the lafarge success story in north america lafarge success story in north america ... 1956 the...
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The Lafarge success story in North America Voyage aux Etats-Unis (7-11 mars 2005)
CONTENTS
The Lafarge Group
Lafarge in North America
• Key stages of Lafarge’s development in North America
• Our North American business lines
Continuous improvement in performance
Sustainable development, the key to performance
Research & Development and innovation
Biographies
Group presentation sheet
Press kit – March 2005
LAFARGE OVERVIEW World leader in building materials, Lafarge holds top-ranking positions in its four
divisions: world no. 1 in Cement and in Roofing, world no. 2 in Aggregates and
Concrete, , and world no. 3 in Gypsum.
Established in 75 countries and with a workforce of 77,000, the Group operated over
2,100 industrial sites around the world in 2004.
Listed on the Paris and New York stock exchanges, it posted sales of €14.4 billion
euros in 2004.
The Cement Division produces cement, cementing materials and lime for construction,
renovation and public works.
The Aggregates and Concrete Division produces aggregates, ready-mixed and
prefabricated concretes, plant mixes for civil engineering works, roads, buildings, etc.
The Roofing Division produces concrete, clay and metal roof tiles, roofing components
and accessories, chimney systems for new constructions and renovations.
The Gypsum Division produces gypsum wallboard systems, tiles and
building/decoration gypsum for finishing work on new constructions and renovation
projects.
The Group’s strategy is founded on the twin pillars of growth and performance, in order
to achieve the kind of profitable growth which can create value for shareholders,
customers, employees and the communities in which operations are based.
Lafarge stands apart for its multisector strategy underpinned by top-ranking positions in
each of its activities (Cement, Aggregates & Concrete, Roofing, and Gypsum), and a
balanced geographical breakdown between developed and growing markets. Lafarge
has the financial capacity to pursue a development strategy which combines organic
growth with acquisitions.
The Group is currently involved to an unprecedented degree in creating new capacities
in Cement (6 plants), Gypsum (4 plants) and Roofing (3 plants). In the course of the
last five years, annual organic growth rose by an average of over 5% in all divisions
with the exception of Roofing which was held back by the German recession. Organic
growth was just under 8% in 2004.
At the same time, the Group plans to push ahead with growth via small- and medium-
scale acquisitions. Over the last ten years, annual growth generated by our small- and
medium-scale acquisitions came to 5.6% on average (excluding Redland and Blue
Circle).
An excellent performance in 2004:
Our strategy is producing the expected results
• Organic growth +7.7%
• Double-digit growth in earnings and cash flow
• Current earnings before interest & tax
at constant scope and exchange rates +12.8%
• Marked upturn in net income +19.2%
• Cash flow +17.5%
• Return on capital employed 8.4%
(vs. 7.1% in 2003, after tax, at the 2003 rate)
• Net earnings per share of €5.20 +5.0%
LAFARGE IN NORTH AMERICA
Lafarge gained its first foothold in North America when it entered the Canadian market
in 1956. It set up in the United States from 1973 onwards by means of successive
partnerships with other manufacturers. In 1982, the group became the leading US
cement producer, following the takeover of General Portland Cement. That same year,
the two Canadian and American companies merged into a structure which was listed
on the New York stock exchange. The 1990s saw the group develop in Aggregates,
Gypsum and Roofing while pursuing growth in Cement. 1997 and 2001 were marked
by the acquisition of Redland and Blue Circle.
Industrial sites in the United States
cement grinding plant cement plant concrete roof tile plant gypsum wallboard plant
(Blue Circle assets are shown
in bold)
Key stages of Lafarge’s development in North America UELQUES DATE 1833 Founding of Lafarge in France. 1956 The Lafarge group enters the North American market by building a cement plant in Richmond, British Columbia, near Vancouver and forming Lafarge Cement North America (LCNA). 1970 LCNA merges with Canada's largest cement producer, Canada Cement Company (est. 1909), creating Canada Cement Lafarge Ltd. (CCL). With 11 plants stretching from coast-to-coast, CCL becomes Canada's largest cement producer. 1973 Lafarge enters the US market through a joint venture involving its Canadian subsidiary (Canada Cement Lafarge) that creates Citadel Cement Corporation. 1977 The venture dissolves, but CCL keeps Citadel and two cement plants. 1982 Acquisition of Portland, the second largest US cement producer with 10 plants and a 6 million tonnes annual capacity. 1983 Creation of Lafarge Corporation which is listed on the New York, Toronto and Montreal stock exchanges. 1986 Lafarge acquires the Huron Division of National Gypsum including 14 cement terminals and an idle cement plant. 1989 Lafarge purchases seven subsidiaries of Standard Slag (11 million tonnes of annual aggregate production), and thus becomes one of the largest aggregate producers in the US. 1991 Acquisition of two cement producers and related assets in Aggregates & Concrete (3 dry-process cement plants, 15 terminals, 2 quarries and some 30 ready-mixed concrete facilities). 1993 Divestment of assets in Texas and Alabama. 1995 Acquisition of a 600,000 tonnes capacity cement grinding plant in Florida.
