Press release

At a meeting yesterday, the Italcementi Board of Directors examined and approved the consolidated quarterly report for the year to September 30, 2008.
As announced at the end of October, the planned purchase of SET Group operations in Turkey by OJSC Holding Company Sibirskiy Cement did not take place on the agreed closing date, and the Group has therefore decided to review its options with a view to strategically optimizing its operations in Turkey; consequently, line-by-line consolidation of SET Group operations has been resumed as from this quarterly report.
In the third quarter of the year, Group overall sales volumes were down with respect to the year-earlier period although the reduction was smaller than in the first half of 2008. This also takes account of the fact that the crisis in the financial sector now spreading through the real economy began to intensify in September, bringing dramatic changes in the macroeconomic scenario. Against this background, the construction industry experienced a further slowdown in the mature countries together with growth, albeit at a slower rate, in some emerging countries.
In the first nine months of the year, the Italcementi Group reported a reduction in cement and clinker sales volumes to 48.3 million metric tons (-3.0% on a like-forlike basis). The sharpest downturns were in Italy, Spain and North America and in Trading, in the latter case due to the increase in domestic market sales in the main emerging countries, which reduced volumes available for export. Ready mixed concrete sales totaled 10.8 million cubic meters, a downturn of 3.6% or 37% on an historic basis including the effect of the deconsolidation of Calcestruzzi S.p.A. in Italy. Sales of aggregates totaled 36.9 million metric tons
(-4.2% on a like-for-like basis), largely owing to the sharp decrease in Spain.
Despite the reduction in sales volumes, the positive sales price trend – with the exception of North America and Turkey – enabled the Group to report revenues of 4,419.4 million euro. The 3.5% improvement in sales performance was offset by the changes in the scope of consolidation (-4.8%) and the exchange-rate effect (-2.9%), leading to an overall decrease of 4.2% in revenues.
Operating results were affected by the rise in operating expenses (specifically, costs for energy, logistics and procurement of raw materials), countered only in part by higher sales prices, the reduction in sales volumes and the negative exchange-rate effect were reflected in operating results. Recurring EBITDA at September 30, 2008, was 906.0 million euro (-18.1%) while EBIT, at 577.8 million euro, fell by 26.5% with respect to the situation at September 30, 2007. In contrast to the sharper slowdown on the mature markets, some emerging countries (Bulgaria, Egypt and India) and Trading reported an upturn in results.
Total net profit for the first nine months was 325.2 million euro, a decrease of 30.2%. Group net profit was 195.5 million euro
(-37.9%).
During the January-September period, the Group continued its large planned investments in industrial and financial fixed assets, with an outlay of 704.2 million euro, of which approximately 2/3 was capital expenditure to improve production facilities and raise operating efficiency.
At September 30, 2008, net debt stood at 2,581.4 million euro and shareholders' equity was 4,696.7 million euro. The gearing ratio (net debt/equity) was 55.0% (from 58.7% at June 30, 2008).

Outlook – The negative economic situation triggered by the financial market crisis is impacting the real economy of the industrialized countries and causing a slowdown in the growth of the emerging economies. The cyclical downturn had already been anticipated by the construction sector, where the slowdown is now intensifying on the majority of markets.
The recent fall in oil prices on the international markets – absorbed in part by the strengthening of the dollar – confirms the volatility of the economic situation and will not produce immediate effects on operating expenses. The benefit of lower oil prices is expected to emerge in the early months of 2009.
The Group will continue strategic action to strengthen its industrial facilities, whose effects will be felt as from the end of next year. Meanwhile the measures introduced to contain fixed costs have enabled the Group to invert the tendency of these costs to rise, with the erosion of operating results already beginning to slow in the second half of this year.

Subject to currently unforeseeable events, full-year results are expected to be down on 2007, in line with the trend of the first nine months of the year.

The Board of Directors also verified full compliance with the new Consob dispositions envisaged by the «Market Regulation» regarding listing conditions, both for the companies that «control companies whose registered office is in a non-EU State» and for companies «subject to the direction and coordination of another company».

