Interim Report as of June 30, 2005

Transcription

1 Interim Report as of June 30, 2005 Buzzi Unicem S.p.A. Registered Office: Casale Monferrato (AL) Via Luigi Buzzi 6 Capital stock 118,260, Chamber of Commerce of Alessandria no

2 CONTENTS CONSOLIDATED INTERIM REPORT Review of operations page 3-17 Consolidated financial statements " Notes to the consolidated financial statements " Appendix: Transition to international financial reporting standards page List of companies at June 30, 2005 page BUZZI UNICEM SPA Financial statements page 85-89

3 REVIEW OF OPERATIONS As from January 1, 2005 Buzzi Unicem has adopted the international accounting standards IFRS. In this half-year interim report the 2004 figures for the corresponding period have been reclassified and restated according to the new accounting principles. For additional details on the contents of these standards and their impact on the 2004 financial statements already published, please refer to the Appendix herein. The first half of 2005 shows results on the rise compared with the 2004 corresponding period: consolidated net sales improve by 5.2% to m 1,382.2, and EBITDA by 8.2% to m 328.1, m 10.5 thereof for non recurring items. Gross of foreign exchange effect, less penalizing than in the recent past, the two figures would have increased by 6.2% and 9.8% respectively. Changes in the scope of consolidation account for a decrease of m 21.7 in net sales and m 2.8 in EBITDA. EBIT improves from m to m while consolidated net profit totals m 82.4 ( m 72.0 net of non-recurring items) versus m 48.1 in the first half of The net profit improvement is due to better operating results but also to lower finance costs. After capex for m 94.5 and dividends paid out for m 65.9, net debt equal to 1,223.5 decreases by m 51.9 from year-end The improvement mainly stems from the good performance of United States, where high volumes combined with a very favourable price trend, and Mexico, whose organic growth path resulted in volumes and results further rising. In Italy, notwithstanding a strong demand, the hike of production costs and a very competitive market have lowered profitability. In Central-Eastern Europe, Poland slowdown was more than offset by the Czech Republic holding steady and especially by positive developments in Russia and Ukraine. Operating and financial results Sales volumes of the cement sector, for the half-year, reach 15.6 million tons, up 3.2% compared with The rise of United States, which reached a record level, Mexico, Russia, Ukraine, has more than offset the slowdown reported in Germany, Poland and Czech Republic. Italy makes up for the ground lost in the first quarter and in the first six months shows high volumes, in line with the previous year. Ready-mix concrete volumes stand at 7.4 million cubic meters, + 1.5% over the first half 2004; against a negative trend in Italy and Germany, volumes are on the rise in the other markets, especially United States and Czech Republic

4 In the first half of the year consolidated net sales stand at m 1,382.2, up 5.2% over The improvement is mainly due to the exceptional performance of US operations, whose net sales, thanks mainly to very good unit prices, reach US$ million (+19.0%), equal to m (+13.6%). Good results are posted also in Mexico: net sales stand at m 75.5, up m 11.5 (+18.1%), despite a negative fx effect for m 2.9. The increase is attributable to the higher volumes realized by the Cerritos cement plant, whose contribution in the first half 2004 was negligible. In Italy the volumes rebound in the second quarter has allowed to reduce the gap accrued in the first quarter of the year: thus net sales come in at m 476.2, down 1.2% versus m in Net sales in Germany decrease to m over m in the first half 2004 (-2.0%). While average unit prices have improved, both cement and ready-mix concrete volumes have further shrunk. Changes in scope negatively impact for m 6.4. Total net sales in Central-Eastern Europe markets reach m ( m in the first half 2004). The increase is due for m 21.7 to the favourable fx in the Czech Republic and Poland, whose markets were not especially flourishing. On the contrary Russia and Ukraine recorded a rise in both volumes and unit prices. EBITDA increases from m in 2004 to m 328.1, inclusive of m 10.5 positive nonrecurring item related to the gain on disposal of 50% interest in Glens Falls (USA) effected at the beginning of the year. In the first half 2004, non recurring-items amounted to m 2.2. At group s level, EBITDA to sales margin increases from 23.1% in 2004 to 23.7% (23.0% excluding non-recurring items). The influence of exchange rate movements is lower than in the recent past; fx negatively impacts EBITDA for m 4.7 while changes in the scope of consolidation negatively account for m 2.8. As for the different markets, profitability sharply increases in the United States, where EBITDA in dollar is up over 50% and it is on the rise in Mexico (+26.2% in local currency). In Italy the unfavourable trend in price and the hike of production costs reduce EBITDA by 21.8%. Despite the restructuring efforts, profitability of German operations is still unsatisfactory, at a level slightly lower than in the previous year. Central-Eastern Europe markets on the whole improve EBITDA by 15.6% at constant fx, thanks to the satisfactory performance of Russia and Ukraine. After m 99.7 amortization and depreciation (versus m in the first half 2004), EBIT is up to m ( m in June 2004). The re-payment of burdensome loans and a lower impact of fx fluctuations have allowed for a remarkable reduction of finance costs from m 92.5 to m As a consequence, profit before tax stands at m versus m in 2004 (+48.3%), while consolidated net profit increases from m 48.1 to m

