Net profit in sizeable improvement
Key performance in Central and Eastern Europe markets
Dividend proposal (detachment date of coupon: May 19, 2008): €0.420 to ordinary shares, €0.444 to savings shares

Consolidated data								2007				2006				% 07/06
Net sales				€m				3,496.1				3,205.0				+9.1
Ebitda				€m				1,045.6				931.1				+12.3
Net profit				€m				536.5				417.5				+28.5
Consolidated net profit				€m				458.5				349.8				+31.1
								12/07				12/06				Change
Net debt				€m				621.2				609.0				12.3

The Board of Directors of Buzzi Unicem met today to examine the statutory and consolidated financial statements for the year ended December 31, 2007.

At group level, 2007 was a positive year, with sales and operating results in sizeable improvement. Cement volumes totalled 34.1 million tons, +2.2% over 2006. The increase is attributable to the Czech Republic, Luxembourg, Mexico, Ukraine and Germany while volumes are down in the United States and to a lesser extent in Italy. Sales are virtually unchanged in Russia, where the plant has reached full capacity, and in Poland whose market growth was sustained by exports from other countries.
Ready-mix concrete sales at 17.1 million cubic meters are up 3.4%, thanks mainly to the Czech Republic (Slovakia), Ukraine and Mexico contribution, as well as to a favourable trend in Poland. Volumes are down in Germany and even more in Italy, while in the United States they improve due to the integration of new lines of business in the operations’ scope.

Consolidated net sales come in at €3,496.1 million versus €3,205.0 million in 2006 (+9.1%). Changes in scope impact positively for €122.2 million while foreign exchange accounts for a €110.8 million decrease. Excluding these effects, net sales would have increased by 8.8%. The improvement stems mostly from the geographical areas of Dyckerhoff’s competence, besides the inclusion in the scope of consolidation of the Dutch operations.

Ebitda reaches €1,045.6 million (+€114.6 million over €931.1 million in 2006), of which €60.5 million are non-recurring income related to contingent assets and gains/losses on disposal of investments. Consequently, net of non-recurring items both in 2007 and in 2006 (€21.4 million income), Ebitda increases to €985.2 million (+8.3%, versus €909.7 million in 2006), with Ebitda to sales margin at 28.2% (28.4% in 2006). Changes in scope are positive for €6.9 million, while foreign exchange effect is negative for €41.3 million.
All Eastern Europe countries report a strong growth, +68.1% overall, most pre-eminently Russia, Ukraine and Poland. Also Central Europe markets (Germany, Luxembourg, the Netherlands) post an Ebitda much improved over the previous year (+44.1%). In Mexico the organic growth trend continues, but the year closes with an Ebitda in euro in line with 2006. Italy’s contribution is lower by €28.7 million compared with the previous year. In the US the falling dollar causes a 5.7% decrease; at constant exchange rate a 2.9% increase would have resulted.

Amortization and depreciation amount to €210.9 million vs. €203.2 million in 2006. Ebit rises by 14.7% from €727.9 million to €834.7 million. Net financial expenses total €22.2 million vs. €44.7 million in 2006. Equity in earnings of associates brings about a €12.4 million income (€24.5 million expense in 2006). Profit before taxes comes in at €824.8 million (vs. €658.7 million in 2006, +25.2%). Income taxes amount to €288.3 million (€241.2 million in 2006). Income statement reports a sizeable improvement in net profit which stands at €536.5 million (+28.5%), of which €458.5 million attributable to the equity holders of the company (+31.1%).

Cash flow, gross of non-recurring positive and/or negative items, stands at €747.5 million vs. 620.7 million in 2006. As of December 31, 2007, net debt amounts to €621.2 million, up €12.3 million from €609.0 million at year-end 2006. In 2007 the group paid out dividends for €99.8 million, €83.0 million thereof distributed by Buzzi Unicem SpA, and invested €322.4 million in property, plant and equipemnt plus €204.9 million in equity investments.

