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Dürr fully on track at the mid-year mark

Results (IFRS) for the first half of 2008

08/07/2008

• Strong sales and earnings growth
• Order backlog assures capacity utilization until mid-year 2009
• Positive full-year outlook for 2008
• Optimization of financial structure to continue

Stuttgart, August 7, 2008 – The Dürr Group achieved strong sales and earnings growth in the first half of 2008. While sales revenues were up 15.7% to € 752.7 million compared to the previous year’s period, earnings before interest and tax (EBIT) more than doubled to € 24.6 million. Earnings after tax were well into positive territory at € 10.8 million after just breaking even in the first half of 2007. Orders on hand grew by 8.4% to almost € 1.2 billion compared to the end of 2007 and will keep capacities well employed until mid-year 2009. For the full-year 2008 the plant and mechanical engineering company expects sales growth of up to 10% and an improvement in the EBIT margin to around 5% from 3.8% last year. At € 876.1 million, order intake in the first six months only slightly fell short of the previous year’s high level (€ 912.4 million). With a ratio of new orders to sales of 1.16, the book-to-bill ratio was again comfortably above 1.

Ralf Dieter, Dürr AG’s CEO, commented: “We are fully on track at the mid-year mark and momentum will pick up in the second half. Demand in the automobile industry’s growth markets remains strong so we are also optimistic for order intake in the coming months. As far as earnings generation is concerned we expect the acceleration in the third and fourth quarters usual in our business.”

The basis for the positive earnings development in the first half of 2008 was a strong improvement in the gross margin from 16.1% to 17.0%. At 4.1%, the increase in selling and administrative expenses was held well below the growth in sales revenues (+15.7%).

Cash flow from operating activities improved by € 15.8 million in the first half of 2008 although net working capital rose temporarily due to the large number of orders being executed. Net financial debt increased temporarily versus the end of 2007 (€ 61.8 million) to € 89.0 million. The equity ratio rose to 25.8% as of June 30, 2008 (December 31, 2007: 23.9%). Besides the positive earnings after tax, this was also due to the capital increase in June, which generated gross proceeds of € 44.0 million that Dürr received at the beginning of July.

The Measuring and Process Systems division, which is focused on the mechanical engineering products business (balancing and cleaning technology), increased its order intake by 14.7% to € 234.3 million. Orders in the Paint and Assembly Systems division (painting, assembly and environmental technology) were down 9.4% at € 641.8 million. This was mainly due to the fact that Dürr refrained from taking on low-margin orders in the final assembly conveyor technology business. Both divisions increased their sales revenues by 15.7% each: Measuring and Process Systems to € 197.3 million, and Paint and Assembly Systems to € 555.3 million.

Positive full-year outlook for 2008
For 2008 Dürr expects new orders more or less on a level with last year provided the economic conditions and exchange rate situation do not take a decisive turn for the worse. Sales revenues will rise by up to 10%. Dürr continues to expect a further strong improvement in earnings, to which a higher gross margin should contribute. Dürr aims to achieve a cash flow at least at the 2007 level. The company expects to be able to completely run off its net financial debt by the end of the year and post a positive net cash position for the first time since 1998. As a next step in the process of optimizing its financing structure Dürr plans to redeem an initial 50% of its high-yield bond in the third quarter. Dürr is currently also in negotiations with the banking consortium to renew and increase its syndicated credit facility on terms in line with the company’s improved situation.

On the refinancing Dürr’s Chief Financial Officer Ralph Heuwing commented: “The combination of capital increase and bond redemption will probably yield significant relief in our interest expense already in 2009. It will also make for greater long-term security while providing us with financial flexibility.”

The Dürr Group is a supplier of plant and equipment that commands leading global market positions in its areas of activity. Business with the automotive industry accounts for about 85% of its sales. Dürr also supplies innovative manufacturing and environmental technologies for the aircraft, mechanical engineering, chemical and pharmaceutical industries. The Dürr Group operates in the market through two divisions. The Paint and Assembly Systems division supplies production and painting technologies, mainly for automotive body & chassis manufacturing. The equipment and systems supplied by the Measuring and Process Systems division are used, among other things, for engine and transmission production and for final vehicle assembly. Dürr achieved sales of close to € 1.5 billion with approximately 6,000 employees in 2007. Dürr is present in 47 locations in 21 countries around the world. 

KEY FIGURES (IFRS) 

All figures relate to the Dürr Group´s continuing operations. The figures have been calculated in accordance with IFRS.