9-months results for the 2000/01 business year

BERU sales and adjusted net income show double-digit growth

Ludwigsburg, February 15, 2001 ¬ó In the first nine months of the 2000/01 business year (ends March 31, 2001) BERU increased Group sales by 14.8% from DM 335.1 mn to DM 384.6 mn. Despite heavy investments in expanding the new division electronics and sensor technology adjusted net income rose by 16.4% to DM 44.0 (37.8) mn. Earnings per share came in at DM 4.20 topping last yearÕs result by 11.1%.

Growth in all business fields

Despite an overall weak automotive market BERU gained sales growth in all three business fields. The acquisitions carried out in 1999 in Mexico, Korea and Spain contributed DM 33.7 mn to Group sales.

In Europe, the diesel bandwagon continued in 2000 driven by new motor technology and soaring fuel prices. Diesel car new registrations were up 11.0%. BERU increased sales in this core business field by 8.9% to DM 203.6 (187.0) mn. In the Asian market the company won two major orders from Toyota and Kubota for diesel cold-start technology. BERU also started to supply glow plugs in series for General Motors and Ford Group Europe. Due to the unusually warm weather conditions during the winter months the after-market business for glow plugs, that are necessary for cold-starting diesel engines, came in below expectations and posted marginal gains as compared to the period last year.

In the ignition technology business field BERU expanded sales by 17.7% to DM 129.7 (110.2) mn. Sales share increased to 33.7%. Excluding sales of the newly consolidated company BERU S.A. de C.V., Mexico, sales in this business field grew by 1.0% outperforming a weak automotive market. In Europe, new passenger car registrations in 2000 were 2.3% below last yearÕs figures, in Germany car sales decreased by 11.0%.

High investments in corporate strategy »Formula BERU = Diesel + Electronics«

In the last quarter BERU stepped up capital expenditure in the new electronics and sensor technology division. During the last nine months investments in plant, property and equipment increased by 54.3% to DM 39.5 (25.6) mn. In the US, the regulation passed in Congress to make tire pressure warning systems mandatory for new motor vehicles from the end of 2003 on, provides large-scale growth opportunities for BERU. Currently, new passenger car registrations in the US amount to approximately 15 to 16 million units per annum. In the field of sensor- based, electronic tire pressure monitoring systems BERU currently has a market share of 35 to 40%. The business field electronics and sensor technology achieved a 35.4% sales growth from DM 37.9 mn to DM 51.3 mn. Share in total Group sales mounted by two percentage points reaching 13.3% (11.3%).

Rising expenses for expansion in electronics development

The massive expansion in electronics and sensor technology and the coinciding build-up of R&D personnel and application engineers in this division as well as acquisitions of companies have led to an increase in the number of Group employees by 318 people to a total of 2.019 (1.701). Personnel expenses rose by 18.7% to DM 114.9 (96.8) mn. Personnel expenses as a percentage of sales was 29.9% compared to 28.9% in the previous year. Costs of materials went up by 20.8% to DM 124.4 (103.0) mn. Due to the product mix and the increasing sales share of electronics material expenses as a percentage of sales was at 32.3 (30.7)%. Other operating expenses, that contain marketing and distribution costs as well as operating and administrative expenses rose by 19.5% from DM 54.4 mn to DM 65.0 mn. The disproportionately high investments in the new electronics plant in Bretten are being reflected by higher depreciation up 32.9% to DM 29.1 (21.9) mn. For the next business year management expects both, capex and depreciation, to come down significantly.

Operating result remains at a high level

Adjusted for the one-off income resulting from the sale of the stake in the sensor manufacturer Optek Technology Inc., Carrollton, Texas, earnings before interest, depreciation and amortisation (EBITDA) went up by 8.5% to DM 98.5 (90.8) mn. Despite high expenses for R&D personnel in electronics development, the costs related with the build up of the electronics facilities at the Bretten, Germany plant and an increasing share of depreciation as a percentage of sales of 12,4% the operating result (EBIT) rose to DM 69.4 (68.9) mn. The operating margin (EBIT margin) was at 18.0%.

