PERFORMANCE IN THE FIRST QUARTER OF 2007

During the first three months, the Italcementi Group reported significant growth in sales volumes in all lines of business compared with the first quarter of 2006, itself a period characterized by very strong performance. Cement sales volumes for the first quarter increased by 7.6% (or 4.4% at constant size) to 15.3 million metric tons; aggregates rose to 14.4 million metric tons, a 10.7% improvement (9.4% at constant size); ready mixed concrete sales volumes climbed 11.4% (7.6% at constant size) to 5.4 million cubic meters.

The 127.8 million euro increase in revenues (+9.9%) arose entirely from the improvement in the Group’s business performance (sales volumes and prices), since the negative exchange-rate effect (-2.2%) was offset by the change in the consolidation area (+2.2%).
The most significant increases in value terms were obtained in the France-Belgium area, Italy, Turkey and Spain. Double-digit growth was reported by the majority of countries, with notable progress in Kazakhstan, Turkey and Bulgaria. In North America, where the market was particularly weak, in part due to poor meteorological conditions, sales volumes decreased compared with the very lively performance of the year-earlier first quarter.

Rises in both fixed and variable costs offset the positive impact of sales volumes and sales prices, with the result that operating figures grew at a lower rate than revenues.

Recurring gross operating profit, at 282.6 million euro, gained 6.4%, with significant contributions from the France-Belgium area and, to a lesser extent, from Italy and the emerging countries (notably Turkey, Bulgaria, Morocco, India), with the latter reporting particularly strong growth rates.
Operating profit increased by 5.1% to 176.1 million euro, while net profit progressed by 5.6% to 92.9 million euro.
Net profit attributable to the Group, which benefited from the increase in equity investments in some subsidiaries (India and Egypt), amounted to 55.3 million euro (+9.8%).

Net debt stood at 2,051.7 million euro at March 31, down by 158.6 million euro from December 31, 2006, in part thanks to the effect of the securitization without recourse of trade receivables for about 115 million euro and despite high capital expenditure and financial investments (about 215 million euro). Gearing (net debt/shareholders' equity) was 43.2% at the end of March, compared with 47.4% at the end of 2006.

OUTLOOK

The overall trend in the construction industry in the first quarter was favorable, despite the slowdown in the residential sector in the USA; it is probable that the dynamic investment mood in public works and non-residential building will offset the impact of this downturn.
Although the construction cycle will remain positive, it could slacken in the Group’s other industrialized countries during the year. Conversely, strong growth should continue in the emerging countries, with the exception of Thailand.
Against this background, the Group expects an overall improvement in revenues driven by the positive effect of sales volumes and prices, although this will be accompanied by higher operating expenses, especially for energy and logistics.
Given these trends, and the benefits of the action taken to boost industrial and organizational efficiency, the Group confirms the projection announced when the 2006 financial statements were approved: in the absence of currently unforeseeable events, 2007 full-year operating results will be in line with the extremely positive figures posted for 2006.

The Board of Directors also decided to convene an ordinary and an extraordinary session of the Shareholders' Meeting on June 20, 2007 (first call) and June 21 (second call).
The ordinary session will be asked to approve the remuneration of committees and bodies formed under the Corporate Governance system, a proposal for a new stock option plan for directors and delegation of powers to the Board of Directors to raise share capital in connection with the plan. The purpose of the plan, reserved for a number of directors of Italcementi S.p.A. and its subsidiaries, is to link the beneficiaries’ overall remuneration to the medium/long-term success of the company and to creation of shareholder value. The plan envisages three-year cycles offering options for the subscription or purchase of Italcementi ordinary and or savings shares for a three-year period beginning with the commencement of the term of office of the Board of Directors. Exercised options will entitle the holder to subscribe or purchase Italcementi ordinary and or savings shares on a 1:1 basis.
The extraordinary session will discuss the amendment of the company By-laws in line with the provisions of Italy’s Law for the Protection of Savings.