Aggregates & Concrete
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ANNUAL REPORT 2001 Materials for building our world Contents 1 | Profile 2 | Chairman’s message THE GROUP IN 2001 4 | Key figures 6 | The new dimension of the Group 12 | Innovation to support our customers 16 | Sustainable development: a strategic commitment 22 | Human resources at the heart of our systems and our values 24 | Executive Committee and “Direction Générale” 26 | Senior managers (operational and functional) 28 | Corporate governance 30 | Lafarge and its shareholders MANAGEMENT REPORT 32 | The Group 40 | Cement 48 | Aggregates and Concrete 54 | Roofing 58 | Gypsum 62 | 2002: performance & synergies FINANCIAL STATEMENTS 66 | Consolidated financial statements 107 | Corporate financial statements 110 | Industrial and environment-related risks and insurance 112 | Legal and financial information LAFARGE, WORLD LEADER Cement SALES: f5,995 MILLION 41,832 employees Ranges of cements, hydraulic binders and limes designed to meet the needs of construction industry and civil engineering players. INTERNATIONAL SCOPE North America: 25% Europe: 33% Asia-Pacific: 13% Rest of the world: 29% Gypsum SALES: f1,072 MILLION 4,944 employees Plasterboard systems, gypsum blocks and sprayable plaster intend- ed for construction finishings, new buildings and renovation. INTERNATIONAL SCOPE North America: 16% Europe: 62% Asia-Pacific: 18% Rest of the world: 4% Photos | Cement : Venezuela, Caracas theater | Roofing : Malaysia, Golf Club Kuala Lumpur | Aggregates & Co IN BUILDING MATERIALS Roofing 1833: f SALES: 1,585 MILLION BIRTH OF LAFARGE 12,620 employees Ranges of roof tiles in concrete, clay and metal, roof system components and chimney systems. • INTERNATIONAL SCOPE North America: 8% Europe: 84% Asia-Pacific: 6% Rest of the world: 2% t13.7 BILLION OF SALES IN 2001 • 83,000 EMPLOYEES Aggregates IN 75 COUNTRIES & Concrete • SALES: f4,806 MILLION 21,852 employees Aggregates, ready-mix concrete, prefabricated concrete units 210,000 for builders of engineering structures, roads, buildings, etc. PRIVATE INTERNATIONAL SHAREHOLDERS SCOPE North America: 54% Europe: 38% Rest of the world: 8% oncrete : Canada, United States Embassy - Ottawa | Gypsum : France, The Roubaix Museum of Arts and Industry. profile OTHERS: 1% GYPSUM: 8% THE ACQUISITION OF BLUE CIRCLE ROOFING: 12% IN 2001 HAS STRENGTHENED OUR WORLD LEADERSHIP CEMENT: 44 % AGGREGATES & CONCRETE: 35% The acquisition of Blue Circle constitutes a major milestone for our Group. It has increased our production capacity in cement by 35 % and expanded our workforce by Breakdown of sales by Division 17,000 newcomers on five continents. We were listed on the New York Stock Exchange (NYSE) on July 23, 2001, and this has improved our access to American financial markets. Our sales have risen 12% in the context of a strategy of sustainable development. Our know-how combines ASIA - PACIFIC: 8% industrial efficiency, creation of value, protection of the AFRICA - environment, respect for people and their cultures and INDIAN OCEAN: 5% LATIN AMERICA: 6% WESTERN the sparing use of natural resources and energy. EUROPE: 40% We aim to develop and improve building materials by NORTH situating the customer at the very heart of our concerns. AMERICA: 32% We offer the construction industry and the general public CENTRAL AND MEDITERRANEAN BASIN: 5% EASTERN EUROPE: 4% innovative solutions that will bring more safety, comfort and beauty to their everyday lives. Breakdown of sales by geographical zone chairman’s message he major highlight of 2001 was, The Cement Division performed extremely the successful integration of Warren Paving of course, the acquisition of Blue well, as a result of an increase in volumes in Canada and price increases in Europe, T Circle, which established our at constant scope, a number of acquisi- particularly impacting aggregates sales in Group as the world number one cement tions in Asia and the integration of Blue France and the United Kingdom. producer, strengthened our position as Circle in the second half. Total volumes The profound slump in the German the world leader in building materials and rose 36% as a result. Pursuit of perform- market continues to handicap the Roofing greatly enhanced the value of our shares. ance improvement programmes and Division’s operations, in spite of the ener- The slowdown of the global economy and measures to control energy costs yielded getic restructuring measures that have been the terrible events of September 11 had a yet further improvement in operating undertaken and the improvement on the relatively limited impact on our markets. margins. American and Asian markets. Volumes Most of our markets experienced stabil- The impact of our worldwide development fell by 6% over the whole year. ity, or even growth in the case of North strategy over the past few years is seen in The Gypsum Division, whose sales have American, Europe (except Germany) and the increased share of the Cement Divi- risen 7% over the year, has been subjected in the