Results for the first nine months 2001/02

BERU first nine months profit shows double-digit increase

Ludwigsburg, February 14, 2002 ¬ó During the first nine months of the business year 2001/02 (ended December 31), BERU Group, Ludwigsburg, increased sales by 8.7% from 196.6 mn Euros to 213.8 mn Euros. Net income increased by 31.1% to 29.5 (22.5) mn Euros. BERU stepped up sales with Electronic Tire Pressure Monitoring Systems (TPMS) by 57.4% to 7.4 mn Euros. TPMS is included in the business area Electronics and Sensor Technology in which the company posted the highest growth rates of 30.9% to 34.3 (26.2) mn Euros. DVFA/SG-earnings per share came in at Euro 2.44 (2.15) topping last year´s level by 13.5%.

Group sales increase by 9%

During the first nine months of the business year 2001/02 (April 1, ¬ó December 31, 2001) BERU sales rose 8.7% despite a weak German car market which decreased by 1% and regressive light vehicle production in the USA. Sales increased from 196.6 mn Euros to 213.8 mn Euros. The Korean company Hyunil, Chungju-City, which meanwhile operates under the name of BERU Korea, that had been taken- over in January 2001 contributed approximately 12 mn Euros to Group sales. The value of orders in hand rose to 146.8 (134.2) mn Euros and thus was 9.4% higher than in the previous year. The value of order intake picked up by 7.5% to 152.7 (142.0) mn Euros.

Sales of all business areas increased in face of a weak automotive market

In 2001 the overall automotive market in Western Europe remained nearly unchanged on the previous year´s level, with car sales rising slightly by 0.6%. In the USA in contrast light vehicle production figures showed a decrease of more than 10%. In expectation of a downturn in demand OE manufacturers during the third quarter of the BERU business year reduced markedly their car inventory and parts stock.

Diesel remains pillar of growth

The European diesel car market has continued to grow during 2001. Diesel share of new passenger car registrations in Europe reached 35.9% (32.3%). In contrast the US and Asian markets showed a weak performance with commercial vehicle engine production falling sharply. Diesel car production on a worldwide basis was up 7%.

In the core business field Diesel Cold-start Technology BERU increased sales by 4.1% to 108.4 (104.1) mn Euros. The company´s sales in diesel cold-start systems for engine applications in the OEM business came in in line with market growth at 6.7%. The change-over to a new engine generation at International Truck & Engine Corp., Seattle, a major US customer, and the double-digit decrease in engine production figures there negatively affected sales. Business with diesel cold-start and flame start systems for commercial vehicles performed weak (-16%). Due to a an unsatisfying pricing situation BERU purposely dispensed Euros 1.5 mn in sales of water glow plugs, which are not subject to the high standards of the OEMs engine application specifications. Water glow plugs are non-engine applications used for heating the water circuit to finally warm up the car interior. This solution no longer suffices modern technological requirements and will be substituted by the newly developed PTC-heating systems as off the end of 2002. BERU will then supply these systems to the new VW golf platform and another volume platform.

Ignition Technology driven by acquisitions and a strong aftermarket

In the business area Ignition Technology BERU increased sales by 7.2% to 71.1 (66.3) mn Euros. A strong aftermarket business and the increase in the scope of consolidation with BERU Korea made significant contributions. Due to the phase-out of a VW contract, sales of ignition coils were down. Beginning in late 2002 new orders awarded by French OE manufacturers will be compensating.

Electronics and Sensor Technology business contributes 16% of sales

BERU expanded sales of the business area Electronics and Sensor technology by 30.9 % to 34.3 (26.2) mn Euros. 16.0 % of Group sales are thus generated by this new business field from which the company expects the highest growth rates in the future. Electronic tire pressure monitoring systems and the new PTC (positive temperature coefficient)-heating systems are included in this business area. Just recently BERU gained major contracts for both product lines. The orders for TPMS by Porsche and Ford Motor Group from model year 2004 on are expected to contribute more than 30 mn Euros in the first year, increasing to 70 mn Euros annually in the following years. Sales with the new product line PTC-heating systems is to rise to approximately 30 mn Euros in 2004/05.

High growth in Tire Pressure Monitoring

BERU expanded sales of the business area Electronics and Sensor technology by 30.9% to 34.3 (26.2) mn Euros. 16.0% of Group sales are thus generated by this new business field from which the company expects the highest growth rates in the future. Electronic tire pressure monitoring systems and the new PTC (positive temperature coefficient)-heating systems are included in this business area. Just recently BERU gained major contracts for both product lines. The orders for TPMS by Porsche and Ford Motor Group from model year 2004 on are expected to contribute more than 30 mn Euros in the first year, increasing to 70 mn Euros annually in the following years. Sales with the new product line PTC-heating systems is to rise to approximately 30 mn Euros in 2004/05.