5 Cash flow is equal to m 199.6, inclusive of positive non-recurring items for m 10.5; even excluding non-recurring items the improvement is remarkable versus at June Summary consolidated income statement (million euro) 1 H-2005 IFRS 1 H-2004 IFRS Net sales 1, ,313.5 Consumables, operating expenses and services (860.2) (800.9) Other income and expenses Staff costs (204.4) (211.7) Operating cash flow (EBITDA) Depreciation and amortization (99.7) (103.1) Operating profit (EBIT) Finance costs, net (69.0) (92.5) Equity in earnings of associates Profit before tax Income tax expense (62.5) (48.2) Net profit before minority interest Minority interest (17.4) (13.1) Net profit Cash flow Consolidated net debt as of June 30, 2005 amounts to m 1,223.5 versus m 1,275.4 at December 31, 2004 (- m 51.9). In the period dividends for m 65.9 were paid out by the group, m 57.5 thereof by the parent company Buzzi Unicem SpA. Capital expenditures total m 94.5, m 11.1 thereof (equal to 50% pertaining to the group) for the realization of the second production line at Cerritos plant in Mexico, whose completion is expected in the first half of In Houston, Alamo Cement is building a cement import terminal in partnership with Ash Grove; for the 25% pertaining stake in the project, Alamo invested in the first half US$ 3.2 million, net of US$ 4.0 million cashed in for the sale of the land where the terminal is built. Among the other initiatives in Italy are worth mentioning the installation of a new Horomill at Augusta (SR), the chlorine by-pass with dust recovery at Barletta (BA) and the enlargement of limestone and natural aggregates reserves. In the United States, 10 new truck mixers were acquired and the system to feed petcoke to Selma (MO) kilns was improved. In - 5 -

6 Germany the kiln by-pass for the treatment of exhaust gas at Amöneburg was completed while in Ukraine the refurbishing of kiln 2 at Yugcement is in progress. Zapa Beton, an important Czech subsidiary in the ready-mix concrete sector, is strengthening its presence in Slovakia with the construction of a new batching plant. In January, Buzzi Unicem purchased from Banca IMI 24.2% of Dyckerhoff s voting capital, for a total amount of m Following the application of IFRS principles according to which this interim report has been drawn up, this obligation is already included in net debt at December 31, The following table shows the assets and liabilities of the net financial position, grouped by their degree of liquidity: Net financial position (million euro) IFRS IFRS IFRS Cash and marketable securities Short-term debt (161.3) (662.2) (846.7) Net short-term cash (debt) (188.7) Long-term assets Long-term debt (1,501.0) (1,504.4) (1,528.6) Net financial position (1,223.5) (1,275.4) (1,703.6) As of June 30, 2005, shareholders equity, inclusive of minorities, is equal to 1,872.3 million versus 1,654.7 million at 2004 year-end (according to IFRS). Consequently debt/equity ratio improves from 0.77 at 2004 year-end to 0.65 as of June 30, In June #147,180 Buzzi Unicem new savings shares were allocated to the company s and its subsidiaries managers under the 2004 MBO plan

7 Summary consolidated balance sheet (million euro) IFRS IFRS IFRS Property, plant, equipment and intangible fixed assets, net 3, , ,477.2 Financial fixed assets Working capital Net invested capital 4, , ,242.6 Stockholders equity of which, Minority interests 1, , , Reserves for risks and charges 1, , ,115.9 Net financial position 1, , ,703.6 Total financing 4, , ,242.6 Italy In the second quarter of the year Italian GDP rose 0.7%, discontinuing the negative trend of the two previous quarters. However Italian economy is still facing a difficult time, dragging behind the major European partners. Although inflation has kept at a moderate level (+1.8% on an annual basis), a recovery seems not likely in the remaining part of the year, due to the rise in oil and energy products prices. The construction industry confirms the favourable trend, with record cement consumption; based on the first estimates, cement production in the first six months of the year is in line (+0.8%) with that of the first half In the first six months of 2005 sales of hydraulic binders and clinker show an overall increase of 1.3% over the previous year. The gap accrued in the first quarter as a consequence of the harsh weather and the reduced number of trading days, was fully recovered. Despite a good demand, the strong competition caused average unit prices to decrease by some percentage points. Big questions exist about the implementation of the Kyoto protocol, which cannot foster stability and positive prospects for the market. Despite the uncertain scenario, Buzzi Unicem is strongly committed to reduce CO 2 emissions: some actions have already been carried out or are in progress (i.e. reduction of clinker content, greater use of alternative fuels) others are being thoroughly examined. Their feasibility and suitability will mainly depend on the development of the whole issue and the adjustments to the serious distortions affecting the law provisions in the first phase of the Kyoto protocol s application ( )