1996 Lafarge enters the Gypsum market with the acquisition of Georgia Pacific (2 gypsum wallboard plants) and Tews Company (including 14 ready-mixed concrete plants). 1997 Acquisition of Redland (consolidation effective in 1998) which enables Lafarge to become the largest construction materials company in North America. 2000 Acquisition of one of the largest quarries on the Great Lakes. Lafarge Gypsum opens its state-of-the-art drywall plant in Silver Grove, Kentucky using 100% substitute raw materials (synthetic gypsum). 2001 Acquisition of Blue Circle and related assets in Aggregates and Concrete (Pine Hill and American Ready-Mix Concrete) Lafarge Corporation becomes Lafarge North America Inc. The Gyspsum activity opens its second state-of-the-art drywall plant (Palatka, Floride). Start-up of papermaking plant to supply gypsum wallboard plants as part of a joint venture. 2002 Acquisition of Continental Gypsum (with an annual capacity in excess of 27 million m²). 2003 Disposal of Florida-based businesses (two cement-grinding units and import terminals), for around 142 million euros, with the aim of geographical rationalisation of our assets. 2004 Lafarge announces the acquisition of assets belonging to the Concrete Company in the Southeast of the United States. Upgrading of the Buchanan gypsum wallboard plant. Continued management by Lafarge North America of Blue Circle assets in the United States.
Strong growth trend in North America during the past ten years
Une croissance continue
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Lafarge, the leading global player in North America
Lafarge has carved out a position as North America’s leading player on the
construction materials market.
Group plants are concentrated in several US regions. In the region of the Great Lakes,
the Group is leader with a 35% market share. In the Southeast region, around the
Mississippi and Iowa rivers, the Group acquired new positions via three sites at
Harleyville, Atlanta and Calera. In the Northeast region, Lafarge has consolidated its
position. Finally, the Group has also consolidated its presence in Quebec.
On a fragmented market , with local companies competing for business, Lafarge has
become the leading global player and has achieved significant geographical and
cultural coverage.
This new position meant that in 2002, all cement activities in the North America zone
were reorganised into five regions (Northeast, Southeast, River, Great Lakes and
Northwest). Each region comprises three to five plants and therefore manages
comparable capacities (between 3 and 5 million tonnes). This restructuring has
enabled Lafarge to gradually become a big company capable of operating on a small-
scale by getting closer to the local structures of its client base and staying in tune with
local market requirements with support from strengthened central functions, particularly
with regard to marketing.
Lafarge North America is listed on the New York, Toronto and Montreal stock
exchanges and 53%-owned by Lafarge. The Roofing business has traditionally been
owned by Lafarge via a joint venture and managed at Group level.
Blue Circle’s former assets in North America are held by Lafarge SA, which delegates
management to Lafarge North America within the framework of a management
agreement. This arrangement favours integrated management of all Cement,
Aggregates & Concrete assets in North America.
Our North American business lines
Lafarge materials sold in North America accounted for 27% of the Group’s worldwide
sales in 2004.
Lafarge North America is the largest diversified supplier of construction materials such
as cement and related products, ready-mixed concrete, gypsum wallboards,
aggregates, asphalt and concrete-based products in the United States and Canada. Its
products are used in the construction of houses and apartment blocks, commercial and
non-residential premises and infrastructures. Its head office is located in Herndon,
Virginia, close to Washington DC. Lafarge North America has a workforce of
approximatly 15,000 spread across 1,000 or so sites. The three main business sectors
for Lafarge North America are: Cement and related products, Aggregates & Concrete,
and Gypsum.
Cement and related products 5,448 employees in North America Sales volumes: 21 million tonnes
Lafarge is the leading supplier of top-quality cement and related products in the United
States and Canada. With over 20 types of cement and mixtures, Lafarge provides
imaginative solutions for contractors, manufacturers, local authorities, ready-mixed
concrete producers, manufacturers of concrete-based products and builders.
Specialties such as NewCem®, MaxCem™, Tercem 3000™ and SF™ cement have
been designed to meet the challenges created by bridge-building, subsea structures,
skyscrapers and industrial flooring. Lafarge cement used for concrete masonry and as
mortar mix have applications in all types of residential or commercial construction work
in brick or concrete blocks. Lafarge manages the most extensive manufacturing and
distribution network in Canada and the United States thus ensuring that its cement and
related products are made available to its customers.
Aggregates and Concrete 8,653 employees in North America Sales volume: 133 million tonnes
Aggregates are fundamental to the construction chain. Lafarge is one of North
America’s largest producers of aggregates offering one of the most sophisticated
product ranges in the construction industry with new series of top-quality products.
Lafarge produces an extensive range of ready-mixed concrete (a mix of cement,
aggregates, water and admixtures) for various applications such as the new high-
performance Ultra™ Series mixtures. Lafarge is also at the cutting-edge for the
development of special patented mixes like Agilia®, a revolutionary self-placing
concrete. Lafarge is also a major producer of asphalt, road construction and road
surfaces in regions and ensures the correct operation in all kinds of building sites.
Ductal®, the new ultra-high-performance material from Lafarge, combines resistance,
long life, aesthetics and ductility in a unique manner and provides engineers and
architects with extensive options in terms of design and applications.
