This trading update precedes the publication of the group’s preliminary results for the year to 31 March 2004, due on 20 May 2004.

FULL YEAR PERFORMANCE EXPECTATIONS

• Group turnover up 12% to over £2.1 billion, driven by further growth in global plasterboard demand, acquisitions and improved selling prices.
  
• Underlying profit before tax (before goodwill and exceptional items) up by some 15% to around £220 million (2002/03: £191.6 million), with results in local currency up some 11%.
  
• Underlying operating profit up by about 12% to over £245 million, after group restructuring and redundancy costs of circa £20 million (similar to last year) mostly relating to the Gyproc Benelux integration and European efficiency initiatives.
  
• European profit up by around 6% to over £190 million, with continuing good overall sales volume growth and the benefit of a stronger Euro expected to more than offset the impact of higher regional restructuring costs and difficult trading conditions in Germany.
  
• North American profit up by over 30% to around £40 million, despite higher costs (mainly energy) and a weaker US dollar, due to improving average selling prices, further strong growth in wallboard volumes and a significant reduction in restructuring costs.
  
• Rest of the World profit up by two-thirds to over £15 million, underpinned by a good Asian performance.
  
• Group underlying tax rate expected to remain at around 32%.
  
• Net debt expected to reduce by more than £100 million to around
  £550 million (at current exchange rates) by the year end, as a result of strong operating cash flow and favourable currency translation.

GROUP TRADING HIGHLIGHTS

• Group plasterboard volumes (including acquisitions) will increase by nearly 11%, with overall sales on a like-for-like basis advancing by some 6% due to continuing strong housing activity in the US and Canada, further volume growth in France and the British Isles, and greater demand in the emerging markets of Eastern Europe and Asia.
  
• Improvements in average selling prices across Europe are likely to have broadly offset the impact of cost inflation, particularly freight and energy costs which are increasing.
  
• US wallboard average realised prices in the first half were marginally below $90 per 1,000 square feet. However, price increases in September and January have lifted second-half average prices by some $7. BPB selling prices are currently averaging around $100, although the benefit of this is expected to be partly offset by rising freight costs.
  
• Group building plaster volumes will be similar to last year, with sales maintained in the key Spanish market and good growth in the UK and Eastern Europe offsetting reduced demand in France and Portugal.
  
• Restructuring of the acquired Gyproc Benelux business, which will involve a charge of approximately £7 million, is on schedule to achieve annualised cost savings of Euro 9 million by March 2005.
  
• Sourcing of substantially greater volumes of European plasterboard liner from Tecnokarton has been successfully accomplished, achieving the dual goals of reducing operating costs and maintaining security of supply.
  
• UK paper mill at Purfleet closed as planned in December (the group’s ultimate pre-tax net exceptional charge is currently estimated to be around £20 million after allowing for future site disposal proceeds).
  
• Group cost savings this year below the on-going target of 1% of turnover, largely due to additional carriage costs (as localised capacity shortages were met) and operational disruptions caused by plant upgrades.
  
• Continuing strong cash flow, facilitating BPB’s growth ambitions and strengthening the group’s financial position.

Commenting on BPB’s full year performance expectations, Richard Cousins, chief executive said:

“Management is continuing to deliver on its business plan for future growth and anticipates an improvement in BPB’s underlying profit of some 15%, higher than expected at the interim stage due to a more favourable trading environment.”

• 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.