8 In the fist half of the year, net sales in cement sector total m 280.0, slightly lower than the m posted in the previous year; the decrease of average unit price and the rise in production costs have considerably restrained profitability: EBITDA goes down from m 99.6 to m 78.7 (-20.9%), equal to 28.1% of sales (35.0% at June 2004). The following are key figures for the cement sector in Italy, before eliminations among lines of business: (million euro) 1H H-2004 Net sales EBITDA % of sales Capital expenditures Headcount end of period (number) 1,479 1,475 In the first six months ready-mix concrete volumes decreased by 4.2% as a consequence of a slowdown in big public works which could not be offset by a more prosperous ordinary market. To date, the volume decrease has not penalized average selling prices which, having stuck to the level reached in the last part of the previous year, are slightly higher than in the first half of In the ready-mix concrete sector, net sales come in at m in line with m in EBITDA stands at m 21.8 versus m 29.1 in 2004, which included non-recurring income for m 1.0. The decline in EBITDA to sales ratio from 10.9% to 8.2% is mainly a consequence of the rise in fuel prices which impacts on transports and raw materials costs. The following are key figures for companies in the ready-mix concrete and aggregates sector in Italy, before eliminations among lines of business: (million euro) 1H H-2004 Net sales EBITDA % of sales Capital expenditures Headcount end of period (number)

9 Germany The German economy is still in a difficult situation. GDP, which was up 0.8% in the first quarter, showed no change in the second quarter of the year. The hope is for the forthcoming political elections to unleash the drive that would put the country back on the development track, at which some prospective indicators already hint. The construction sector is showing no signs of resilience; in the first six months all building activities were penalized by a further shrinkage in investments which negatively impacted on cement consumption. The restructuring plans implemented in the sector have reduced the supply-demand imbalance which however is still great; the recent moves in the shareholding of some major cement players do not modify the general scenario, unless they would result in sizable downsizing of capacity. In the first half of 2005 sales of cement products decrease by 3.9% versus Ready-mix concrete volumes are down 6.0%. Despite the difficult background, average selling prices have stuck to the level of the beginning of the year, on the rise over Net sales in Germany decrease to m versus m of the 2004 half-year (-2.0%); at constant scope, net sales would have been virtually unchanged. EBITDA goes down to 22.3 million from 25.9 million in 2004; the decrease is due for 1.4 million to changes in consolidation scope. Profitability level is still unsatisfactory, as shown by the EBITDA to sales margin down to 9.9% from 11.3%. The present pressure on the market and the poor prospects of recovery in the short term have made it necessary to adopt further measures to optimize and reduce Dyckerhoff production capacity. In June, the Management Board resolved to discontinue the production of clinker for grey cement at the Amöneburg plant in Wiesbaden as of December 31, Grinding operations for grey cement will be continued at a capacity of about 280,000 tons. The production of white cement in Amöneburg will be maintained. At the Neubeckum facility, clinker production will be discontinued entirely after having been downsized to part-time production in Cement grinding will be maintained for the whole of One-time plant closure costs will amount to approximately m 30, m 25 thereof due to non-cash extraordinary asset write-offs. The downsizing plan will help Dyckerhoff upgrade the capacity utilization rate of the remaining plants and achieve cost and capex cash savings in the range of m 10 a year on a permanent basis. The plan was submitted for approval to the company s Supervisory Board in its extraordinary meeting on July 5,

10 The following are key figures for German operations: (million euro) 1H H-2004 Net sales EBITDA % of sales Capital expenditures Headcount end of period * (number) 1,956 2,177 * including central services Luxembourg In the first half of the year the market remained stable. Sales of cementitious products are up 18.3%, while average unit revenues decrease as a consequence of the remarkable increase in clinker sales, nearly tripled in the six months. Net sales at m 70.9 are in line with the previous year; Ebitda decreases from m 14.5 (20.6% of sales) in the first haft 2004 to m 12.2 (17.2% of sales). The reduction is attributable to the increase in costs of electric power, fuel and maintenance. The table below sets out financial highlights for Luxembourg: (million euro) 1H H-2004 Net sales EBITDA % of sales Capital expenditures Headcount end of period Poland In the first six months of the year the economic trend was less buoyant than expected: the increase in exports was opposed by a slowdown in investments and consumption. To boost development, authorities adopted a softer approach to monetary policy and, at the end of June, they lowered interest rates by 50 basis points. Also the construction market suffered a cut in investments, partly due to the harsh weather but also to a statistic fact: from January to April 2004 many building works were speeded up to avoid the VAT increase following the entrance into the EU

11 Cement volumes in the first six months are down 29.2% with prices in local currency slightly higher, which proves that demand remains good; positive signs are shown by the ready-mix concrete sector where the 13.7% volumes increase combines with a rise in prices of two percentage points. Net sales and EBITDA in local currency decrease by 14.1% and 27.7% respectively. The revaluation of the zloty favoured the translation into euro of the results: thus net sales come in at m 32.2, in line with the 2004 corresponding period while EBITDA decrease from m 9.1 to m 7.6 (-16.0%). As a consequence of the higher impact of fixed costs and the hike of electric power and fuel, EBITDA to sales ratio stands at 23.6% versus 28.1% in The table below sets out financial highlights for Poland: (million euro) 1H H-2004 Net sales EBITDA % of sales Capital expenditures Headcount end of period Czech Republic In the first six months of the year the economy confirmed its buoyancy, thanks mainly to exports. The wealth growth, primarily oriented to meet housing needs, will have a positive effect on the construction industry. Cement volumes in the first six months were down 10.3% over the previous year, mainly for a statistic effect, since in the first half of 2004 cement volumes had been exceptionally high to anticipate the VAT increase following the accession to the European Union. Higher imports from the adjoining countries contributed to curb sales. Average selling prices in local currency have improved by some percentage points; thanks to the krona strengthening, the rise expressed in euro is even more remarkable. The growth of Zapa Beton, a subsidiary in the ready-mix concrete sector, active also in Slovakia, continues in the first half of the year. Sales volumes are up 18%, although average unit prices are slightly down. The ready-mix concrete sector accounts for approx. 70% of the overall net sales realized in the Czech Republic. The improvements are amplified by the over 8% revaluation of the Czech krona against the euro. Thus net sales and EBITDA translated into euro reach 59.8 million (51.0 million in 2004, +17.3%) and 17.9 million (15.4 million in 2004, +16.4%) respectively. Thanks to good pricing and operational excellence of the plant, profitability remains at a very high level, with EBITDA to sales ratio at 30.0%

