The ratings on Germany-based cement producer HeidelbergCement AG reflect the group's aggressive--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 geographic diversity, strong market positions, and sustained ability to generate healthy funds from operations (FFO). HeidelbergCement is the fourth-largest cement producer worldwide after France-based Lafarge S.A. (BBB/Negative/A-3), Switzerland-based Holcim Ltd. (BBB+/Stable/A-2), and Mexico-based Cemex S.A. de C.V. (BBB-/Stable/--). In the first nine months of 2003, ended Sept. 30, HeidelbergCement posted a 4% decline in sales to €4.8 billion compared with the same period in 2002, reflecting mainly ongoing challenging conditions in the German market as well as negative exchange-rate effects on its U.S. operations. Operating margins decreased
