First half year results for the business year 2002/03

BERU: moderate sales growth in the first half year 2002/03

Ludwigsburg, November 14, 2002 ¬ó Despite slow car production worldwide BERU succeeded in increasing its sales by 0.4% during the first-half business year 2002/03, with proceeds rising from EUR 139.8 million to EUR 140.3 million. In the business area Electronics and Sensors sales grew by 29.8% to EUR 29.2(22.5) million. BERU´s sales in TSS electronic tire pressure monitoring systems rose by 90.5% to EUR 8.0 (4.2) million. After-tax profits were 5.8% lower than last year at EUR 17.9 (19.0) million. The costs of restructuring and operating losses in the subsidiaries REMIX and F1 Systems placed a EUR 1.9 million burden on the result. DVFA/SG earnings per share, adjusted for one-offs, were EUR 1.41 (1.47), just under last year´s level.

Diesel business stable

In its core business area of Diesel cold-start technology, also the area in which it generates most sales, BERU saw a slight increase in sales of 0.1% from EUR 67.4 million to EUR 68.1 million. This growth was below the market average, primarily due to the fall in sales of water heater plugs for car interior heating, which are due to be phased out this year, and a weak international market in commercial vehicles. BERU AG´s electronic PTC auxiliary heating systems will replace water heater plugs in the future, and will be gradually introduced into Europe´s largest platform, the new VW Golf, during the last quarter. The aftermarket business also developed below forecast during the summer months. Manufacturers´ extremely reserved behaviour in stocking spare parts, combined with restrictive storage policies, should lead to an increase in materials issued over the coming months, assuming the weather turns colder. Proceeds from OEM sales for passenger car diesel engines increased by 4.6%.

Ignition technology in decline as expected

The car industry is weak throughout the world, and this also affected the business in ignition technology for petrol engines. Furthermore, the ignition coil business with the VW Group which wound up at the end of the last business year will not be substituted by the start of new orders from French manufacturers until the last quarter of this year. Sales in Ignition Technology declined by 13.8% to EUR 43.0 (49.0) million during the first six months. Shares were also lost at Hyundai. In the spare parts aftermarket, sales were hit by uncertainty among consumers in Germany and the rest of Western Europe coupled with the weak development of commercial business in South America. On the basis of existing orders, sales in ignition technology for petrol engines should stabilise towards the end of the business year and grow during the forthcoming year.

Electronics and Sensors grows by 30%

The Group´s newest business area, Electronics and Sensors, displayed the strongest growth as expected. BERU increased its sales in this division by 29.8% from EUR 22.5 million to EUR 29.2 million, and Electronics and Sensors accounted for a 20.8% (16.1%) share in total sales. BERU increased its sales in the electronic tyre pressure monitoring division by 90.5%, from EUR 4.2 million to EUR 8.0 million. BERU currently supplies the manufacturers Porsche, BMW, Audi, VW, Bentley, Ferrari and DaimlerChrysler. Several new models are being launched with the VW Touareg and the Porsche Cayenne, and together with the increasing equipment levels this should keep sales rising fast in this division. Successful contract negotiations on new platforms with European vehicle manufacturers are currently in their final stages. In the USA, BERU is collaborating with the Lear Corporation to offer systems differing from the European standards and wheel sensors with lesser technical specifications.

Orders received and orders on hand are recovering

Despite negativity in the industry, orders received rose during the first six months of the 2002/03 business year by 1.9% from EUR 77.3 million to 78.8 million. Orders on hand also rose slightly, by 0.5% from EUR 140.3 million to 141.0 million.

Falling number of employees in the Group

The number of employees in the Group fell again from 2002/03´s first quarter figure of 2,213 to 2,185. This was mainly due to the restructuring of subsidiaries F1 and REMIX conducted during the second quarter as part of the PAP (Productivity Action Plan). In comparison with the previous year, however, the number of employees was 5.4% higher, principally on account of the incorporation of F1 Harness Systems Ltd., Diss, United Kingdom, and REMIX Group Electronics Rt., Tiszakécske, Hungary, into the Group´s consolidated companies.

Personnel expenses as a percentage of sales rose from 30.3% to 33.5% as a result of a salary and wage increase of almost 4% in Germany which came into force in July, as well as the inclusion of F1, REMIX and BERU S.A.S, Saint Germain (France) operations into the consolidated companies.