12 The following are key figures for Czech activities: (million euro) 1H H-2005 Net sales EBITDA % of sales Capital expenditures Headcount end of period Ukraine In the first half of the year, the construction sector shows a favourable trend as a result of the bright economic scenario and housing and infrastructures needs. The strong cement demand has resulted in a volumes increase of 14.1% and a double-digit rise of unit average prices. Sales have positively developed also in the ready-mix concrete sector, whose activities, still at the outset, began during Net sales improve from m 21.0 to m 27.1 and EBITDA from m 3.0 to m 4.5; the Ebitda to sales ratio increases to 16.4% from 14.1% in The table below sets out financial highlights for Ukraine: (million euro) 1H H-2004 Net sales EBITDA % of sales Capital expenditures Headcount end of period 1,624 1,540 Russia Based on the first estimates, in the first half of 2005 Russian economy reported a growth rate of 5-6%. Development was backed not only by the energy sector but also, for the first time in the Russian macro-economic scenario, by a booming family spending. The construction sector confirmed a positive trend

13 Suchoi Log plant increased its cement sales by 15.5% due also to the high supplies to the oilrelated research and exploitation projects in the area. The strong demand led to a sizable rise in average selling prices (over 10% in local currency). Consequently net sales and EBITDA in rubles increase by 26.8% and 81.0% respectively. Being the Russian currency quite stable, the figures translated into euro show the same growth rate: net sales improve from m 27.8 to m 34.6 and EBITDA from m 6.1 to m EBITDA to sales margin is up to 31.3% versus 22.0% in 2004, which means a quite high profitability level. The following are key figures for Russian activities: (million euro) 1H H-2005 Net sales EBITDA % of sales Capital expenditures Headcount end of period 1,525 1,566 United States of America In the first part of the year US economy recovered its strength, posting a GDP growth of 3.8% in the first quarter and 3.3% in the second one. This buoyancy allowed the Fed to pursue its policy of gradually raising short-term interest rates, which from the all-time low 1% in June 2004, after 10 hikes, now stand at 3.5%. After a phase of deep weakness, the dollar has partially recovered against the euro. The construction industry was among the major wealth creators in the country, boosting cement demand: in the first six months of the year consumption increased by 6% over Demand was sustained in all building sectors (public, industrial, residential). So far the 2004 year-end assumptions of slowdown in residential construction have proved wrong. As expected, high demand and very expensive imports for the joint effect of dollar weakness and low cement availability on the international markets, resulted in a sizable improvement of average selling prices, which positively reflected on profitability. In the first half of the year, US subsidiaries sales overall grew 4.9% over 2004; like-for-like, the increase would have been of 10.0%. Both Buzzi Unicem USA and Alamo made the most of the favourable market conditions, much improving their average unit revenues in dollars. Also ready-mix concrete sales were on the rise (+19.5%): Alamo Cement posted recordbreaking volumes for the six months. The robust demand allowed to move downstream the raw materials and fuel hikes, without penalizing the profitability level

14 Net sales in local currency come in at $m 495.6, up 19.0% over 2004 and +24.6% like-forlike (i.e. net of 50% Glens Falls). EBITDA stands at $m148.5, $m 12.8 thereof for Glens Falls disposal, accounted in EBITDA as required by IFRS principles. Excluding this non-recurring item, EBITDA equal to $m is up 57% over the first half 2004 ($m 86.4), while EBITDA to sales margin improves from 20.7% to 27.4%. Translated into euro, net sales increase from m to m (+13.6%, or +19.0% l-f-l) and EBITDA, excluding the gain for Glens Falls disposal, increases by m 35.1, from m 70.4 to m (+49.9%). The profitability improvement is conspicuous for both US subsidiaries and stems mainly from the favourable pricing environment. Especially bright is the development of Buzzi Unicem USA, which succeeded in containing the hike of production costs, less remarkable is Alamo Cement progress, penalized by higher than expected consumables costs and clinker purchases from third parties. The following are key figures for the companies operating in the United States of America: (million euro) 1H H-2004 Net sales EBITDA EBITDA, net of non-recurring items % of sales Capital expenditures Headcount end of period (number) 2,287 2,254 Mexico In the first half of the year, Mexican economy benefited from the US favourable trend. In a context dominated by the electoral campaign for the presidential election in July 2006, the main growth drivers were the services and construction sectors. The country potentialities are very high thanks to its proximity to the Unites States, the oil and minerals resources, the quite qualified manpower and the tourist attractions. However the continual postponement of economic reforms prevents the country from turning this potential into competitive advantage. Our associated company Corporación Moctezuma reported a sizable increase in sales thanks to the new Cerritos plant, whose contribution in the first half of the previous year was negligible since it had come on line in May Average selling prices in local currency are down some percentage points, as a result of the market general trend and the commercial policy more oriented to increase the capacity utilization rate of the new plant. Ready-mix concrete sales are up over 9.4% with prices slightly lower than in the previous year

