Lafarge: First Quarter Results as at March 31, 2008

Business Wire,  May 7, 2008  

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STRONG INCREASE IN FIRST QUARTER EARNINGS

* NET INCOME UP 49% EXCLUDING 2007 CAPITAL GAINS ((1))

* RESULTS UP 70% IN EMERGING MARKETS

PARIS -- Lafarge (Paris:LG):

KEY FIGURES UP SHARPLY

[TABLE OMITTED]

HIGHLIGHTS FOR THE FIRST QUARTER OF 2008

* Strong contribution from emerging markets, where trends are very positive overall. 70% increase in current operating income in emerging markets in the first quarter.

* Increase in our results in developed markets, despite the slowdown in the US and Spain.

* Very strong cost reductions, producing results in all countries and businesses.

* The Orascom Cement acquisition, effective since January 23 2008, contributed to the strong increase in earnings. The merger with Orascom Cement is progressing fast and well.

* At the end of March, the Group's balance sheet reflects the financing of the Orascom Cement acquisition.

OUTLOOK

* We maintain our positive overall market outlook for the full year.

* The fundamentals of our sector remain sound, and Lafarge is well armed to make the difference in 2008. There are still considerable construction and infrastructure needs in emerging markets. We anticipate further growth in world demand for cement, driven by growth in emerging markets, despite weak demand in the US and the slowdown in Spain.

* We foresee another year of growth in our Aggregates & Concrete business, with a strong increase in emerging markets in particular.

* We anticipate further increases in energy and transportation costs.

* The cost reduction program will continue to generate substantial savings in 2008. The initial target of EU340 million will be exceeded and should reach EU400 million by the end of 2008.

* We expect another increase in our earnings in 2008, a significant step in the achievement of our 2010 targets of earnings per share of more than EU15, return on capital employed after tax of more than 12% and free cash flow of more than EU3.5 billion.

(1) Disposals in the 1(st) quarter of 2007 of the Roofing business and our Cement and Aggregates & Concrete operations in Central Anatolia, Turkey.

CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31, 2008

[TABLE OMITTED]

(1) Excluding the impact in 2007 of the disposal of the Roofing business and our Cement and Aggregates & Concrete operations in Central Anatolia, Turkey, for 261 MEU.

CURRENT OPERATING INCOME AS AT MARCH 31, 2008

EU m                         Q1  >        >


                           2007  >        >    2008

Change
Cement                      298  >        >     469

+ 57%
Aggregates & Concrete    18  >        >      26

+ 44%
Gypsum                       46  >        >      20

- 57 %
Other                      (17)  >        >     (3)


TOTAL                       345  >        >     512

+ 48 %

HIGHLIGHTS BY BUSINESS

CEMENT

* Sales up: +16% to EU2,554 million (+9% at constant scope and exchange rates)

* Current operating income up strongly: +57% to EU469 million (+32% at constant scope and exchange rates)

* Solid growth in emerging markets, which generated 75% of the business's income, with particularly remarkable growth in Central and Eastern Europe and Asia, and the contribution of Orascom Cement's operations

* Very positive pricing trends in a climate of rising energy costs

* Positive impact of the cost reduction program in all regions

* Resilience of our operations in North America despite lower volumes in the US.

* Solid contribution from Orascom Cement operations, consolidated as from end-January 2008.

AGGREGATES & CONCRETE

* Sales slightly down: -3% to EU1,234 million

* Current operating income up: +44% to EU26 million

* Growth in operating income driven by price increases and cost reductions, despite lower volumes in the first quarter due to the slowdown in the US and poor weather conditions in certain markets.

* Continuing development of value-added concrete products, which accounted for 23% of volumes in the first quarter of 2008, compared to 20% over the same period in 2007.

GYPSUM

* Sales down: -4% to EU398 million

* Current operating income down: -57% to EU20 million, affected by the slowdown in the US residential market.

* Elsewhere, higher energy costs offset by price increases.

INVESTMENTS AND DIVESTMENTS

* Sustaining capital expenditure was stable at EU165 million in the first quarter of 2008.

* Development capital expenditure to increase production capacity totaled EU244 million. These investments were related in particular to the construction of new cement capacity in Morocco, China, Zambia, Indonesia, India, Ecuador, the US, South Africa, Chile, Cameroon, Russia and Poland, as well as in those countries where Orascom Cement is present.

* Acquisitions consisted mainly of the acquisition of Orascom Cement, effective as of January 23 2008. The total acquisition price amounted to 8,3 billion euros and was financed through the issuance of 22.5 million shares for 2.5 billion euros and a syndicated credit facility.