Press release

At a meeting today, the Italcementi Board of Directors examined and approved the annual financial report as at December 31, 2009.
As a result of the severe worldwide economic and financial crisis in 2009, the Group experienced a reduction in sales volumes in all lines of business, although the slowdown eased in the last part of the year. While markets in the industrialized countries as a whole were weak, in some emerging countries the Group reported an improvement in sales compared with 2008.
The downturn in volumes, combined with stable average prices, pushed down revenues and results. Nevertheless, thanks to the benefits of the cost-cutting plan introduced as the crisis emerged, the Group was able to maintain its 2009 profit margins at the 2008 levels (recurring EBITDA/revenues 19.4%). In addition, the strong increase in cash flows from operations, assisted by incisive action to reduce working capital, and a lower level of financial investments brought an improvement of approximately 10% (259 million euro) in the net financial position compared with the position at the end of 2008.
The measures taken to raise efficiency brought significant savings in variable and fixed costs in 2009, estimated at more than 240 million euro; cost control and on-going efficiency programs will also produce cost reductions in 2010, albeit on a smaller scale.
For full-year 2009 cement and clinker sales totaled 55.7 million metric tons (-11.1% on an historic basis), aggregates sales were 39.1 million metric tons (-17.8%), and ready mixed concrete sales were 11.2 million cubic meters (-19.2%). The reduction in cement sales volumes was heavier in the industrialized countries, whereas Egypt and China reported significant growth and Morocco maintained the healthy levels of 2008.
Turning to revenues, the downturn in volumes, combined with stable average prices, generated 2009 consolidated revenues of 5,006.4 million euro, a reduction of 13.3% from 2008 (-13.6% at constant size and exchange rates).
Revenue growth was reported in several emerging countries, including Egypt, Morocco and China.
Operating results, too, were adversely affected by the significant volume effect, while the positive price trend of the first half of the year was undermined in part during the second half. Recurring EBITDA was 971.6 million euro (-12.7%); EBIT was 443.0 million euro
(-27.1%), reflecting the impact of impairment variations on industrial assets, mainly in Thailand, where the residual service life of a number of plants was shortened.
Profit before tax was 309.5 million euro (-27.7%), while net profit was 215.3 million euro (-22.2%). Group net profit, at 71.3 million euro, reflected a heavier decrease (-50.0%) since the positive contribution of companies with significant minority interests was not sufficient to counterbalance the general earnings decline.
Investments in fixed assets for 2009 totaled 742.3 million euro, and related largely to strategic projects in North America (Martinsburg), Morocco (Ait Baha), India (Yerraguntla) and Italy (Matera), where the new plants will already begin making a positive contribution to operations in 2010.
Thanks to careful cash flow management, and tight control of the working capital requirement in particular, at the end of 2009 Group net debt was significantly lower, at 2,419.9 million euro, an improvement of 259.4 million euro from 2,679.3 million euro at the end of 2008. Shareholders' equity rose to 4,692.2 million euro (4,621.6 million euro at the end of 2008). The gearing ratio (net debt / shareholders' equity) was 51.6% (60.8% at June 30, 2009, and 58.0% at the end of 2008).

Outlook – With economic and financial conditions remaining extremely difficult and unstable at global level, with the exception of some important emerging countries, in 2010 the Group will continue with its program to contain costs and keep working capital under tight control. The greater industrial efficiency generated by the operating start-up of new strategic plants will counterbalance in part the expected negative effect of the volume-price factor on some Group markets and the possible increase in energy costs.
These measures, together with the new investment plans scheduled for 2010 – if on a more limited scale than in 2009 –, will enable the Group to develop an even more solid and efficient structure to enjoy the benefits as the recovery begins.