HOCHTIEF Construction Services Europe Division
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HOCHTIEF Construction Services Europe Division

(EUR million) Q1-Q3 2007 Q1-Q3 2006 Percentage change Q3 2007 Q3 2006 Full Year 2006
New orders 2,222.3 1,593.1 39.5 810.9 491.4 2,443.2
Work done 1,871.9 1,777.4 5.3 712.4 671.5 2,452.8
Order backlog 3,326.3 2,790.9 19.2 3,326.3 2,790.9 2,966.5
External sales 1,521.6 1,445.0 5.3 615.2 579.9 2,010.8
Operating earnings (EBITA) -128.6 3.0 - 1.6 0.3 -2.7
Profit before taxes -127.8 9.8 - 2.1 1.2 2.1
Capital expenditure 18.5 17.7 4.5 9.0 6.0 25.8
Net assets 380.7 450.0 -15.4 380.7 450.0 486.5
Employees 8959
(End Q3 2007)
(End Q3 2006)
2.9 8959
(End Q3 2007)
(End Q3 2006)
(2006 average)

Orders in the HOCHTIEF Construction Services Europe division developed favorably in the third quarter.

New orders closed the first nine months of the fiscal year EUR 629.2 million, or nearly 40 percent, higher than the prior year's figure. A key contribution was made by our activities in Central and Eastern Europe, especially Russia and Poland. Four major projects were secured in the third quarter. Compared with the corresponding three-month period of 2006, new orders thus climbed by 65 percent. As of September 30, work done was EUR 94.5 million, or 5.3 percent, higher than a year earlier. In the third quarter, the previous year's figure was bettered by 6.1 percent. The order backlog is also high, representing a forward order book of well over a year.

In keeping with work done, external sales had also advanced by 5.3 percent in the period to September 30. Our activities in Poland and the Czech Republic made a substantial contribution here.

Losses in the German building construction sector have already been reported and incorporated in the earnings figures in previous quarters. The measures initiated in 2006, especially the selective contracting practices, gave rise to positive contributions to operating earnings and profit before taxes in the third quarter of 2007. We were thus able to break the loss pattern established in the first halfyear.

Compared with the previous year, the net assets decreased by EUR 69.3 million because of the division's negative results.

The climate in the German building construction market remains inhospitable. In this segment, HOCHTIEF Europe is therefore focusing on regular clients and concentrating on high-margin projects within its areas of expertise. The emphasis in Germany in the third quarter was on office and health sector property projects. In Düsseldorf, the Sky Office tower project, worth about EUR 74 million, is scheduled for completion in summer 2009. In Hanover, HOCHTIEF is part of a joint venture constructing an office and administration building for Vereinigte Hannoversche Versicherung aG.

HOCHTIEF's share in the project, which runs until spring 2009, is worth more than EUR 54 million.In the Porz district of Cologne, HOCHTIEF is building a forensic psychiatric hospital. With a contract value of almost EUR 23 million, the hospital is designed to meet the very latest security and therapeutic standards.

In the third quarter, our promising real estate development business acquired residential projects with a total volume of some EUR 85 million.

We continued successfully to reinforce our activities in Central and Eastern Europe in the third quarter. In Russia, HOCHTIEF Construction is building a flood protection dam for the St. Petersburg conurbation in a joint venture with a Dutch partner. The project which is scheduled for conclusion in 2012 has a total volume of EUR 350 million. HOCHTIEF's share is some EUR 135 million. At Moscow's Sheremetyevo Airport, construction of the new railroad station is entering the next phase. This order is worth almost EUR 32 million. In the Czech Republic, HOCHTIEF Construction has won the follow-on contract to extend Prague's Ring Road urban expressway. The volume of the Tunnel Blanka project exceeds EUR 56 million. Finally, in the center of the Polish capital, Warsaw, we are erecting the 22-floor Platinum Towers apartment building which is to be completed by August 2009; the contract value is over EUR 47 million.

HOCHTIEF Europe outlook

The action taken in the context of restructuring the German building construction business is improving the quality of the division's new orders. The decision to accept only high-margin contracts from now on may result in a reduction in new orders in the German building construction business and corresponding capacity alignments. HOCHTIEF Europe expects to post a profit before taxes for the fourth quarter. This would enable it to meet the forecast published in the first quarter, with a loss of up to EUR 120 million for fiscal 2007 as a whole.
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