THIRD QUARTER 2008
For the third quarter, Group total sales volumes, on a like-for-like basis, were down on those of the year-earlier period, although the reduction was smaller than in the first half of the year.
The sales volume downturn in cement and clinker arose mainly in North America, the Med Rim countries (decreases in Egypt, Turkey and Bulgaria), and in Trading.
Central Western Europe recorded only a small decrease, while sales volumes in Asia made strong progress (significant growth in all countries with the sole exception of Kazakhstan).
Performance in aggregates reflected the slackening in Central Western Europe due to performance in Spain and France.
The downturn in ready mixed concrete arose as a result not only of the deconsolidation of the ready mixed concrete business in Italy but also of slower performance in all macro areas.
Third-quarter revenues (1,493.3 million euro) reflected the negative exchange-rate effect and consolidation effect, but continued to be buoyed by a positive sales price trend, enabling the reduction to be contained at 3.0%.
Operating expenses, and variable expenses in particular, increased sharply, with a negative impact on the quarter’s operating results. Recurring EBITDA (312.7 million euro) fell by 18.9%, while EBIT (199.8 million euro) shed 28.2%.
Total net profit was adversely affected by the write-down of 11.4 million euro on the equity investment in Calcestruzzi but assisted by a smaller tax charge; it amounted to 106.5 million euro, a decrease of 30.0% from Q3 2007.

BUSINESS PERFORMANCE IN THE YEAR TO SEPTEMBER 30, 2008
In the year to September 30, 2008, the slide in sales volumes in cement and clinker arose chiefly on the mature markets (notably Italy, Spain and North America), and in Trading. The emerging countries as a whole reported overall growth in domestic market sales, despite reductions in Turkey, Thailand and Kazakhstan, and consequently a reduction in product availability for export and trading.
In aggregates, sales volumes on a like-for-like basis were affected by the significant downturn in Spain, set against a slight reduction in France and positive performance on the other markets (notably Greece and Morocco).
In ready mixed concrete, also on a like-for-like basis, the slowdown in Central Western Europe (generated by negative performance in Spain and Greece) caused a reduction in total sales volumes, despite healthy performance in Egypt and Morocco.

CENTRAL WESTERN EUROPE (Italy, France, Belgium, Spain, Greece)
In Italy cement consumption dropped sharply in the first nine months, reflecting the decline in all segments of the construction market. In the third quarter, although the Group sales trend slowed, it was better than the market trend. Overall revenues in the cement sector for the first nine months were slightly up on the year-earlier period, thanks to a positive sales price effect counterbalancing the slide in sales volumes. The increase in operating expenses, offset only in part by revenues per unit, and in non-recurring expense for the rationalization of Italian production facilities produced a significant reduction in operating results.
In France, cement consumption in the third quarter dropped slightly. Group sales volumes were in line with the market trend in the third quarter and down in the first nine months compared with the year-earlier period, owing to strikes in February and saturation of production capacity in the first half. Overall revenues improved since the decrease in volumes was balanced by higher sales prices. Despite a positive third quarter, operating results were down at the end of September as a result of a sharp increase in operating expenses (mainly energy and raw materials).
In Belgium, in the third quarter Group sales volumes rose in the three segments and sales prices were positive, producing an increase in revenues. Revenues also rose for the nine months, while operating results were penalized by higher costs, especially for energy.
In Spain, the drop in demand for cement and construction materials sharpened in the third quarter due to the crisis in residential building, especially in Andalusia; this caused Group sales to decrease. Results for the nine months slackened due to the business slowdown, although they benefited from a reduction in operating expenses obtained through efficiency improvements on the new Malaga line.
In Greece, although domestic demand dropped sharply during the third quarter and the nine months, Group cement sales volumes increased YoY thanks to exports. Overall, operating results were down at September 30 despite a healthy third quarter, since the increase in costs was not fully countered by the rise in sales prices.

NORTH AMERICA (USA, Canada, Puerto Rico)
In an economic climate severely hit by the effects of the crisis, for the third quarter and the first nine months the Group reported a downturn in cement and clinker sales volumes. In ready mixed concrete, volumes for the first nine months increased as a result of the acquisitions in 2007 and 2008.
Overall, operating results for the third quarter and first nine months of 2008 were significantly down on the year-earlier periods.