15 Net sales and EBITDA in local currency are growing by 22.5% and 26.2% respectively. The depreciation of the Mexican peso, in the range of 4%, has penalized the translation into euro less than in the recent past. Expressed in euro, net sales increase by 18.1% (from m 63.9 to m 75.5) and EBITDA by 21.6% (from m 29.6 million to m 36.0). EBITDA to sales ratio stands at 47.7%, up from 46.3% at June The profitability recovery is mainly due to the gradual increase of the capacity utilization rate of Cerritos plant but also significantly to the change in fuels mix at Tepetzingo. Works were in progress for the construction of the second production line at Cerritos, for which $ 22.5m were invested in the period. Completion is expected in the first half of The following are consolidated key figures of Corporación Moctezuma, of which 50% pertains to our group: (million euro) 1H H-2005 Net sales EBITDA % of sales Capital expenditures Headcount end of period (number) Significant events subsequent to June 30, 2005 In July, Dyckerhoff s supervisory board approved the restructuring plan resolved by the Board of Management in June and previously described. On August 5, 2005 two tax assessments were notified, ensuing from previous inspections on year 2000 and related to the deductible expense of the antitrust fines inflicted to Buzzi Unicem by the UE. From the documents the following ensues: Unimed SpA was assessed a greater taxable income for m 2.5 and a lower VAT, recognized as deductible expense, by m 0.5; consequently the income tax assessed amounts to m 1.5, while the sanctions imposed total m 1.6; Buzzi Unicem SpA was assessed a greater taxable income for m 5.9, with a consequent income tax assessed for m 2.2 and sanction imposition for the same amount

16 The company s professionals confirm the opinion already expressed and reported that the defence elements of the company s deeds are legitimate and sound. Other possible litigation defences are being examined and evaluated. Under these circumstances and awaiting the assessment that will be taken within the terms of procedure for impugnation, the company deems it not necessary to make provisions in the financial statements. At the end of August, hurricane Katrina caused devastating human and economic losses in the United States, especially on the Gulf of Mexico coastline. Buzzi Unicem USA plant in New Orleans, located just east of downtown, was flooded and access roads and bridges were severely damaged or destroyed. Preparations are being made to re-enter and repair the plant as soon as practical although it is too early to determine when that might be. Considering the limited size of the plant and the good insurance coverage, the consequences on US operations profitability will not be conspicuous. In September, Buzzi Unicem sold the minority interest held in E.ON. Italia Produzione SpA to E.ON. Kraftwerke Gmbh, the controlling shareholder of the company and a prime international energy player. The agreement is the completion of a successful co-operation between Buzzi Unicem and E.ON. which will lead to an industrial project, and a foreign investment thereto related, in the electrical power production field of a significant strategic and economic interest for Italy. Buzzi Unicem s co-operation will continue also in the construction phase of the Livorno Ferraris (Vercelli) combined cycle natural gas power plant, through to start-up. The parties will then enter into an agreement covering Buzzi Unicem s possible subsequent participation in the initiative and securing Buzzi Unicem a power supply contract at competitive terms. Outlook for operations In Italy, cement demand should remain strong. The desirable revenue improvement in the second part of the year, however, will not allow to recover the first half weakness and offset the high increase in production costs. Consequently, for the whole of 2005, profitability will be lower. In Central-Eastern Europe markets, operating results are expected on the rise, with a greater contribution from Russia and Ukraine. In Germany, the same weak trend should continue also in the second part of the year; however operating results for the full year 2005 are expected to be slightly better than in In the United States demand should stay at a high level, barring especially negative effects on the general economy of hurricane Katrina. Consequently, full year 2005 results should remain very satisfactory. Katrina caused the flooding of Buzzi Unicem USA s slag grinding plant in New Orleans; the impact on the whole of Buzzi Unicem USA s operations will however be marginal

17 In Mexico profitability in local currency is expected on the rise thanks to the higher volumes from the new Cerritos plant. Overall, the lower profitability of Italian operations should be more than offset by improvements in United States, Mexico and Central-Eastern Europe. Consequently, if exchange rates remain similar to those of the first quarter, the group expects to attain better operating results than in Casale Monferrato, September 13, 2005 On behalf of the Board of Directors Alessandro BUZZI Chairman and CEO

18 CONSOLIDATED BALANCE SHEET ASSETS (in thousands of euro) Note Non-current assets Goodwill Other intangible assets Property, plant and equipment Investment property Investments in associates Available-for-sale investments Other non-current assets Deferred tax assets Current assets Inventories Trade receivables Other receivables Available-for-sale investments Cash and cash equivalents TOTAL ASSETS

19 EQUITY AND LIABILITIES (in thousands of euro) Note Shareholders' equity Share Capital Paid-in capital Other reserves Retained earnings less, Treasury shares 11 (17.140) (17.140) (14.964) Total shareholders' equity of the Group Minority interests Non-current liabilities Long-term debt Employee benefits Provisions Deferred tax liabilities Other non-current liabilities Current liabilities Current portion of long-term debt Bank overdrafts and borrowings Trade payables Current tax liabilities Other payables TOTAL EQUITY AND LIABILITIES

