Figures for the first half of 2003 - Dürr's incoming orders up substantially

08/20/2003

• Incoming orders +29.0 %, sales +5.1 %
• First-half earnings unsatisfactory, but improved in second quarter
• SPRINT SQUARE earnings enhancement program under way

The Dürr Technology Group improved its incoming orders in the first half of 2003 by 29.0 %. Dürr sales gained 5.1 %. Although earnings improved compared to the same period last year, they remain unsatisfactory.

Consolidated pretax income for the second quarter, at Euro 0.5 million, was better than in the first quarter (Euro -5.4 million). Pretax income for the first half was Euro -4.9 million. This represents an improvement of Euro 10.7 million from the previous year's period, which was dominated by restructuring charges. But the figure for the first half of 2003 continued to be pulled down by pressure on margins and sluggish product business with shorter turnaround times in comparison to the systems business. Additionally, the earnings for the first six months of 2003 include one-time charges for capacity adjustments and structural revisions.

EBITDA (earnings before interest expense, taxes, depreciation and amortization) for the first half of 2003 was Euro 23.4 million, slightly above the previous year's level of Euro 21.9 million. The EBITDA of the first quarter of 2003 was Euro 9.1 million, of the second quarter Euro 14.3 million. On Group net income of Euro -2.5 million for the first six months of 2003 (previous year's period: Euro -7.9 million), loss per share was Euro -0.18 (previous year's period: Euro -0.55).

EBITDA for the individual business units in the first half of 2003 was as follows: Paint Systems Euro 10.4 million (previous year: Euro 15.8 million), Final Assembly Systems Euro 2.4 million (previous year: Euro -2.8 million), Services Euro 4.9 million (previous year: Euro 4.9 million), Ecoclean Euro 4.3 million (previous year: Euro 5.4 million), Measuring Systems Euro -5.3 million (previous year: Euro -12.7 million).

Enhancing profitability with SPRINT SQUARE

"In spite of the second-quarter improvement, the Group's earnings are still unsatisfying. That's why management is working full force on improving profitability under the SPRINT SQUARE earnings enhancement program," emphasized Dürr AG CEO Stephan Rojahn.

SPRINT SQUARE concentrates on materials management, project management, order handling, the sales force and administration, and also on structural adjustments of locations and portfolio. All the Group's business units and companies have defined earnings enhancement projects, which they have also begun implementing. SPRINT SQUARE will extend into 2005. The program is designed for the long term, and will lay the groundwork for lasting profitability through best practices. Hence it will yield relatively little in the way of immediate contributions to profits this year.

Sales remain high

With consolidated sales of Euro 921.9 million, Dürr outperformed the previous year's figure by Euro 44.9 million. Using the same exchange rates as for the same period last year, sales would have been up roughly Euro 80 million additionally. Second-quarter sales were well above the figure for the first three months of the year. Total sales for each of Dürr's business units in the first six months of 2003 were as follows: Paint Systems Euro 500.3 million (previous year: Euro 438.6 million), Final Assembly Systems Euro 147.3 million (previous year: Euro 160.5 million), Services Euro 71.3 million (previous year: Euro 71.3 million), Ecoclean Euro 88.5 million (previous year: Euro 96.4 million), Measuring Systems Euro 160.1 million (previous year: Euro 161.1 million).

Incoming orders above average

The Dürr Group's new orders were above average for the first half of 2003, reaching Euro 1,513.0 million (previous year's period: Euro 1,172.7 million). After adjustments for currency translation effects, the value would have been up roughly Euro 209 million additionally. The principal factor behind this strength in incoming orders was a major order that US automobile manufacturer General Motors placed for several turnkey body painting systems in North America. This order, the largest in Dürr's history, will be carried out by the Paint Systems and Final Assembly Systems business units through 2006. Consolidated orders on hand were up to Euro 1,956.1 million as of June 30, 2003 (previous year's figure: Euro 1,462.6 million).

The high figures for incoming orders and orders on hand were not uniformly distributed throughout the Group. Consequently capacity is utilized to a highly variable degree in the individual product lines and regions.

In the first half of 2003, the business units booked the following total incoming orders: Paint Systems Euro 1,013.2 million (previous year: Euro 694.3 million), Final Assembly Systems Euro 262.1 million (previous year: Euro 192.5 million), Services Euro 71.2 million (previous year: Euro 73.4 million), Ecoclean Euro 91.6 million (previous year: Euro 91.0 million), Measuring Systems Euro 173.5 million (previous year: Euro 196.3 million).

Engineering staff cut back

As of June 30, 2003, the Dürr Group had a total of 12,918 employees (previous year's figure: 12,577). New projects at the Services business unit, with its personnel-intensive line of operations, caused the staff there to grow to 4,470 (previous year's figure: 3,975). By contrast, staff in the Group's engineering business units was down 154, to 8,448 as of June 30, 2003. The drop here since December 31, 2001, has been 500 (-5.6 %). By year's end, Dürr plans to reduce staff in the engineering units still further.

In the first six months of 2003, Dürr cut back its capital expenditures to Euro 8.6 million, compared to Euro 9.9 million in the previous year's period (-13.1 %). The statement of income for the first half of 2003 includes research and development (R&D) expenses of Euro 18.7 million, following Euro 16.4 million in the previous year's period. This figure does not include R&D expenses for specific projects. "Thus Dürr has invested further funds in innovative projects, despite the difficult economic picture. This is one of the foundations for expanding our market and technology leads," says Dürr CEO Stephan Rojahn.

Outlook for the Group

No consistent recovery of the world economy is expected in the second half of 2003. Therefore, Dürr assumes that the automotive industry will still be spending conservatively. Amid this setting, the Board of Management has increasingly come to view the goal of stabilizing the sales and earnings situation during 2003, which it announced this spring, as rather ambitious. The primary factor in achieving this goal will be the performance of the product business, with its shorter turnaround times.

You can find the complete Interim Report for the first half of 2003 on the Internet at www.durr.com.