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Titan reports Q1 results

World Cement,

Titan Group Turnover for the first quarter of 2010 reached €286 million, down by 7% compared to the first quarter of 2009. EBITDA fell by 5% to €61 million. The Group’s net profits, after minority interests and taxes, stood at €25 million, up by 16% compared to last year.

The impact of the continuing drop in demand in the three out of the four regions where the Group operates, namely Greece, USA and Southeastern Europe, was only partially compensated by the growing contribution of the Egyptian activities and the increased exports from Greece.

It should be noted that the first quarter results are not necessarily representative of full year results, due to the seasonality of demand for the Group's products. The decline of demand for building products was aggravated by the comparatively heavier and more prolonged winter this year compared to last year, particularly in the USA.

In Greece, construction activity declined for a fourth consecutive year, and there was a significant drop in sales for all Group products. However, increased exports and the comparatively lower cost of solid fuels, versus last year’s period, helped support operating results. EBITDA decreased by 1% compared to the first quarter of 2009, and stood at €22 million.

In the USA, the already extremely difficult situation in the building materials market was exacerbated by adverse weather conditions, leading to a further significant drop in sales. EBITDA was negative by €6 million.

Southeastern Europe
In Southeastern Europe, the construction sector continued on a negative trend due to the financial crisis, with Bulgaria’s market suffering the most. The Group’s new greenfield plant in Albania, with an annual capacity of 1.5 million tons, started its operation in late March, and had no economic contribution during the first quarter. In total, EBITDA in Southeastern Europe rose by 61% to €12 million, assisted by positive extraordinary gains.

In Egypt, demand for construction materials continued its rise, but at a lower pace. The second production line of the Beni Suef plant, with an annual capacity of 1.5 million tons, contributed significantly to the rise in profit levels. In Turkey demand grew, but there was also pressure on exports, leading to stagnation in financial results. EBITDA increased by 30% and amounted to €34 million, rendering the Eastern Mediterranean region the Group’s most profitable for the year’s first quarter.

On 23/3/10, Titan Group signed a contract with the International Finance Corporation (IFC) providing for an €80 million equity investment by IFC for roughly 16% of Titan’s business in Egypt. IFC’s investment is expected to be concluded by mid-2010. The collaboration with an organization such as IFC is expected to add significant value to Titan’s investment in Egypt.

On 30/3/10, Titan America sold its Cumberland quarry in Kentucky, USA for $42 million, excluding outstanding receivables. This quarry is located far from the Group’s activities and was not a strategically important asset.

The Group's overall results were positively affected by the reduction in financial expenses and lower taxation resulting from the tax return in the USA. Net debt amounted to €988 million, compared to €1154 million at the same time last year. Finally, the Group’s total investments were limited to €22 million this quarter versus €55 million in the same period last year, due to the completion of the major project in Egypt.

Significant post-balance sheet events
On 6/4/10, the US Army Corps of Engineers issued to Titan Group’s subsidiary in the US, Tarmac America LLC, a permit to mine in the Lake Belt area of Miami-Dade in Florida. The new permit has a tenure of 20 years. This permit is not expected to have a significant impact on current operations and profitability, within the context of current depressed market conditions. However, it represents the positive outcome of a three-year-long process and allows Titan a long term focus on operating excellence and environmental stewardship in the region.

On 21/4/10, Standard’s & Poor's reconfirmed the Group’s long term credit rating at BB+, with positive outlook.

2010 outlook
In Greece, the reduction in disposable income, as a result of the measures to reduce public sector deficits, combined with the credit crunch, are expected to result in a further drop in building activity.

A small recovery in construction activity is expected in the USA within 2010. The Portland Cement Association forecasts a 5% increase of cement consumption for 2010, from the extremely low levels of 2009.

In SE Europe, no material changes compared to 2009 are expected as far as market conditions are concerned. The Group’s results however will benefit in the second quarter by the commissioning of the new 1.5 million t greenfield plant in Albania.

In Egypt, a further increase in demand for cement is expected in 2010, but at a lower rate than in 2009. This fact, in combination with the operation of the new 1.5 million ton production line in the Beni Suef plant, is expected to have a positive impact on the Group's results in the region. In Turkey, the market is expected to partially recover in 2010.

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