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Röchling Is Right On Target

Re-structuring measures begin to show resultsThe financial statement for 2001 and for the first half of 2002 have been published

Mannheim (Germany), July 22, 2002 – The benchmark data of Gebr. Röchling KG for the first half of 2002 show that the company’s re-structuring measures work: The reduction of costs, discarding of unprofitable business, selling businesses with marginal activities, and last but not least increased productivity are measures that enabled the company to stand its ground in a difficult market during an instable economic situtation.

Gebr. Röchling KG’s result before taxes for the first half of 2002 is € +20 million comparedd to a loss of € -1 million for the same period of the previous year. “We are moving in the right direction; Röchling is right on target,” was the comment of Georg Duffner, Chairman of the Executive Board, on the newest figures. Admittedly the bad economic situation led to a decrease in new orders (a volume of € 732 million during the first half year of 2002 compared to € 833 million during the first half of 2001), and sales dropped from € 801 million for the first six months of 2001 to € 767 million for the first six months of the current year, but the company compensated for this development by cutting back on production capacity and by displaying aggressive innovativeness. “We are optimistic regarding our chances for a significantly improved profitability and more financial power in 2002,” Duffner adds.

In the past business year, 2001, for which the Executive Board also presented the financial statement, Gebr. Röchling KG, which comprises all companies of the group which are not listed on the stock exchange, achieved a 3 per cent increase in sales (€ 1,6 billion). The annual surplus sank from € 18 million to € 10 million. The number of employees stayed the same as in the last year.

The result was heavily influenced by the negative development of the telecommunications market: In the Electronics business segment the placement of new orders dropped to 745 million (2000: € 758 million), while sales dropped to € 779 million (2000: € 788 million). Likewise, in the first half of 2002, the volume of new orders decreased (by 19 per cent to € 312 million) and sales dropped (by 5 per cent to € 349 million). After a negative result before taxes of € -24 million for the first half of 2001, a profit of € +3 million was generated for the first six months of 2002.

“During the business year 2001 homemade mistakes in the Electronics segment added to the impact of the bad economic situation. We cleaned up these mistakes by a reformation of the Boards, by strictly tightening our belts in order to reduce costs, plus we discarded of unprofitable businesses, such as Klein & Partner and DeTeWe Produktionsgesellschaft mbH, while also increasing product innovativeness,” CEO Duffner elaborated. He points out that DeTeWe, a manufacturer of telecommunication installations, has developed a modern, competitive communications portal with its ‘OpenCom 1000’ product, which will also be sold in England, Austria and Switzerland from this year on. Francotyp-Postalia has launched its innovative franking machines ‘Mymail’ and ‘Optimail’.
In the completed business year 2001 especially the business segment Industrial Plastics stood out: The placement of new orders increased from € 262 million in 2000 to € 278 million in 2001, while sales grew from € 256 million to € 281 million at the same time. The result before taxes was € +33 million compared to € 29 million in the previous year.
This trend continued for the first half of 2002. The number of new orders increased by almost 9 per cent to € 158 million. Sales increased from almost 8 per cent to € 154 million. Duffner emphasizes that Gebr. Röchling KG’s Industrial Plastics segment stands out through its high quality level of production and processing technology. “Our products are appreciated worldwide,” he stated.

In the business segment Automotive Technology, to which Seeber-Group and the Metal segment belong, the placement of new orders and sales increased in the business year 2001 (new orders from € 584 million in 2000 to € 607 million and sales from € 573 million in 2000 to € 602 million), though it should not go unmentioned that the result before taxes decreased from € 14 million to € 8 million in 2001. “Faced with less and less sufficient profit margins in the supply business, Seeber-Group did not manage to finish the business year with a satisfactory result,” judges Duffner. This trend could not be reversed in the first half of 2002. The volume of new orders (from € 306 million in the first half of 2001 to € 262 million in the first six months of the current year) as well as sales figures dropped (from € 294 million to € 264 million) for the business segment Automotive Technology. The result before taxes decreased from € 7 million in the first half of 2001 to € 3 million in the first half of this year. The companies belonging to the metal producing and working industries had a stabilizing effect on the result, Duffner said. This can be explained through high flexibility in manufacturing, experienced staff and good management. Nevertheless, even for these companies the bad economic situation led to a strong decline in new orders.

Duffner sums up the overall results for the year 2001: “All in all, Gebr. Röchling-Group has earned a positive result, which nevertheless can and should be improved.”

Röchling Industrie Verwaltung GmbH, which comprises mostly of Rheinmetall-Group companies that are listed on the stock exchange, was able to slightly increase its sales to € 4,630 billion (2000: € 4,598 billion) in the business year 2001. The EBITDA (Earnings Before Interests, Taxes, Depreciation and Amortization) grew by 24 per cent from € 374 million to € 464 million in the same period. The number of employees sank by 7 per cent from 30,126 to 28,065.

In the mid- and long-term the Plastics segment is supposed to gain more importance within Röchling-Group. “We are aiming at an organic growth process. If the opportunity presents itself, we will also use acquisitions,” Duffner states. It is a rule that all Röchling companies which wish to expand must do so with their own funds.