First half year results for the 1999/2000 business year

Strong first half year at BERU: Sales revenue rose by 8%, profit after taxes including one-off other operating income up 66%

Ludwigsburg, November 24, 1999 ¬ó In the first half year 1999/2000 BERU group increased Group sales by 7.8% from DM 194.9 mn to DM 210.1 mn. The manufacturer of diesel cold start systems, ignition technology and sensor solutions lifted profit after taxes by 65.8% to DM 25.2 (15.2) mn. The sale of BERU´s stake in the sensor manufacturer Optek Technology Inc., Carrollton, Texas contributed DM 5.0 mn to profit after taxes. The company will expand its business in the field of electronics and expects a positive development of business for the full business year.

Booming Diesel Cold Start Technology

For the first time sales revenue passed DM 200 mn. The 7,8% increase in sales revenue during the first half of the business year (April 1 until September 30, 1999) surpassed the 5-6% sales target from organic growth. 52.4% of sales originated in the core business field diesel cold start technology. Due to technological inno-vations and new clients such as GM and Isuzu BERU managed to increase sales beyond the European diesel market growth rate of 20.5% by 23.7% and achieved DM 110.9 (88.9) mn in sales revenue. Ignition technology for petrol engines declined by 9.8% because of lower than expected sales of ignition coils, less demand for ignition connection modules and the high production output in diesel cars. This business field contributed DM 74.2 (82.3) mn to Group sales. The third business field Sensors, Suppression Equipment and General Industrial Products picked up 9.3% from DM 23.7 mn to DM 25.9 mn. Particularly sensor applications and the systems business with the oil and gas burner industry achieved high growth rates.

Margins continue to improve

High utilisation and a persistent implementation of the efficiency programme helped to further improve the Group´s cost structure. Personnel expenses grew at a lower rate than sales by 5.2% from DM 59.3 mn to DM 62.4 mn. Due to the increased output and the takeover of the Electronic Tire Pressure Monitoring Systems division from AMI Doduco the number of employees worldwide as of September 30, 1999 rose by 111 to 1,628 (1,571). In the first half of the business year 1999/2000 BERU employed an average of 1,552 persons, an increase of 4.5% on the 1,485 employees a year ago. Despite the higher number of employees the share of personnel expenses in sales was reduced to 29.7% (30.4%).

Higher output made material costs rise from DM 64.4 mn to DM 69.0 mn. As a percentage of sales material costs decreased from 33.0% to 32.8%. The high utilisation of the production facilities caused well above average maintenance and repair costs so that other operating costs ¬ó that comprise expenses for marketing, sales, plant expenses and administration ¬ó increased from DM 35.0 mn to DM 36.7 mn. As a percentage of sales other operating expenses also decreased to 17.5% (18.0%).

High capital expenditure guarantees future growth

Depreciation reflects the high investments undertaken by the company. In the period covered by the report depreciation on property, plant and equipment amounted to DM 16.0 (13.2) mn. This was 21.2% above last year´s level. Share of depreciation in total Group sales picked up from 6.8% to 7.6%. For the full business year BERU plans to invest DM 40 mn in plant , property and equipment.

Operating profit increases by 57%

EBIT (earnings before interest and taxes) increased from DM 29.2 mn to DM 45.8 mn. Consistent cost management and the ongoing efficiency programme helped improving the EBIT margin further. The sale of BERU´s stake in the Texan sensor products manufacturer Optek Technologies Inc., USA added one-off other operating income of DM 9.7 mn. Consequently the EBIT margin came in disproportionately high and rose from 15.0% to 21.8%. Excluding the Optek sale BERU increased EBIT by 23.6% to DM 36.1 mn, the EBIT margin amounted to 17.2%.

Profit before taxes 52% above last year

The financial result was DM 2.0 (2.3) mn, slightly below last year´s financial result so that pre-tax profit grew by 51.7% from DM 31.5 mn to DM 47.8 mn. Adjusted for the sale of the Optek stake, profit before taxes reached DM 38.1 mn. This corresponds to an increase of 21.0%. The pre-tax margin improved from 16.2% to 22.8%.

Profit after taxes benefits from lower taxation

Profit after taxes increased disproportionately. Ongoing optimisation of the international structure of the Group´s production facilities as well as lower corporate taxes helped reducing taxation from 51.7% to 47.3%. Profit after taxes surpassed last year´s level by 65.8% and increased from DM 15.2 mn to DM 25.2 mn. Excluding the sale of the Optek shares, profit after taxes increased by 32.9%.

