Effects of financial crisis impossible to predict with sufficient certainty
Strategic orientation key to long-term growth targets
Wide-ranging opportunities harbor strong earnings potential
Consistent, earnings-driven dividend policy

Looking ahead

Competitive advantage of good strategic positioning

A realistic judgment of how the financial crisis will impact on the real economy is not currently possible. Uncertainty about the way forward and the scale of the global crisis has grown considerably in the last several months. Leading economic research institutes expect that the world economy will undergo a major slowdown in 2009, although with regional variation. The growth markets of the recent past will also be affected.

HOCHTIEF is outstandingly well placed with its strategy of spanning the whole infrastructure project, real estate and facility life cycle and of serving international markets. We can seize available opportunities and better make up for cyclical downturns. Our integrated capability portfolio and global presence lend HOCHTIEF considerable risk diversification and greater independence from fluctuations in specific industries and markets. By closely dovetailing the elements of that portfolio, we are also able to generate synergies and thus add value for customers. We see HOCHTIEF's strategic positioning as a sound competitive advantage and the key to attaining our long-term growth targets' through both favorable and adverse phases of the economic cycle.

Group forecast subject to uncertainty

With the financial crisis dynamically unfolding, we are currently only able to provide a very limited forecast for the Group in 2009, burdened still by major uncertainty. As the year progresses, we will add further detail to our expectations regarding HOCHTIEF's performance in our quarterly reports.

Our planning is based on the assumptions that the international finance and capital markets will increasingly normalize from 2010 and that there will not be a sustained recessive setback in the world economy. We also work on the basis that the situation in areas of political tension will not lastingly deteriorate any further. We anticipate an increasing rise in the euro against the US dollar and the Australian dollar through fiscal 2009. We expect euro exchange rates in 2009 averaging about USD 1.30 and AUD 2.00.

New orders, order backlog and sales regain normal levels

HOCHTIEF once again achieved outstanding results in 2008 with new orders of EUR 25.28 billion, an order backlog of EUR 30.92 billion and sales of EUR 19.10 billion. On current perspectives, in light of the situation now on lending and goods markets, we expect that these figures will settle back to normal this year, below the levels attained in 2008.

Earnings at similar high level to prior year

HOCHTIEF further stepped up its earning power in fiscal 2008. Both profit before taxes (EUR 520.1 million) and consolidated net profit (EUR 175.1 million) for 2008 were above their prior-year levels. The earnings growth showed through particularly impressively in consolidated net profit, which climbed by more than 24 percent. Despite the difficult economic operating environment, we aim in the current fiscal year to attain similar strong earnings performance both on profit before taxes and on consolidated net profit. We consider these earnings targets to be attainable in particular with a view to our large order backlog and the currently available opportunities.

Dividend continuity

HOCHTIEF has a longstanding dividend policy geared to Group earnings and liquidity. Over recent years, we have delivered dividend continuity with steadily rising dividends and payout ratios above the average. The Executive Board"s proposal for the use of net profit for fiscal 2008 provides for a further increase in dividends to EUR 1.40 per share. This represents just short of eight percent dividend growth on the prior year and a payout ratio at over 55 percent of consolidated net profit. It also implies an average 17 percent annual dividend increase through the last five years.

Value growth

Generating sustained value growth from the assets in our charge is integral to HOCHTIEF's vision. The Group and its divisions are rigorously managed for value creation. Aligned to capital market needs, our return on net assets (RONA) performance metric makes value growth measurable and transparent. It is integrated into all planning and control systems and also feeds into portfolio and investment decisions pointing the way forward. Based on our earnings expectations, we currently once again anticipate RONA exceeding our ten percent cost of capital in 2009. We are confident of achieving substantial value created and hence further increasing value.

