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BERU with double-digit growth in revenues and EBIT in first half of 2006“After a very good start to the year 2006, the BERU group continued along its path of profitable growth in the second quarter. Revenue growth in the first half of 2006 was supported by the ramp-up of new products. At the same time, the Company’s value creation increased. With an operating margin of 13.9%, BERU once again achieved a return above the average for the industry,” commented Marco von Maltzan, Chairman of the Executive Board of BERU AG, on business developments in the first six months of 2006. Good international business developments – strong growth for Original Equipment and Aftermarket segments Sales revenues generated outside Germany in the first half of 2006 increased to EUR 157.2 million (EUR 141.5 million), equivalent to 70.5% of the Group’s total (70.0%). In Germany, the domestic market, BERU posted revenues of EUR 65.8 million (EUR 60.5 million). Although unit sales of passenger cars remained flat in the world’s three major markets (the United States, Europe and Japan), BERU increased its first-half sales revenues generated in the Original Equipment segment by 11.4% to EUR 150.0 million (EUR 134.7 million). BERU continued to expand its business in the fields of ignition technology and electronics and sensor technology. The Aftermarket segment also had a significant impact on the positive revenue trend of the first half of 2006. Aftermarket sales revenues increased by 9.2% to EUR 59.1 million (EUR 54.1 million). BERU profited in the winter quarter from the rising demand for components subject to wear and tear, especially ignition components. Demand for spare parts was also boosted by the increasing average age of cars on the road. In the General Industry segment, which comprises the business with manufacturers of oil and gas burners and our industrial electronics, sales revenues in the first half of 2006 increased by 5.3% to EUR 13.9 million (EUR 13.2 million). Youngest division posts strongest growth BERU’s three specialist divisions – Ignition Technology, Diesel Cold-Start Technology and Electronics and Sensor Technology – all strengthened their market positions in the first half of this year. The sales revenues posted by the division of Diesel Cold-Start Technology were at a similar level to the prior-year period, actually rising by 0.7% to EUR 95.7 million (EUR 95.0 million). Unit sales of second-generation diesel cold-start systems for light trucks in the United States and Asia grew at double-digit rates. With its innovative diesel cold-start systems, BERU is currently the only supplier of series components that fulfills the demanding on-board diagnostic regulations of the California Air Resources Board (CARB). The sales revenues generated by the Ignition Technology division grew by 5.7% to EUR 61.0 million (EUR 57.7 million). BERU strengthened its market position as an ignition specialist for gasoline engines, increasing its unit sales of both spark plugs and ignition coils in the first half of 2006. In BERU’s youngest division, Electronics and Sensor Technology, successful product launches and higher equipping rates led to particularly strong revenue growth of 34.5% to EUR 66.3 million (EUR 49.3 million). This was the first time that this division generated higher sales revenues than Ignition Technology. The key growth driver was the series ramp-up for two European premium manufacturers with tire-pressure monitoring systems. As had been expected, first-half sales revenues from the Tire Safety System (TSS) increased at an above-average rate of 76.0% to EUR 19.0 million. At the same time, sales revenues form PTC auxiliary heating systems for vehicle interiors developed very positively, rising by 31.1% to EUR 17.7 million (EUR 13.5 million). BERU gained new orders from European and North American customers. The Group is now developing the second generation of PTC auxiliary heating systems and is expanding its range of these products. High operating efficiency Intensifying pressure on sale prices means that automotive suppliers such as BERU have to improve their operating efficiency. Strict cost management and high utilization of capacity led to an operating profit of EUR 30.9 million (EUR 25.1 million). The operating margin in the first half year reached 13.9% (12.4%). Earnings before taxes increased to EUR 31.7 million (EUR 21.8 million). The return on sales after taxes amounted to 9.2% (4.2%). BERU continues to make sustained investments in the future of the Company and also in the expansion of its German sites in Ludwigsburg, where the headquarters are located, and in Bretten. Investment in tangible and intangible assets totaled EUR 15.7 million (EUR 11.7 million) for the Group in the first half of the year, equivalent to 7.0% of sales revenues. BERU was once again in a position to finance all of its investment completely out of its cash earnings. As of June 30, 2006, the Group employed a total workforce of 2,562 persons (December 31, 2005: 2,702). 57.5% were employed in Germany and 42.5% were employed in other countries. The order backlog of EUR 199.4 million at the balance-sheet date of June 30, 2006 was 6.8% higher than a year earlier (EUR 186.6 million). Sound balance-sheet structure and finances The BERU Group improved its net financial position during the reporting period. Cash and cash equivalents at the end of the half-year amounted to EUR 87.1 million, compared with EUR 83.9 million at the end of short financial year 2005 on December 31, 2005. Due to credit repayments, liabilities to banks decreased from EUR 11.1 million to EUR 0.2 million. The BERU Group is thus virtually debt free. BERU’s equity ratio of 72.8% (December 31, 2005: 70.0%) is one of the highest in the German metal-working industry. The balance-sheet total of EUR 438.8 million at June 30, 2006 was slightly lower than at the end of short financial year 2005 (EUR 439.6 million). The consolidated balance sheet at June 30, 2006 included retained earnings of EUR 220.3 million (December 31, 2005: EUR 208.6 million). Forecast for 2006 affirmed In operational terms, Executive Board Chairman Marco von Maltzan believes the Group is on the right track. “Assuming that the world economy and the automotive industry develop in line with market projections, we anticipate Group sales revenues for 2006 at the upper end of our target corridor of EUR 425-435 million, and possibly slightly higher. Accordingly, BERU expects to achieve earnings before interest and taxes of at least EUR 52 million,” stated Marco von Maltzan with a view to the full year. The market environment continues to be characterized by intensifying pressure on sale prices and profit margins accompanied by high raw-material and energy prices. In the further course of this year, BERU anticipates a relatively moderate revival of global demand for automobiles. However, the Executive Board is confident that it will perform well in this difficult market as a result of product startups and further efficiency improvements in the international production network, and is also examining opportunities for external growth. BERU business developments in the first half of 2006 (January 1 – June 30, 2006) based on preliminary, unaudited figures Consolidated income statement
Consolidated balance sheet
1 Including minority interest Other key figures
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