Gypsum 707 employees in North America Production capacity: 204 million m²
Construction work would be virtually impossible without gypsum. The US market
accounts for 50% of the global market in gypsum wallboards. Lafarge’s Gypsum
division offers its customers a broad range of products, whether architects, specifiers,
distributors, constructors, contractors or applicators. Lafarge products come in all sorts
of shapes and sizes and the applications are extremely varied. Protecta® AR 100,
gypsum wallboard which is resistant to shock, denting and surface abrasion, benefits
the entire industry by reducing maintenance and replacement costs. Protecta AR 100 is
recommended for buildings with high through flows such as schools and hospitals.
Lafarge’s gypsum products are manufactured as per current environmental
construction standards enabling compliance with the LEED standard of the U.S. Green
Building Council which corresponds to the international standards of the ASTM
(American Society for Testing and Materials).
Its cutting-edge plants use manufacturing processes based on recycled products,
particularly 100% recycled paper. They are thus able to recycle gypsum wallboard. In
addition, the plants in Palatka, Florida, and Silver Grove, Kentucky, use synthetic
gypsum and deliver "green" products, which are among the most environmentally
friendly on the market. As a supplement to its extensive gypsum wallboard range,
Lafarge offers a full range of highly innovative finishing products: Rapid Coat®, Classic
Coat™ and Rapid Joint™ which meet the varied requirements of the finishing trade. In
2004, Lafarge launched Rapid Deco ® Level 5 ™ Skim-Coated Dryawall and the Joint
Finishing System, fast and easy in terms of technical performance and design of
lighting and paint solutions.
Roofing 576 employees in North America
The Lafarge Group Roofing activity is present in the United States but is not
managed by Lafarge North America. It is represented by MonierLifetile, founded
in 1997 as part of a joint venture between Monier and Boral Lifetile. Monier was
formally part of the Redland group before being acquired by Lafarge at end
1997. MonierLifeTile offers customer-oriented solutions on a high-potential
market (substitution in favour of concrete roof tiles and the market in new
constructions).
PERFORMANCE AS THE KEY DRIVER FOR PROFITABLE GROWTH
In the past ten years, the Group has established a position as the world leader in
construction materials. This rise to the top has been built on the tried and tested twin
pillars of growth and performance.
Whether we are talking about Top, Rock, Pave, SpiD, FIRST or Advance, the
performance programmes, which have been tailored to the various business lines and
are therefore specific to each division, have enabled Lafarge to channel all of its
energy, continually move forward and integrate newcomers rapidly.
For Lafarge, performance is not just about tools and processes. It is first and foremost
about behaviour. The Group has stepped up efforts to switch from a cost-cutting
industrial approach to one founded on research and overall performance in order to
remain the uncontested leader in its sector well into the future.
The new performance-related challenges There is nothing new about the Group’s performance-centred approach. In 15 years, it
has established itself as a key aspect of management. The notion of performance is no
longer restricted to the technical field and has spread to strategy, marketing, security
and environmental protection. Our performance plans are integrated into the units’
management tools alongside strategic plans and budgets.
Our employees are key players in the performance drive which is why the Group has
made every effort to ensure that each employee makes the connection between his
everyday tasks and his contribution to performance overall. Communication, training
and development of a performance culture vis-à-vis staff, have enabled objectives to
be understood and shared by all and will continue to do so, which represents a major
challenge in local business lines and within a highly decentralised organisation.
So that everyone adopts good practices and tools developed in their Division and is
able to take the right decisions locally with a view to ensuring continuous progress, a
number of resources have been established: decentralised networks which oversee
programmes on the ground, creation of ad hoc training programmes, particularly for
managers, awards for excellence, …
An unprecedented collective effort In 2003, Lafarge initiated an approach aimed at building unity: the gradual mobilisation
of all staff with the aim of changing behaviour in order to embrace a performance-
centred culture. Banking on the gradual appropriation by all staff, the Group rolled out
this project in stages: in 2003, senior management at Group and Division levels, the
150 operational and functional managers then its 800 top executives set the ball in
motion. In 2004, 10,000 managers took up the challenge by deploying the project’s four
key priorities. They all took part in a “Leader for Tomorrow” team-working day:
customer orientation; continuous improvement in performance; implementation of a
more effective organisation and staff development.
All kinds of initiatives were launched on the ground with each unit building its own
project around the specific context and local challenges. This made it possible to create
positive dynamics which are starting to bear fruit at all levels of the organisation.
The performance ingredients The performance programmes launched in each Division are founded on similar
principles but tailored to very different business lines and contexts.
It is firstly about providing all players in the same business line with the same language and defining common performance indicators. How can productivity at a
cement plant furnace be defined? How do you evaluate the cost of maintenance at an
aggregates quarry? What are the profitability criteria for a ready-mixed concrete plant?
How can customer satisfaction be gauged when it comes to roofing products? By
providing one-stop answers to all of these questions, we were able to provide the sites
with the means to run comparisons, point by point, and therefore work out where they
stood in relation to overall performance and to a target.
If a site has weaknesses in a particular field, asking advice from those who know better
and making use of their recipes for success then becomes a matter of course. Thanks
to its long history and broad international experience, the Group has just about seen it
all so when a problem arises on a site, you can be sure that the solution exists
elsewhere.
