30 Welcome coffee 8:30 9:00 Keynote address / Safety Bruno Lafont 9:00 9:30 Cost Reduction Program John Stull 9:30 10:15 Innovation - Introduction Bruno Lafont - Concrete Dyfrig James 10:15 10:45 Coffee break 10:45 12:30 Visit of Technical Centre and Concrete Laboratory with short presentation Denis Maitre 12:30 14:00 Lunch 14:00 16:00 Business Development - Introduction Bruno Lafont -Gypsum Isidoro Miranda - Concrete Didier Riou - Aggregates Bradley Mulroney - Cement Guillaume Roux 16:00 16:30 Open discussion / General Q&A Bruno Lafont Jean-Jacques Gauthier 16:30 Conclusion Bruno Lafont 2

3 Disclaimer 3 Statements made in these presentations that are not historical facts, including statements on our expectations regarding the improvement of our operations, the increase of our existing capacities, the growth of our markets, our product innovation policy and results and our Health & Safety policy as well as statements on our expected sales, margins, EBITDA, cost reductions, cash flows, earnings per share, return on capital employed and divestments are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 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 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.

4 Excellence 2008 Towards undisputed leadership Health & Safety Bruno Lafont Analyst & Investor Day June 21, 2007

5 Safety Leading to Performance World class H&S organizations are also among the best performers in their peer groups Excellence in the processes drives safety performance Being good at safety Being excellent in overall performance 5

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7 What Do World Class H&S Companies Have in Common? Operational discipline Motivated work force Excellent overall communication Strong corporate image Phototèque Lafarge / Alam Beg Imtiaz / Interspeed Full integration of safety in their business processes Accountability for safety performance Visible leadership 7

8 Safety at Lafarge Leading with Safety workshops Serious Event Review Process Contractor Safety Management H&S Operational Standards Done Working at Height (Operational) Personal Protection Equipment (Operational) Reporting and Investigation (Governance) Phototèque Lafarge / Shaun Browne To do Contractors Safety Management (Governance) Energy Isolation (Operational) Confined Space Entry (Operational) 8

9 Our Efforts Deliver Results Lost Time Injury Frequency Rate (LTIFR) march-07 T

10 Excellence 2008 Towards undisputed leadership Cost Reduction Program John Stull Analyst & Investor Day June 21, 2007

11 Three Key Questions What has changed at Lafarge? How will Lafarge deliver? Is this change sustainable? 11

12 Our Target 2005 Cost Base (Bn ) Targeted savings (M ) Depr 0.7 Others 1.0 SG&A 1.7 Cement Aggregates & Concrete Gypsum Holding Inter-Divisions Eliminations (0.7) Raw materials 3.3 Fixed costs 2.5 Transport 1.5 Energy 1.5 Total costs: 12.2 Bn 12

13 What Has Changed at Lafarge Sense of urgency Evolution From technical indicators to costs From performance to bottom-line Specific individual commitments / bonus alignment Regular review of commitments at all levels OK to ask for help 13

14 Delivering Savings - Methodology Top assessment High quality action plans Strict, auditable cost tracking capturing positive and negatives Management review of results at all levels 14

15 Delivering Savings Example: North America SG&A Refined initiatives identify 60M in savings by Total? Cement BUs Division AC&A BUs Division -L1 - PL / country Gypsum BU Corporate Shared Finance HR Common IT Purchasing Total Action plans BU rationalization 2 Sales & marketing 3 New generation distribution 4 5 Mobility and employment administrative cost reduction 7 AC&A reorganization and regional consolidation 8 ERP related cost reduction in BUs Gypsum SG&A cost control Post tender offer cost reduction 12 Finance Reorganization 13 P2P savings 14 02C savings 15 IT Optimization 16 HR Process streamlining and reorganization 17 Non Personnel 15 Note: All figures are in M. Negative numbers indicate savings; positive numbers indicate costs. Totals may not add due to rounding

16 Delivering Savings Example: North America SG&A Reduction The 60M Savings BU Rationalization New generation distribution Mobility A&C reorganization / regional consolidation France transformation P2P savings O2C savings IT optimization HR process streamlining Non personnel costs Sales and marketing ERP related All organizations realized more net reductions than planned in action plans Cement AC&A Gypsum Corporate Shared / common Total Net FTE changes Planned Actual M improvement Q vs. Q

