1

GROUP PRESENTATION
1.3Overview of operations

A WORLD

LEADER
(December31, 2014)

CEMENT

8,545
revenue

million euros

37,000
employees
(27,000 without
jointventures)

Blasting
1

Quarry

Crusher

Grinder

55

countries

4
Preheating

Kiln

Cooler

149

production sites

Clinker storage

7
Boat

Additives

6 Grinder
Storage Silos

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Lafarge - Registration Document 2014

Rail
Truck

GROUP PRESENTATION
1.3Overview of operations

1.3.1 CEMENT
Cement production historically represents the Lafarge core business.
Cement is the principal hydraulic binder. It is the principal strengthgiving and property-controlling component of concrete. It is a high
quality, cost-effective building material that is a key component of
construction projects throughout the world.

An average breakdown of the production cost of cement (before

distribution and administrative costs) is approximately: energy 30%,
raw materials and consumables 32%, labor, maintenance and other
production costs 26%, and depreciation 12%.
See paragraph Customers, products and services on page36.

On the basis of both internal and external research, taking into account
Revenue, production capacity, geographical positions, technological
development and quality of service, Lafarge is a global leader in cement
production.

c) The cement industry

a) Profile

Today, there are several multinational cement companies, including,

other than Lafarge, Holcim (Switzerland), HeidelbergCement
(Germany), Italcementi (Italy), Buzzi Unicem (Italy), Cemex (Mexico),
Taiheiyo (Japan), Camargo Corra and Votorantim (Brazil), and many
smaller international corporations. Most of the major international
cement companies implemented cost reduction plans and focus on
internal growth. There are also well-positioned national and regional
producers alongside multinational corporations.

At year-end2014, Lafarge operated, 112 cement plants and

37grinding plants in 55 countries, with an annual production capacity
of 215million tonnes (total capacity of the entities consolidated by
Lafarge, of which 165million tonnes after deduction of capacities
operated in the framework of joint ventures). Consolidated sales for
2014 reached 116.4million tonnes (compared with 114.4million
tonnes in 2013 restated to reect the application from January1, 2014
of the new IFRS11 accounting standard on joint arrangements).

b) Production process
The raw materials needed to make cement are calcium carbonate,
silica, alumina and iron ore. These are usually present in limestone,
chalk, marl, shale and clay.
These raw materials are crushed, then ground up and mixed in the
appropriate proportions. The resulting mixture is then put into a rotary
kiln and heated to approximately 1,500C to produce clinker. The
clinker is nely ground with gypsum to make cement.
It is also possible to substitute other ingredientssuch as limestone,
ground slag (by-product of steel manufacturing), y ash (created when
coal is burned in thermal power plants), or pozzolan (volcanic slag)
for certain raw materials or to add these ingredients at the end of
the manufacturing process. This technique makes it possible to cut
energy bills and CO2 emissions and to broaden the range of products.
See Section1.2.3.b) (Becoming increasingly competitive through
performance) for further information on lowering energy costs and
improving the cement/clinker ratio.

The cement industry is capital intensive: construction of a new

production line represents more than two years of its full capacity
sales. As a result, the cement industry saw a trend toward concentration
beginning in the 1970s.

In 2014, local players based in emerging countries continued to gain

strength. Chinese giants CNBM and ANHUI CONCH do not have any
presence outside China.

d) Markets
Emerging markets (Central and Eastern Europe, Asia, Middle East &
Africa, Latin America) currently represent 90% of the worldmarket,
while North America and Western Europe make up the remaining
10%. Lafarge has a large presence in each of these markets, in erce
competition with other international cement companies and local
producers.
Over the past twenty years, worldwide cement consumption has
signicantly increased with an average rate of growth above 5% per
year. Despite the economic and nancial situation, global cement
demand grew by approximately 3% in 2014, supported by the
dynamism of many emerging markets, particularly China and SubSaharan Africa and the progressive recovery in the United States.
Mid and long-term prospects for cement demand remain favorable,
especially in these markets, where demography, urbanization and
economic growth drive the needs for housing and infrastructure.