Transfer of good practices: this is the second ingredient in the performance-centred
approach. But where can you find out about them? The Cement and Aggregates &
Concrete divisions have set up good practice databases (how do you build a silo for
wet sand? or how do you lay cement in cold or hot weather? for instance). But, it is not
enough to make this information available since being willing to turn the experience of
others to full account forms part of the performance culture.
Other key components of the "Made in Lafarge" approach to performance: respecting a
number of rules which have proved their worth in other business sectors –
segmentation, cost analysis, diversification of customer portfolios, use of
subcontractors. These rules have sometimes been overlooked but experience shows
that their application is effective. Performance also means setting ambitious but
realistic targets as well as regular monitoring of results in order to fine-tune where
necessary. This approach may not be particularly original but it does require stringency
and continuity.
From commodity products to tailored solutions: aggregates, concrete, gypsum,
cement, roof tiles, etc., these products are often considered to be "commodities". One
of the key challenges for the Division performance plans is to break away from this
outmoded image and provide all products with increasing levels of added value by
means of quality, service and innovation. For instance, in the past ten years, research
into concrete has led to major innovations which are transforming construction
methods. Customers are developing a taste for innovative products such as Agilia®
and what sets competitors apart is service quality and the qualitative added value of
the material. Faced with these often small-scale business rivals it would be pointless to
compete on pricing alone. Our competitiveness is being built on differentiation and the
added value of our products and services.
Each of our business lines is endeavouring to make the change from being product
manufacturers to being providers of differentiated solutions depending on the type of
application and customer: thermal or acoustic insulation of a room, erecting a water-
resistant partition in a bathroom, installing a sustainable, coloured roof with insulating
properties, using self-placing concrete for foundations or deactivated concrete for a
terrace, etc. This requires a different approach to both production and performance
with innovation playing a central role…
From an industrial approach to overall performance The Cement Division has prioritised exchange of know-how and performance
measurement, assigning them the status of a fully-fledged management tool.
As of 1990, efforts were focused on achieving technical expertise at all plants, but
expertise was often all about “having the knack” in a way which was not particularly
formalised and therefore difficult to pass on. A plant self-assessment process was
conducted throughout the Division to enable each site to identify its strong points (for
transfer of its know-how to others) and its weak points (where it could benefit from
others’ know-how).
The first 3-year technical plans were centred on technical progress: a cement plant
which was both costly (between US$ 150 and 200 million per unit) and a high energy
user (the flame of the kiln must burn at 2000°C so that the clay and limestone burning
in the 1500°C furnace turn into clinker). Almost 200 indicators enabling evaluation of a
cement plant’s performance at every level were defined: energy consumption,
maintenance costs, productivity of furnaces, etc. Thanks to this “common language”, it
is now possible to compare performances of all plants, point by point, and therefore
identify good practices and areas for improvement. Several improvement plans have
since been introduced with significant results. For instance: the cost of producing a
tonne of cement has fallen by around one euro per year in the course of five years.
In 2003, the Cement Division launched a broader performance programme dubbed
Advance, incorporating aspects other than those covered by an industrial approach
alone. This programme has five pillars: strategy (improve the appeal of our markets);
marketing (become an acknowledged benchmark supplier); industrial (consolidate our
leading position in industrial plant expertise); performance culture (rally staff around the
performance banner in an increasingly open-ended environment); and finally,
sustainable development (be recognised as a responsible entity) and relations with
communities. Each of these areas has been assigned detailed targets. Moreover,
systematic benchmarking is conducted between the 46 units on key parameters so that
each is able to position itself vis-à-vis the others and focus on a number of priorities.
The Aggregates & Cement Division began by tackling performance from an angle
which, in addition to industrial factors, included aspects such as strategy, marketing
and the sales approach. The Division analysed practices at profitable units so as to
identify factors which were key to their success: a dozen or so for each business line,
such as the commercial segmentation in aggregates, formula optimisation in concrete,
etc. These key factors were then formatted and systematically disseminated to all units
around the world. Strongly attached to the notion of behaviour, the Division implements
performance programmes while drawing a clear distinction between what comes under
performance and what comes under environmental impact.
The Roofing Division also focused on industrial performance with the launch of the
SPiD programme which aimed to empower each employee vis-à-vis progress
indicators. It then launched Booster, a programme centred on the commercial
performance of sales and marketing.
The Gypsum Division placed a strong emphasis on priorities related to the customer
approach: management of pricing and product quality. The Division launched the
FIRST programme. The performance plans result from the strategic guidelines; they
are supplemented by action plans (for implementation) and remedy plans (when
objectives have not been attained). Certain plans are focused on functions while others
are more cross-cutting (security, environment, communication).
Thanks to its performance programmes, the Lafarge Group is now capable of
distinguishing between factors arising from its environment (the effects of inflation on
raw materials or changes in volumes, for instance) and what is due to the performance
of Group employees (positive, such as increased market share or negative, such as the
decision to reduce our prices). It should be noted that it is up to managers to draw the
distinction between the environment and operational performance since gauging
performance is a management process rather than an accounting method.