17 Delivering Savings Example: Philippines Alternative Fuel Use rice husks (biomass) as alternative to classical fuels Husks systems installed in Republic and Teresa plants Republic: working / Teresa: July 2007 Reduce energy cost Positive environmental impact Savings 4.8 M annually Investment approved 3.9 M 17

18 Delivering Savings Example: South Africa C/K ratio Increase cement to clinker ratio in Lichtenburg New product launch (Buildcrete), using limestone as extender Installed fly ash transportation system More cement with same quantity of clinker Savings 4.8 M annually Investment approved 2.5 M 18

19 Sustainable New action plans are being developed continuously Frequent management review with standard tracking: a fixed base Commitment integrated into our incentive plan: Auditable Investments have been made and will continue to provide results Strict attention paid to price over costs factor 19

20 Conclusion The culture has changed through priority setting, methods, and strict review Methods are in place to properly identify, track, and deliver savings Continuous and sustainable process of benchmarking, tracking and action planning Our goal is to become better than our competitors in all cost matters 20

21 Excellence 2008 Towards undisputed leadership Why Innovation? Bruno Lafont Analyst & Investor Day June 21, 2007

22 Why Innovation? Innovation in products and services is no more an option: it is the signature of a leader People want better housing and infrastructure Construction must become sustainable The best way to differentiate and to elevate barriers of entry Innovation reinforces customer loyalty Products that are easier / cheaper to use Products that give better rendering Products that are more versatile Prescriptors to recommend Lafarge Innovation serves our shareholders interests More sales with higher margins Increased penetration A win-win approach Value added is shared with our customers = We Gain, They Save Vertical integration is reinforced 22 Engine for growth, leadership and profit improvement

23 Excellence 2008 Towards undisputed leadership Innovation in RMX Dyfrig James Analyst & Investor Day June 21, 2007

24 Value Added and Innovative Products A New Business Model Unique competitive advantage from technology Accelerating implementation 24

25 Value Added and Innovative Products A New Business Model Strong value generation Help accelerate return on development investments Prices not sensitive to cycles Become a must have from a customer s perspective Sustainable solutions A second benefit, on top of vertical integration 25 Engine for growth and profit improvement

26 Concrete: A Complex Chemistry Concrete appears to be a simple product But reality is different! Very complex chemistry Combining mineral and organic At nanometric level With natural / non standard materials ST-Béat ( Effort en Newton Déplacement vertical en nanomètres 26

27 Lafarge Has a Proprietary Knowledge Past history explains our Multi disciplinary expertise More than ten years of scientific approach From empirical expertise to scientific understanding of mechanisms Changing BU s mindset and resources has been a major shift and a long process A unique competitive advantage, not easy to replicate 27

28 Many different uses Multiple customer needs Meeting new environmental requirements Hundreds of different applications & Numerous characteristics that can be modified and combined Housing 40% Commercial building Non building Road construction Individual 15% Grouped Individual Vertical Multifamily Horizontal 5% High rise Foundation Other shapes Large slabs Small slabs Decorative slabs Decks Screed 1% 400/600 mix designs per plant Rheology Shrinking Weight Color Aspect Temperature sensitivity Setting time Strengthening kinetics Long term Strength Longevity Insulation capacity Thermal ability Frost resistance.. 28 Provide as many opportunities for innovation & differentiation

29 From Commodity to Value Added Products We Know How to Escape the Commodity Trap Current Operating Income per m 3 After specific costs X 10 X 5 Average COI/m 3 Standard All VAPs Agilia/Artevia 29 Progress on Innovative and Value Added Products is key!