20 CONSOLIDATED INCOME STATEMENT (in thousands of euro) NOTE 1H H-2004 Year 2004 NET SALES Changes in inventories 22 (10.977) Internal work capitalized Other operating income Raw materials, supplies and consumables Services Staff costs Other operating expenses Operating cash flow ( EBITDA) Depreciation and amortization Operating profit (EBIT) Finance costs, net 29 (68.950) (92.546) ( ) Equity in earnings of associates (5.470) Profit before tax Income tax expense 31 (62.467) (48.223) ( ) Net profit before minority interest Minority interest (17.445) (13.131) (37.097) Net profit Earnings per share (in euro) 32 Base - ordinary 0,42 0,28 0,97 - savings 0,44 0,30 0,99 Diluted - ordinary 0,41 0,26 0,93 - savings 0,43 0,29 0,

21 CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands of euro) 1H-2005 Year 2004 A) Cash and cash equivalents at the beginning of period B) Cash provided (used) by operating activities Net profit before minority interests Depreciation and amortization Deferred income taxes ( ) Equity in earnings of associates (2.913) (Gains) losses on disposal of ppe and investments (11.358) (20.431) Net change in provisions and employee benefits Changes in operating assets and liabilities: (37.779) Inventories (9.586) (10.012) Trade receivables ( ) (23.823) Other receivables Trade payables Other payables (36.995) Current tax liabilities C) Cash used by investing activities Total B) Purchase of intangible assets (623) (3.333) Purchase of property, plant and equipment (87.277) ( ) Purchase of equity investments ( ) ( ) Proceeds from the sale of property, plant and equipment Proceeds from the sale of equity investments Changes in financial assets and liabilities (19.360) Changes in available-for-sale investments Total C) ( ) ( ) D) Cash used by financing activities Proceeds from long-term debt Principal payments on long-term debt ( ) ( ) Net change in bank overdrafts and borrowings (1.426) Issuance of ordinary shares Purchase of treasury shares (1.308) Dividends paid to third parties (65.917) (55.415) Total D) ( ) E) Change in the scope of consolidation and translation differences Cash and cash equivalents at the beginning of year of Dyckerhoff AG and subsidiaries Translation differences and others (2.518) F) (Decrease) increase in cash and cash equivalents (B+C+D+E) ( ) G) Cash and cash equivalents at the end of period (A+F)

22 CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY Share capital Paid-in capital Other reserves Retained earnings (losses) (in thousands of euro) Treasury shares Balance as of December 31, (17.140) Total Allocation of 2004 net income: Dividends (57.512) (57.512) To reserves (47.725) Differences on translation of foreign financial statements Capital increase for bond conversion Other movements (10.680) (720) Net income for the period Balance as of June 30, (17.140) Share capital Paid-in capital Other reserves Retained earnings (losses) Treasury shares Balance as of December 31, (15.833) Total Allocation of 2003 net income: Dividends (46.780) (46.780) To reserves ( ) (96.547) Differences on translation of foreign financial statements Other movements ( ) 869 (66.753) Net income for the period Balance as of June 30, (14.964)

23 SEGMENT INFORMATION (in milion euro) Primary segment information - per market area (in milion EURO) Italy USA Mexico Germany /Luxemburg Central-Eastern Europe Eliminations and adjustment Total 1st half 1st half 1st half 1st half 1st half 1st half 1st half Net sales 476,2 481,8 385,6 339,4 75,5 63,9 291, ,8 132,1-0,5-0, , ,50 as % of total 34,50% 36,70% 27,90% 25,80% 5,50% 4,90% 21,10% 22,60% 11,10% 10,10% EBITDA 101,2 129,3 115,5 70, ,6 34,5 40,5 40,8 33,5 - -0,2 328,1 303,2 as % of net sales 21,20% 26,80% 30,00% 20,70% 47,70% 46,30% 11,80% 13,60% 26,60% 25,40% 23,70% 23,10% as % of total 30,80% 42,70% 35,20% 23,20% 11,00% 9,80% 10,50% 13,40% 12,50% 11,10% Depreciation and amortization -24,9-26,6-29,7-32,7-5, ,6-26,1-11,7-13, ,7-103,1 EBIT 76,3 102,7 85,8 37,7 30,4 25,7 6,9 14,4 29,2 19,7-0,3-228,4 200,1 as % of net sales 16,00% 21,30% 22,30% 11,10% 40,30% 40,10% 2,40% 4,80% 19,00% 14,90% 16,50% 15,20% as % of total 33,40% 51,30% 42,90% 18,80% 15,20% 12,80% 3,00% 7,20% 12,80% 9,80% Capital Expenditures 441,2 150,4 32,6 21,1 15,9 16,9 10,5 11,1 16,9 10, ,3 Headcount (end of period)