Investing in sustained growth

Our capital expenditures serve to reinforce and continuously enhance HOCHTIEF's leading position in the international competitive arena. We systematically make additions to our integrated service portfolio based on our strategy of life cycle management. HOCHTIEF has some EUR 780 million in capital expenditure planned for the current 2009 fiscal year. Most of this expenditure, accounting for more than 85 percent of the total, will be undertaken at our Australian subsidiary Leighton. The majority of the outlay at Leighton is earmarked for our capital-intensive and profitable contract mining activities. Acquisitions may also be made to further expand our concessions and service business. Given the uncertain onward economic outlook, we – like the entire industry – will be subjecting every commitment of resources to more critical scrutiny than ever with regard to profitability and funding.

Liquidity further secured

The HOCHTIEF Group is assured adequate short and medium- term liquidity with strong reserves of cash on hand and at banks as reported, undiminished holdings of readily marketable securities, and revolving credit facilities still not fully utilized. As of the December 31, 2008 balance sheet date, HOCHTIEF Aktiengesellschaft had available a total of around EUR 300 million in bilateral credit facilities. As in previous years, such facilities are not collateralized. Despite developments on the international financial and lending markets, extensions were successfully negotiated for borrowings scheduled for repayment in 2008.

As in past years, our invested funds are held in capital-guaranteed products and remain unchanged in total amount at roughly EUR 240 million. These investments are scheduled to mature at the end of the third quarter of 2009. Our current intention is to reinvest the funds on a medium-term basis as a reserve. A guaranteed annual minimum return and capital guarantees provided by issuers with immaculate credit standing have avoided any writedowns to date. HOCHTIEF also collects a percentage of any outperformance over and above the minimum return.

The Group's long-term financing is founded on internationally syndicated revolving credit and guarantee facilities opened in 2004 and 2005. The credit facility now expires in November 2012 following our decision to exercise the second regular option to extend it by a further year in 2007. The syndicated guarantee facility was also refinanced in 2007 and increased to EUR 2 billion while extending its duration from initially three to five years. The price and attached conditions were significantly improved in HOCHTIEF's favor on refinancing, reflecting the Group"s continued immaculate credit standing on international lending markets. The two facilities provide HOCHTIEF with sufficient scope and security for its long-term growth plans.

HOCHTIEF successfully issued two promissory note loans at the beginning of July 2008 to restructure interim initial borrowing for Group expansion and capital expenditure on a long-term basis. Notes were issued for a total amount of EUR 250 million and with tenors of five and seven years. Attractive long-term conditions were once again obtained for the issues, whose documentation is largely based on that of the syndicated facilities. The notes issue again extends the HOCHTIEF Group's circle of lenders beyond its traditional core banks, avoiding the need for the latter to increase their loan exposure. Separate facilities were also secured during the year for specific major projects – for example, to obtain required bank guarantees – with banks in the various countries in which we operate.

The EUR 200 million first promissory note loan issued in 2004 is due to run out in May 2009. At the current state of planning, we expect that we will be able to refinance it with similar debt instruments. Negotiations to this end have already started with banks with which a new issue may be placed. For future borrowing plans, we are working on the assumption that the international financial and capital markets will gradually settle down in the course of 2009 – not least thanks to concerted support from central banks and governments. We expect that the markets will increasingly return to normal from 2010.

Innovation as a key success factor

HOCHTIEF will continue to forge ahead with its innovation management in 2009. Sustainability will be a key focus. In addition, we want to develop research and development results and shape them into new business ideas. By focusing on ideas management, we aim to tap into more of HOCHTIEF's innovation potential. The 2009 budget for central Group-wide innovation management activities will be around the same level as in previous years.

Ongoing optimization of procurement

In 2009, our procurement volume is expected to remain at around the same level as in 2008 – approximately 75 percent of Group sales. A number of measures are planned to further boost procurement efficiency. As we continue to systematically standardize procurement processes, we will exploit economies of scale. In addition, we will develop further our integrated supplier management and systematically expand our internal lead buyer organization. We expect a considerable further reduction in procurement costs on the whole.

Targeted measures for the recruitment and retention of employees

In order to counter the acute shortage as well as meet future requirements for qualified skilled and management personnel, human resources management will focus again in 2009 on positioning HOCHTIEF as an attractive employer worldwide, despite the financial crisis. The regional importance of HOCHTIEF companies and their brands as well as our international Group will play key roles. HOCHTIEF's long-term projects require investment in future experts and management personnel. We will persist in using and continue to promote successful measures to recruit university graduates, train employees and advance management personnel.