Gross yield margin significantly improved

Despite increased sales in the Electronics and Sensors division, in which materials expenditure is normally high, material expenses as a percentage of sales fell from 40.8% to 33.9%. Savings in purchasing, less build-up of stocks, and the reduction in the ignition coil business in the Group caused the gross margin to rise to 66.1% (59.2%). Other operating expenses rose from EUR 22.0 million to 22.8 million.

Operating profits weakened

The company undertook all the measures necessary for the restructuring of its subsidiaries REMIX and F1, in the second quarter, and reduced the number of employees at these subsidiaries by 84 in comparison with the previous year. Restructuring expenses and operating losses from the two subsidiaries amounted to EUR 1.9 million during the quarter. BERU´s management believes that the restructuring has now largely been completed, and it plans to break even with F1 before this business year is out. The company spent around EUR 5 million during the first six months on purchasing materials and services for the development and application of the new PTC auxiliary heating systems, ISS diesel instant start systems and tyre pressure monitoring systems. The quarter´s result was also reduced by market-related depreciation of securities amounting to EUR 0.6 million. BERU achieved an EBIT margin of 14.5% (16.1%). The earnings before interest and tax (EBIT) were EUR 20.4 (22.5) million, while the operating margin, including the EUR 3.8 million tax-free capital gain from the sale of shares in other companies, was 17.2% (18.3%) setting the operating result at EUR 24.2 (25.6) million.

Pre-tax result slightly lower

The company generated a tax-free capital gain of EUR 3.8 (3.1) million through the sale of shares in the American companies Impco Technologies, Inc. and Stoneridge Inc. The investment earnings and financial result fell from EUR 1.8 million to 1.7 million on account of persisting weak interest rates, and the pre-tax profits were hence reduced by 4.4% from EUR 27.4 million to 25.9 million. The overall tax ratio during the quarter was higher at 30.7% (27.3%), which reduced the first six months´ net profits by 5.8% from EUR 19.0 million to 17.9 million. The DVFA/SG result, adjusted for one-off and extraordinary factors, was EUR 1.41 compared with EUR 1.47 the previous year.

EUR 116 million liquid assets

Cash flow remained strong at EUR 28.0 (28.3) million. Liquid assets and marketable securities were reduced slightly to EUR 116.1 (120.9) million. The Group´s net financial position by the end of the quarter was EUR 91.4 (99.2) million. Despite a major investment of EUR 11.8 million in the extension of production and in the construction of a new logistics centre for the spare parts business - EUR 8.6 million of which was spent in the second quarter - BERU still managed to generate an operating free cash flow of EUR 3.6 million during the second quarter. The operating free cash flow for the whole year should once again exceed EUR 20 million. Page 3 of 7

Outlook for the next six months

BERU assumes that the world economic situation has not yet reached rock-bottom. »The modest growth in September still does not mean that the car industry has restarted,« states Ulrich Ruetz, Chairman of BERU Group´s Managing Board. »The industry around us is currently very weak and even BERU did not remain unscathed by this during the second quarter. However, on the basis of existing orders and the projects we are launching in tyre pressure monitoring, diesel instant start systems, and ignition technology, we do expect over the year as a whole to reach or even slightly exceed the record sales of the previous year. Most of the essential restructuring steps have been successfully executed, and business has so far developed better than planned during the first six weeks of the current third quarter. Business is seasonally stronger during the second six months, and because of that and the cost reductions we have introduced, management is banking on a clearly improved EBIT margin in the months to come.«

Consolidated Profit and Loss Account
First half-year (April 1, ¬ó September 30, 2002)

	2002/2003 EUR million	2001/2002 EUR million	Change in %
Sales	140.3	139.8	0.4
Change in inventory of finished products and work in process	3.2	9.1	-64.8
Other own work capitalized	0.3	0.1	200.0
Other operating income	7.7	7.4	4.1
Material costs	-47.5	-57.1	-16.8
Personnel expenses	-47.0	-42.4	10.8
Depreciation of intangible assets, plant and equipment	-10.0	-9.3	7.5
Other operating expenses	-22.8	-22.0	3.6
Profit before investment and financial result and taxes	24.2	25.6	-5.5
Investment earnings and financial result	1.7	1.8	-5.6
Income from ordinary activities	25.9	27.4	-5.5
Taxes on income and earnings	-7.8	-8.3	-6.0
Minority interests	0.0	0.0	0.0
Consolidated earnings	17.9	19.0	-5.8
DVFA earnings per share (in EUR)	1.41	1.47	-4.3