24 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (in thousands of euro) FORM AND CONTENT Accounting Principles The Consolidated Financial Statements for the fiscal year 2005 will be prepared in accordance with the international Accounting Standards (IFRS) issued by the International Accounting Standards Board and endorsed by the European Commission. Under the definition of IFRS are included also all the revised international accounting principles ( IAS ), all interpretations of the International Financial Reporting Interpretations Committee ( IFRIC ), including those formerly issued by the Standing Interpretations Committee ( SIC ). The consolidated interim financial statements as of June 30, 2005 have been prepared in accordance with the International Accounting Standard n. 34 Interim Financial Reporting (IAS 34), as foreseen by the Consob Regulation no of May 14,1999, as amended by the Consob Resolution no of April 14, 2005, and for what concerns the booking and valuation criteria, according to the IAS/IFRS issued by the IASB and endorsed by the European Union, as required by the art. 81 of the Consob Issuer Regulation (Regolamento Emittenti) no of May 14, 1999 and following amendments and integrations. In the Appendix to this Financial Report at June 30, 2005 are illustrated: the reconciliations, for comparative purposes, between profit and the shareholders equity reported under the previous Italian accounting standards and under IFRS, for the prior periods, as required by IFRS 1 First time Adoption of IFRS, the related explanatory notes to the income statement and the balance sheet for the fiscal year ended at December 31, 2004 presented in accordance with the new accounting principles, as well as, the income statement of the first half 2004 and balance sheet at June 30, The accounting principles adopted are described in the specific Appendix to this semiannual report, to which reference is made. The preparation of the interim financial report requires the formulation by the management of some estimates and assumptions which could impact revenues, costs, assets and liabilities, as well as contingent assets and liabilities at the balance sheet date. In case these estimates and assumptions, based on the best valuation of the management, should significantly differ from the actual circumstances, they would be modified accordingly in the relevant period in which they change. This semi-annual financial report has been prepared on the basis of the IFRS principles and interpretations in force at that date; therefore changes in the data hereby presented may occur during 2005 due to future decisions taken by the European Commission in this transition phase regarding the approval or the issue of new principles, interpretations or

25 implementation guidelines issued by the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretation Committee (IFRIC). Foreign currency translation The exchange rates used for translation of the financial statement in foreign currencies are the following: (euro) Currency Rate at Average rate 1st sem Rate at Average rate year 2004 US Dollar 1,2092 1,2855 1,3621 1,2439 Mexican Peso 12, , , ,0333 Danish Kroner 7,4515 7,4448 7,4388 7,4399 Czech Koruna 30, , , ,8911 Slovakian Koruna 38, , , ,0218 Ukrainian Hryvnia 6,0833 6,6812 7,2348 6,6196 Russian Ruble 34, , , ,8084 Polish Zloty 4,0388 4,0783 4,0845 4,5268 Hungarian Forint 247, , , ,6560 The exchange difference which arises from using, for the conversion of the assets and liabilities expressed in foreign currencies, an exchange rate different from the one used the previous year is attributed to shareholders equity. The difference that arises from converting the balance sheet and the income statement at different exchange rates is also taken to shareholders equity. It is noted that the strengthening of the US dollar and to a lesser extent also of the other currencies- against the euro during the first half 2005 compared with year end 2004, gave rise to a significant reduction of the translation differences. Consolidation Area The main changes in the consolidation area occurred during the first half 2005 in comparison with the consolidated annual report at December 31, 2004 concern the disposal of the 50% interest in Glens Falls (USA), and some minor changes within Dyckerhoff group. As described in the Review of operations, to which reference is made for additional information, the changes in scope of consolidation led to a decrease of euro 21.7 million in sales (mainly related to Glens Falls) and euro 2.8 million in EBITDA, thereof approximately euro 1.4 million related to Germany

26 The above mentioned changes in the consolidation area are not material for comparative purposes. OTHER RELEVANT INFORMATION It is reminded that in Review of operations is provided also the information about : significant events subsequent to June 30, 2005; outlook for operations. * * * NOTES TO THE CONSOLIDATED BALANCE SHEET (in thousands of euro) ASSETS 1. Goodwill and Other intangible assets The following table shows in detail the changes occurred in the first six months of the year: Goodwill Industrial patents, licences, similar (1) Other intangible assets Formation and expansion (2) Assets in progress and Total other advances (3) Other (4) ( ) Net Value at Dec. 31, ,305 2, ,087 3,374 Translation differences Amortization (536) (627) (1) (334) (962) Increases Changes in the consolidation area Reclassifications 1, ,405 Disposals and other 2 (4) (2) (4) Net Value at June 30, ,857 3, ,327 4,

