EANS-Adhoc: ElringKlinger benefits from recovery of automotive markets and raises net income for 2010 by 97%

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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
responsible for the content of this announcement.
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29.03.2011

Dettingen/Erms, March 29, 2011 +++ Fiscal 2010 saw the
ElringKlinger Group recover well from the crisis-induced effects of
sluggish sales within the international automotive industry, with
revenue up 37.4% to EUR 795.7 (579.3) million in 2010. Despite one-
off charges, the Group's operating result stood at EUR 116.0 (63.3)
million, thus exceeding last year's figure by 83.3%. Net income
after minority interests rose by 97.6% to EUR 65.6 (33.2) million.

Growth driven by Original Equipment
The surprisingly dynamic expansion of production output within the
automobile sector, together with several new product start-ups, led
to particularly strong growth in the Original Equipment segment. In
regional terms, both Asia and North America made above-average
contributions. In total, sales revenues in the Original Equipment
segment increased by 45.1% to EUR 606.9 (418.2) million. Thus,
ElringKlinger clearly outpaced global vehicle production in terms
of growth.

Benefiting from better capacity utilization, alongside measures
implemented during the crisis for the purpose of streamlining cost
structures, the Group's financial performance improved visibly. The
percentage rise in the cost of sales, up 30.4% to EUR 556.1 (426.3)
million, was less pronounced than revenue growth.

Higher R&D expenditure on E-Mobility
ElringKlinger recorded a further increase in research and
development expenditure to EUR 43.7 (35.7) million. In response to
significant customer interest in the Group's new cell contact
systems for lithium-ion batteries, the workforce was further
expanded within the newly created E-Mobility division during the
fourth quarter of 2010. The ElringKlinger Group increased its
capital expenditure on property, plant and equipment to EUR 127.3
(89.7) million. The focus was on the construction and expansion of
new plants, including those at the Chinese sites in Suzhou and
Changchun, as well as investments in equipment and tools for new
product start-ups.

Non-recurring expenses in the fourth quarter
In the fourth quarter of 2010 earnings were impacted by one-off
charges in connection with the migration of activities relating to
shielding technology from the site in Dettingen/Erms, Germany, to
ElringKlinger Abschirmtechnik (Schweiz) AG, Switzerland, as well as
relocation costs associated with Changchun ElringKlinger Ltd. in
China, where a new plant with double the previous floorspace is
scheduled to open in May 2011. In total, these items resulted in
additional expense of EUR 1.8 million. The discontinuation of
Aftermarket sales operations at the Spanish subsidiary
ElringKlinger S.A.U. and the takeover of these activities by
ElringKlinger AG resulted in one-off termination costs of EUR 0.5
million.

Furthermore, one-time provisions of EUR 1.7 million were created -
also in the fourth quarter - in response to a ruling by the German
Federal Labor Court in December 2010 on the interpretation of the
Framework Collective Pay Agreement (Auslegung der Bestimmungen des
Entgeltrahmentarifabkommens - ERA). The purpose of this provision
is to hedge against potential settlement payments for the company´s
obligations under the structural fund established by the Framework
Collective Pay Agreement. Compared to the accounting method adopted
in the past, the most recent changes in accounting policies
particularly in respect of inventories, receivables, warranties and
contingent losses resulted in additional non-recurring expense of
EUR 0.5 million. More extensive flexitime accounts as a result of
higher capacity utilization necessitated an increase in provisions
by EUR 1.1 million in the fourth quarter.

EBIT rises by 69%
In total, the Group's operating result rose by EUR 52.7 million
year on year to EUR 116.0 (63.3) million. Compared to the previous
year, which had been severely impacted by the crisis, the Group's
operating result thus expanded by 83.3% in 2010, i.e. at a more
pronounced rate than revenue. The operating margin reached 14.6%
(10.9%). Earnings before interest and taxes (EBIT), which in
contrast to the operating result takes account of foreign exchange
gains and losses, were adversely affected by net foreign exchange
losses of EUR 9.3 (0.0) million in 2010. At EUR 106.7 (63.3)
million, EBIT grew by 68.6% in 2010. EBITDA rose by EUR 54.4
million to EUR 188.9 (134.5) million.

