RNS Number:6501K
RMC Group PLC
02 May 2003


Friday, 2 May 2003

RMC Group p.l.c. - CHAIRMAN'S STATEMENT TO SHAREHOLDERS AT THE ANNUAL GENERAL
MEETING

Speaking today at the Annual General Meeting of RMC Group p.l.c., Sir John
Parker, Chairman, will say:

 "At the time of our Preliminary Results, I indicated that in markets which face
considerable economic uncertainty, we expected broadly similar conditions in the
first half of 2003 as in the second half of 2002.   Against this background and
following our first quarter's trading, I am pleased to report that, with the
exception of Germany, results are in line with our expectations.

In Great Britain, the highlight of the first quarter has been the performance of
the Rugby cement plant, which has been particularly encouraging.   Since the
kiln's burners were replaced during the annual shut-down in January, the plant
has consistently delivered production volumes that give us confidence that a
turnaround is now underway.   However, a further three month period of
consistent production at these levels is required before we can raise our
financial targets for the current year.

In our other key European markets, trading conditions and financial performance
are as expected.  This is also the case in the US and Australia.

Despite the satisfactory performances of the Group in these markets, we have to
report a continuing decline in consumption of cement and concrete in the German
market, accompanied by a further deterioration in prices.

Overall, from the peak, the demand for cement and concrete in Germany has
dropped by roughly 40%.   During the same period, housing permits have fallen by
over 50%.  From the second quarter of 2002, cement and concrete prices fell
sharply, reflecting the surplus production capacity.

The response of our new German management to these adverse market conditions has
been very impressive and the German results have already benefited from the
rationalisation of the regional structure, from 8 to 4 regions, with a
consequent reduction in overhead costs.   In addition, concrete plants have been
closed and the rationalisation programme is accelerating.

As we anticipated, in the first quarter of 2003 cement and concrete consumption
in Germany has declined further.  Although RMC has achieved increased cement
volumes, prices have declined at a greater rate than expected.  Despite the
benefit of significant cost reduction and restructuring, we have been unable to
counteract the financial impact of this further fall in prices.

At this stage in the year it is too early to predict the likely out-turn in
Germany for the full year.   However, should prices not recover in the second
half of the year, our performance in Germany would have a material impact on
budgeted Group results for the year.

On 14 April, the German competition authorities announced fines totalling Euro660m,
naming six companies operating in the German cement market.   The RMC fine was
Euro12m.   Some rationalisation of cement production capacity has taken place and
more is likely.   Over time, this will lead to a more balanced market structure
in which RMC is extremely well positioned to compete effectively.
Nevertheless, we must face the possibility of a weak German market for some time
to come and, as part of a wider Group review, further action is being taken to
reduce our cost base in Germany and to review the balance sheet carrying value
of our German assets.

The prevailing market conditions in Germany make forecasting particularly
difficult and we will keep shareholders informed of our progress as we go
through 2003.

The restructuring of the Group announced in September last year has largely been
successfully implemented and, as a result, Group debt has been reduced by over
#300m.   However, the Board believes it is now right to take further action to
ensure that the Group is in the best position to achieve our target RONOA of 12%
and to maximise the value to be delivered from the core asset base of the Group
when market conditions recover.

Accordingly, the Board has initiated the next phase in the reshaping of the RMC
Group.  This will result in the further streamlining of the Group's organisation
and reductions in the cost base of the core business in Great Britain, Europe
and the USA.   The successful implementation of this process will lead to a
further strengthening of the balance sheet and provide the opportunity to review
both the capital structure and future funding requirements of the business.

From a stronger financial base, in addition to the benefit of growth
opportunities arising from our important footprint in Eastern Europe, the Group
will also be in a better position to selectively invest in our more mature core
markets, whilst also giving the appropriate consideration to a reduction in the
equity base of the business.

These initiatives are being led by the Executive Directors, under the leadership
of Stuart Walker, Group Chief Executive, with close Board involvement and
supported by L.E.K. Consulting.

Stuart will reach retirement age early in 2004.   In order to ensure a smooth
transition, the search is underway for his successor.

Overall, this will be a challenging year for the Group.   However, building on
the actions already delivered by the management team and the plans I have
outlined this morning, there is a strong platform from which to rebuild long
term value for shareholders."

-ends-


For further information please contact:

Investor Relations: Gary Rawlinson +44 (0)1932 583219

Media Relations: Tim Stokes +44 (0)1932 583219


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