DVFA earnings per share increase to DM 2.02

The earnings per share according to DVFA/SG standards (not adjusted for goodwill depreciation in accordance with the standards set by the Joint Committee of the DVFA/SG) were up 32.9% from DM 1.52 to DM 2.02 per share.

Further growth in electronics

BERU chairman of the board, Ulrich Ruetz, is confident to reach targeted figures. for the full business year (April 1, 1999 ¬ó March 31, 2000). BERU expects a sales increase of 5-6% from organic growth. The expansion of the scope of consolidation by BERU Mexico and BERU Korea will contribute another 2-3% of sales. First sales revenue from the Electronic Tire Pressure Monitoring System division taken over from AMI Doduco will add approximately DM 5 mn. Income adjusted for one-off other operating income from the Optek sale is expected to rise at least in line with sales. The sale of the stake in Optek will lift pre-tax profit by DM 9.7 mn. In addition to the expansion of the international market position as the leading company in diesel cold start technology BERU´s growth strategy will focus on acquisitions of companies and product development in the field of electronics. The recently acquired Spanish electronics company Sistemas de Microelectronicas, S.A. ,Vitoria will contribute with hybrids circuits and electronic control units to BERU Group´s electronic systems development such as the Diesel Instant Start System 2000 and further development and production of the electronic tire pressure monitoring systems. In both areas BERU expects to see solid growth rates in the upcoming years.

Consolidated Profit and Loss Account BERU Aktiengesellschaft, Ludwigsburg
First half year 1999/2000 (April 1, ¬ó September 30, 1999)

in DM mn	1. half 1999/2000	1. half 1998/1999	change in %
Sales	210.1	194.9	7.8
Change in inventory of finished products and work-in-process	7.8	5.0	56.0
Other own work capitalised	0.3	0.2	50.0
Other operating income*	11.7	1.0	1070.0
Material costs	69.0	64.4	7.1
Personnel expenses	62.4	59.3	5.2
Depreciation	16.0	13.2	21.2
Other operating expenses	36.7	35.0	4.9
Operating profit (EBIT)	45.8	29.2	56.9
Financial result	2.0	2.3	-13.0
Income from ordinary activities	47.8	31.5	51.7
Extraordinary expenses	0.0	0.0
Pre-tax profit	47.8	31.5	51.7
Pre-tax profitTaxes on income**	22.6	16.3	38.7
Profit after taxes (PAT)***	25.2	15.2	65.8
DVFA/SG-earnings	20.2	15.2	32.9
Earnings per share (in DM)	2.02	1.52	32.9
* including sale of Optek	9.7
** taxes on Optek	4.7
*** PAT excluding sale of Optek	20.2

Cash Flow Statement of the Group

in DM thou	09/30/1999 1999/2000	09/30/1998 1998/1999
Net income	25,249	15,212
Depreciation on intangible fixed assets and tangible assets	15,979	13,198
Result of the disposal of fixed assets	-58	-
Increase in special item for investment subsidies	243	297
Increase in inventories	-23,650	-16,934
Decrease in trade accounts receivable (previous year increase)	1,984	-4,378
Increase of other assets and prepaid expenses (previous year decrease)	-286	1,402
Decrease in other accruals (previous year increase)	-15,921	6,223
Increase in trade accounts payable (previous year decrease)	121	-2,089
Increase in other liabilities and accrued expenses (previous year decrease)	1,446	-2,496
Change in receivables from and liabilities to affiliated companies	1,139	589
Inflow of funds from operating activities	6,246	11,024
Payments for investments in fixed assets	-32,856	-9,302
Outflow of funds for investment activities	-32,856	-9,302
Changes in liabilities due to banks	14,102	-2,198
Dividends paid out	-10,000	-8,000
Inflow of funds for financing activities (previous year outflow)	4,102	-10,198
Effective changes in overall funds	-22,508	-8,476
Total funds at beginning of period	157,750	156,697
Total funds at end of period	135,242	148,221

Consolidated Cash flow

in DM mn	09/30/1999 1999/2000	09/30/1998 1998/1999
Net income	25.2	15.2
Depreciation	16.0	13.2
	41.2	28.4

BERU group is a listed public company since October 1997. The company is the leading manufacturer of diesel cold start systems with an estimated worldwide market share of 40% for glow plugs. In the field of ignition technology for gasoline engines BERU is one of the four major manufacturers in Europe. The company also produces suppressor devices, sensors, ignition systems for the oil and gas burner industry as well as electronic controlling devices. Almost all OE-manufacturers of automobiles, commercial vehicles and engines are BERU´s customers. The company´s headquarters are located in Ludwigsburg.