EANS-Adhoc: ElringKlinger records earnings well within positive territory and strong cash flow for first half of 2009 despite challenging automobile markets

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ad-hoc disclosure pursuant to section 15 of the WpHG transmitted by euro
adhoc with the aim of a Europe-wide distribution. The issuer is solely
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quarterly report

06.08.2009

Dettingen/Erms, August 6, 2009 +++ In the first half of 2009,
the severe malaise facing the international automobile markets
led to a decline in consolidated sales of 23.5% to EUR 267.9
(350.2) million within the ElringKlinger Group. Despite these
challenging conditions, earnings remained well within positive
territory, with the Group generating EBIT of EUR 22.6 (60.4)
million and net income after minority interests of EUR 10.0
(38.1) million. In the same period, net cash from operating
activities totaled EUR 60.9 (42.4) million, up 43.6% on last
year's figure for the first half.

Slight upturn in revenue during second quarter
While Asia recorded a slight improvement in sales revenue over
the course of the first half, the decline in US vehicle
production by around 50% as well as the slump in car
manufacturing by approx. 28% in Europe as a whole proved
detrimental. By contrast, the second quarter of 2009 produced
initial signs of a slight upturn in demand. Despite the
continuing weakness of the commercial vehicle sector and the
downturn in demand recorded by ElringKlinger Kunststofftechnik
GmbH in the field of mechanical and plant engineering, compared
with the first quarter Group sales revenue grew by EUR 8.5
million to EUR 138.2 million in Q2 2009. By contrast, sales
revenue was still down 26.3% on the second quarter of 2008.
Within this context, the comparative base for the second quarter
of 2009 was significantly higher due to the fact that Q2 2008
had included the newly acquired SEVEX Group and the consolidated
ElringKlinger Marusan Corporation, Japan, for the first time (as
from April 1 and May 1, 2008, respectively), which contributed a
total of EUR 21.7 million to sales. Within the Original
Equipment segment, which supplies vehicle manufacturers, sales
declined by 27.1% in the first half of 2009 to EUR 185.8 (254.8)
million. The Aftermarket segment remained relatively stable
during the same period, with first-half sales revenue
contracting by 8.4% to EUR 47.5 (51.8) million - a year-on-year
decline that was much less severe.

The ElringKlinger Group invested EUR 19.1 (16.5) million in the
development of new products and technologies, including capital
expenditure on fuel cells and battery components as well as on
its diesel particulate project, which was 15.8% more than in the
first half of the previous year. By contrast, investments in
property, plant and equipment were scaled back year on year to
EUR 41.5 (54.1) million.

Improved cost structure and positive effect from commodity price
hedging In response to the unparalleled downturn seen within the
automotive markets and the severe slump in production figures, the
ElringKlinger Group launched an extensive cost-reduction program
towards the end of 2008, the effects of which became increasingly
tangible over the course of the first half of 2009.

As a result of settlement payments to be made in connection with
a hedging transaction for alloy surcharges related to high-grade
steel, material expenses, i.e. ultimately the cost of sales,
rose by an additional EUR 3.7 million in the second quarter of
2009. Due to the rise in the price of nickel over the course of
the second quarter of 2009 and the concomitant changes to the
fair value of commodity-related derivatives, provisions
recognized under IFRS were partially reversed. Correspondingly,
other operating income rose by EUR 9.5 million in the second
quarter of 2009. In the same period, the balance between the
reduction of provisions and settlement payments made had a
positive effect on earnings before taxes equivalent to EUR 5.8
million. In July 2009, ElringKlinger took advantage of the
continuing rise in the nickel price and sold a substantial part
of its contracts to hedge purchasing prices for raw materials.
At present, this is expected to produce a positive earnings
effect of approx. EUR 0.7 million in the third quarter of 2009.
As the settlement payments made in the first half of 2009 are no
longer applicable, the effect on the Group's gross profit margin
in the second half of the financial year will be favorable.

Quarter-on-quarter improvement in Q2 EBIT
EBIT remained well within positive territory despite the
significant decline in unit sales and the associated excess
capacities in production. In the first half of 2009,
ElringKlinger achieved EBIT of EUR 22.6 (60.4) million - which
includes positive foreign-currency effects of EUR 2.0 million.
In the second quarter, negative foreign currency effects of EUR
1.1 million impacted adversely on EBIT. Despite this, the
ElringKlinger Group recorded EBIT of EUR 15.8 (31.2) million in
the second quarter, with the EBIT margin standing at 11.4 %.
Within this context, the slight improvement in revenue as well
as cost-streamlining measures and the contribution from the
reversal of provisions for commodity-related hedging had a
positive effect. In the same period, the EBIT margin adjusted
for the positive effects of the reversal of provisions for
commodity-related hedging was 7.2%. Compared with the first
quarter (EUR 6.8 million), EBIT was EUR 9.0 million higher in Q2.