Total equity, inclusive of minorities, stands at €2,513.4 versus €2,425.4 million as of December 31, 2006. Consequently debt/equity ratio is stable at 0.25.

In 2007 the parent company Buzzi Unicem SpA reports a net profit of €149.2 million (€147.6 million in 2006) with cash flow at €186.8 million.

Italy
Cement and clinker volumes decrease by 1.4% over 2006, with prices aligned with inflation trend. Ready-mix concrete volumes are down 10.9%, with prices not making up for the decline.
Overall net sales in Italy come in at €961.5 million, down 4.2% vs. 2006. Ebitda decreases 12.2% to €207.1 million with Ebitda to sales margin at 21.5% (23.5% in 2006).

Central Europe
In Germany cement sales are up 4.1%, thanks to higher exports, mainly to the Netherlands; average price level improves by 7.7%. Conversely ready-mix concrete volumes decrease by 3.5%, with prices up around 9% vs. the previous year.
Net sales in Germany stand at €514.9 million (€480.0 million in 2006, +7.3%). Changes in scope negatively impact for €13.8 million, net of which net sales would have increased by 10.4%. Ebitda improves from €91.2 million in 2006 to €139.7 million, inclusive however of non-recurring contingent assets for €58.2 million. Operating income, favored by better average selling prices and a higher use of alternative fuels, allows for a sizeable improvement in Ebitda to sales margin (15.6% vs. 13.3% in 2006). No income from the sale of carbon emission rights is recorded (€6.6 million in 2006)

In Luxembourg, cement and clinker volumes, net of inter-group trading, are up 20.0%; with a higher impact of clinker supplied to outside parties; on the rise are also average unit revenues (+5.7%), favorably affected especially by the increase in clinker price. Before elimination of inter-group trading with Germany, net sales come in at €91.8 million, up 9.7% over the previous year. In October the 100% of Marbrerie Jacquemart Sàrl was sold, consequently at constant scope of consolidation, net sales would have increase by 12.7%. Ebitda decreases by 21.9% to €19.5 million from €25.0 million; net of non-recurring items (€2.5 million expense in 2007 and €3.7 million income in 2006) Ebitda increases by €0.7 million with Ebitda to sales margin at 24.0%. vs 25.5%. No income from the sale of carbon emission rights is recorded (€3.3 million in 2006).

In the Netherlands, volumes reach 1 million cubic meters of ready-mix concrete and 5.7 million tons of aggregates, with net sales at €140.6 million. Ebitda stands at €8.1 million with an Ebitda to sales margin of 5.8%.

Eastern Europe
In Poland sales are in line with the previous year’s ones, supplemented however by inter-group trading from Germany and the Czech Republic. Net sales in local currency are up 25.6% and the translation into euro brings them to €142.8 million (+29.3% over €110.4 million in 2006). Ebitda improves by 55.5% to €52.1 million from €33.5 million. Ebitda to sales margin rises from 30.4% to 36.5%. No income from the sale of carbon emission rights is recorded (€4.8 million in 2006).

In the Czech Republic and Slovakia, group’s volumes record a brilliant trend. Net sales report an increase of 18.4% from €182.4 million to €215.8 million. The stronger kroner positively accounts for €4.4 million. Ebitda increases from €61.8 million to €70.3 million; net of non recurring items (€3.4 million gains on disposal of lines of business in 2007) Ebitda to sales margin decrease to 31.0% from 33.9% in 2006 which however included €6.0 million income from the sale of carbon emission rights.

In Ukraine, cement and ready-mix sales are up 12.4% and ready-mix volumes improve by 37.2%. Also unit average prices record a very favorable trend (+69.3% in local currency) thus making net sales up 67.2%, from €107.2 million to €179.2 million. The rise in prices is partly due to higher production costs but mostly to the strong demand. Ebitda benefits from such an environment, making an astonishing progress both in absolute value (+€42.9 million) and in percentage of sales (from 14.2% to 32.4%).

