Operating income reaches third-quarter record. Board declares quarterly cash dividend
Lafarge North America Inc, the leading supplier of construction materials in the US and Canada, today reported third-quarter 2003 net income of $225.3m, or $3.04 per share diluted. These results include $78m, or $1.05 per share diluted, from cement-related divestment gains and discontinued operations. The results compare with third-quarter 2002 net income of $142.9m, or $1.94 per share diluted, which included $2.8m, or $0.04 per share diluted, from cement-related discontinued operations. Excluding the effects of divestment gains and discontinued operations, net income during the quarter increased 5 percent compared with last year. All business segments reported higher operating income year-over-year as volumes rebounded in response to more seasonal weather conditions, many product lines experienced price gains, and cost performance continued to improve. In addition, the company's gypsum operations returned to profitability during the quarter. The strengthening of the Canadian dollar contributed approximately $11m to operating income during the quarter, but this favorable effect was largely offset by increased pension and energy costs.
"We are pleased with the improvement in our operating performance this quarter," said Philippe Rollier, president and chief executive officer of Lafarge North America. "As we expected, we began to recover volumes associated with projects that had been delayed earlier in the year due to poor weather. Generally high levels of construction activity, combined with contributions from our performance improvement programs and a strong Canadian dollar, produced record earnings for the company during the quarter."
Net sales from continuing operations were up 8 per cent over last year to $1,163m. Excluding the favorable impact of the stronger Canadian dollar, net sales were 3 per cent higher than last year. The company completed the previously announced sale of its Florida cement operations in August 2003, resulting in an after-tax gain of $57.8m, or $0.78 per share diluted. The company also realized an after-tax gain of $18.9m, or $0.25 per share diluted, in connection with the relocation of its cement terminal in Detroit, Michigan.
Operating income during the third quarter from cement and cement-related product continuing operations improved 2 per cent to $138m from $135.2m in the third quarter 2002. The results reflect increased sales volumes, decreased fixed manufacturing costs and a stronger Canadian dollar, partially offset by increased pension expenses. In addition, the cost of waste fuels and electricity were higher compared to the same period in 2002. Net sales, excluding Lafarge Florida, were $414m, an increase of 7 per cent compared with the third quarter 2002. Excluding the favorable impact of the exchange rate, revenues were up 4 per cent from the same period last year.
Total cement sales volumes during the quarter, excluding Lafarge Florida, were 3 per cent higher compared with last year. US volumes were up 1 per cent to 3.4Mt and Canadian volumes were up 9 per cent to 1.2Mt. Average prices in Canada were up compared to the same period in 2002 due to price increases implemented earlier this year. Average US price levels declined modestly compared with last year due to competitive activity in several markets. Following the trend established during the first half of the year, fixed manufacturing costs, primarily at the Sugar Creek, Missouri, and the Bath, Ontario, plants were lower than during the third quarter 2002.