In the second quarter of 2009, higher interest costs associated
with financing conducted in 2008 and restructuring of short-
term financial liabilities into long-term loans were a key
factor in driving the net finance result down by EUR 1.3
million to EUR -5.0 (-3.7) million. In the first half of 2009,
the net finance result fell from EUR -5.1 million in the same
period a year ago to EUR -5.3 million. This led to a 72.5%
decline in earnings before taxes for the first six months of
2009, down to EUR 15.3 (55.6) million. In the second quarter of
2009, earnings before taxes contracted by 57.5% year on year to
EUR 11.9 (28.0) million but improved markedly when compared
with the first quarter of 2009.

Net income after minority interests remains solid
The tax rate rose slightly to 29.4% (28.4%) in the first half
of 2009. In total, net income for the first half of 2009 stood
at EUR 10.8 (39.8) million. In the second quarter of 2009 net
income amounted to EUR 8.4 million, compared to EUR 20.1
million for the same period a year ago. After deducting
minority interests, profit attributable to the owners of
ElringKlinger AG was down 73.9% to EUR 10.0 (38.1) million in
the first half of 2009. In the second quarter of 2009, the
decline was less pronounced at 58.4%, taking profit
attributable to the owners of ElringKlinger AG to 8.0 (19.2) million.

In the first half of 2009, basic and diluted earnings per
share, calculated in accordance with IFRS, contracted from EUR
0.66 to EUR 0.17. In the second quarter of 2009, earnings per
share stood at EUR 0.14 (0.33).

Slower decline in order intake
In the first half of 2009, order intake - which includes the
entities of the former SEVEX Group and the proportionate
consolidation of ElringKlinger Marusan Corporation, Japan -
contracted by 22.8% to EUR 274.2 (355.1) million. In the second
quarter of 2009, order intake was slightly more dynamic, with a
decline of just 21.7% to EUR 148.8 (190.0) million, compared
with the first quarter, when order intake had stood at
EUR 125.4 million.

The automotive markets as a whole remain in a situation that
leaves little scope for forward planning. Although the
direction of future sales trends has become more discernible
over the course of the second quarter of 2009, the volumes
requested by customers as part of their production scheduling
are subject to more pronounced fluctuations and delivery orders
are often placed at much shorter notice than has usually been
the case. While the European market should continue to improve
at a moderate rate compared to the first half - working on the
assumption that production of automobiles will decline by 15 to
20% in 2009 as a whole -, ElringKlinger cannot rule out that
vehicle production in North America will fall below last year's
level by a further 25 to 30% and will not recover significantly
until 2010.

On the basis of market performance at the levels outlined
above, together with modest economic stabilization in the
second half of the year, the ElringKlinger Group no longer
anticipates that revenue will contract to EUR 500 million in
the annual period as a whole, a scenario that previously could
not be discounted entirely by the Group given the dramatic
market downturn in the first quarter of 2009. In the present
climate, the ElringKlinger Group expects to generate
consolidated sales of between EUR 540 and 580 million,
depending on future market performance. The EBIT margin is
targeted to be at 8 to 10%. However, due to the historically
exceptional market circumstances, the issuance of forecasts
concerning business performance remains difficult and is
subject to risk. The current Group-wide program aimed at
reducing costs will make a significant contribution in terms of
partially offsetting the downturn in demand. ElringKlinger
anticipates that it will achieve the targeted savings of EUR 10
million in 2009. Lower prices for raw materials compared to
previous years are now beginning to have a positive impact on
the cost situation.

end of announcement euro adhoc
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ots Originaltext: ElringKlinger AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

For further information, please contact:

ElringKlinger AG Corporate Communications / Investor Relations

Stephan Haas

Max-Eyth-Straße 2

72581 Dettingen

Phone: +49 0 7123-724-137

E-mail: stephan.haas@elringklinger.de

Branche: Automotive Equipment
ISIN: DE0007856023
WKN: 785602
Index: MDAX, Classic All Share, Prime All Share
Börsen: Frankfurt / regulated dealing/prime standard
Berlin / free trade
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