Number of employees decreases

Within the Group, BERU has further optimized its production network focussing on the international sites and has reduced cost. The number of employees worldwide decreased to 2,032 (2,073) when compared to the previous quarter. Personnel expenses as a percentage of sales were down to 29.2 (29.9)%.

Cost structure improved

As compared to the second quarter where material expenses as a percentage of sales amounted to more than 40%, the trend in the third quarter has clearly improved. Yet at 38,6% of sales for the first nine months it has remained above the previous year´s level (32.3%). The increase came due to a higher material cost due to the expanding electronics business in addition to an almost 80% share of material expenses at the subsidiary BERU Korea that was included in the scope of consolidation. Seasonal stocking up of glow plugs for diesel engines for the expected sales increase in the aftermarket business during the winter months also contributed. Group output increased disproportionately by 13,3%.

Other operating expenses as a percentage of sales were down sharply from 16,9% to 15,1%, depreciation was slightly lower at 7.2 (7.6)%.

Operating result up

In the last couple of months BERU´s strategic focus on the growth niches automotive electronics and sensor solutions has come to fruition. The company has gained several major contracts in the field of tire pressure monitoring as well as with PTC-heating systems for direct injection diesel engines. Expanding R&D and applicational engineering capacities in these fields at the Group´s electronics site Bretten, Germany implies cost in the range of 10 mn Euros in the current business year.

Shipments of tire pressure monitoring systems for Ford and Porsche will commence in calendar year 2003. At the same time BERU will as off late 2002 start equipping all diesel-engine plattforms of Europe´s largest VW golf plattform with PTC heating systems. Despite the increased preinvestments and cost resulting from this order income and the ongoing build-up of the new product lines, BERU has managed to achieve an operating margin of 17.5%. Adjusted for one-offs EBIT increased 5.6% from 35.5 mn Euros to 37.5 mn Euros. Including the other operating income from the sale of shares in the US companies Impco Technologies, Cerritos and Stoneridge, Novi, operating result was up 14.4% to 40.6 mn Euros.

The strong fall in interest rates and the necessity to keep cash in short-term investments to have it available for planned acquisitions had interest income and income from participations fall by more than one mn Euros to 2.6 (3.7) mn Euros. Pre-tax profit was 10.2% higher than in the previous year reaching 43.2 (39.2) mn Euros.

Net income soars 31%

The proceeds from the sale of of stocks in Impco Technologies and Stoneridge contributed a capital gain of 3.1 mn Euros. Predominantely this tax-free capital gain and an increasingly international structure of the Group helped by the effects of Germany´s tax reform had taxation fall to 31.7%. Profit after taxes picked up 31.1% to 29.5 (22.5) mn Euros. Adjusted earnings per share came in 13.5% higher at 2.44 (2.15) Euros.

Strong cash flow generation

Strong cash generation has continued with cash flow growing by 19.7% from 37.6 to 45.0 mn Euros. Cash and marketable securities increased from 74.6 mn Euros to 78.8 mn Euros. Though facing high cost and capex for the build up in Sensors and Electronics the Group´s net cash position increased another 5.6% to 62.2 (59.3) mn Euros.

Outlook

»Despite significant downturns in the US market and a weak market environment worldwide that had its effect on our ignition business at the OEM side, the company has managed to enhance sales and earnings by growing the diesel cold- start business in Europe and a sound double-digit pick-up in the aftermarket business«, says BERU´s chairman and CEO Ulrich Ruetz. »We will continue working hard to keep profitability at a reasonable level while going through the current phase of high pre-investments and cost exceeding 3% of sales for building up the PTC and TPMS product lines. Starting end of this year, the ramp up of our new electronic systems will increasingly contribute to Group growth. As far as passenger car production is concerned management still expects a tense market environment for the US as well as for the European market in the first half of 2002. Yet the difficult market will provide us with good buying opportunities as regards external growth by acquisitions in the aftermarket as well as in Sensors and Electronics. For the full business year management aims at growing sales and earnings by 4-5 percent.«

Consolidated Profit and Loss Account
9 months 2001/02 (April 1, ¬ó Dezember 31, 2001)