30 A Lot of Potential in both Mature and Growing Markets Best in Class countries well ahead of Division average VAP penetration (16%) France North America % of total volumes 28% 22% % of total margin 54% 57% Still room for growth in Best in Class countries France: VAPs represent 28% of total volumes But regions from 24% to 37% Agilia represents 8% of total volumes But regions from 4% to 15% Also a great potential in growing markets Malaysia: 5% Venezuela: 3.5% China Emirates 30 Both our existing volumes (43 Mm 3 ) and our developments will benefit from VAP penetration

31 From Vertical Integration to Value Creation An example: Value Added Products in the UK Value Added Products Agilia (started in 2001) Artevia (started in 2006) Extensia (starting in 2007) Micro-silica, steel fibres, superplasticiser, etc In M Sales As a % of total 9.4% 14.0% 15.3% Gross contribution As a % of total 10.5% 16.6% 20.7% 31

32 From Vertical Integration to Value Creation Innovation in Readymix brings value for our customers Quality Aesthetics Ease of use Durability Environment and brings value for Lafarge Better margins Growth in volumes Customer loyalty An example: Agilia in the UK What it represents for Lafarge In M Sales Gross Contribution For the customer Time saving on job site Quality, aesthetics Benefit shared 32 Win - Win: We Gain, They Save

33 A Unique Branding Strategy to Support our Innovative Approach Strong product brands with a view to Build barriers and strengthen our competitive advantage Increase visibility and accelerate penetration A clear brand architecture supporting our positioning Inventiveness, Technicality, Reactivity and Passion Value Creation = Segmentation + Product Range + Branding 33

34 A Unique Branding Strategy to Support our Innovative Approach 4 International Innovative Brands Endorsed by Lafarge, driving to a mutual reinforcement of positioning 34

35 Our Vision of Product Development Special concretes 16% 35% Current concretes 84% 65% Standard High Quality & Consistency Standard High Quality & Consistency A long term ambition: VAPs representing 50% of volumes 35

36 Our Vision of Product Development From To Commodity Value Added Product A Cement Distribution Channel A Highly Profitable Activity 36

37 The TURBO Plan Our Program for Acceleration A commitment by each BU to accelerate Value Added Products penetration Commitment formalized by quarterly milestones and action plans monitored every month Additional resources in people and equipment Each BU builds up the plan: resources, actions and results Keeping our Excellence 2008 cost reduction commitment 37 A strong ROCE improvement

38 Two Launches in 2007 Concrete designed for large slabs From the traditional 25 m² to a stunning 400 m² without joints/saw cut No steel! Thinner slabs Harder surface Launches In 2007 in the UK, France, US and Canada In 2008 South Africa, Chile, Spain, Long term potential: 10% of our sales Value creation for Lafarge: superior margin 38 Value creation for our customers No steel Reduced Thickness Less joints Ease of placement

39 Two Launches in 2007 Concrete range designed to accelerate formwork stripping Maintain 2 hours workability Launches In 2007 in the UK, France, US and Canada In 2008 South Africa, Chile, Spain, Long term potential: 6% of our sales Value creation for Lafarge: superior margin Value creation for our customers Early removal of formwork Possible double daily rotation Very high early strength Faster loading of structural elements Accelerate construction Increased productivity 39

40 Value Added and Innovative Products A New Business Model Unique competitive advantage from technology Accelerating implementation 40

41 Excellence 2008 Towards undisputed leadership Lafarge Research Center Denis Maitre Analyst & Investor Day June 21, 2007

42 Concrete: A Very Complex Material 1mm - 10cm 10µm - 1mm 1µm - 10µm Complex chemistry Complex physics 10nm - 1µm Heterogeneity at all levels 42 Expected properties at different time periods

43 LCR: A Unique Center of Knowledge 200 researchers from 10 countries Top ranking scientific expertise in key disciplines State of the art equipment Partnerships with world renowned universities 43

44 Innovation: Optimum Job Site Efficiency Productivity Speed of construction Organization flexibility Working conditions Etc Sensium Agilia Chronolia 44

45 Innovation: The End User s Benefits Mechanical properties Aesthetics Durability Thermal efficiency Etc 45

46 Excellence 2008 Towards undisputed leadership Business Development Bruno Lafont Analyst & Investor Day June 21, 2007

47 Business Development What is it about? Need to keep pace with market growth Cost reduction through modernization and network optimization Cement In line with market requirements Highly profitable, because carefully phased in Will be implemented despite challenges Aggregates Invest at reasonable cost Invest at the right place, at the right time Levers: growth, scarcity, consolidation Ready Mix Concrete Vertical integration + vector for VAPs Internal development + acquisitions Gypsum Opening new, very promising markets Profitable growth through capacity development and innovation 47 Growth and Profitability

