Transcript 2002 RESULTS

2002 RESULTS
2002 A Year of Contrasts

Good growth of cash flow from operations: 17%

Successful reduction of debt by €1.5bn
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Divestments realized as planned
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Blue Circle synergies are on track and confirmed
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Market conditions weaker in H2, and especially Q4
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Significant negative currency fluctuation effect
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Provisions for competition issues
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BCI performance hindered by adverse environment
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2002 RESULTS
Key Figures
Jean-Jacques Gauthier
Executive Vice President
and Chief Financial Officer
Key Figures
€m
Sales
Operating income from
ordinary activities
Net income group share before
extraordinary provision and goodwill
2002
14 610
2001
13 698
02 - 01
+ 7%
2 132(1) 1 934(1) + 10%
914
892
+ 2%
Net income group share before
extraordinary provision
756
750
+ 1%
Net income group share
456
750
- 39%
€
Income per share
Net dividend
3.5
2.3(2)
6.0
2.3
- 41%
(1) Not including share of equity affiliates: € 131m in 2001 and € 146m in 2002
(2) Subject to approval of shareholders meeting 20/5/2003
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Divisions Contribution to Operating Income (1)
€m
Cement
Operating
income
Variation
Like for like
2002 - 2001
1 606
+ 12%
+ 3%
Aggregates & concrete
336
- 11%
- 10%
Roofing
132
+ 3%
+ 4%
Gypsum
51
NA
Holdings
7
NA
Total
2 132
+ 10%
+2%
(1) Operating income from ordinary activities
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2002 RESULTS
Divisions
Cement Operating Income (1) : + 12%
€m
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Growth from first full year consolidation of
Blue Circle
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A further improvement of underlying
operations and operating margins

Mixed markets, particularly in quarter 4

Blue Circle synergies on track, earnings
disappointing

Fuel costs reduced by 50 € cents per ton
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Negative currency fluctuation effect
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ROCE 8.4%
Operating margin 21.4%
12%
1 606
1 434
2001(2)
2002(2)
(1) Operating income from ordinary activities
(2) Not including share of equity affiliates: € 73m in 2001 and € 79m in 2002
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Cement: operating margins further progressing
despite challenging year
Lafarge without former Blue Circle operations
23,0%
23,3%
21,9%
21,0%
21,0%
21,4%
Lafarge with former Blue Circle operations (1)
1998
1999
2000
2001
2002
(1) 2001 pro forma, with 12 months BCI, comparable consolidation method for Morocco (at 50%), and new depreciation and asset life policy
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Aggregates & Concrete Operating Income (1) : - 11%
€m
-11%

Strong European results supported
by favorable price trends
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North American results impacted by
some weaker markets and a difficult
year for asphalt and paving
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ROCE 7.1%
Operating margin 6.6%
378
336
2001(2)
2002(2)
(1) Operating income from ordinary activities
(2) Not including share of equity affiliates: € 3m in 2001 and € 4m in 2002
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Aggregates & Concrete operating margins affected
by unfavorable markets
14,1%
13,0%
(1)
Aggregates
Total
6,9%
7,1%
7,2%
7,4%
6,6%
5,7%
4,2%
3,80%
Other activities
(Asphalt &
Paving...)
3,40%
Ready Mix
1998
1999
2000
2001
2002
(1) 13.2% excluding UK levy introduced in 2002
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Roofing Operating Income (1) : + 3%
€m
3%

Operating income maintained
in Germany despite further market
decline

Mixed markets across Europe
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Improvement in operating income
in the USA and continued growth in Asia
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ROCE 4.2%
Operating margin 8.6%
132
128
2001(2)
2002(2)
(1) Operating income from ordinary activities
(2) Not including share of equity affiliates: € 14m in 2001 and € 16m in 2002
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Roofing Operating Margins
13,6%
13,5%
12,1%
10,6%
8,1%
10,4%
8,6% Roofing
7,1%
5,7%
Europe
excluding Germany
Asia, America
6,5% Germany
5,1%
1998
1999
2000
2001
2002
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Gypsum Operating Income (1)
€m

North American losses reduced
significantly
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Good results in Europe except for
Germany and Poland