SUSTAINABLE DEVELOPMENT, THE KEY TO PERFORMANCE For many years, Lafarge has incorporated the three key dimensions of sustainable
development, economics, and social/environmental factors into its strategy and culture.
We are convinced that our performance will only be sustainable if we manage to
combine profitability with environmental quality while remaining turned outwards
towards society and striving to help it advance.
In the economic field, optimised use of our non-renewable resources, responsible use
of recycled materials and substitute fuels enable us to save rare resources and reduce
production costs. The same is true of use of alternative raw materials, subproducts
from other industries, such as fly ash or slag originating from the coal or steel industries
which due to their similar hydraulic characteristics, replace cementing materials in the
cement industry and also help to reduce our C02 emissions.
In social terms, openness towards society, active dialogue and the construction of
ambitious partnerships with our stakeholders, NGOs, populations and local
governments, etc. allow us to integrate our operations into the local economy in close
collaboration with the communities adjacent to our production sites. Programmes on
health, accommodation, education and local development are deployed in support of
our sites in less developed countries, making it possible to improve local living
conditions.
Finally, in environmental terms, our commitment to reducing our CO2 emissions
requires us to identify innovative technical solutions both in terms of processes and
products. At end 2004, the result was a 11.8% reduction in our net emissions of CO2 in
relation to 1990. Similarly, the successful redevelopment of quarries ensures optimum
integration of our operations into local landscapes and helps preserve the biodiversity
of our operating sites.
For several years, Lafarge has developed an ambitious policy of active partnerships
with the various players in society so that these activities which are vital to the
development of communities form part of a general strategy to build a modern society.
For instance, we have been working with WWF International for five years on improving
our environmental performances and are tackling health-related problems in
developing countries alongside the Care NGO.
Our industry is a key development industry: concrete is the second most consumed
product in the world after water, present in all infrastructure projects which are essential
to the economic and social development of communities; it meets the rightful
expectations of populations for accommodation, health, education and mobility thanks
to roads, schools, hospitals, water supply infrastructures, etc. Fully aware of our
responsibilities in this regard, we are developing solutions to ensure that this
development does not occur to the detriment of the environment or quality of life.
We have decided to place this recognised experience as a responsible company
involved for many years in sustainable development and in dialogue and partnerships
with civil society. We are keen to promote technical solutions for construction which
respect the environment and local populations both in terms of the worksites which are
better integrated, more effective, quicker to completion and safer, and in terms of the
choice of materials and systems in order to minimise the global footprint of buildings
and temporary or permanent structures.
A FEW EXAMPLES IN NORTH AMERICA Habitat for Humanity In 2001, Lafarge North America (LNA) and Habitat for Humanity signed a five-year deal
making Lafarge the biggest supplier of cement, concrete, aggregates and gypsum
wallboards to NGOs. Through this partnership, LNA has undertaken to provide one
million US dollars in financial aid and materials. This partnership is part of the Habit for
Humanity’s “More than Houses” campaign, whose objective is to collect US$ 500
million in order to build 100,000 houses by 2005.
Objective: In August 2003, Lafarge had already fulfilled its undertaking, having
contributed US$ 1 million to the Habitat For Humanity initiative two years ahead of
schedule. The partnership has remained solid, with the group’s respecting its
commitment to helping build a better world.
Summary: An example of this project is the support for the “Jimmy Carter Work Project”
in 2003. Lafarge donated all the materials (cement, aggregates, concrete, gypsum)
required for the project. Around 50 employees from various sites gave up their time for
one week. In addition, many employees from the southeast and the Palatka gypsum
plant worked on producing and supplying materials during company hours. Some even
collected donations thus contributing several thousand dollars in additional funds to
Habitat for Humanity.
Result: 92 houses were built in one week in Alabama and Georgia, offering families the
chance to live in a modern, comfortable home. The worksites also provided volunteers
with an opportunity to gain first-hand experience of how Lafarge products are used.
Redevelopment of quarries: creation of a nature park
The Limestone Valley Park was created on a part of the Texas Quarry, in Maryland,
which has reached the end of its operational life. In addition to attractive landscaping,
the quality of the water in the park is excellent, as reflected in the presence of trout,
perch and beavers.
Objective: redevelop part of the quarry which has reached the end of its useful life.
Protect water quality in a trout stream.
Context: some sections of the Texas Quarry in Maryland reached the end of their
operational life in the late 1970s. In addition, the Goodwin Run, a small trout stream,
passes alongside the quarry, an asphalt production plant and a concrete plant, before
feeding into a reservoir which supplies the city of Baltimore with drinking water.
Solution: In 1995, Lafarge North America launched a competition for projects to
redevelop the site. The winning project, which was awarded 10,000 dollars, resulted in
the opening of Limestone Valley Park. In this new nature park, dotted with ponds and
wooded areas, wildlife habitats have been given special attention. The Goodwin Run,
which feeds into the park’s wetlands and while also supplying the quarry installations,
is protected by stringent controls of pH levels, suspended particulates, and waste-water
temperature as well as by numerous installations designed to prevent accidental
pollution.
Results: Today, Limestone Valley Park is home to a wide variety of wildlife including
deer and beaver, as well as numerous bird species. Lafarge internal training courses
and customer visits are organised at the site. The Goodwin Run and the ponds are
inhabited by numerous species of fish, including trout.