48 Excellence 2008 Towards undisputed leadership Gypsum Development Isidoro Miranda Analyst & Investor Day June 21, 2007

49 A Proven Track Record Sales (M ) 1,006 1,204 1,632 Sales volumes (Mm²) Operating margin 5.2% 7.0% 12.1% ROCE 4.0% 6.3% 11.3% From 49 industrial sites in 22 countries in 2000, to 76 sites in 25 countries in 2006, most of them through internal growth 49

50 Internal Development is Key to our Success Gypsum wallboard market offers growth opportunities We make them profitable In Europe, by reducing our delivered costs, and taking new opportunities in the East In the US, by reinforcing our low cost position In Asia, by enhancing our market leadership We plan to extract more value from our customer base By reducing our time to market: less than two years from study to good board By standardizing and adapting our investment costs to market returns By focusing on quality and innovation and increasing the offer to our customers 50

51 A Significant Development Program Additional capacities Total Division ~320 Mm² (*) + Plaster / Jointing + Gypsum Reserves USA Buchanan Vietnam Mexico * Including 50 Mm² built in equity affiliates Romania South Africa USA Silver Grove 2 UK Ukraine South Korea Turkey India China Colombia Spain 51 Over 450 M committed M / year run rate

52 Excellent Investment Track Record We develop our own solutions and processes to implement cheaper and faster investments Palatka: 84 Mm² plant in Florida Commissioned in 2001, (100 MUS investment) Among lowest cost in South East of USA Exceeded all project expectations: Capacity, maintenance costs, cash costs, 500 days without LTA Probably world record of single line production in one month: 8 Mm² Gacki: 38 Mm² plant in Poland Replacement of old line (10 Mm² capacity) to reduce Fixed Costs by a factor of 4 and Variable Costs by 30% Customer Complaints have disappeared (less than one per Mm²) and we have already produced 2 Mm² of Signa 52

53 Impact of Current Development Program ~ 320 Mm² development plan including ~50 Mm² in equity Additional sales (Mm²)* Additional sales ( M)* Additional EBITDA ( M) ROCE after tax on assets started up >7% ~10% >12% * Lafarge share excluding equity affiliates, volumes at 100%, sales at Lafarge share 53

54 Innovation Amplifies our Success Our ambition is around 20% of Gypsum s turnover Generating value coming from Higher margin from innovative products Price premium on the total plasterboard sales where Lafarge is perceived as the most innovative group Better quality, more efficient services By 2012, our target is to generate > 400M of sales coming from innovation 54

55 Internal Development Offers Significant Opportunities We have a successful internal development model Short response time to take market opportunities Standard yet modulable equipment, with low investment cost Strong focus on innovation and quality Innovation and Growth 55

56 Excellence 2008 Towards undisputed leadership Development in RMX Didier Riou Analyst & Investor Day June 21, 2007

57 Why Accelerate Development in RMX? A proven operating model based on performance and innovation, developed over the last 15 years A winning strategy Vertical Integration Innovation Good returns on capital employed Tremendous profitable growth opportunities 57

58 A Proven Operating Model Mm 3 Sales Volumes 21.5 Mm 3 x2 3.4 Bn Sales 1.3 Bn x M COI 12 M x15 Operating Margin 1.0% +440bp 5.4% 58 ROCE 1.5% +1,120bp 12.7%

59 Developing in Mature Markets Further improvement of ROCE through Acceleration of innovation roll-out Turbo plan Cost reductions and performance action plan implementation Growth opportunities through Consolidation Networks optimization 59

60 A Major Opportunity for Profitable Growth in Growing Markets Very high market growth rates Cement growth + Rmx penetration increase Allow for fast returns at early stage of market development Implementing our model Performance, value added products and innovation Allows for faster and higher returns 60

61 A Lower Capital Base to Achieve Strong ROCE in Growing Markets In countries already in our portfolio, most of the growth will be achieved through greenfields In new countries, depending on the market, first move might be an acquisition, but would then be followed by greenfields Standardized optimized plants, fit to comply with our operating model request IT Mix design optimization tools VAP 61

