Lafarge (company)

Lafarge S.A.

Type	Société Anonyme
Traded as	Euronext: LG
Industry	Building materials
Founded	1833 (1833)
Headquarters	Paris, France
Key people	Bruno Lafont (Chairman and CEO)
Products	Cement, Construction aggregates, asphalt production and concrete
Revenue	€12,843 million (2014)[1]
Operating income	€ 1,881 million (2014)[1]
Total assets	€34,804 million (end 2014)[1]
Number of employees	63,000 (end 2014)[1]
Website	www.lafarge.com

Lafarge is a French industrial company specialising in three major products: cement, construction aggregates, and concrete. The company has become a world leader in building materials.

History

Lafarge was founded in 1833^[2] by Joseph-Auguste Pavin de Lafarge in Le Teil (Ardèche), to exploit the limestone quarry in Mont Saint-Victor between Le Teil and Viviers. The limestone is white and argillaceous, and yielded an eminently hydraulic lime.

In 1864 Lafarge signed its first international contract for the delivery of 110,000 tonnes of lime to the Suez Canal construction project.^[2] In 1980 Lafarge joined with the Belgian coal, coke and fertilizer company Coppée to become SA Lafarge Coppée.

Lafarge purchased a plant from the National Gypsum Company in early-1987.^[3] Ten years later, it bought Redland plc, a leading British quarry operator.^[4]

In 1999, Lafarge acquired 100% shareholding in Hima Cement Limited, the second-largest cement manufacturer in Uganda, with installed capacity of 850,000 metric tonnes annually, as of January 2011.^[5] In 1999, Lafarge entered the Indian market through its cement business,with the acquisition of Tata Steel's cement activity.This acquisition was followed by the purchase of the Raymond Cement facility in 2001.^[6] In 2001, Lafarge, then the world's second largest cement manufacturer, acquired Blue Circle Industries (BCI), which at the time was the world's sixth largest cement manufacturer, to become the world leader in cement manufacturing.^[2]

In 2006, Lafarge North America shareholders accepted a $3 billion tender offer from Lafarge Group which gave the parent company full control over the North American business, removing LNA from the New York Stock Exchange. Previously the Group had owned 53% of LNA shares.^[7]

In 2007, it divested its roofing division, selling it to a private equity group in a deal that resulted in Lafarge retaining a 35% equity stake.^[2]

In December 2007, Lafarge announced the purchase of the Orascom Cement Group, an Egyptian based cement producer with operations across Africa and the Middle East, from Orascom Construction Industries (OCI).^[8]

On May 15, 2008 Lafarge acquired Larsen & Toubro Ready Mix-Concrete (RMC) business in India for $349 million.^[9]

In 2010, Lafarge strengthened its presence in Brazil (agreement with Lafarge and STRABAG to create a common company in Cement in Central Europe).

In 2011, Lafarge SA announced it would build a cement plant in Langkat, North Sumatra, Indonesia with investment up to Rp 5 trillion ($585 million).^[10]

Lafarge launched three plants in Hungary, Syria and Nigeria and created a joint-venture with Anglo American in the United Kingdom.

The Group sold most of its European, South American, Asian and Australian gypsum operations.^[11][12][13]

In April 2013, Lafarge adopted a new brand baseline "Building better cities".^[14] It reflects the Group’s ambition to contribute to the improvement of cities by developing innovative construction products, solutions and systems. Lafarge’s contribution to better cities addresses some key challenges of urbanization:^[15]

• contribute to more housing in cities;
• contribute to more compact cities;
• contribute to more durable cities;
• contribute to more connected cities;
• contribute to more beautiful cities.