EASTERN EUROPE AND SOUTHERN MED RIM (Egypt, Morocco, Bulgaria, Turkey)
In Egypt, domestic cement demand climbed strongly in the first nine months, fully absorbing Group production. Demand also rose for ready mixed concrete, which the Group met thanks to its recent acquisitions. The generally positive trend in sales prices and the increase in sales volumes produced a small improvement in operating results, which reflected a rise in some operating expenses and the negative exchange-rate effect.
In Morocco, despite a slowdown in the third quarter, demand for cement rose in the nine months. In the third quarter the Group worked at full production capacity and its operating results were up on 2007, thanks to higher sales volumes and prices, which counterbalanced the increase in operating expenses. For the nine months, the positive sales price-volume dynamic failed to offset in full the increase in fuel costs and clinker purchases outside the Group.
In Bulgaria, the cement market continued to grow at a steady pace, assisted by current infrastructure projects. Group performance was slower than the country trend, since activities are located mainly on the coast where work sites cannot operate during the tourist season. The positive sales price trend produced an increase in revenues and operating results.
In Turkey the construction industry in 2008 was affected by the weak general economic situation and the climate of uncertainty, with a downturn in private real estate investment and public works for infrastructures. This situation, together with increased production capacity at other players, caused sales prices to fall with a negative impact on Group revenues. Higher energy costs and the negative sales price trend caused a decline in operating results compared with the particularly positive performance of 2007.

ASIA (Thailand, India, China, Kazakhstan)
In Thailand, whose political situation remains unstable, domestic cement demand continued to fall, largely as a result of delays on infrastructure projects and private initiatives. Group domestic cement sales volumes decreased in the third quarter, countered by an increase in exports, although export margins are smaller. Overall, operating results in the third quarter and first nine months were down on the yearearlier periods, adversely affected by the increase in some operating expenses and the negative exchange-rate effect.
In India, lively economic growth produced a strong improvement in Group domestic cement sales volumes. Operating results for the third quarter were slightly down, however, due to a significant increase in energy costs and the sharp depreciation of the rupee. Results strengthened in the first nine months, thanks to strong business performance and a favorable sales price trend.
In China, in the third quarter, Group cement sales volumes made significant YoY progress. Operating results in the first nine months were negative, largely due to the sharp increase in energy costs and adverse meteorological conditions in the first quarter.
In Kazakhstan, the market decline of the first half intensified in the third quarter.
Also, the temporary suspension on quarrying licenses in the first quarter of the year caused a business slowdown in 2008, with a significant impact on results. Nevertheless, the downturn was offset by an increase in sales prices.

Cement/Clinker Trading
Clinker and cement availability for export in the first nine months was affected by the reduced contribution from the Southern Med Rim countries as they responded to strong local demand. Operating results rose in the nine months thanks to the improvement in margins and the positive consolidation effect (consolidation of Hilal Cement as from September 30, 2007), which more than made up for the decrease in sales volumes and the negative exchange-rate effect.