62 A Selective Strategy in Growing Countries We want to establish leading positions in high growing areas, at various levels depending on country size Can be several cities Can be one or several regions Can be the whole country Focus on key markets Central and Eastern Europe Asia The Middle East Taking advantage of our strong presence and growth in cement 62

63 A Radical Transformation in Growing Markets Growing Markets Sales (M ) Sales volumes (Mm 3 ) Operating margin -2% 4% 7% ROCE -2.7% 7.9% 15.6% 63

64 A Strong Growth Potential Development Small acquisitions and greenfields Value Added Products 0.6 to 0.8 Bn investment over Investment ratio: 6 times EBITDA RMX Volume Growth RMX COI Growth 64 Development Mature Development Growing Existing Assets Development Mature Development Growing

65 Zoom on Development in Growing Markets 26 Mm 3 development plan: close to 500 M investment Additional sales (Mm 3 ) Additional sales (M ) Additional EBITDA (M ) ROCE after tax on assets started up % , %-14% 65

66 An Evolving Portfolio Growing Markets 17% 20% 25% 33% 36% % of total Rmx Sales % of total Rmx COI -12%

67 In Summary A proven operating model A win-win strategy Profitable growth opportunities 67

68 Excellence 2008 Towards undisputed leadership Development in Aggregates Bradley Mulroney Analyst & Investor Day June 21, 2007

69 Why Accelerate Development in Aggregates? Strong existing reserve base Solid operating model which drives results Good growth opportunities 69

70 A History of Profitable Development ,450 MT Reserves 1,860 MT x Redland 1999 Texada Island Capital Employed 0.5 Bn x5 2.7 Bn 2000 Warren 2000 Presqu Isle 2001 Blue Circle 262 MT 2004 Hupfer Sales 84 MT x Various Central Europe 328 M 70 COI 41 M x Chicago

71 Two Categories of Markets Mature and Growing with Different Business Models In mature markets Selecting well located assets with minimal risk of imports Implementation of the Lafarge operating model Valuing scarcity of reserves through robust pricing model Professional practices to minimize costs & increase competitive advantage Consolidation 71

72 An Example France - Success of our Business Model EBITDA/Sales % ROCE 6 pp 3.5 pp Performance beyond original targets Cost optimization Valuing the scarcity factor 72

73 Developing in Mature Markets United States of America Still only 40% consolidated Market growth demand varies dramatically by state Scarcity is valued France Still only 50% consolidated Scarcity has started to be valued Spain Very limited consolidation to date but starting to accelerate Scarcity is valued 73 UK > 70% consolidated Scarcity has started to be valued

74 An Example Chicago - Selective small size acquisitions deliver value 3 acquisitions for in excess of 9 MT, within 14 months 2006, Rein Schulz and Dahl 3.0 MT 2006, Western Conco 3.7 MT 2007, Feltes 3.0 MT Potential: 12% ROCE within 3 years 74

75 Two Categories of Markets Mature and Growing with Different Business Models In growing markets Stay focused and selective to ensure sufficient critical mass and consolidation achieved Selecting best located assets Growth driving profitability during consolidation phase With low entry price (mixing acquisitions with green fields) and good profitability from the beginning 75

76 Developing in Growing Markets Central Europe / Asia / Africa Increase in environmental pressures Advantage for corporations focused on sustainable development Recognition of scarcity Strong market growth of RMX and Asphalt is driving increasing requirements of high quality aggregates Leverage our know how and experience by taking key positions in new markets Lafarge already has strong positions in Poland, Ukraine and Romania 76

77 A Solid Performance Growing Markets Sales (M ) Sales volumes (MT) Operating margin 2.5% 10.3% 17.3% ROCE 2.7% 10.4% 21.6% 77

78 An Example Poland A market with strong growth and consolidation prospects Continued investment from 2002 has enabled us to achieve number 1 position in aggregates with 10 MT During 2006 we have acquired 11 quarries (3.5 MT) EBITDA/Sales % ROCE 8.5 pp 11.5 pp

