This trading update is published ahead of the announcement of the group's
interim results and dividend for the six months to 30 September 2001, due on
29 November.

FIRST HALF PERFORMANCE EXPECTATIONS

• Group turnover to increase by up to 10% to almost £850 million, due principally to last year's acquisitions in North America and Europe.
• Underlying profit before tax (pre-goodwill and exceptional items) of around £70 million in line with expectations, down approximately 35% on the corresponding period but up approximately 35% on last year's second-half.
• Very low US wallboard selling prices, resulting in a North American operating loss of £16 million (after charging £3 million of plant closure costs) against a corresponding period profit of £12 million. However, since July prices have started to improve.
• Recovery in European operating profit to nearly £100 million from £78 million in the difficult second-half of last year, but below the comparative period's £105 million due to lower German volumes.
  
• Redundancy costs groupwide will be about £4 million (£1 million corresponding period).
  
• Interest costs will rise over £3 million to £15 million (on average net debt of £500 million) and the group tax rate is expected to be adversely affected by unrelieved US trading losses.

FIRST HALF TRADING CONDITIONS

• Group plasterboard volumes, including acquisitions, will be around 15% higher (but up 3% on a like-for-like basis). North American volumes, including Celotex's recovery of market share, will increase substantially but European volumes are expected to be marginally lower due to a significant fall in German demand.
• US wallboard prices declined further, reaching a low in July around the mid $60's per 1,000 square feet, approximately half the level of a year earlier. However, price increases have subsequently been implemented, raising average selling prices by about 30%.
• Across Europe, the selling price improvements made in the previous autumn-spring period came under some competitive pressure as cost inflation eased.
  
• Headline plaster volumes are expected to grow by almost 20%, with good progress in the development of the group's business supported by acquisitions in Egypt and Turkey. Like-for-like group volumes will increase by up to 5%, driven by continuing strong demand in Spain and Eastern Europe.
• Group cost reduction is progressing to plan, with the German business restructured and workforce reduced by 20%, and the North American restructuring on course to meet the targeted rate of annual savings of at least US$50 million by March 2003.

FIRST HALF KEY TRENDS

• Difficult market conditions in the US and Germany, as indicated in last year's preliminary results announcement, have adversely affected first-half results.
• European sales margin has improved on last year's second-half, despite continuing demand weakness in Germany, due to easing commodity cost inflation and further group cost reduction. However, selling prices are now showing some signs of softness compared to the improved levels of last year's second-half.
  
• US wallboard demand is running ahead of last year and operating performance has started to improve, reflecting the impact of the substantial cost savings programme and recent selling price movements.
  
• Challenging trading conditions are expected to continue in the second-half, with the global economic outlook made more uncertain by the recent tragic events in the US.

• BPB is a world leader in the supply of plasterboard, plasters, insulation, ceiling tiles and related products for internal linings, serving growing markets for building systems in over 50 countries.
  
• The group's interim results and dividend for 2001/02 will be announced on 29 November 2001 and will include a re-statement of the corresponding period and 31 March 2001 comparatives for eps and certain other items as a result of the adoption of the new financial reporting standard on deferred tax (FRS 19).

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