HOCHTIEF Annual Report 2006 - Management Report

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Looking Ahead

Major potential for continued profitable growth

New orders and order backlog likely to sustain high levels
Consolidated net profit to exceed EUR 100 million
HOCHTIEF Group continuing to create value
Continuity in dividend growth

Well-founded optimism for HOCHTIEF's future growth

HOCHTIEF is excellently placed to meet the challenges of global competition. The foundations are laid by our strategy of integrating traditional construction capabilities with innovative services to span the entire value chain involved in complex project operations. Our international focus and our four capability modules-development, construction and services plus concessions and operation-allow us to continue profiting from divergent economic trends. Our early mover advantage in airports and public-private partnership and the systematic expansion of our contract mining business have already secured us a strong market position. This all adds up to ample potential for further profitable growth throughout the Group.

Our projections for 2007 are based on the assumption that the situation in areas of political tension will not worsen, there will be no crisis-scale weakening of the economy and the international financial markets will not be restrained by turbulence. With respect to euro exchange rates, we assume the 2007 averages will be around USD 1.30 and AUD 1.75.

Our targets for key performance indicators:

New orders and order backlog to maintain high levels in 2007

After setting new all-time records in the year under review, HOCHTIEF forecasts that new orders will steady off at a high level during fiscal 2007. Given that we secured a number of exceptionally large contracts in 2006 which far surpassed our expectations, however, new orders for 2007 are likely to be short of the prior-year total.

Our forecast for the order backlog is on a par with the prior-year figure, representing about eighteen months of

work in hand. Our international activities will account for the lion's share-some 90 percent-of contracts.

Group sales close to 2006 peak

Based on our order backlog from 2006 and the anticipated influx of new orders, we project sales for 2007 on a par with the previous year's figure. HOCHTIEF expects to generate about 15 percent of sales in Germany. We forecast sales shares of around ten percent for the rest of Europe, about 40 percent for America and approximately 35 percent for the Asia-Pacific region.

Consolidated net profit to exceed EUR 100 million

HOCHTIEF aims to further boost earnings in 2007, with targets for both profit before taxes and consolidated net profit above prior-year levels. Consolidated net profit is set to pass the EUR 100 million mark. This means 2007 will see HOCHTIEF already exceed the medium-term target we communicated during 2006.

Sustained continuity in dividends

HOCHTIEF has a longstanding policy of continuous dividend growth in line with the Group's business performance. This continuity is underscored by a steady stream of dividend increases over the last several years. The Executive Board's proposal for the use of net profit for fiscal 2006 once again provides for a dividend increase relative to the prior year, this time to EUR 1.10 per share. Setting aside the EUR 0.10 bonus paid for 2005, this marks a 37.5 percent rise in dividends over the previous year. It also means HOCHTIEF will have increased its dividends by over 17 percent a year on average for five years in succession. HOCHTIEF plans to retain this dividend policy unchanged: In view of the sound earnings outlook, we hold out the prospect of a further attractive share in net profit for our shareholders in 2007.