21 February 2006

HeidelbergCement – Overview 2005

  • Turnover increased to EUR 7.8 billion
  • Expansion in markets of the future continued

In the fourth quarter, the positive trend in our major markets became stronger. HeidelbergCement was able to increase turnover and sales volumes in almost all regions. During 2005, the cement and clinker sales volumes increased by 4.9% to 68.4 million tonnes (previous year: 65.2). Welcome increases in sales volumes were achieved in North America, Northern Europe, Central Europe East and China.

Overall, Group turnover rose by 12.6% to EUR 7,803 million (previous year: 6,929). Almost half of this increase came from North America. Adjusted for exchange rate and consolidation effects, the increase amounts to 8.5%.

The complete annual accounts of HeidelbergCement will be published on 23 March 2006.

North America with the highest contribution to growth

With construction activity remaining lively, we achieved record figures in North America for sales volumes and turnover. Turnover rose by 26.1% to EUR 2,142 million (previous year: 1,699); cement sales volumes increased to 14.7 million tonnes (previous year: 13.4). We expanded our market position in the ready-mixed concrete operating line with a complete takeover of the market leader in the Houston area and Southern Texas.

In Germany, the rise of 8.7% in turnover to EUR 920 million (previous year: 846) and the increase in sales volumes are attributable to the expansion of the consolidation scope. Demand for ready-mixed concrete, concrete products and aggregates declined. In Western Europe, the decline of 3.1% in turnover to EUR 900 million (previous year: 929) was influenced by the price pressure from deliveries from Germany to the Benelux countries. Domestic sales volumes recovered pleasingly in the Benelux countries, while remaining below the previous year’s level in the United Kingdom. In the ready-mixed concrete operating line, we expanded our market position by acquiring additional participations.

Turnover in the Northern Europe region improved significantly, increasing by 11.6% to EUR 799 million (previous year: 716). Cement and clinker exports were cut back due to the heavy increase in domestic demand. In the ready-mixed concrete operating line, we expanded our market position considerably. In the countries of the Central Europe East region, turnover – supported by consolidation and exchange rate effects – rose by 29.2% to EUR 849 million (previous year: 657). The highest growth in sales volumes was achieved in Ukraine; in the Czech Republic and Romania, we were also able to increase cement deliveries considerably.

In the combined region Africa-Asia-Turkey, turnover rose by 4.9% to EUR 1,057 million (previous year: 1,007). While the cement sales volumes of our African subsidiaries recorded slight growth, our cement deliveries in Asia and Turkey did not quite reach the previous year’s level, due to declining exports.

The markets of maxit Group developed positively, with the exception of Germany. In 2005, turnover rose to EUR 1,118 million (previous year: 1,053). We achieved the strongest growth in Northern Europe. In Russia and China, we commissioned two new dry mortar plants.

Efficient structures

In the 2005 financial year, HeidelbergCement initiated extensive measures to reduce costs and increase efficiency, with the focus on Germany and Europe. Our aim is to attain cost leadership. The “win” project centres on the introduction of the new, integrated Group organisation with flat hierarchies at Group and country levels. The leadership principles adopted in connection with this project focus on the ability to put ideas into practice, speed and proximity to operating activities. As regards the restructuring measures, which should be fully implemented by the end of 2007, the Chairman of the Managing Board, Dr. Bernd Scheifele, explained, “Restructuring, cost reduction and growth strategy are directly connected. With new, more efficient structures, we are creating the organisational conditions and financial scope for long-term, high-earnings growth.”

Growth strategy continued

In the fourth quarter of 2005, HeidelbergCement continued its expansion in markets of the future. In Kazakhstan, we acquired one of the leading cement manufacturers. The expansion of the oil and gas industry leads us to expect dynamic economic development in the Central Asian country. In Ukraine, we further expanded our market position by purchasing the cement company Doncement. In addition, we strengthened our position in Northern Europe with the acquisition of a cement import terminal and a leading ready-mixed concrete company in Denmark. In September, we established a second foothold in China by founding a joint venture in the Northern Chinese province of Shaanxi.

Prospects 2006

The economic environment remains generally positive for 2006. In Europe, the upward trend in the euro zone is supported by the increasing recovery of domestic demand and rising exports. In Eastern Europe, the economy is experiencing strong growth; the burden of high energy prices could have a dampening effect. In the US, economic development remains on an upward trend despite a slight weakening. The emerging countries in Asia are likely to experience above-average growth rates once again.

Thanks to our progress in improving efficiency and competitiveness, we expect a further noticeable improvement in turnover and results for HeidelbergCement this year.

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Andreas Schaller

Group Spokesman, Director Group Communication & Investor Relations
+49 6221 481 13249
+49 6221 481 13217
HeidelbergCement AG
Berliner Straße 6
69120 Heidelberg