§ Expansion of the market position

STRABAG is a European group whose home markets are Germany and Austria. We consider a leading market position not just in these two home markets to be a critical factor for success. Last year we set ourselves the goal of maintaining or expanding these strong market positions – and we were successful. We are still number one in Austria, Germany and Hungary and number three in the Czech Republic. In Poland, we rose up one slot to second place. In Slovakia and in Romania, we have even managed to move up from second to first place.

In 2009, we generated more than 80 % of our output volume in those countries in which we hold a market position among the top 3 construction firms. Business in Eastern Europe accounts for 30 % of the output volume, which gives us a unique position compared to the competition and we are market leader in the construction sector in Central and Eastern Europe.





§ Securing access to resources

The access to resources offers us a significant competitive advantage, as the approval for new production facilities is granted only to a limited extent in those regions in which such facilities already exist. Our supply of resources from within the group also helps us to reduce our dependency on external suppliers, allowing us to better plan our raw materials access.

We possess an extensive resource network that is especially dense in our home markets and several of our growth markets. In the previous year, we had set ourselves the objective of further profiting from our own resource access and optimising our raw materials portfolio – and for the most part, we have been successful: with 3251) asphalt mixing facilities (2008: 348) and 183 concrete mixing facilities (2008: 199), we have increased the coverage of group supply from own production. Our own stone and gravel production, however, only covered 17 % of the need, compared to 19 % in the previous year. The number of active production sites in this area fell from 188 to 179.





§ Public Private Partnerships (PPP) and concession projects

Public Private Partnerships (PPP) have been gaining in importance in public-sector projects in the past few years. PPP projects involve a partnership between the public and the private sector regarding the financing, building, maintenance and operation of infrastructure projects. Concession projects offer a continuous stream of income – even during times when the construction sector is in an unfavourable phase.

We have worked successfully with operator models for nearly two decades. In the areas of building construction and infrastructure, the portfolio comprises 29 projects with a total investment volume of almost € 8.0 billion. In the 2009 financial year, we were awarded six new projects with an investment volume of € 2.3 billion. Capital appropriations of € 40.6 million in the form of equity capital and shareholder loans were made available for these projects.





§ Expansion of Service Business and Niche Segments

In the past, acquisitions had primarily served to increase our market share, as our strategic objective of market leadership could not be achieved through organic growth by itself. As acquisitions alone contributed growth of € 2.0 billion to the output volume in the 2008 financial year, we focused on integrating the acquired enterprises in 2009 – as planned – and kept new acquisitions to a minimum.

Even more important than acquisitions for solidifying our market positions are the extension of the value-added chain and the filling of niche segments like railway construction, property & facility service and environmental technology. Our broad portfolio of services makes us a valuable partner as a single-source provider for our clients. Offering a broader range of services also makes us less dependent on individual construction segments.





§ Strict cost and risk discipline

For several years, it was our goal to increase our EBITDA and EBIT margins. Continuous improvement, however, was not possible given the market situation. In 2009, our EBIT margin grew only slightly to 2.3 % after the decline from 3.2 % to 2.2 % in 2008.

We see the equity ratio as a suitable figure with which to measure STRABAG’s financial stability and strength. Only financially strong companies can participate in PPP projects, as these require construction firms to finance the project themselves with their own shareholder equity. In the medium term, we will be satisfied with an equity ratio (shareholder equity/total assets) between 20 % and
25 %. At the end of December 2009, the group’s equity ratio stood at 32.2 %.

We are continuing to focus on cost efficiency, disciplined employment of capital and strict risk management.

Please find the details concerning our growth drivers in our Annual Report 2009.