EVOLUTION OF THE GLOBAL CEMENT MARKET

3,960

Million tonnes

4,060

3,710
3,540

ar
5% / ye

3,290
2,980
2,740 2,800
2,500
2,300

2,100

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

1,900

2003

1,800

2002

2001

2000

1999

1,620
1,495 1,570

1998

1997

1,420 1,470

1996

1995

1994

1,300 1,350

1,700

Analyse Lafarge

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GROUP PRESENTATION
1.3Overview of operations

e) Location of our cement plants and markets

Cement is a product that is costly to transport over land. Consequently,
the radius within which a typical cement plant is competitive extends for
no more than 300 kilometers for the most common types of cement(1).
However, cement can be shipped more economically by sea and
inland waterway over great distances. The location of a cement plant
and the cement transportation cost signicantly affect the plants
competitiveness. Lafarge establishes its plants near its clients as far
as possible.

f) Customers, products, and services

Lafarge produces an extensive line of cements and hydraulic
binders, ranging from Portland cements and classic masonry
cements to specialized products for different types of environments
(e.g., environments exposed to seawater, sulfates and other harsh
natural conditions, in which case cements with high slag or pozzolan
content provide greater durability) and products intended for specic
applications (e.g.white cement, oil-well cements, road surfacing
binders, etc.).

These products are designed for all segments of the construction

and public works industries: construction/public works companies,
manufacturers (producers of ready-mix concrete and prefabricated
products), and the general public, via retailers.
These products go hand-in-hand with certain complementary services,
such as technical support, order and delivery logistics, documentation,
and demonstrations and training related to the characteristics and
proper use of cement.
The quality and consistency of the products, as well as the reliability of a
producers deliveries and related services represent major competitive
advantages. Lafarge makes every effort to meet its customers
expectations in these areas.

g) Breakdown by regions
Lafarge produces and sells cement in the regions and countries listed
in the tables below.
The following presentation shows, for each region, the percentage
contribution to 2014 cement Revenue ineuros, as well as the number
of plants operated, cement production capacity, and approximate
market share in each country over the year ending December31, 2014.

REVENUE CEMENT ACTIVITY 2014

In the following section, stated production capacities are reported
on the basis of 100% of operating plants of companies controlled by
Lafarge and joint ventures in the indicated countries, irrespective of the
percentage of ownership. Volumes sold are reported by origin before
elimination of intra-group sales.

6 1

REVENUE 2014
3

(1) G4-DMA: transport.

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Lafarge - Registration Document 2014

1. Western Europe
2. North America
3. Central and Eastern Europe
4. Middle East and Africa
5. Latin America
6. Asia

13%
14%
9%
36%
6%
22%

The approximate market share has been calculated per country based
on information contained in the Industrial Building Materials Sector
report published by Jefferies in June2014 (the Jefferies Report)
and internal estimates.

GROUP PRESENTATION
1.3Overview of operations

WESTERN EUROPE (13% OF THE CEMENT ACTIVITY 2014 REVENUE)

NUMBER OF

Country

Cement plants

Grinding plants

Cement production
capacity
(million tonnes)

France(1)

10.6

34

Greece

6.8

50

Spain

6.0

10

United Kingdom(1)

4.6

40

Germany(1)

3.7

10

French West Indies

0.7

100

21

10

32.4

TOTAL WESTERN EUROPE

Approximate
market share
(%)

(1) See Section1.2.7 for more information on disposals proposed in the framework of the merger project.

Lafarge disposed of one cement grinding station in French Guyana in 2014.

In the United Kingdom Lafarge operates through a 50/50 joint venture co-owned by Lafarge and Anglo American.

NORTH AMERICA (14%OF THE CEMENT ACTIVITY 2014 REVENUE)

NUMBER OF

Country
United States
Canada
TOTAL NORTH AMERICA

Cement plants

Grinding plants

Cement production
capacity
(million tonnes)

10.7

21(1)

5.8

33

12

16.5

Grinding plants

Cement production
capacity
(million tonnes)

Approximate
market share
(%)

(1) For our relevant markets.

