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IFRS business figures for the first quarter of 2005 - Dürr registers growth of incoming orders despite auto industry's capital spending restraint

05/12/2005

The Dürr Group slightly increased incoming orders in the first quarter of 2005 by 4% versus the same period last year. In view of the decline in sales, earnings before taxes amounted to Euro -6.8 million and were thus lower than in the first three months of 2004 (Euro 2.1 million). Industrial business outside the auto sector went well and is to be expanded further. Dürr expects earnings development to improve in the remainder of the year.

Incoming orders rose in the first quarter of 2005 to Euro 375.6 million (previous year: Euro 361.9 million). The increase was largely due to positive development in the Measuring and Process Systems division, which managed among other things to expand its industrial business in the growth markets of Asia. For example, that region's high energy and raw material needs and dynamic infrastructure expansion have led to strong demand for process engineering solutions, such as coal-washing plants and pulverized coal feeding systems for the basic materials industries.

At Euro 337.6 million, consolidated sales revenues in the first quarter of 2005 expectedly fell short of their year-earlier level (Euro 429.8 million). However, the 2004 figure was above average due to high sales contributions from a large order. The decline of sales revenues in the Group also reflects the capital spending restraint of the automotive industry in the past six months.

Note: All data refer to the new Group structure in effect as of March 1, 2005 (continuing operations), which comprises the Paint and Assembly Systems division, the Measuring and Process Systems division, and the Corporate Center (Dürr AG). The Services business unit and Development Test Systems product line are classified as discontinued operations and are not included in the data.

Gratifying earnings development in Measuring and Process Systems

In addition to reduced sales revenues, an increase of interest expense by Euro 3.7 million to Euro 8.9 million contributed decisively to the earnings decline in the first quarter. Dürr made greater use of its credit lines because prepayments from customers declined for project-specific reasons. These fluctuations are not untypical for mechanical engineering firms. Net financial debt increased accordingly to Euro 328.9 million as of March 31, 2005 (December 31, 2004: Euro 242.8 million).

Development of the earnings situation in the Measuring and Process Systems division was gratifying. Earnings before income taxes improved by Euro 1.5 million to Euro -0.8 million. Operations in industrial business which Dürr will expand further played a substantial part in the improved performance. The earnings of the Paint and Assembly Systems division declined to Euro 1.5 million (previous year: Euro 10.8 million) primarily due to lower sales revenues.

Cost of sales reduced more than proportionately

The company made progress in the first quarter of 2005 on the cost of sales, which was reduced more than proportionately relative to sales. The gross margin improved from 17.1% to 19.4%. Earnings before interest, income taxes, depreciation and amortization (EBITDA) amounted to Euro 7.0 million, Euro 12.7 million in the previous year. At Euro 5.5 million, depreciation was near the previous year's level (Euro 5.8 million). Earnings before interest and income taxes (EBIT) stood at Euro 1.6 million (previous year: Euro 7.0 million). Net interest expense came to Euro 8.4 million (previous year: Euro -4.9 million).

A net loss of Euro 4.2 million was booked for the first quarter of 2005 (previous year: net income of Euro 0.7 million). Earnings per share after minority interests amounted to Euro -0.29 (previous year: Euro 0.03).

Capacity expansion in Asia

Dürr had 7,221 employees as of March 31, 2005. That is 4.8% fewer than a year before (7,582 employees). There are now 624 persons employed by Dürr in the growth markets of Asia (+23%).

R&D ratio and capital expenditures increased

Dürr raised direct expenditures on research and development (R&D) to 1.8% of sales in the first quarter of 2005 (previous year: 1.6%). Including additional development expenditures in connection with customer orders, the R&D ratio amounted to about 6%. Energy-saving concepts for the painting process, further development of our painting robot technology, and more efficient pulverized coal feeding systems were among the most important R&D projects. Dürr increased its capital expenditures on property plant, and equipment and intangible assets to Euro 4.5 million in the first quarter of 2005 (previous year: Euro 3.0 million).

Outlook

Dürr now believes that with consumer sentiment remaining poor, the difficult market conditions in the automotive industry will not change substantially in 2005. The company forecasts that earnings will develop better in the further course of the year than in the first three months. The expansion of our operations in industrial business and first cost-saving effects from implementing the leaner Group structure will play a key role in that. The aim is, parallel to that, to improve the margin quality of our sales revenues by means of careful selection of orders. Dürr expects that consolidated sales revenues in 2005 will be below the previous year's level.

Expected incoming orders in the next few months are important for the further course of the business year in the Paint and Assembly Systems division. Negotiations with some of our customers are at an advanced stage. In the Measuring and Process Systems division, we believe that earnings can be improved further after the customarily weaker first quarter. That is supported by solid incoming orders, which are 28% higher than last year's. Against that background, Dürr's guidance for earnings before taxes in 2005 as a whole is above the previous year's level.

The Dürr Group is one of the world's leading suppliers of production systems and of modules as well as components for measuring and process systems. It focuses primarily on the automotive and aviation industries as well as the mining and basic materials industries.

The Corporate Center (Dürr AG) had 53 employees as of March 31, 2005 (2004: 58); its EBT amounted to Euro -7.5 million (2004: Euro -6.4 million).