First quarter results for the business year 2002/03

BERU grows Q1 sales and net income in difficult economic environment

Ludwigsburg, August 13, 2002 ¬ó In the first three months of the 2002/03 business year (1 April to 30 June 2002), BERU Group in Ludwigsburg/Germany increased group sales by 1.5% from EUR 65.0 to 66.0 million. After-tax profits rose by 12.3% to EUR 8.2 (7.3) million. BERU succeeded in increasing of electronic tire pressure monitoring systems by 116.7% to EUR 3.9 million. Tire pressure monitoring is part of the company´s Electronics and Sensors business area which recorded the strongest growth of 31.0% to EUR 13.1 (10.0) million. At EUR 0.70 (0.67), earnings per share (adjusted for one-offs, according to DVFA/SG standards) were 4.5% up on the previous year´s level.

EBIT margin again over 15%

In spite of continuing cost of research and development in the areas of Electronics and Sensors and persisting burdens resulting from restructuring measures at F1 Harness Systems Ltd., Diss, UK and REMIX Group Electronics Rt., Tiszakécske, Hungary BERU succeeded in maintaining its EBIT margin at the high level of 15.2 (15.7)%. EBIT totalled EUR 10.0 (10.2) million. The operating margin including the EUR 1.2 million tax-free income from the divestment of shares of the US company Impco Technologies, Inc. Cerritos reached 17.0%. The operating result increased by 9.8% to EUR 11.2 million after totalling EUR 10.2 million in the year before.

Net income up by 12%

The sharp fall in interest rates levels as well as the short-term necessity to have cash available for acquisition projects resulted in investment earnings and financial result contracting by 36.4% to EUR 0.7 (1.1) million. Profits before taxes were 5.3% up on last year and the pre-tax earnings totalled EUR 11.9 (11.3) million. First-three-month net income was up 12.3% to EUR 8.2 (7.3) million. Earnings per share adjusted for one-offs and extraordinary effects increased by 4.5% to EUR 0.70 after EUR 0.67 last year.

Cost of materials noticeably down

In spite of increased sales in the generally cost of materials-intensive area of Electronics and Sensors, the overall cost of materials dropped from 39.2% to 35.3%. Compared to the beginning of the business year, the number of employees in the BERU Group fell from 2,256 to 2,213. However, the figure was clearly up on the 2,083 people employed in the last first quarter. This resulted from personnel reductions which were part of restructuring measures at the REMIX and Hyunil Electronics Co. Ltd., Korea subsidiaries and the continuing automation of manufacturing processes at these two facilities. Compared to the last first quarter, personnel costs increased to 32.7 (30.6)%. This already includes the one-off lump-sum payment due in June which formed part of the 2002 pay negotiations in Germany and which contributed to increasing personnel costs.

Diesel growth remains the most important pilla

In its core business field and most important area in terms of sales, namely Diesel Cold start Technology, BERU increased its sales by 1.5% to EUR 33.2 (32.7) million. On the OEM side in Europe, BERU increased diesel cold-start sales by more than 9%. Declines in water heater plugs for car interior heating which are due to be phased out this year as well as continuing weakness in the commercial vehicle business thwarted higher growth. Electronic PTC auxiliary heating systems from BERU AG will replace water heater plugs in the future and together with the diesel Instant Start System will be fitted to Europe´s largest platform, the VW Golf platform from the fourth quarter on. In the USA and Asia, sales were weaker due to market conditions and in Korea, a long strike at the Hyundai Motor Corporation burdened sales. In the USA, there are some clear signs that a number of manufacturers are preparing for an increase in the share of diesel-powered cars in North America.

Difficult times for Ignition Technology

The company´s ignition technology sector for gasoline engines was hit by global weakness in the automobile industry and sector sales fell by 11.7% to EUR 19.7 (22.3) million. Apart from the strike-related decline in Korea, sales of ignition connectors also dropped. Aftermarket sales allowed BERU to largely match last year´s spark plug business. With new supply contracts for advanced ignition coils for Renault coming on stream, sales of ignition coils are due to rise again towards the end of the third quarter.