Asia and Australia showing further
growth

ROCE 3.6%
Operating margin 4.4%
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3
2001(2)
2002(2)
(1) Operating income from ordinary activities
(2) Not including share of equity affiliates: € 6m in 2001 and € 12m in 2002
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Gypsum Operating Margins
13,7%
10,8%
4,4%
5,1%
0,3%
1998
1999
2000
2001
2002
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Significant Debt Reduction
€m
Cash flow from operations
Changes in working capital
Sustaining capex
Free cash flow
2002
1 956
-165
-704
1 087
Development investments
Divestments
Free cash flow after investments
-809
725
1 003
Dividends
Equity issuance
Currency fluctuation impact
Other
Debt reduction
-388
256
572
44
1 487
Debt as 01.01.02
Debt as 31.12.02
11 703
10 216
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Financial Structure:
progressive improvement of financial ratios
2002
Gearing
Net debt/EBITDA
Cash Flow/Net debt
Operating income interest cover
2001
2000
110%(1) 110%
84%
3.3
4.1
2.6
19%
14%
24%
4.1
3.6
3.9
(1) Excluding extraordinary provision and currency effects, the gearing amounts to 96%
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2002 RESULTS
Bertrand Collomb
Chairman and
Chief Executive Officer
Blue Circle Operations

First full year of consolidation

Operational integration successfully realized
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Synergies delivery on track: € 117m in 2002

Bottom line performance held back by a few specific
market and operational circumstances
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Blue Circle Operations


•
Synergies
€ 117m
Negative market impact:
-€ 79m
Philippines (price not offset by volumes)
BCNA (volume NE, price SE for cement
and volumes SE for aggregates and concrete)
Malaysia (immigrants)
Operating issues:
Ravena
Start-up costs
Halkis strike
€ 10m
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Our Strengths and Weaknesses
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Geographical diversity
Growth drivers linked to GDP
Local business with worldwide
expertise
Technical performance know
how and achievements
Regional technical support
Strong cash flow generation
Value creation potential
Currency exposure limited to
accounting translation
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Profit generation stronger in
Western Europe & North
America (so exposure to
slowdown)
Time required to implement
and roll out performance
improvements
Value creation challenge in
Roofing and Gypsum
Competition issues
Currency exposure to some
volatile regions
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Confirmed Strength of Cash Flow Generation

2002
Strong cash flow generation of € 2bn
Debt reduction of € 1.5bn
Controlled capital expenditure at € 1.5bn
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2003
Maintain momentum
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Strong cash flow (performance improvement)
Divestment program
Investment limited to € 1.5bn
Return to 2000 financial structure
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Investments
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2002 Limited capital expenditure
Sustaining capital expenditure
Internal development

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€ 704m
€ 380m
USA, Poland,Morocco, China
External development
Serbia, Slovenia, South Korea
€ 429m
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2003 Limited capital expenditure
Sustaining capital expenditure
Internal & External Development

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€ 750m
€ 750m
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Divestments
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2002 Divestments € 725m
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Achieved at good prices in a challenging environment
Andalusia in Southern Spain, Brumado in Brazil
Concrete activities in Canada
2003 Continue selective asset pruning
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Competition Issues
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To be cautious,we have taken a provision for both gypsum
and German cement cases.
We have appealed the EC gypsum fine, and will discuss
fine amount for German cement
We are making sure anti-competitive practices (or the
appearance of) will not happen any more
We believe profitability is linked to concentration,
performance, differentiation and innovation.
Industry shares more and more return on capital
objectives
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OUTLOOK
Outlook
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An uncertain economic environment
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North America:
• Slight decline in cement and aggregates volumes
• Good prospects for gypsum wallboard
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Europe: soft markets, with upside in Eastern Europe and
continuing decrease in Germany
Emerging markets: continued growth
A generally positive pricing outlook, but with a few difficult
markets
Limited impact of oil prices on our fuel costs
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Outlook

We will not expect too much from the markets,
and will focus on performance improvement

We will maintain strict financial discipline
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New organization of senior management plays
on the strengths and the traditions of the Group
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Disclaimer
Lafarge is a corporation listed in the NYSE and Euronext Paris. Statements made in this
presentation that are not historical facts are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. 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; seasonality 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
Reference Document filed with the French COB under the reference number D02-162 and updated
under the reference number D02-162/A1, and its annual report on Form 20-F filed with the
Securities and Exchange Commission in the USA. 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.
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