Cash Flow Statement of the Group
First half-year (April 1, ¬ó September 30, 2002)

	2002/2003 EUR million	2001/2002 EUR million
Net income (including shares in results by minority shareholders)	17.9	19.0
Depreciation on intangible fixed assets and tangible assets	10.0	9.3
Decrease in accruals	-0.4	-6.9
Other income/expenses not affecting cash flow	-0.1	-0.4
Profits from the disposal of intangible fixed assets and tangible assets	-0.1	-2.5
Profits from the disposal of securities in current assets	-3.8	0.0
Decrease (previous year increase) in inventories, trade receivables as well as other assets not allocated to investment or financing activities	0.7	-10.7
Increase in liabilities arising from trade receivables as well as other liabilities not allocated to investment financing activities	2.6	3.4
Cash flow from current operating activities	26.8	11.2
Deposits arising from the disposal of fixed assets	1.0	0.1
Payments for investments in fixed assets	-11.2	-5.7
Deposits arising from the disposal of intangibel assets	0.0	0.0
Payments for investments in intangible assets	-0.3	-0.1
Deposits arising from the disposal of financial assets	0.0	3.8
Payments for investments in financial assets	-0.3	-1.4
Payments for acquisitions of consolidated companies	-0.5	0.0
Deposits arising from financial assets as part of temporary financial management	10.8	0.0
Payments arising from financial assets as part of temporary financial management	0.0	0.0
Cash flow from investment activities	-0.5	-3.3
Payments for dividends	-11.0	-9.2
Deposits arising from taking-up finance credit	3.9	3.9
Payments arising from finance credit amortization payments	-2.0	-0.6
Cash flow arising from financing activities	-9.1	-5.9
Changes in funds affecting cash flow	17.2	2.0
Changes in funds not affecting cash flow	-1.4	0.0
Changes in funds resulting from consolidated companies	0.0	0.0
Total funds at the beginning of the period	93.4	67.1
Total funds at the end of the period	109.2	69.1

Group sales by division (distribution channels)
First half-year (April 1, ¬ó September 30, 2002)

	2002/2003 EUR million	2001/2002 EUR million
OEM	92.6	92.8
Aftermarket	37.0	39.5
General industry	10.7	7.5
	140.3	139.8

Group Cash flow
First half-year (April 1, ¬ó September 30, 2002)

	2002/2003 EUR million	2001/2002 EUR million
Net income	17.9	19.0
Depreciation	10.0	9.3
Change in long-term accruals	0.1	0.0
	28.0	28.3

Consolidated Balance Sheet
First half-year (April 1, ¬ó September 30, 2002)

Assets	30/09/2002 EUR million	31/03/2002 EUR million
Fixed assets
Intangible assets	15.0	16.4
Property, plant and equipment	74.5	72.5
Financial assets	4.2	3.9
	93.7	92.8
Current assets
Inventories	57.5	44.8
Accounts receivable and other assets
Trading accounts receivable	48.1	55.5
Accounts receivable from affiliated companies	3.7	3.7
Other assets	2.0	7.9
	53.8	67.1
Marketable securities	29.6	80.2
Liquid assets	86.5	27.0
	227.4	219.1
Deferred charges and prepaid expenses	0.8	0.9
	321.9	312.8
Equity and liabilities	30/09/2002 EUR million	31/03/2002 EUR million
Shareholders´ equity
Subscribed capital	26.0	26.0
Capital surplus	73.1	73.1
Earnings reserves	103.8	94.7
Retained earnings	18.2	21.3
Other shareholders´ equity	1.8	2.2
	222.9	217.3
Special items from investment subsidies	2.3	2.3
Provisions
Provisions for pensions and similar obligations	11.3	11.2
Other provisions	33.4	33.9
	44.7	45.1
Liabilities
Liabilities due to banks	24.7	22.8
Trade accounts payable	13.8	16.1
Notes	1.4	1.4
Accounts due to affiliated companies	0.2	0.3
Other liabilities	11.7	7.3
	51.8	48.0
Deferred expenses and accruals	0.2	0.1
	321.9	312.8

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.