The ratings on HeidelbergCement AG, the fourth-largest cement producer worldwide, reflect the group's above-average business profile--translating into a consistent ability to generate satisfactory cash flow--and currently weak financial profile attributable to significant debt-financed external growth over the past few years. With €3.2 billion of sales in the first half of 2002, HeidelbergCement enjoys broad geographic diversification and strong market positions in highly consolidated markets. These factors help enhance cash flow resilience--as shown by a limited 7% like-for-like decline of EBITDA, to €493 million, in the first half of 2002--despite very challenging conditions in Germany (where EBITDA dropped by 39% to €41 million). The company's strengths are tempered by the industry's overall cyclicality and seasonality; the heavy capital outlays required; and