Saving resources: Use of desulfogypsum
Use of desulfogypsum (reprocessed waste from thermal power plants) in the
manufacture of gypsum wallboards helps preserve natural resources.
Objective: Save natural resources by conversion of a substitute for natural gypsum,
desulfogypsum, for use in the manufacture of gypsum wallboards.
Context: The burning of coal and lignite in electricity generating thermal power plants
results in significant emissions of sulphur oxides. Power plants must eliminate this gas
in order to comply with environmental standards. They perform this purification process
by washing gas through addition of calcium carbonate or limestone, which produces a
synthetic gypsum (or desulfogypsum) of high quality and excellent regularity.
Solution: Built in 2001, the new gypsum wallboard plant in Palatka, Florida, sits
alongside a thermal power plant belonging to Seminole Electric. A partnership was
established between Lafarge North America and Seminole Electric in order to
transform the desulfogypsum, in accordance with precise specifications.
Results: Since it began operations, the Palatka used 410,000 tonnes of gypsum in
2001 and 530,000 tonnes in 2002. The gypsum wallboards are 100% produced using
synthetic gypsum. The use of a substitute raw material helps to preserve natural
resources. A growing number of Gypsum Division’s units around the world use
desulfogypsum.
Saving resources: converting slag
Waste from the steel industry, termed slag, is converted by Lafarge for use in three
products: cement, concrete and aggregates.
Objective: converting slag from the steel industry into raw material for cement or
concrete or as a substitute in aggregates.
Context: When iron ore is heated up in blast furnaces, the separated impurities become
slag. This slag is generally dumped. However, if it is quickly cooled with water, it takes
on properties similar to cement.
Solution: Lafarge converts the liquid slag into pellets using specialist installations on
the site of the Ispat-Inland Steel plant in Indiana. The pellets are then transported to the
Lafarge installations in South Chicago, Illinois for grinding. The end product is either
converted or used as a concrete additive (NewCem), or added to the clinker at the
Davenport cement plant. Finally, some of the pellets are calibrated for use as substitute
material for sand, gravel and stone chips.
Results: In 2002, the South Chicago plant ground 120,000 tonnes of slag converted
into a concrete additive (NewCem). Around 15,000 tonnes were shipped to Lafarge
cement plants as a cement additive (MaxCem). 10,000 tonnes were recycled as
aggregates (True Lite Lightweight Aggregate™) directly at the Ispat-Inland steel plant.
Conversion of slag reduces dumping, cuts greenhouse gas emissions, reduces energy
consumption and preserves natural resources.
Reducing air pollution and nuisances: modernisation of a cement plant A major modernisation programme is making it possible to significantly reduce
emissions released into the atmosphere as well as the amount of energy required to
produce cement.
Objective: Take advantage of a cement plant modernisation programme to improve
environmental performances.
Context: Built in 1905, the Sugar Creek plant is located close to Kansas City, an urban
area with over 1.8 million inhabitants. In 1999, a major modernisation programme was
launched aimed at reducing costs, increasing the production capacity and significantly
reducing the environmental impact.
Solution: Lafarge has replaced two production lines dating from the 1950s. This new
system reduces energy consumption: the extremely hot exhaust gases emitted by the
furnace are recovered for reheating and precalcination of the raw mix (ground raw
materials). The improved combustion reduces the nitrogen oxide emissions while the
installation of bag filters reduces dust emissions. In addition, the opening of an
underground limestone quarry measuring 210 metres in depth makes it possible to
protect the landscape, flora and fauna.
Results: Officially opened on 30 July 2002, the plant is now one of the most modern
cement plants in the United States. Energy consumption has been reduced by 50% per
tonne of cement produced. Emissions of SOx and NOx were reduced by 53% and 18%
respectively.
Protection of water: Mississippi clean-up
Employees at the Davenport plant “adopted" a mile of the Mississippi river and
undertook to clean up their section.
Objective: Increase staff awareness of environmental issues through practical
initiatives.
Context: The cement plant in Davenport, Iowa, is located on the banks of the
Mississippi and ships part of its production along this major trade route. However, this
river has become polluted by large quantities of waste abandoned on the banks by all
types of users.
Solution: Since 1999, staff at the Davenport plant have become increasingly aware of
environmental issues in the context of the “You… & the Environment” programme. In
2000, an association gave Lafarge the chance to turn this awareness into action with
an “Adopt-a-mile” project for the Mississippi River (in the United States, many sections
of roadways and waterways are adopted by volunteers who clean and maintain them).
Twelve Lafarge employees volunteered and have committed to maintaining this stretch
of the river. Several months later, this same association asked Lafarge for help with
dismantling and removing a barge which sank over twenty years ago. This week-long
operation was ultimately successful.
Results: The equivalent of four containers of waste (tyres, cans, refrigerators,
televisions, bicycles, chairs, motorbikes, etc.) was collected on the banks of the
Mississippi River by twelve volunteers. The sunken barge was dismantled and
removed. The plant’s staff are now even more aware of environmental issues.
