Dürr Interim Report - January 1 to June 30, 2002 - Increased incoming orders in difficult environment

08/21/2002

By obtaining major orders from North America, Europe and China, the Dürr technology group has increased its incoming orders in the first half of 2002 by 16% to 1,173 million euros. At 877 million euros, Dürr's sales revenue was close to the high level of the same period in the previous year. Operating income (EBITDA) of 21.9 million euros and earnings before taxes (EBT) of -15.6 million euros were marked strongly by restructuring expenses, which were incurred primarily by the Schenck Group, as well as some Dürr companies in the USA. In the second quarter, along with strong increases in incoming orders and revenue, Dürr came close to achieving a positive EBT and did reach a clearly positive EBITDA. The lively pace of incoming orders continued at the beginning of the second half of the year as well. In July, Dürr received major orders valued at about 160 million euros. From its current perspective, the Board of Management expects incoming orders and sales revenues for all of fiscal year 2002 to be at last year's level. Earnings, before restructuring expenses, should be on the scale of the previous year also. However, there could be additional risks if the global economy declines further, among other things as a result of negative developments in the stock markets.

Consolidated incoming orders climbed in the first six months of the current fiscal year by 16% to 1,173 million euros (previous year: 1,008 million euros). In addition to systems orders for paint shops from Europe and China, the Paint Systems business unit also signed a major contract with a US car manufacturer. In the USA, the Final Assembly Systems business unit strengthened its market position with an order for modernization of a final vehicle assembly line. Significant growth rates were posted by the Services business unit, which concluded multiyear service contracts in Northern Europe, the USA, and Brazil. In markets outside the automotive industry, Dürr's activities in painting and assembly systems for the aerospace industry in particular showed positive development.

Sales revenue at last year's high level

Consolidated sales revenue of 877 million euros was approximately the same as the previous year's level of 888 million euros. While the Services business unit posted a strong gain in sales revenue (71.3 million euros vs. the previous year's 61.0 million euros), development of total sales revenues (including intra-Group sales revenues) of the other business units was somewhat restrained. Decisive factors were lower demand, primarily in the USA, as well as a lower degree of completion of major orders compared to the previous year. Total sales revenues for the individual business units were: Paint Systems: 438.6 million euros (previous year: 471.1 million euros), Final Assembly Systems: 160.5 million euros (previous year: 161.6 million euros), Ecoclean: 96.4 million euros (previous year: 109.6 million euros), as well as Measuring Systems: 161.1 million euros (previous year: 162.3 million euros).

Consolidated orders on hand as of June 30 exceeded the previous year's high value by 0.6% (1,463 million euros vs. 1,455 million euros). Against the background of the positive development in incoming orders, orders on hand increased by 296 million euros compared to end of 2001.

Number of employees adjusted to meet market conditions

Overall, the number of employees in the Dürr Group as of June 30 fell by 1.4% to 12,577 (previous year: 12,754). Only in the Services business unit did the number of employees increase due to project-related hiring, in the other business units it declined by 6%.

After a period of above-average investment in capital expenditures by the Group in the previous years, this item declined in the first half of 2002 to 9.9 million euros (previous year: 19.9 million euros). One emphasis was in the Services business unit. Additional equipment was acquired for this business unit in order to support the technical services growth segment.

Restructuring measures taking effect

In the first half of 2002, Dürr attained an operating income (EBITDA - earnings before interest expense, taxes, depreciation, and amortization) of 21.9 million euros (previous year: 54.1 million euros). Earnings before taxes (EBT) were -15.6 million euros (previous year: 12.2 million euros). However, in the second quarter, along with strong increases in incoming orders and revenue, Dürr already came close to achieving positive earnings before taxes. EBITDA in the second quarter was clearly positive.

The earnings situation is still marked by restructuring expenses, primarily in the Schenck Group, as well as in some Dürr companies in the USA. Implementation of our restructuring measures is proceeding as planned. It has been decided to reduce our workforce at our Darmstadt location by up to 200 positions by the end of the year. In addition, the continuing economic weakness affected earnings.

By business unit, EBITDA during the first half of 2002 compared to the same period in 2001 was as follows: Paint Systems: 15.8 million euros (previous year: 19.4 million euros), Final Assembly Systems: -2.8 million euros (previous year: 1.1 million euros), Services: 4.9 million euros (previous year: 5.1 million euros), Ecoclean: 5.4 million euros (previous year: 7.1 million euros), Measuring Systems: -12.7 million euros (previous year: -0.3 million euros). EBITDA for the Corporate Center was 11.3 million euros (previous year: 21.7 million euros).

SPRINT, the Group-wide program for increasing earnings, is on target and is making significant contributions to improvements in profitability. In addition to staffing adjustments in companies with weak earnings, it also includes the further development of synergies by merging locations, the reduction of tied-up capital, as well as intensifying global procurement programs.

Previous year's levels expected for all of Fiscal Year 2002

Dürr's incoming orders remained brisk after the reporting period and the situation regarding strategic major projects in the automotive industry was also stable overall. Therefore, from its current view, the Board of Management expects incoming orders and sales revenues for all of fiscal year 2002 to attain the level of the previous year. Earnings too, before restructuring expenses, should also again be on the scale of 2001. However, there could be additional risks if the global economy declines further, among other things, as a result of negative developments in the stock markets. This could have an effect on Dürr's currently stable project situation as well.

Dürr is very confident that it will benefit above-average from an economic upturn as of 2003.