	01.4.-31.12.01	01.4.-31.12.00		01.10.-31.12.01	01.10.-31.12.00
	2001/2002 (EUR mn)	2000/2001 (EUR mn)	change in %	2001/2002 (EUR mn)	2000/2001 (EUR mn)
Sales	213.8	196.6	8.7	74.0	71.7
Change in inventory of finished products and other work-in-process	9.2	4.6	100.0	0.1	0.3
Other own work capitalized	0.2	0.5	-60.0	0.1	0.2
Other operating income*	10.1	4.2	140.5	2.7	1.7
	233.3	205.9	13.3	76.9	73.9
Material costs	-82.6	-63.6	29.9	-25.5	-22.4
Personnel expenses	-62.5	-58.7	6.5	-20.1	-20.0
Depreciation	-15.3	-14.9	2.7	-6.0	-5.0
Other operating expenses	-32.3	-33.2	-2.7	-10.3	-12.0
Profit before investment and financial result and taxes*	40.6	35.5	14.4	15.0	14.5
Investment earnings and financial result	2.6	3.7	-29.7	0.8	1.5
Profit before taxes*	43.2	39.2	10.2	15.8	16.0
Taxes on income and earnings	-13.7	-16.7	-18.0	-5.3	-6.3
Net income*	29.5	22.5	31.1	10.5	9.7
Preliminary DVFA/SG-earnings	24.4	21.5	13.5	9.7	9.2
Earnings per share (in EURO)	2.44	2.15	13.5	0.97	0.92
*incl. one-off tax-free income from sale of shares	3.1

Consolidated Balance Sheet
9 months 2001/02 (April 1, ¬ó Dezember 31, 2001)

Assets	31.12.01 EUR mn	31.03.01 EUR mn
Fixed assets
Intangible assets	13.3	15.2
Property. plant and equipment	68.7	72.4
Financial assets	17.2	16.6
	99.2	104.2
Current assets
Inventories	53.8	36.3
Accounts receivable and other assets
Trading accounts receivable	47.1	53.6
Accounts receivable from affiliated companies	5.1	2.9
Other assets	7.9	5.0
	60.1	61.5
Marketable securities	12.4	17.6
Liquid assets	66.4	57.0
	192.7	172.4
Deferred charges and prepaid expenses	0.9	1.1
	292.8	277.7
Equity and liabilities	31.12.01 EUR mn	31.03.01 EUR mn
Shareholders´ equity
Subscribed capital	26.0	26.0
Capital surplus	73.2	73.2
Earnings reserves	71.7	66.9
Retained earnings	29.8	14.4
Other shareholders´ equity	2.0	2.0
	202.7	182.5
Special items from investment subsidies	2.0	2.2
Provisions
Provisions for pensions and similar obligations	11.1	10.9
Other provisions	39.7	42.6
	50.8	53.5
Liabilities
Liabilities due to banks	16.6	15.3
Trade accounts payable	14.0	16.1
Notes	1.8	1.0
VAccounts due to affiliated companies	0.5	0.9
Other liabilities	4.4	6.1
	37.3	39.4
Deferred expenses and accruals	0.0	0.1
	292.8	277.7

Cash Flow Statement of the Group
9 months 2001/02 (April 1, ¬ó Dezember 31, 2001)

	2001/2002 EUR mn	2000/2001 EUR mn
Net income (incl. shares in results by minority shareholders)	29.5	22.5
Depreciation on intangible fixed assets and tangible assets	15.3	14.9
Decrease in accruals	-2.7	-7.7
Other expenses/income not affecting cash flow	-0.9	0.2
Profit arising from the disposal of intangible fixed assets and tangible assets	-2.5	-
Increase in inventories. trade receivables as well as other assets not allocated to investment of financing activities	-15.9	-18.2
Decrease (previous year: increase) in liabilities arising from Trade payables as well as other liabilities not allocated to Investment financing activities	-2.9	3.7
Cash flow from current operating activities	19.9	15.4
Deposits arising from the disposal of fixed assets	0.1	-
Payments for investments in fixed assets	-9.5	-19.8
Payments for investments in intangible assets	-0.2	-0.4
Deposits arising from the disposal of financial assets	3.8	-
Payments for investments in financial assets	-2.0	-4.0
Cash flow from investment activities	-7.8	-24.2
Payments for dividends	-9.2	-9.7
Deposits arising from taking-up finance credit	3.4	10.7
Payments arising from finance credit amortization payments	-2.1	-0.5
Cash flow arising from financing activities	-7.9	0.5
Changes in funds affecting cash flow	4.2	-8.3
Total funds at the beginning of the period	74.6	78.5
Total funds at the end of the period	78.8	70.2

Group sales by division
9 months 2001/02 (April 1, ¬ó December 31, 2001)

	2001/2002 EUR mn	2000/2001 EUR mn
OEM	137.6	132.5
Aftermarket	63.8	53.1
General Industry	12.4	11.0
	213.8	196.6

Group Cash Flow
9 months 2001/02 (April 1, ¬ó December 31, 2001)

	2001/2002 EUR mn	2000/2001 EUR mn
Net income	29.5	22.5
Depreciation	15.3	14.9
Change in long-term accruals	0.2	0.2
	45.0	37.6

BERU Group is a listed public company since October 1997. The company is the leading manufacturer of diesel cold start systems with an estimated world- wide 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 suppresor devices, sensors, ignition systems for the oil and gas burner industry as well as electronic controlling units. Almost all OE- manufacturers of automobiles, commercial vehicles and engines are BERU´s customers. The company´s headquarters are located in Ludwigsburg.