Dyckerhoff’s 2005 outlook

According to work done by analysts at Exane BNP Paribas, Dyckerhoff?s outlook for 2005 is positive as the Group confirmed its target of EUR1.3bn sales for the year (vs. EUR1.2bn in 2004) and its outlook about a ?significantly improved net profit from operating activities?

The Group expects further cost and debt reduction, an increase in demand in all markets, except Germany, price increases in most markets and a further step up of recovery of German prices.

Dyckerhoff reduced its net debt to EUR458m according to its methodology and to EUR928m according to the analysts calculation, taking into account EUR262m of pension provision and the EUR210m mezzanine financing. We estimate this represents gearing of 88% (vs 102% in 2003). Even though small-sized acquisitions are possible (the analysts believe that Russia and Eastern Europe are targeted), Dyckerhoff will continue to focus on further debt reduction to improve its investment grade rating.

Dyckerhoff has also disclosed for the first time guidance on its EBITDA target of at least 25 per cent for the mid term. This guidance assumed
that the German prices recover to their historical level of EUR62/t. Were prices to recover to such an extent, the EBITDA margin target will be easily achievable in the analysts view, and could be even surpassed. We believe that the guidance is relatively cautious especially as the German cement margin were well above 25 per cent before the price war and is the only main market to perform currently well below the guidance (14 per cent published in 2004, of which 24.8 per cent solely for cement activities).