4 May 2005

HeidelbergCement – Interim Report January to March 2005

– Extract –

  • Turnover at the previous year’s level
  • Strong adverse seasonal effects in Europe
  • Double-digit growth in North America
  • Cartel Office authorises acquisition of Teutonia
  • Moderate increase in sales volumes and slight rise in turnover expected for 2005
  • Improvement of equity ratio to approx. 40% after successful capital increase

Overview January – March 2005

EURm20042005
Turnover1.3471.355
Operating income before depreciation (OIBD)9085
Operating income-33-35
Additional ordinary result18-21
Results from participations211
Earnings before interest and income taxes (EBIT)-13-44
Result before tax-83-99
Loss for the financial year-60-96
Group share-58-105
Investments84140

The international economic growth has weakened slightly in recent months. However, the US and China continue to provide the strongest impetus. In the EU countries, the considerable slowdown in the economic dynamics was partly caused by the heavy increase in raw material prices. The severe winter impaired major parts of Europe in the first quarter. In Germany the growth forecast was lowered significantly as a result of the continuously weak domestic economy and the strong euro.

In the first quarter, turnover increased slightly in comparison with the previous year by 0.6% to EUR 1,355 million (previous year: 1,347). Welcome growth in turnover was achieved in Northern Europe, Central Europe East and North America. In North America, turnover in US dollars increased by around 17%. Excluding currency and consolidation effects, Group turnover rose by a total of 0.8% in comparison with the previous year.

At EUR 85 million (previous year: 90), operating income before depreciation (OIBD) was 5.4% below the previous year’s value. In the first quarter, operating income decreased by 6.6% to EUR -35 million (previous year: -33). The positive contribution to results made by North America and Africa-Asia-Turkey was counterbalanced by the effects of unfavourable weather conditions in Europe. The additional ordinary result of EUR -21 million (previous year: 18) essentially results from taking into account the prepayment penalty for the redemption of 35% of our high yield bond. The financing costs will decrease in the following years accordingly. Our participation Vicat exerted a considerable influence on the results from participations, which amounted to EUR 11 million (previous year: 2).

The financial results improved by EUR 16 million to EUR -54 million (previous year: -70). This was primarily due to the fact that unlike in the previous year Indocement incurred no foreign exchange losses.

Loss before tax amounts to EUR -99 million (previous year: -83). In accordance with the revised German tax laws, no tax assets resulting from losses were recognised. Consequently, in the first quarter of 2005, the tax income decreased by EUR 21 million to EUR 2 million (previous year: 23). As a result of the positive development of Indocement’s profit for the financial year, the minority interests total EUR 8 million (previous year: -1). The Group share amounts to EUR -105 million (previous year: -58).

Acquisition of Teutonia successfully completed

Following the conclusion of the public tender offer for Teutonia Zementwerk AG, Hanover, HeidelbergCement now holds 131,164 ordinary shares and 68,541 preference shares. This corresponds to around 99% of the voting rights and 92% of the share capital. The Cartel Office’s authorisation for the acquisition of Teutonia was issued on 28 April 2005.

Change in the Supervisory Board

On 6 April 2005, Mr. Gerhard Hirth was appointed member of the Supervisory Board, as a shareholder representative, by resolution of the Local Court (Amtsgericht) in Heidelberg. He succeeds Dr. Bernd Scheifele, who was appointed Chairman of the Managing Board of HeidelbergCement effective 1 February 2005.

Further development of the corporate and management structure

In line with the personnel changes in the Managing Board, some of the responsibilities within the Managing Board were also redistributed. In addition to Central Europe West and Central Europe East, Andreas Kern is now also responsible for the United Kingdom and Northern Europe. Furthermore, Dr. Lorenz Näger was assigned responsibility for maxit Group.

We have appointed the management consultancy firm Boston Consulting to examine the organisational structure for Europe and to develop a transparent and efficient structure for the European regions.

In addition, the decision has been made to move the Group departments Strategy & Development, Internal Audit and Finance & Treasury from Brussels and Malmö respectively to Heidelberg. The administrative locations in Malmö and Singapore are to close. The responsibilities assigned to Singapore will, in future, be handled directly by our operating units in Asia. A decision will be made regarding the administrative location in Brussels following the conclusion of a detailed investigation.

Cement and clinker sales volumes

In the first quarter of 2005, cement and clinker sales volumes decreased by 2% to 12.7 million tonnes (previous year: 12.9). In most regions, sales volumes were adversely affected by the severe winter. We were able to achieve increases in sales volumes in North America, Northern Europe and Africa-Asia-Turkey. Excluding consolidation effects, the decline amounted to 3.7%.

Prospects

Despite a weak first quarter, we expect moderate increases in sales volumes and turnover in the current financial year. Once again, North America and the growth markets will provide strong impetus. Germany, where construction sector capital spending is continuously decreasing, will undoubtedly remain weak.

We will focus on increasing efficiency and reducing costs in all areas, not just in the plants but also in the central functions. We will also reduce costs in the finance area.

We will continue to participate in the process of consolidation that is taking place in the international cement sector, directing our attention towards small or medium-sized acquisitions. Our aim is to further improve our existing market positions.

6,300 characters

Andreas Schaller

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

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