27 At June 30, 2005, the caption Other intangible assets includes Industrial patents, licences and similar (total euro 3,218 thousand) made up of mining licenses (euro 775 thousand), industrial patents rights (euro 1,260 thousand), application software licences for plant and office automation (euro 1,145 thousand), industrial licenses (euro 37 thousand) and euro 1 thousand of trademarks mainly owned by the parent company. The remaining portion of the other intangible assets refers primarily to ancillary charges related to the Mexican subsidiary (euro 1,328 thousand at June 30, 2005) and to Italian concrete companies (euro 54 thousand). Goodwill and Impairment Test As first time adopter of the International Accounting Standards, the group decided to avail itself of the option provided for by IFRS 1. Thus, Buzzi Unicem maintained at transition date - January 1, the residual value differential from the first-time consolidation of the main subsidiaries and booked it as Goodwill. As a consequence, the total Goodwill at June 30, 2005 amounts to euro 535,857 thousand and refers to the following acquisitions and consolidations: euro 362,736 thousand, to Dyckerhoff AG, euro 83,706 thousand, to Dyckerhoff s several acquisitions accomplished before the entry of Buzzi Unicem in its share capital. In particular: Cement Hranice a.s. (euro 36,129 thousand), ZAPA Beton a.s. (euro 5,630 thousand), Cementownia Nowiny Sp. z.o.o. (euro 22,781 thousand), VAT Volyn (euro 10,758 thousand), VAT Yugcement (euro 5,437 thousand) and other minor companies, mainly German (euro 2,971 thousand), euro 55,777 thousand to Unicem SpA, merged in 1999, euro 12,232 thousand to firms active in Italy in the concrete and natural aggregates sector, euro 8,116 thousand to other minor companies active in Germany and Eastern Europe euro 7,202 thousand due to the remaining 33% (to reach 100%) of Alamo Cement Co. acquired by Buzzi Unicem in 1999, and euro 6,088 thousand, to Betonval SpA. As explained in the accounting principles section, goodwill is no longer amortized, but, if necessary, impaired in case of losses of value. As a consequence, the group tests annually the carrying amounts of its goodwill (impairment test). Upon transition to IFRS, Buzzi Unicem carried out such test, which confirmed the full recoverability of its carrying amounts. During the first half of the year 2005 there has been no indication of a potential impairment loss; therefore, no need for additional impairment test nor write-down has risen-up in the period

28 2. Property, plant and equipment The information on the main changes occurred in the first six month of the year are summarized in the following table. Value At December 31, 2004 Land and buildings Plant and machinery Industrial and commercial equipment Assets in progress and advances Other Total Book Value 1,965,997 3,254, ,322 81,927 97,277 5,660,399 Accumulated depreciation (590,024) (2,059,152) (173,284) (81,174) (2,903,634) Net value at December 31, ,375,973 1,195,724 87,038 81,927 16,103 2,756,765 Translation differences 120,481 61,961 9,307 5, ,892 Amortization (19,974) (65,533) (9,886) (2,999) (98,392) Reclassifications 2,481 11,628 2,508 (14,154) (1,236) 1,227 Increases 2,330 6,887 9,172 67,351 1,467 87,207 Changes in the consolidation area (4,073) (15,202) 291 (180) (182) (19,346) Disposals and other (2,968) (1,772) (198) (3,718) (133) (8,789) Net value at June 30, ,474,250 1,193,693 98, ,491 13,898 2,916,564 Value At June 30, 2005 Book Value 2,099,619 3,356, , ,491 93,777 5,972,008 Accumulated depreciation (625,369) (2,163,059) (187,137) (79,879) (3,055,444) Net value at June 30, ,474,250 1,193,693 98, ,491 13,898 2,916,564 Increases and decreases in the gross value refer to ordinary business investments and disposals. It is reminded that land on which natural aggregates are quarried is depleted in proportion to the volume of material extracted. The consolidation area changes are mainly driven by the exit from the scope of consolidation of Glens Falls Lehigh Cement Co. The translation differences, as explained in the paragraph Foreign currency translation, are chiefly due to the significant strengthening of the US dollar against the euro in the first half Real guarantees on assets of consolidated companies are represented by mortgages and liens on property, plant and equipment and amount to euro 2,612 thousand at June 2005 (euro 3,045 thousand at December 31, 2005; see Note 16). A description of capital expenditures and additions is illustrated in the Review of operations

29 3. Investment property The Investment property decreased from euro 9,613 thousand to euro 7,068 thousand primarily due to reclassifications made by the Mexican joint venture. They are booked at cost which is representative of the fair value of the assets at June 30, Investments in associates and Available-for-sale investments The following table shows the break-down of the equity investments of the group by nature and type: Value at June Value at Dec. 30, , 2004 Investments in associates (accounted for by the equity method) 160, ,309 Unconsolidated subsidiaries 5,635 2,597 Other companies 4,774 4,480 Total Available-for-sale investments 10,409 7,077 Total equity investments 170, ,386 As detailed below, compared to December 31, 2004, the total equity investments at June 30, 2005 increased by euro 15,306 thousand mainly due to the Investments in associates accounted for by the equity method. In particular the overall improvement, among which the positive exchange difference from Kosmos participation (euro 4,205 thousand) and the increase in the Houston Cement Co. partnership (euro 5,969 thousand), was partly offset by the write-down of Cementi Moccia for euro 2,285 thousand. Among the unconsolidated subsidiaries euro 2,590 thousand come from the increase in ownership of Nova Beton Srl from 33% to 100%, and euro 680 thousand from the conversion in equity of the interest bearing loans granted to Orionidas. Due to the nature of the participations and to the kind of relationships with the other group s subsidiaries, the impact of the non-consolidation on assets, liabilities and income statement is irrelevant. Value at Dec. 31, 2004 Valuation at Equity Purchases and subscriptions Write downs Disposals and other Value at June 30, 2005 Investments in associates (at equity) 148,309 1,683 6,348 3, ,283 Unconsolidated subsidiaries 2,597 3,270 (232) 5,635 Other companies 4, ,774 Total equity investments 155,386 1,683 9,623 4, ,692 The foreign exchange rate impact is equal to euro 4,562 thousand and is included under the caption Disposals and others