Our Global Recruiting Initiative was set up to accommodate HOCHTIEF's international position: In the future, for example, certain projects will make use of a special intranet platform which will ensure that vacant, international positions can be more purposefully filled.

Opportunities

HOCHTIEF positioning opens up opportunities

Our tried and trusted life cycle management strategy and internationalization open up opportunities for HOCHTIEF to cope well with the current economic downturn and to continue growing profitably in the long term. For all services offered along the value chain of infrastructure projects, real estate and facilities, HOCHTIEF offers its clients

both international expertise and value added through synergies and premium quality. This positioning enables us to be among the best in the competition, even in the increasingly difficult economic climate. Furthermore, the fact that we have focused intensively on fast-growing segments over the last few years is also paying off. Our order backlog reached a volume of almost EUR 31 billion in 2008 – yet another excellent figure. This represents a forward order book of almost one and a half years.

State economic measures focus on infrastructure

In many industrial nations, but also in emerging economies, governments are pouring billions into economic stimulus plans to prevent a sustained recession taking hold. For example, the US administration is planning a total package of around USD 800 billion, China has announced a program of some USD 600 billion and the EU member states intend to invest a total of approximately EUR 200 billion to support the economy. Germany's federal government also wants to provide an additional EUR 50 billion for a second economic stimulus package to overcome the financial crisis. A key element of these programs are infrastructure projects, such as construction and refurbishment in the education, health, transportation, energy and telecommunications sectors. HOCHTIEF has international experience and success in managing complex projects and hence sees great opportunities for itself in these government stimulus programs. In the USA, for instance, HOCHTIEF is very well placed to exploit opportunities for growth in the building construction and civil engineering sectors with its subsidiaries Turner and Flatiron.

Public-private partnerships

In connection with efficient use of public resources, we believe there are plenty of opportunities for the public-private partnership (PPP) model to become more prevalent and thus for the private sector to play a greater role in public infrastructure projects. As a proficient company with international experience, HOCHTIEF PPP Solutions could not be better positioned for the growing PPP markets. The North American market presents ideal opportunities for HOCHTIEF PPP Solutions North America to employ our international PPP expertise. The company can also draw on the expertise of Flatiron and Turner.

Green building

Considerable opportunities for the expansion of HOCHTIEF's business also exist in the growing market for green building: In light of rising energy prices, there is increasing recognition that investment in resource-friendly and environmentally- friendly buildings pays off. This requires early, holistic planning for the entire life cycle of the property based on ecological factors. HOCHTIEF identified the trend toward sustainable construction early on and has played a decisive role in shaping this movement. We are driving forward the development of sustainable construction and management models and all modules in our product range cover this market segment. With this expertise, HOCHTIEF is excellently positioned to exploit opportunities in this market which is growing, particularly in the USA.

Energy efficiency and renewable energies

HOCHTIEF is well poised internationally to help realize climate protection targets. For example, we provide services that help in this aim for development, construction, revitalization and the management of projects. In this way, HOCHTIEF Energy Management improves the energy efficiency of buildings, for instance, with innovative offers for energy contracting. Through our commitment to geothermal energy and offshore wind energy, we are also active in the growth market for renewable energies. HOCHTIEF will

benefit in Germany and internationally from the measures taken to achieve international climate protection targets.

HOCHTIEF and its subsidiaries operate in markets brimming with opportunities. We will continuously identify and strategically exploit these opportunities at all levels of the Group.

Forward-looking statements

This annual report contains statements related to the future performance of the HOCHTIEF Group and its companies as well as to economic and political developments. These statements represent estimates we made on the basis of a thorough review of all information available to us at the time of going to print. If the underlying assumptions prove false or additional risks arise, actual results may differ materially from those currently expected. Thus we are unable to guarantee the statements made here.

Post balance-sheet events

There were no material events to report between the close of fiscal 2008 and the editorial deadline for this annual report.

Looking Ahead: Outlook and Opportunities