RESEARCH & DEVELOPMENT AND INNOVATION
Lafarge, the world leader in construction materials, is keen to develop innovative
products and new solutions for all players in the construction sector. 500 staff dedicated to Research & Development In total, almost 500 people work in R&D at the Lafarge Group. In order to carry its
projects through to completion, R&D is founded on fundamental research related to
physical and chemical properties of construction materials.
The R&D activities of the Lafarge Group are organised around the Lafarge Centre of
Research (LCR), founded in 1887, and a network of technical centres and specialised
laboratories by division and geographical zone. The Lafarge Centre of Research is
located in Lyon and its Director is Denis Maitre.
Lafarge R&D has a team of 200 researchers, from various countries (United States,
Russia, China, Germany … over 20 nationalities in total), all recognised experts in their
field, for instance:
• chemical hydration processes;
• rheology (study of viscosity);
• micromechanics. Customer-oriented R&D Lafarge’s R&D is customer oriented which is reflected by the recent marketing of
innovative products such as the new cements and cementing materials, self-placing
(Agilia ®) or ultra high performance (Ductal®) concretes, innovative roof tiles (Big®),
multifunction gypsum wallboards (Prégydéco®, Prégydro®)… To develop these new
generations of products, researchers and technicians are in constant contact with
Group Divisions (Cement, Aggregates and Concrete, Roofing and Gypsum). The
divisions identify new trends and have responsibility for improving performance and the
long-term success of their business.
Research programmes tailored to the needs and aspirations of our
customers The entire Lafarge research effort is focused on high quality materials, which respect
the environment and social conditions: minimal environmental impact; preservation of
natural resources and increased level of use of recycled raw materials; reduction in
energy bills; maintenance; health protection.
Among the main research programmes at present:
• tomorrow’s concrete product ranges which deal with customers’ principal
concerns: cracking, control of when setting or hardening starts, productiveness of
the worksite, robustness, durability;
• obtaining better controlled and more suitable cements by improving their
characteristics (regularity, workability, setting time, resistance for the first few
hours, etc.) and by a greater differentiation which enables the various
applications to be covered;
• new generation roof tiles, with long-term aesthetics and heightened
performances, for which LCR carries out upstream research;
• gypsum wallboard with mechanical and acoustic performances enhanced by
microstructure optimisation.
No innovation is ever taken through to manufacture as an end product if it is not better
or at least equivalent to existing products in terms of sustainable development. R&D at the service of sustainable development Lafarge is strongly committed to sustainable development underpinned by significant
efforts in terms of R&D aimed at developing materials which are more respectful of the
environment and social conditions. This commitment has already achieved the
following results:
• Reduction in emissions of CO2 gases: in 2000 Lafarge joined forces with WWF to
commit to reducing its emissions by tonne of cement produced by 20% for the
period 1990-2010.
• Limitation of the impact on the environment of materials (preservation of natural
resources, recycling, reduced energy consumption).
• Improvement of conditions for implementation of its products: routing of its
products and development of alternatives to road transport; reduction of dust,
noise, nuisance related to worksites (new Agilia® self-placing concretes;
Pregymax® gypsum wallboards with lighter and easier-to-install thermoacoustic
lining); recycling of waste on worksites.
• Continual improvement in health and safety conditions and increased training for
staff and subcontractors.
International partners Lafarge develops partnerships with the world’s leading research and laboratory
centres. In France, Lafarge is a partner of the Ecole Polytechnique and signed a
framework agreement with the CNRS (French national centre for scientific research) in
2002. Internationally, Lafarge cooperates with the MIT, and the universities of
Princeton and Berkeley in the United States, the universities of Laval and Sherbrooke,
in Canada and the Ecole Polytechnique Fédérale in Switzerland.
BIOGRAPHIES
Bruno Lafont
Deputy managing director at Lafarge since May 2003, Bruno Lafont (1956) is a graduate of the Ecole des Hautes Etudes Commerciales (HEC 1977, Paris) and former student at the Ecole Nationale d'Administration (ENA 1982, Paris).
Bruno Lafont began his career at Lafarge in 1983 as an internal auditor in the finance department. In 1984, he joined the Sanitary division as administrative and financial director of a subsidiary in Germany. He subsequently served as financial director of the division (1986-1988) then director of development, based in Germany (1988-1989). In 1990, he was appointed director of operations Cement and Concrete & Aggregates for Lafarge, covering Turkey and the Eastern Mediterranean zone.
He served as assistant managing director charged with finance from 1994 to 1998. From 1998 to 2003, Bruno Lafont was assistant managing director responsible for the Gypsum division. Since May 2003, he has been deputy managing director for the Group. He co-manages the Cement division with Michel Rose, and oversees the Aggregates and Concrete division as well as Lafarge North America.
The Lafarge Board of Directors, which met on 23 February 2005, has revealed that among the renewals and appointments to be voted on at the shareholders General Meeting (25 May 2005) it will put forward Bruno Lafont as a director.