79 Profitable Growth Development: a combination of small acquisitions and greenfields 1.0 to 1.2 Bn investment over Investment ratio: 7.5 times EBITDA Aggregates Growth Levers Sales Volumes Current Operating Income Existing Assets Development Mature Development Fast Growing Existing Assets: Valuing scarcity Development Mature Development Fast Growing 79 We have increased our aggregates capacity through acquisitions by 33 MT over the past three years at an average multiple of 7.7 x EBITDA with a target of > 12% ROCE before the end of the third year

80 Zoom on Development in Growing Markets 60 MT development plan: ~ 400 M investment Additional sales (MT) Additional sales (M ) Additional EBITDA (M ) ROCE after tax on assets started up >10% %-14% 80

81 An Evolving Portfolio Growing Markets 22% 26% 7% 6% 11% 14% % of total Aggregates Sales % of total Aggregates COI

82 In Summary Strong existing reserve base Solid operating model which drives results Good growth opportunities 82

83 Excellence 2008 Towards undisputed leadership Cement Development Guillaume Roux Analyst & Investor Day June 21, 2007

84 Our Internal Development Plan Lafarge to build 45 MT of new capacities between 2006 and 2010 to generate around M EBITDA *, 12% to 15% ROCE by 2012 Everything has been put in place to deliver this Plan on time, on budget In four years, Asia including China and also Africa, Central and Eastern Europe to be major contributors to the Group 84 * Group share

85 45 MT: 700 to 800 M EBITDA *, 12% to 15% ROCE To keep pace with market growth in more than 20 countries To reduce costs At a low cost price: < 100 per ton in average Faster than ever Short construction time Fast ramp up 85 * Group share

86 45 MT: 700 to 800 M EBITDA *, 12% to 15% ROCE MT China RoW Total investment : 3.4 Bn * 86 * Group share

87 45 MT: 700 to 800 M EBITDA *, 12% to 15% ROCE Europe 6 MT North America 4 MT Med.Basin 4 MT China 15 MT Latin America 2 MT Africa 3 MT India + Bangladesh 9 MT South East Asia 2 MT More than 80% in fast growing markets 87 * Group share

88 45 MT: 700 to 800 M EBITDA *, 12% to 15% ROCE Additional sales - net (MT)* Additional sales (M )* 300 1,000 1,800 Additional EBITDA (M )* ROCE* after tax on assets started up 10% > 11% 12%-15% 88 * New Capacity after replacement, Group share

89 At Less than 100 per Tonne Average cost per Tonne 30 to 50 on China 70 to 150 in the rest of the world except the US 150 to 200 in the US This cost includes Quarries and land Infrastructures Buildings and plants Project team, engineering and technical center fees Capitalized financial interests Specific costs in some cases Waste heat recovery Power plant 89

90 Faster than Ever Shorter construction time Opportunity study: Feasibility: Notice to proceed: First clinker: 2 months 5 to 6 months 4 to 5 months 13 to 15 months in China 22 to 26 months in the rest of the world Faster ramp up Import replacement Thorough supply / demand analysis Average 85% utilization after 4 years 90

91 Everything Has Been Put in Place to Deliver this Plan on Time, on Budget Our track record is strong Strong focus on the two main areas Equipment supply Human Resources 91

92 Fast Growing Markets are Part of our Sustainable Profit Sales (M ) 2,109 2,969 4,841 Sales volumes (MT) Operating margin 18% 21% 22% ROCE 7% 8.5% 11.2% 50% 49% % Sales % Current Operating Income 44% 38%

93 Equipment Supply: Differentiation Opportunity Standardization and globalization of offerings 2,500 Tpd:2 completed, 5 in construction, 3 to come 3,500 Tpd:1 completed, 1 in construction, 2 to 4 to come 5,000 Tpd:10 to 12 to come China Purchasing Platform beginning in September 2005 > 20 people dedicated to suppliers relation, negotiations and quality control Few Suppliers Strong mutual knowledge 93

94 Human Resources: Our Strength A dedicated worldwide predictive recruitment process for projects started 18 months ago A follow up of projects since opportunity phase A separate group handling recruitment of site people A unique Operation Preparation Guide (OPG) Top managers handling project management Building bench strength: a personal objective of each BU manager Supported by result oriented training E.g.: 3 plant schools Kiln coaches and certification 94