In September 2013, Lafarge agreed to the sale of its 53.3 per cent stake in its Honduras subsidiary Lafarge Cementos SA de CV to Cementos Argos for €232m.^[16]

Proposed merger

On April 7, 2014, Lafarge and Holcim announced they had agreed to terms on a "merger of equals".^[17] The exchange ratio will be based on 9 Holcim shares for 10 Lafarge shares.^[18] The new company would be based in Switzerland and have a manufacturing capacity of 427 million tons a year would vastly exceed the 227 million ton capacity Anhui Conch, the current industry leader in that category.^[19] Lafarge Chief Executive Officer Bruno Lafont and Holcim's Chairman Wolfgang Reitzle will be co-Chairmen of the new Group. ^[20] Eric Olsen, current Lafarge Executive Vice-President, in charge of Operations will be the future CEO of the new Group. ^[21] Executives from both companies said the deal would save the new company 1.4 billion euros (US$1.9 billion) annually and create "the most advanced group in the building materials industry."^[19]

The deal will face significant regulatory obstacles, as 15 different jurisdictions could potentially raise objections. The cement market in Europe is already tightly consolidated and antitrust scrutiny of deals has been commonplace since the 1970s.^[19] To meet regulatory concerns, Holcim and Lafarge plan to sell or spinoff assets that generated about 5 billion euros (US$6.9 billion) of revenue in 2013 in areas of large overlap between the two companies.^[20] Lafont said the merger was aimed at rebalancing operations, not cutting costs. He said overlapping businesses would be sold, not closed, so industry job losses would be minimal.^[19]

Industry analysts said the deal would combine Holcim's marketing strength with Lafarge's edge in innovation, while providing significant cost savings, but cautioned "the road to merger clearance will be a long, complex and uncertain one."^[22] Others said the deal could lead to further mergers within the industry and give competitors a chance to pick up assets at a bargain price.^[20] Most analysts surveyed by Reuters felt the merger would be approved in the end.^[22]

Environmental concerns

On July 11, 2008, the Albany Times Union reported that Lafarge's Ravena, New York plant "was the greatest source of mercury emissions in New York from 2004 to 2006" ^[23] According to the story, plans have been made to upgrade the plant to reduce the mercury emissions. A second story, published the following day, stated that the factory had emitted 400 pounds (181 kg) of mercury annually from 2004 to 2006.^[24] In November 2010 Lafarge, together along with other companies, opposes new EPA regulations that require mercury-emissions reductions at cement plants.^[25] Preliminary data published by the EPA for the year 2009 showed 145 pounds of mercury were recorded for the Ravena plant (total on- and off-site disposals). The plant has continued to perform within permitted limits.^[26]

In July 2013, the New York State Department of Health (NYS DOH), in partnership with the federal Agency for Toxic Substances and Disease Registry, completed a public health assessment for communities near the Lafarge Cement Plant in Ravena, New York.^[27]

Major findings and results from the NYS DOH Lafarge Cement Plant Health Assessment:

• Breathing the ground-level air concentrations of metals (e.g., mercury), polycyclic aromatic hydrocarbons, polychlorinated biphenyls, carbon monoxide, lead, particulate matter, dioxins, furans, hydrocarbons, volatile organic compounds and ammonia released in cement kiln stack emissions is not expected to harm people's health.
• For the general public, breathing ground-level air concentrations of sulfur dioxide or nitrogen dioxide released in the kiln stack emissions is not expected to harm people's health.
• Touching, breathing or accidentally eating dust that originated from the Ravena cement plant and other sources is not expected to harm the health of people who reside, work, or attend school in the community.
• Current health status of the communities near the cement plant is similar to the health status of other areas in the region and state.

On July 23, 2013, under an agreement with the U.S. Environmental Protection Agency, the U.S. Department of Justice and the state of New York, Lafarge North America Inc. agreed to fund $1.5 million in projects to reduce air pollution in the community surrounding its Ravena, New York cement plant.^[28] The agreement also amends a March 2010 consent decree that the federal Environmental Protection Agency, New York and 11 other states entered into with Lafarge requiring the company to limit pollutant emissions from its 13 plants nationwide.^[29]

Under the agreement, Lafarge North America will adhere to an updated schedule that provides Lafarge an additional 18 months to finish construction of a new modernized facility by July 1, 2016. At that time, the existing Ravena plant - which remains in compliance with all current environmental requirements - will be taken offline.^[30]

Details of the agreement include that Lafarge North America will:

• Invest $1.5 million in projects benefiting the local environment;
• Make additional improvements to the environmental infrastructure at the existing Ravena plant;
• Adopt new, stricter emission limits for SO2 and Hg; and
• Set a strict, new timetable complete the Ravena plant modernization project.