Profit after taxes up 16%%, cash flow increases 22%%

BERU Group has benefited from its increasingly international structure and managed to reduce taxation further to 42.6 percentage points. Profit after taxes rose by 16.4% reaching DM 44.0 mn. Adjusted for the one-off income from the sale of the stake in Optek, Inc. profit after taxes had amounted to DM 37.8 mn in the year- ago period. Adjusted cash flow increased by 22.3% from DM 60.0 mn to DM 73.4 mn.

Earnings per share up 11%

Preliminary earnings per share for the first nine months were DM 4.20 (DM 3.78). This corresponds to an increase of 11.1%. The companyÕs order backlog was 5.3% stronger at DM 264.6 (DM 251.3) mn. For the full business year management plans to increase organic sales by 6-7% and to rise earnings in-line. Additional sales and earnings contributions are to be added by acquisitions. BERU will continue to invest in R&D personnel and plant, property and equipment to actively pursue the expansion of is technological competence in the sensors and vehicle electronics business laying the basis for future growth.

Consolidated Profit and Loss Account
9-months 2000/01 (April 1 ¬ó December 31, 2000)

in DM mn	9-months 2000/2001	9-months 1999/2000	Change in %
Sales	384.6	335.1	14.8
Change in inventory of finished products and work-in-process	9.1	6.7	35.8
Other own work capitalised	0.9	0.5	80.0
Other operating income*	8.2	12.4	-33.9
Material costs	124.4	103.0	20.8
Personnel expenses	114.9	96.8	18.7
Depreciation	29.1	21.9	32.9
Other operating expenses	65.0	54.4	19.5
Operating profit (EBIT)	69.4	78.6	-11.7
Financial result	7.3	3.6	102.8
Income from ordinary activities	76.7	82.2	-6.7
Pre-tax profit	76.7	82.2	-6.7
Taxes on income**	32.7	39.4	-17.0
Profit after taxes (PAT)***	44.0	42.8	2.8
DVFA/SG-earnings	42.0	37.8	11.1
Earnings per share (in DM)	4.20	3.78	11.1
* including sale of Optek		9.7
** taxes on Optek		4.7
*** PAT excluding sale of Optek	44.0	37.8	16.4

Cash Flow Statement of the Group

in DM mn	31/12/2000 2000/2001	31/12/1999 1999/2000
Net income	44.0	42.8
Depreciation on intangible fixed assets and tangible assets	29.1	21.9
Increase in long-term accruals	0.3	0.3
Increase in special item for investment subsidies	0.4	0.8
Increase in inventories	-27.4	-24.1
Increase in trade accounts receivable (previous year decrease)	-9.5	2.2
Decrease of other assets and prepaid expenses (previous year increase)	4.3	-0.1
Decrease in other accruals	-15.4	-14.8
Increase in trade accounts payable	8.3	0.7
Decrease in other liabilities and accrued expenses	-1.1	-1.5
Changes in receivables from and liabilities to affiliated companies	-3.0	-2.5
Inflow of funds from operating activities	30.0	25.7
Payments for investments in fixed assets and tangible assets	-39.5	-25.6
Payments for investments in financial assets	-7.8	-15.1
Outflow of funds for investment activities	-47.3	-40.7
Changes in liabilities to banks	20.0	2.7
Dividends paid out	-18.9	-10.0
Inflow of funds for financing activities (previous year outflow)	1.1	-7.3
Effective changes in overall funds	-16.2	-22.3
Total funds at beginning of period	153.6	157.7
Total funds at end of period	137.4	135.4

Consolidated Cash Flow

in DM mn	31/12/2000 2000/01	31/12/1999 1999/2000
Net income	44.0	42.8
Depreciation	29.1	21.9
Change in long-term accruals**	0.3	0.3
	73.4	65.0*
* including Optek
** considered for the first time

Corporate background: 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 BERUÕs customers. The companyÕs headquarters are located in Ludwigsburg.