This trading update is published ahead of the announcement of the group’s interim results and dividend for the six months to 30 September 2003, due on 21 November.

FIRST HALF PERFORMANCE EXPECTATIONS

• Group turnover to increase by more than 10% to over £1 billion, driven mainly by further plasterboard volume growth and acquisitions.
  
• Underlying profit before tax (before goodwill and exceptional items) around £107 million, up about 12% on the corresponding period with results in local currency up some 6%.
  
• European operating profit around £97 million (£94 million corresponding period), despite higher restructuring costs, due to a solid performance from core businesses and favourable currency translation.
  
• North American operating profit up over 40% to around £17 million, benefiting from lower restructuring costs and a continuing robust volume performance. However, return on sales (before restructuring costs) will be lower due to marginally lower average selling prices and higher natural gas costs.
  
• Rest of the World operating profit substantially increased to around £7 million, underpinned by a good performance in Asia.
  
• Groupwide restructuring and redundancy costs, including the integration of Gyproc Benelux, of around £9 million (£12 million corresponding period) included within underlying pre-tax profit.

FIRST HALF TRADING HIGHLIGHTS

• Group plasterboard volumes (including acquisitions) will increase by around 10%, growing around 5% on a like-for-like basis due to the good level of housing activity in North America, continuing growth in most major European markets, and strong demand in the emerging markets of Eastern Europe and Asia.
  
• Plasterboard selling prices across Europe are slightly better compared to the corresponding period. In the US wallboard market, the average realised price has been lower compared to the corresponding period but is now back up at over $90 per thousand square feet.
  
• Overall building plaster volumes are expected to be similar to those of the corresponding period.
  
• Germany continues to be a difficult trading environment but positive actions are being taken to strengthen BPB’s market position and reduce the cost base.
  
• Integration of the acquired Belgian, French and Dutch operations of Gyproc Benelux is progressing to plan and consultations with employees are now underway regarding the possible closure of the Wijnegem site in Belgium.
  
• Cost savings continuing to run above 1% of groupwide turnover.

PLASTERBOARD LINER SUPPLY

BPB has recently entered into a new long-term supply arrangement for substantially increased quantities of plasterboard liner from the group’s 29% owned German associate, Tecnokarton. BPB’s UK paper mill at Purfleet has become uncompetitive and consultations with employees are now underway regarding the likely site closure by the year end.

At this preliminary stage, it is estimated that closure of the Purfleet mill would give rise to a pre-tax exceptional charge of around £20 million to cover asset write-down and redundancy costs. The new sourcing arrangements will reduce the overall cost of European plasterboard liner supplies, maintain security of supply, reduce the group’s exposure to currency movements, and facilitate management’s focus on developing BPB’s growing core plasterboard business.

OUTLOOK

Commenting on the group’s first half trading update and the full year outlook, Richard Cousins, chief executive said:

“BPB will post a solid overall first half result and we continue to anticipate progress for the year as a whole, as we focus hard on strengthening our core European and North American businesses to deliver future growth.

The new arrangements for sourcing low-cost plasterboard liner in Europe will involve a balance of in-house supply from the group’s UK mill at Aberdeen and external purchases, mainly from Tecnokarton, and will achieve the dual goals of reduced operating costs while maintaining security of supply.”

• BPB is the world leader in the supply of plasterboard and gypsum plasters, and a major supplier of insulation, ceiling tiles and related products for internal linings, serving growing markets for building systems in over 50 countries.
  
• There will be an analysts’ conference call at 9.00 am today to discuss this trading update. The dial-in number is +44 (0) 20 7162 0183 and the password is BPB.