In Russia volumes remain stable (+0.9%) since, as known, the plant has attained full capacity. However surging prices (+68.8% in local currency) allows for a further improvement in margins, by now at the top in the group. Net sales at €197.9 million are up 59.8%, vs. €123.9 million in the previous year. Ebitda increases from €53.2 million to €94.7 million (+78.1%). Ebitda to sales margin reaches 47.9% (42.9% in 2006). To be recorded that in 2007 a €30,0 million expense was booked to income statement related to logistics costs for the new production line at Suchoi Log.

United States of America
Cement sales are down 4.1% but demand was still robust in Texas to the advantage of the Houston new terminal, owned in joint-venture with other players. Also ready-mix concrete volumes increase (+3.3%) as a result of the newly acquired batching plants in Texas and Missouri. Rising costs and poorly competitive imports brings about an average improvement in unit revenues (+5.1% for cement and + 5.2% for ready-mix concrete, in local currency).
Cement sales realized by the US subsidiaries thus reach US$1,166.1 million (+0.4%) corresponding to €850.9 million. Foreign exchange negatively impacts for €77.9 million. Ebitda decreases from €322.5 million to €304.1 million (-5.7%); excluding non-recurring items (€9.5 million net expense in 2006), the decline is more remarkable, but the worsening is almost entirely attributable to the translation of results into euro and Ebitda to sales margin remains virtually unchanged (from 35.9% in 2006 to 35.7%).

Mexico (50% consolidation)
Throughout the year the associate Corporación Moctezuma fully exploited the production capacity of the second line at Cerritos, increasing sales by 18.0%. Average selling prices in local currency are down 2.0%, due to the product distribution to a greater distance and the progressive shift of almost 5% of sale mix from bagged to bulk cement. Ready-mix concrete sales are up 12.3%, with prices in line with the previous year’s ones.
Net sales and Ebitda in local currency increase by 17.7% and 8.3% respectively. Translated into euro, with reference to 50% pertaining to the group, the two figures come in at €212.0 million (+7.6%) and €91.9 million (-1.0%). The surge in production costs, especially energy factors, has hit hard and the non-adjustment of prices to inflation has pressed margins and penalized Ebitda to sales margin which declines from 47.1% in 2006 to 43.4% in 2007.

Outlook for operations
In Italy, cement demand is likely to slowdown, due to no adequate new starts of public works and the beginning of a weaker cycle in residential building. However selling prices are expected to improve to make up for the recent years’ rising costs, which should allow to offset the decrease in volumes and keep profitability levels similar to 2007’s ones.

In Central Europe markets (Germany, Luxembourg, the Netherlands) the short-term trend in construction investment is expected to be slower but still positive, with improvements in the range of 1-3%. Consequently demand is likely to remain favorable, although more restrained than in 2007. The market might accept some price increases and therefore the good performance of our operations should continue also in 2008.

We believe that Eastern Europe countries (the Czech Republic, Poland, Ukraine, Russia) will continue to have a driving effect on profits, thanks to their dynamic economies. Prospects for volumes and prices remain interesting and consequently results should be in good progress. However fear exists that the current confidence crisis which affects capital markets might spread and trigger some sort of slowdown.

In the United States, the residential real estate market will continue to be weak throughout the year and cement consumption is expected to decline also in 2008. Lower selling volumes will continue to impact mainly imports, still poorly competitive, but the demand slowdown will inevitably affect also production levels, with a consequent worsening of operating income. US operations’ results will likely be lower than the record ones posted in 2006 and 2007, also due to the dollar enduring weakness.

In Mexico economic growth expectations for the year are in the range of 3%, only slightly lower than in 2007. However considering the importance of the trading relations with the United States, this estimate might be optimistic. Corporación Moctezuma prospects are for sales volumes in line with the very good ones posted in 2007, a recovery of average unit revenues and operating results in local currency consistent with those of the previous year.

For the year 2008, the economic scenario is challenging and gradually worsening. Our outlook is based on the assumption that the current turbulence of financial markets will have a limited impact on the real economy, mostly confined to the United States. Thanks to the group’s good geographical diversification and operating efficiency the slowdown reported in some countries and the negative foreign exchange fluctuations in the dollar area should be offset by the progress realized in more dynamic markets. We feel confident that the year 2008 will close with operating results similar to the very positive ones posted in 2007.

