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(Ad-hoc) Eliminating a source of losses at Schenck

10/07/2003 - Dürr AG - WKN 556520 / ISIN DE0005565204

Carl Schenck AG, a member of the Dürr Technology Group, is closing its loss-making pre-manufacturing operation in Darmstadt, Germany. As a result, about 350 jobs will be cut by the end of 2004 at the Darmstadt-based firm Schenck Fertigungs & Service GmbH.

The measure will entail one-time charges of about EUR 18 million. With these one-time charges left out of account, the Dürr Group's goal is to stabilize its earnings before taxes in 2003 at the preceding year's level (EUR 22.6 million). Even after deduction of all one-time charges, Dürr still expects a positive pretax result in the current fiscal year. Systems business, which has developed positively overall in the course of the year, is primarily responsible for this, while development of product business has been subdued. For 2004, Dürr expects a significant earnings increase.

The reason for closing Schenck's pre-manufacturing operation, which has been making losses for years, is lack of competitiveness due to structural cost disadvantages arising, for example, from insufficient capacity utilization and high personnel costs. Against that background, there is no realistic prospect of a return to the profit zone.

Closing the pre-manufacturing operation will open up access for Schenck to low-cost procurement markets and thus make considerable cost advantages possible. That will boost the competitiveness of Schenck's divisions and permit rapid amortization of the one-time charges required for the closing of the pre-manufacturing operation. In 2003, however, the one-time charges will entail a significantly negative pretax result of the Schenck Group.

Schenck Fertigungs & Service GmbH supplies input products and components mainly to other divisions of the Schenck Group. The company's management and works council will immediately begin talks about how to implement the job cuts in a socially fair and proper manner. The measure will not affect the roughly 220 persons employed by other Schenck companies in equipment assembly in Darmstadt. Altogether, about 1,800 persons are employed at the Darmstadt facility.

Dürr AG
The executive board

End of disclosure