newly industrialised countries. The sion’s income from emerging countries, to a price war in the United States and fierce German market is in deep recession, which rose 41% in 2001. competition in Germany, but enjoyed however, as are Poland and Turkey. The Aggregates and Concrete Division strong growth in Asia. Growth in sales In this context we have been able to take experienced 29% growth in sales over the peaked at 13% during the fourth quarter full advantage of our worldwide presence year, benefiting from strong demand on of the year, and a degree of recovery in in 75 countries on five continents to pursue the North American market, particularly prices was observed in the United States growth in both sales and income. in the fourth quarter, but most of all from as of September. 2 | Annual Report 2001 THE BLUE CIRCLE with success and has delivered the Group taking restructuring measures that were ACQUISITION improved visibility with corporate investors put in place to anticipate the fall-off in the and access to the most powerful stock German market and are being energeti- The acquisition of Blue Circle has been market on the planet. cally deployed, even though their impact a major landmark in the life of our Group. will not be fully felt until the German It brought with it a 35% increase in our market slump has levelled off. We are also cement production capacities and intro- 2002: PERFORMANCE continuing to position ourselves more duced 17,000 new employees on five con- AND SYNERGIES strongly in Europe and the rest of the tinents. world. The integration of Blue Circle into the The economic outlook for 2002 remains In the Gypsum Division, an upturn in Group was achieved thanks to the exem- uncertain and our view of how market prices on the United States market is under plary mobilisation of our teams who trends will evolve lacks clarity. Prudence way and we now have two new plants in reacted efficiently and in harmonious fash- is therefore still the watchword and it is the country that have become highly ion throughout the whole of 2001. The hard to make judgements about the future competitive following their start-up phase current situation of Blue Circle operations and its impact on our own activities. But in 2001. The acquisition of Continental reveals a shortfall in terms of performance, in the early months of 2002, no downturn has given our East Coast business a differ- is visible in the world’s construction ent industrial configuration which will markets, the majority of which are appar- enable us to make our network more ently well poised. competitive. 2002 should prove to be a In this context, our main priority is to transitional year for Gypsum, which realise the synergies identified during the should begin to achieve improved prof- in-depth work performed by the Blue Circle itability. integration teams. These synergies and We are aiming to return to our target finan- performance improvements, which will cial ratios by the end of 2003. This means represent over N100 million in 2002, will that for 2002, we intend to limit invest- arise from the process of consolidating our ments to a total of N1.5 billion. At the same two companies and their businesses in time, we are pursuing our asset optimi- countries where there is a joint presence, sation programme with a certain number the deployment, with the help of our tech- of ad hoc divestments. nical teams, of specific improvements that In the medium and long term, with the as we have already announced, but their have been identified, and the integration acquisition of Blue Circle and its devel- capacity for improved performance and of Blue Circle units into our performance opment in the emerging countries, our synergies exceeds our initial forecasts. Our programmes. Group is in a good position to continue target for performance improvements and We used the occasion of the Blue Circle to enjoy strong growth. The recovery of synergies stands at N215 million a year acquisition to redeploy our technical the Roofing and Gypsum businesses, hard by 2004. support network for operations, particu- hit in 2001, and the continuing consoli- larly through the creation of a technical dation of the cement and aggregates indus- centre in Asia to support our development tries will provide the Group with major SHARE PERFORMANCE - in this region with particularly strong opportunities for growth. BEST GROWTH OF CAC 40 growth potential. We are also continuing to implement The world’s financial markets demon- performance improvement programmes strated their enthusiasm for the success of in all our operations. These are systemat- our strategy as our share price rose 20% ically deployed and have allowed us to over the year – 40% above the Paris Bourse realise continuous growth of our operat- CAC 40 share index. This performance ing margins. These programmes will enabled us to correct the negative trend expand and develop through the addition that had thwarted the progress of our share of successful practices that will be trans- price the previous year.