95 A Few Examples Doubling the Capacity at our DuJiangYan plant 2007: sold out First clinker in Q3 06 Clearance Q2 04 NTP in Q2 100% Capacity addition (MT) Investment (M ) EBITDA (M ) ROCE % 95

96 A Few Examples Greenfield of 0.7 MT in Zambia First clinker in Q2 08 Clearance Q1 06 NTP Q2 06 Capacity addition (MT) Investment (M ) EBITDA (M ) ROCE % 96

97 A Few Examples New Line of 0.7 MT in Ecuador First clinker in Q4 08 Clearance Q3 06 NTP Q1 07 Capacity addition (MT) Investment (M ) EBITDA (M ) ROCE % 97

98 Asia becoming increasingly contributive with stronger Africa, Central and Eastern Europe COI * 2012 COI * 2006 Mature Markets: 34% Growing Mature Markets: 51% Growing Markets: 66% Markets: 49% Western Europe North America Mediterranean Basin Central and Eastern Europe Latin America Sub-Saharan Africa Asia excluding China China * Current Operating Income 98

99 Zoom on China Our vision Be the leader in the South Western region of China Able to expand into other attractive geographies with a view to generate the best possible return Be a top quality producer and a responsible organization environmentally and socially Be recognized as a leader of the Chinese Cement Industry 99

100 Zoom on China Our strategy Select the best strategic locations Invest and produce at competitive cost compared to our local competitors Deliver leading quality products and services in a safe environment 100

101 Zoom on China 24 MT capacity in 2007 Heilongjiang Xinjiang Gansu Qinghai Xizang Sichuan No. of plants: 5 Capacity: 7 MT p.a. Yunnan No. of plants: 3 Capacity: 5 MT p.a. Jilin Liaoning Hebei Neimongu Beijing Ningxia Shanxi Shandong Gansu Shaanxi Henan Jiangsu Hubei Shanghai Anhui Sichuan Chongqing Zhejiang Jiangxi Guizhou Hunan Fujian Yunnan Guangxi Guangdong Hainan Guizhou No. of plants: 3 Capacity: 3 MT p.a. Beijing No. of plants: 2 Capacity: 1.5 MT p.a. Chongqing No. of plants: 4 Capacity: 7 MT p.a. 101 Total investment at 100% of 1 Bn JV created with Shui On on August 15, M investment for Lafarge (55% share)

102 Zoom on China Current projects in the pipeline to bring over 40 MT by 2012 New capacities (net of wet lines closures) coming on stream in: Total 1 MT 2 MT 4 MT 3 MT 5 MT 5 MT 20 MT Sichuan: No. of plants: 4 Capacity: 11 MT Yunnan: No. of plants: 7 Capacity: 8 MT Xinjiang Xizang Gansu Neimongu Hebei Beijing Ningxia Shanxi Shandong Qinghai Gansu Jiangsu Shaanxi Henan Hubei Shanghai Sichuan Anhui Chongqing Zhejiang Jiangxi Hunan Guizhou Fujian Yunnan Guangxi Guangdong Hainan Heilongjiang Jilin Liaoning Beijing: No. of plants: 2 Capacity: 1.5 MT Chongqing: No. of plants: 7 Capacity: 13 MT Guizhou: No. of plants: 5 Capacity: 7 MT For a total investment of 650 M (Lafarge share at 55%) Out of which 30% for process improvement to reduce production costs Potential: ~ 125 M additional EBITDA (Lafarge share) Margin in line with Group s

103 In Summary Lafarge to build 45 MT of new capacities between 2006 and 2010 to generate around M EBITDA *, 12% to 15% ROCE by 2012 Everything has been put in place to deliver this Plan on time, on budget In fours years, Asia including China and also Africa, Central and Eastern Europe to be major contributors to the Group 103 * Group share

104 Excellence 2008 Towards undisputed leadership Conclusion Bruno Lafont Analyst & Investor Day June 21, 2007

105 Excellence 2008 Towards undisputed leadership Analyst & Investor Day June 21, 2007