CENTRAL AND EASTERN EUROPE (9% OF THE CEMENT ACTIVITY 2014 REVENUE)
NUMBER OF

Country

Cement plants

Approximate
market share
(%)

Poland

5.7

20

Romania(1)

4.9

31

Russia

3.7

Austria

2.0

32

Serbia

2.0

45

Moldova

1.4

62

Czech Republic

1.2

Hungary

1.0

20

Slovenia

0.6

38

14

22.5

TOTAL CENTRAL
AND EASTERN EUROPE

(1) See Section1.2.7 for more information on disposals proposed in the framework of the merger project.

In Russia, Lafarge inaugurated in the Moscow area a brand new integrated dry process plant (2million tonnes capacity) in the second quarter
of 2014 and in the fourth quarter of 2014, disposed of one wet process plant in the Urals region.

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GROUP PRESENTATION
1.3Overview of operations

MIDDLE EAST AND AFRICA (36% OF THE CEMENT ACTIVITY 2014 REVENUE)
NUMBER OF

Cement plants

Grinding plants

Cement production
capacity
(million tonnes)

Egypt

10.0

15

Algeria

9.4

36

Morocco

6.8

43

Iraq

5.8

24

Nigeria

5.7

32

Jordan

4.8

33

South Africa

3.6

17

United Arab Emirates

3.0

Syria

2.6

23

Kenya

2.0

48

Cameroon

1.7

92

Zambia

1.3

75

Uganda

0.8

62

Benin

0.7

37

Zimbabwe

0.5

38

Tanzania

0.3

22

Malawi

0.2

76

25

59.2

Country

TOTAL MIDDLE EAST AND AFRICA

Approximate
market share
(%)

Lafarge develops its Cement Business through joint ventures in Morocco (50%), the United Arab Emirates (50%) and Benin (50%).
Lafarge also has two interests consolidated by the equity method:

Z in Nigeria, a 35% stake in Unicem (2.5million tonnes capacity plant);

Z in Saudi Arabia, a 25% stake in Al Safwa Cement, which operates a 2million tonnes capacity plant.
LATIN AMERICA (6% OF THE CEMENT ACTIVITY 2014 REVENUE)
NUMBER OF

Cement plants

Grinding plants

Cement production
capacity
(million tonnes)

Brazil(1)

7.1

TOTAL LATIN AMERICA

7.1

Country

Approximate market
share
(%)
11-12(2)

(1) See Section1.2.7 for more information on disposals proposed in the framework of the merger project.
(2) For our relevant markets.

In the fourth quarter of 2014, Lafarge sold its cement operations in

Ecuador to Union Andina de Cementos S.A.A. (1.4million tonnes
capacity).

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Lafarge - Registration Document 2014

In 2014, Lafarge disposed of its entire stake (47%) in its joint venture
with Elementia in Mexico (three plants serving the Mexico City area).

GROUP PRESENTATION
1.3Overview of operations

ASIA (22% OF THE CEMENT ACTIVITY 2014 REVENUE)

NUMBER OF

Cement plants

Grinding plants

Cement production
capacity
(million tonnes)

20

31.6

6-22(1)

Malaysia

12.5

37

South Korea

9.6

13

India

11.0

20(2)

Philippines(3)

6.5

33

Pakistan

2.1

Indonesia

1.6

Bangladesh

1.6

Vietnam

0.5

35

12

77.0

Country
China

Total Asia

Approximate market
share
(%)

(1) Depending on the regions in which Lafarge is operating.

(2) For our relevant markets.
(3) See Section1.2.7 for more information on disposals proposed within the framework of the merger project.

In China, Lafarge operates through a joint venture with Hong Kong

based company Shui On. This joint venture is currently the market
leader in South-west China (Sichuan, Chongqing, Guizhou and
Yunnan).
The Cement business in Bangladesh is held through a joint venture
with Cementos Molins (Spain).

CEMENT TRADING ACTIVITIES

Lafarge also manages worldwide cement trading activities, which
helps it to meet uctuations in demand in certain countries without
building plants that may result in excess capacity. Lafarge conducts
these activities primarily through its subsidiary Cementia Trading. In
addition, another subsidiary, Marine Cement. acts as an importer and
distributor of cement in the Indian Ocean and the Red Sea countries.

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