The Board of Directors will propose to the Annual General Meeting, convened in first call for May 13, 2008 the distribution of a dividend of €0.420 to ordinary shares and of €0.444 to savings shares. The dividend payment, if approved by the Shareholders’ Meeting, will be effected as from May 22, 2008 (with coupon detachment on May 19, 2008).

Moreover, the Board of Directors resolved to ask the Shareholders’ Meeting to authorize (and thus revoke the authorization adopted on May 11, 2007 to the extent of the non-used portion) the buy-back of a maximum of additional #4,000,000 ordinary and/or savings shares as well as the total and/or partial exercise of the pre-emption right pertaining to treasury shares in portfolio to the extent of the purchase of additional #2,000,000 ordinary and/or savings shares, besides those for the buy-back of which the authorisation is asked; the authorization is asked also for the sale of the treasury shares held by the company.
The above authorization to the purchase, as well as to the exercise of the pre-emption right and the disposal of treasury shares is required to allow the company to intervene in case of fluctuation of the shares price beyond the normal market volatility, within the extent allowed by the law and the market rules, as well as to give the company an instrument for liquidity investment. The authorisation to the disposal of treasury shares is also required to allow the company to use savings treasury shares under the MBO allocation scheme for granting to employees also without consideration.
The authorisation is asked for a length of 18 months as from the Shareholders’ Meeting approval.
The proposed purchase price, inclusive of additional charges, ranges from a minimum of €0.60, equal to par value, to a maximum of €23 for savings shares and from a minimum of €0.60, equal to par value, to a maximum of €32 for ordinary shares.
Consequently the maximum possible purchase expense is equal to €192 million.
The treasury shares shall be purchased on the market, according to Borsa Italiana rules.
The treasury shares selling transactions can be effected at any time, wholly or partly, in one or several transactions, through sale of the same or as a payment for stock acquisition within the company’s investment policy.
As of today the company owns #377,000 ordinary treasury shares and #300,500 savings treasury shares equal to 0.33% of capital stock.

Moreover the Board of Directors approved the annual report on the company’s Corporate Governance system, which will be made available at the same time as the draft of the statutory financial statements and the consolidated financial statements of the year 2007.

The Shareholders’ Meeting will also renew the Board of Directors and the Statutory Auditors’ Committee whose appointments expire with the approval of the financial statements as of December 31, 2007.

Finally the Board of Directors convened for May 13, 14 and 15, 2008 the special Meeting of the holders of savings shares to resolve upon the appointment of the common representative.

Senior Notes and Bonds on maturity
During the year 2007 no new senior notes and bonds were issued by the companies of the group.
In the 18 months subsequent to December 31, 2007, the following repayments of bond principals shall be effected:
- on February 24, 2008 the convertible bond “Buzzi Unicem 4% 2003-2008” came to maturity. Consequently the remaining #51,134 bonds were repaid at par value, for a total amount of €0.5 million.
- on May 29, 2008, US$58.3 million referred to the Senior Notes Series A issued by the subsidiary Buzzi USA Inc. in 2002;
- on October 20, 2008, US$18.3 million referred to the Senior Notes Series C issued by the subsidiary Alamo Cement Company in 2004.
- on May 29, 2009, US$58.3 million referred to the Senior Notes Series A issued by the subsidiary Buzzi USA Inc. in 2002.

The mezzanine loan issued by the subsidiary Dyckerhoff AG for a principal amount of €200.0 million will be due at the end of 2012. However, upon attainment of some balance sheet ratios based on the financial statements 2007, the lenders have the option to require the advance repayment as from December 15, 2008.

The manager responsible for preparing the company’s financial reports, Aldo Arri, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

Company contacts:
Investor Relations Assistant
Mariangiola Fiore
Phone. +39 0142 416 404
Email: mfiore@buzziunicem.it