31% growth in the Electronics and Sensors business area

The business area of Electronics and Sensors recorded the strongest growth. This was assisted by a hefty pick up in tire pressure monitoring sales and a 23% increase in sensors and electronic control units. BERU increased sales in this area by 31% to EUR 13.1 (10.0) million. The company is also expecting this business area to expand in the future and it accounted for 19.8 (15.4)% of total Group sales.

Tire Pressure Monitoring expanding rapidly

In the area of electronic tire pressure monitoring, BERU increased first-quarter sales by 116.7% to EUR 3.9 (1.8) million. Interestingly, the planned legislative requirement to fit tire pressure monitoring systems in the USA from November 2003 on has also led to increasing fitting rates by BERU customers in Europe. At present, BERU AG supplies the Tire Safety System (TSS) to Porsche, BMW, Audi, VW, Bentley, Ferrari, Land Rover and DaimlerChrysler. In the future, BERU will predominantely concentrate on the European market and German manufacturers with whom the specifications of the tire pressure monitoring system were developed. With a new, modular system design, BERU will be able to match the parameters of tire pressure monitoring systems to customer requirements and to offer cost-effective combinations of Keyless Start/Keyless Go systems with the TSS tire pressure monitoring system also in Europe. BERU will continue to bid for business in the North American market if the tenders involve higher-value platforms and greater technological sophistication. Management will intensify efforts to expand business in this area and expects further profitable growth in tire pressure monitoring in the years to come.

Outlook

BERU sees market conditions to remain difficult. Management expects organic growth will maintain sales at last year´s level or even generate a moderate increase and profits to develop similarly once adjusted for one-off effects. According to BERU´s CEO and Chairman, Ulrich Ruetz, »We are currently operating in a particularly difficult economic environment. Along with continuing growth in diesel business, BERU will generate sales with PTC auxiliary heating and diesel Instant Start Systems scheduled to be fitted to the new Golf platform in the fourth quarter and from the start-up of ignition coil production for Renault. In Europe, we expect to sell twice as many tire pressure monitoring systems as last year. At the same time, we are intensifying our efforts to reduce costs as part of our efficiency program and to achieve break-even with less than 200,000 systems«.

Consolidated Profit and Loss Account BERU Aktiengesellschaft, Ludwigsburg
First quarter 2002/2003 (1 April to 30 June, 2002)

	2002/2003 in EUR mn	2001/2002 in EUR mn	Change in %
Sales	66.0	65.0	1.5
Change in inventory of finished products and work in process	2.3	3.8	-39.5
Other own work capitalized	0.1	0.1	0.0
Other operating income	3.0	2.0	50.0
Material costs	-23.3	-25.5	-8.6
Personnel expenses	-21.6	-19.9	8.5
Depreciation of intangible assets, plant and equipment	-4.9	-4.7	4.3
Other operating expenses	-10.4	-10.6	-1.9
Profit before investment and financial result and taxes*	11.2	10.2	9.8
Investment earnings and financial result	0.7	1.1	-36.4
Income from ordinary activities	11.9	11.3	5.3
Pre-tax profit	11.9	11.3	5.3
Taxes on income and earnings and other taxes	-3.7	-4.0	-7.5
Share in profits by other shareholders	-	-	0.0
Net income	8.2	7.3	12.3
DVFA-earnings per share (in EUR)	0.70	0.67	4.5

* incl. EUR 1.2 million one-off tax-free income from sale of shares

Cash Flow Statement of the Group
First quarter 2002/03 (1 April to 30 June, 2002)

