Broad geographical diversity; Large size, and strong market positions in highly consolidated areas; and Good cash flow generation. Exposure to the structurally difficult German market; Industry cyclicality and heavy capital intensity; and High debt leverage, albeit improving since mid 2003. The ratings on Germany-based cement producer HeidelbergCement AG reflect the group's high--albeit since mid-2003 improving--debt-leverage, and the cement industry's cyclicality and heavy capital intensiveness. These factors are offset by HeidelbergCement's large size, broad geographical diversity, strong market positions, and sustained ability to generate healthy funds from operations (FFO). With sales of €6.4 billion in 2003, HeidelbergCement is the fourth-largest cement producer worldwide after France-based Lafarge S.A. (BBB/Stable/A-2), Switzerland-based Holcim Ltd. (BBB+/Stable/A-2), and Mexico-based Cemex S.A. de C.V. (BBB-/Stable/--). Unadjusted net