The group

The group conducts its operations through more than 1,000 subsidiaries, out of which 82% are consolidated. Further to the divestment of a majority of its gypsum assets and the fundamental changes to its management structure, the group has fully refocused on its core businesses of cement, aggregates and concrete. The strategic shift will accelerate growth and innovation.

It has an organizational structure based on its three divisions, with decentralized local operations and strong corporate expert departments, which are involved in strategic decisions.

• Cement: Lafarge has 149 sites in 55 countries
• Aggregates and Concrete: 1,463 production sites and sales offices in 37 countries

The headquarters of the group are based in Paris (France).

Management team

In November Lafarge announced its new organization project focused on its markets and its clients, designed to accelerate the Group’s development and profitability. The product line-based organization is replaced with a country-based organization. This included the removal of a layer of management and the resulting reorganization of the executive committee. Since January 2012.^[31]

• Bruno Lafont, Chairman and Chief Executive Officer
• Sonia Artinian, Executive Vice-President Organization and Human Resources
• Jean Desazars de Montgailhard, Executive Vice-President Strategy and Development
• Thomas Farrell, Executive Vice-President Operations
• Jean-Jacques Gauthier, Executive Vice-President Finance
• Christian Herrault, Executive Vice-President Operations
• Peter Hoddinott, Executive Vice-President Performance
• Gérard Kuperfarb, Executive Vice-President Innovation
• Eric Olsen, Executive Vice-President Operations
• Alexandra Rocca, Executive Vice-President Communications, Public Affairs and Sustainable Development
• Guillaume Roux, Executive Vice-President Operations

Board of directors

The board of directors of Lafarge has 16 members appointed by the annual shareholders' meeting for a period of four years:^[32]

• Chairman of the Board of Directors and Chief Executive Officer: Bruno Lafont
• Vice-Chairman of the Board of Directors: Oscar Fanjul
• Directors: Philippe Charrier, Philippe Dauman, Paul Desmarais (fils), Juan Gallardo, Ian Gallienne, Mina Gerowin, Jérôme Guiraud, Luc Jeanneney, Gérard Lamarche, Hélène Ploix, Baudouin Prot, Christine Ramon, Michel Rollier, Nassef Sawiris, Ewald Simandl, Véronique Weill.
• Honorary Chairman: Bertrand Collomb

Former members of the Board: Guilherme Frering, Raphaël de Lafarge, Michael Blakenham, Jean-Pierre Boisivon, Alain Joly, Bernard Kasriel, Jacques Lefèvre, Eric de Waubert de Genlis, Michel Pébereau, Pierre de Lafarge, Gérald Frère, Michel Bon, Thierry de Rudder, Colette Lewiner.

Financial data

The following is a summary of data:^[33][34][35]

Financial data in millions of euro

Year	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014
Sales	13,698	14,610	13,658	14,436	15,969	16,909	17,614	19,033	15,884	14,834	15,284	15,816	15,198	12,843
EBITDA	2,862	3,101	2,820	3,028	2,920	3,610	4,183	4,618	3,600	3,614	3,217	3,450	3,102	2,721
Net results	750	446	728	868	1,096	1,372	1,909	1,598	736	827	593	432	601	143
Net debt	9,332	8,544	6,734	7,017	7,221	9,845	8,685	16,884	13,795	13,993	11,974	11,317	10,330	9,310
Staff	82,892	77,547	75,733	77,075	80,146	82,734	77,720	83,440	77,994	75,680	68,000	65,000	64,000	63,000

See also

Main Lafarge competitors are:

• Holcim
• Eurocement group
• Cemex
• HeidelbergCement
• Italcementi
• CRH plc
• Unibeton Ready Mix

External links

• Official website
• Lafarge Nigeria

References

CAC 40 companies of France (Last update 23 March 2015) Accor Air Liquide Airbus Group Alcatel-Lucent Alstom ArcelorMittal AXA BNP Paribas Bouygues Capgemini Carrefour Crédit Agricole Danone EDF Essilor GDF Suez Kering L'Oréal Lafarge Legrand LVMH Michelin Orange Pernod Ricard Peugeot Publicis Renault Safran Saint-Gobain Sanofi Schneider Electric Société Générale Solvay Technip Total Unibail-Rodamco Valeo Veolia Environnement VINCI Vivendi