Philippe Rollier
Director of the North America zone and president of Lafarge North America and assistant managing director of the Group. Agronomic engineer, graduate of the Institut d’Études Politiques de Paris, Philippe Rollier joined the the administrative and finance division of the Lafarge Group at the start of his professional career in 1969. After conducting an audit for the Group’s senior management, he was appointed regional manager of sales and financial director of Canada Cement Lafarge Ltd in 1973. In 1979, he became deputy managing director of Allia Doulton, then from 1982 to 1988 managing director of Allia, the Lafarge Group subsidiary specialised in sanitary equipment. Managing director of Orsan, a company active in the biotechnology field from 1989 to 1994, Philippe Rollier then headed up the Cement activities of Lafarge for Central and Eastern Europe between 1995 and 2001. He has been at the helm of Lafarge North America since May 2001.
THE WORLD LEADER IN CONSTRUCTION MATERIALSWorld N°1 in Cement
Wide range of cements, hydraulic binders and lime for building, renovation and public works.
World N°2 in Aggregates & ConcreteRange of aggregates, standard concrete, « specialty » concrete (such as ready to use or prefabricated) for civil engineering, for roads and for buildings.
World N°1 in RoofingComprehensive offer of roofing products (concrete/clay roof tiles), accessories and chimney systems.
World N°3 in GypsumGypsum blocks and wallboard, plaster coating for finishing worksfor all kinds of buildings, be the new constructions or renovations.
STOCK DATA (at 06/30/2005, Paris Stock Exchange)
Tickers: LG (Paris), LAF (New York) * Subject to approval of AGM
CORPORATE ACTIVITY & STRATEGYWith 77,000 employees and operations in 75 countries, Lafarge holds top ranking positions in each of its four divisions : Cement, Aggregates & Concrete, Roofing, Gypsum, thus offering all construction industry sectors a comprehensive range of products and solutions. The growth of the world leader in building materials is founded on a sustainable development policy: Group know-how encompasses industrial efficiency, value creation while respecting people and cultures, protection of the environment, preservation of natural resources and energy.
BUSINESS BREAKDOWN in 2004
GEOGRAPHICAL BREAKDOWN in 2004
KEY FIGURES
LAFARGE GROUP SENIOR EXECUTIVESChairman: Bertrand Collomb Chief Executive Officer: Bernard KasrielDirection Générale :
- Bernard Kasriel : Chief Executive Officer - Michel Rose : Chief Operating Officer- Bruno Lafont: Chief Operating Officer
Executive Committee:- Jean-Jacques Gauthier : Executive Vice-President, Finance- Ulrich Glaunach : Executive Vice-President, Roofing - Christian Herrault : Executive Vice-President, HR and Organization - Isidoro Miranda : Executive Vice-President, Gypsum - Jean-Charles Blatz : Executive VP, Aggregates & Concrete
FINANCIAL CALENDAR 2005
10/20/05: 3rd quarter sales 9/8/05: Half-year results
LATEST CORPORATE EVENTS
Cement: -South Korea, India and Japan: buyout of minority interests-Ecuador: acquisition of “Cementos Selva Alegre”-Serbia and Montenegro: inauguration of a cement plant-Vietnam: construction of a cement grinding plant-Morocco: a cement plant directly supplied by a wind farm andinauguration of an ultra modern cement plant in Tetouan and a new production line in Bouskoura-Lafarge and Shui On form Joint Venture in China to create the newcement leader in South West Region
Roofing-Schiedel expands its business activities in chimney and flue systems
Gypsum-Lafarge Boral Gypsum in Asia (LBGA) to double its capacity in China-Lafarge to invest €300 million to increase Gypsum production by morethan 20%-Lafarge to increase its plasterboard capacity by 50% in the UK-USA: Upgrade and expansion of Buchanan Gypsum Drywall Plant
• Corporate- Lafarge and WWF renew their partnership-Lafarge successfully completes a Eurobond exchange offer and Euro 500 Million of 15 year bonds
LAFARGE KEY DATES
1833 Lafarge founded in France1956 Lafarge starts operating in North America1997 Acquisition of Redland (Aggregate & Concrete and Roofing)2001 Acquisition of Blue Circle
Reuters: LAFP.PABloomberg: LG FPWebsite: www.lafarge.com
61, rue des Belles Feuilles - B.P. 4075782 Paris cedex 16 – FRANCETelephone: + 33 1 44 34 18 18 / Fax: + 33 1 44 34 12 23
* Operating Income from ordinary activities
Sales
Western Europe
North America
Central and Eastern Europe
Emerging Mediterranean
Asia /Pacific
Latin America & theCaribbeanSub Saharan Africa/IndianOcean/Others Operating
Result
(in euros million) 31/12/2004 31/12/2003Sales 14, 436 13,658Operating Income* 2,124 1,934Group Net Result 868 728EPS 5.2 4.9Gearing 59% 67%Employees 77,000 75,000
Market Cap € 13,186 mShare Price € 71.35Highest/Lowest share price (in 2003) € 74.5 / € 62.3Dividend per share (2003) 2.40*
-3%Operating
Result
74%
6%16%
7%
Sales
11%
0%
33%
9%
47%
Cement
Aggregates & Concrete
Roofing
Gypsum
Other
Contact: Stéphanie TessierGroup VP, External [email protected]
LAFARGE GROUP
43%
20%
6%
8%
6%
7%
10%
5%4%
27%
4%
8%
10%
42%
August 2005