	2002/2003 EUR mn	2001/2002 EUR mn
Net income (incl. shares in results by minority shareholders)	8.2	7.3
Depreciation on intangible fixed assets and tangible assets	4.9	4.7
Decrease in accruals	-0.5	-1.4
Other income/expenses not affecting cash flow	0.0	-0.2
Profits from the disposal of intangible fixed assets and tangible assets	0.0	-0.7
Profits from the disposal of securities in current assets	-1.9	0.0
Decrease (prev. year increase) in inventories, trade receivables as well as other assets not allocated to investment or financing activities	9.0	-1.4
Decrease (prev. year increase) in liabilities arising from trade receivables and other liabilities not allocated to investment or financing activities	-4.6	2.9
Cash flow from current operating activities	15.1	11.2
Deposits arising from the disposal of fixed assets	0.6	-
Payments for investments in fixed assets	-3.0	-2.3
Deposits arising from the disposal of intangibel assets	-	-
Payments for investments in intangible assets	-0.2	-
Deposits arising from the disposal of financial assets	-	1.7
Payments for investments in financial assets	-	-0.6
Payments for acquisitions of consolidated companies	-	-0.4
Deposits arising from financial assets as part of temporary financial management	8.8	2.0
Payments arising from financial assets as part of temporary financial management	-	-
Cash flow from investment activities	6.2	0.4
Payments for dividends	-	-
Deposits arising from taking-up finance credit	0.4	0.8
Payments arising from finance credit amortization payments	-1.5	-0.6
Cash flow arising from financing activities	-1.1	-0.2
Changes in funds affecting cash flow	20.2	11.8
Changes in funds not affecting cash flow	0.2	-
Changes in funds resulting from consolidated companies	-	-
Total funds at the beginning of the period	93.4	67.1
Total funds at the end of the period	113.8	78.9

Group sales by segments (distribution channels)
First quarter 2002/03 (1 April to 30 June 2002)

	2002/2003 EUR mn	2001/2002 EUR mn
OEM	43.8	42.1
After-market	17.2	19.1
General industry	5.0	3.8
	66.0	65.0

Consolidated Cash flow
First quarter 2002/03 (1 April to 30 June 2002)

	30/06/2002 EUR mn	30/06/2001 EUR mn
Net income	8.2	7.3
Depreciation	4.9	4.7
Change in long-term accruals	0.0	0.0
	13.2	12.0

Consolidated Balance Sheet as at 30 June 2002

Assets	30/06/2002 EUR mn	31/03/2002 EUR mn
Fixed assets
Intangible assets	15.7	16.4
Property, plant and equipment	70.8	72.5
Financial assets	3.9	3.9
	90.4	92.8
Current assets
Inventories	52.5	44.8
Accounts receivable and other assets
Trading accounts receivable	42.3	55.5
Accounts receivable from affiliated companies	3.2	3.7
Other assets	4.9	7.9
	50.4	67.1
Marketable securities	88.5	80.2
Liquid assets	32.4	27.0
	223.8	219.1
Deferred charges and prepaid expenses	0.8	0.9
	315.0	312.8
Equity and liabilities	30/06/2002 EUR mn	31/03/2002 EUR mn
Shareholders´ equity
Subscribed capital	26.0	26.0
Capital surplus	73.1	73.1
Earnings reserves	94.0	94.7
Retained earnings	30.5	21.3
Other shareholders´ equity	2.1	2.2
	225.7	217.3
Special items from investment subsidies	2.3	2.3
Provisions
Provisions for pensions and similar obligations	11.3	11.2
Other provisions	33.3	33.9
	44.6	45.1
Liabilities
Liabilities due to banks	21.7	22.8
Trade accounts payable	12.4	16.1
Notes	2.6	1.4
Accounts due to affiliated companies	0.2	0.4
Other liabilities	5.3	7.3
	42.2	48.0
Deferred expenses and accruals	0.2	0.1
	315.0	312.8

BERU AG in Ludwigsburg/Germany has been a listed public company since October 1997. In the last business year, the company generated sales of Euro 303.1 million with 2,250 employees worldwide. With an an estimated world-wide market share of 40% for glow plugs, BERU is the global leader in the field of diesel cold-start technology. In the field of ignition technology for gasoline engines BERU is one of the four major manufacturers in Europe. BERU has significantly expanded in the field of electronics and specializes in complete, electronic system solutions for the automotive industry. BERU is also the exclusive supplier of electronic tire pressure monitoring systems to the German automobile industry. Almost all OE-manufacturers of automobiles, commercial vehicles and engines are BERU´s customers