FINANCIAL PERFORMANCE
In the year to September 30, 2008, revenues totaled 4,419.4 million euro, down 4.2% from the year-earlier period. This overall reduction arose from business growth of +3.5% assisted by the positive sales price trend, which more than counterbalanced the negative sales volume effect, the negative overall effect of the change in the scope of consolidation (-4.8%, reflecting the positive contribution of acquisitions and the deconsolidation of the Calcestruzzi group) and a negative exchange-rate effect
(-2.9% largely for the US dollar and Egyptian pound).
At constant size and exchange rates, Eastern Europe and Southern Med Rim provided the largest contributions to revenue growth, in particular Egypt, although performance was up in all countries with the exception of Turkey, while North America reported a sharp decline. Positive contributions came from Trading (despite lower sales volumes) and Asia, thanks to India. Central Western Europe reported a marginal improvement: the sharp decline in Spain was more than offset by healthy progress in France-Belgium and contained growth, on a like-for-like basis, in the other countries.
Recurring EBITDA (906 million euro) and EBIT (577.8 million euro) fell by 18.1% and 26.5% respectively. The rise in operating expenses (especially costs for energy, logistics and procurement of raw materials and semifinished goods) was not entirely counterbalanced by the increase in sales prices; operating results were also affected by significant negative effects in sales volumes and exchangerates.
The breakdown of results by area and country shows a sharp decline on the mature markets where there was a general downturn in results, particularly in Italy, North America and Spain. Trends varied on the emerging markets, with slowdowns in Turkey, Morocco, Thailand and Kazakhstan and progress in Bulgaria, Egypt (despite the Q3 slide), India and Trading.
Net profit for the year to September 30, 2008, after tax expense of 135.9 million euro, was 325.2 million euro, down by 30.2% from the year-earlier period. This result was due mainly to the decline in operating results, although the rise in net finance costs (up by 12.2% from the year-earlier period) and the write-down on the Calcestruzzi equity investment were significant factors. Positive factors were the share of results of associates (18.7 million euro) and the decrease in tax expense with respect to 2007, partly as a result of the increased weight of the countries with lower tax loads and a reduction in tax rates in some countries (Spain and Morocco in particular).
Group net profit was 195.5 million euro (314.8 million euro for the year to September 30, 2007).

Net debt at September 30, 2008, stood at 2,581.4 million euro, up by 321.1 million euro from December 31, 2007 (restated to exclude amounts for the Calcestruzzi group, no longer included in the scope of consolidation) and down by 26.9 million euro from June 30, 2008.
Key factors in this trend were the significant level of investments in fixed assets for the period (720.0 million euro, of which capital expenditure for 484.9 million euro and investments in financial fixed assets for 235.1 million euro) and distribution of dividends (171.5 million euro), which were not fully covered by cash flows from operations (511.6 million euro). Compared with the year-earlier period, the first nine months of 2007 benefited from an improvement of 114.9 million euro in cash flows from operations, as a result of the reduction in working capital following no-recourse factoring of trade receivables.
After the acquisitions of Ciments Français shares during the year, at September 30, 2008, the equity investment in the company represented 80.98% of share capital (89.78% of voting rights).
Under the program approved by the Shareholders' Meeting of April 14, 2008, during the third quarter Ciments Français bought back 294,432 shares for approximately 27.3 million euro, to be added to the 272,567 shares bought back in the first six months (32.8 million euro). At a meeting on July 31, 2008, the Ciments Français S.A. Board of Directors carried a resolution to cancel 964,522 shares. A total of 340,132 treasury shares were held at September 30, 2008, representing  0.93% of share capital.
At September 30, 2008, Group total shareholders' equity was 4,696.7 million euro. The gearing ratio (net debt/consolidated shareholders' equity) was 55.0% at September 30 (58.7% at June 30, 2008).

OUTLOOK
The negative economic situation triggered by the financial market crisis is impacting the real economy of the industrialized countries and causing a slowdown in the growth of the emerging economies. The cyclical downturn had already been anticipated by the construction sector, where the slowdown is now intensifying on the majority of markets.
The recent fall in oil prices on the international markets – absorbed in part by the strengthening of the dollar – confirms the volatility of the economic situation and will not produce immediate effects on operating expenses. The benefit of lower oil prices is expected to emerge in the early months of 2009.
The Group will continue strategic action to strengthen its industrial facilities, whose effects will be felt as from the end of next year. Meanwhile the measures introduced to contain fixed costs have enabled the Group to invert the tendency of these costs to rise, with the erosion of operating results already beginning to slow in the second half of this year.
Subject to currently unforeseeable events, full-year results are expected to be down on 2007, in line with the trend of the first nine months of the year.

The Board of Directors also verified full compliance with the new Consob dispositions envisaged by the «Market Regulation» regarding listing conditions, both for the companies that «control companies whose registered office is in a non-EU State» and for companies «subject to the direction and coordination of another company».

The manager in charge of preparing the company’s financial reports, Carlo Bianchini, declares, pursuant to paragraph 2 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 entries.