At EUR minus 22.1 (-13.9) million, net finance costs were
significantly higher than in the previous financial year. This was
attributable mainly to foreign exchange effects. The remeasurement
at the end of the reporting period of liabilities relating to the
financing of ElringKlinger's acquisition of the Swiss-based SEVEX
Group in 2008 led to finance costs of EUR 8.9 million, of which EUR
2.9 million were attributable to the fourth quarter. The
ElringKlinger Group saw its earnings before taxes surge by 90.3% to
EUR 94.0 (49.4) million.

Net income up 97%
With the income tax rate having fallen to 27.0% (29.5%), net income
rose at a more pronounced rate than pre-tax earnings, up 97.1% to
EUR 68.6 (34.8) million. The share of minority interests as a
percentage of net income declined as a result of the additional
interests acquired by ElringKlinger AG in 2010. Consequently,
profit attributable to shareholders of ElringKlinger AG rose by
97.6% to EUR 65.6 (33.2) million. This resulted in earnings per
share of EUR 1.11 (0.58).

The significant expansion of production volumes in 2010 led to a
corresponding increase in the amount of capital tied up in
inventories and receivables, as a result of which operating cash
flow contracted to EUR 116.2 (148.8) million.

Dividend to rise by 75%
After allocation of EUR 14.3 (9.6) million to revenue reserves, net
retained earnings, i.e. distributable profit, for ElringKlinger AG
amounted to EUR 22.2 (11.5) million. With the consent of the
Supervisory Board, the Management Board will propose to the Annual
General Meeting a dividend of EUR 0.35 (0.20) per share, which
corresponds to an increase of 75,0 % compared to the previous year.
Within this context, it should be noted that the new shares in
ElringKlinger AG issued on October 6, 2010, as part of a seasoned
equity offering are entitled to dividends as from January 1, 2010.

Order intake expands further in fourth quarter of 2010
The Group saw a substantial recovery in its order intake. In the
fourth quarter of 2010, incoming orders for the ElringKlinger Group
reached EUR 227.3 (172.8) million, the highest level ever recorded
for the final quarter. In 2010 as a whole, order intake for the
Group rose by 44.7% to EUR 886.6 (612.9) million.

Business expected to develop favorably
Based on the assumption that the economy will develop at a stable
rate and that global vehicle production will increase by around 3%,
the ElringKlinger Group anticipates organic revenue growth of
between 5% and 7% in 2011. This will be complemented by a revenue
contribution of an estimated EUR 49 million from the consolidation
of the Metal Flat Gaskets division acquired from the Freudenberg
Group. As a result of the division's inclusion in the scope of
consolidation of the ElringKlinger Group, the Group's operating
margin for fiscal 2011 as a whole will be temporarily diluted, due
to the fact that the divisional operating margin is currently much
lower than the average figure for the Group. The dilutive effect on
the Group's operating margin is expected to be equivalent to around
0.6 to 0.8 percentage points. The objective is to lift the
operating margin of the newly acquired business towards 10% by the
end of 2011 with the help of integration measures currently being
implemented as well as extensive automation and process alignment.
The aim is to guide the former Freudenberg sites towards the level
of the ElringKlinger Group in 2012, similar to the timeline applied
to the integration of the Swiss SEVEX Group in 2008.

Despite the aforementioned dilutive effects and the fact that
various products are still within the start-up pipeline, as well as
an upward trend in commodity prices, Group EBIT is expected to grow
at a more pronounced rate than revenue, rising by 15 to 25%. The
Group anticipates that it can return to its pre-crisis EBIT margin
of between 16 and 18% by 2012.

Further external growth - Acquisition plans
The ElringKlinger Group hereby also announces that advanced
negotiations are currently taking place with the Swiss company Hug
Engineering AG, the objective being for ElringKlinger AG to acquire
a majority interest. The Supervisory Board of ElringKlinger AG
agreed to the project on March 25, 2010. Hug's core business is
centered around the development, engineering and manufacture of
exhaust abatement systems for catalytic exhaust aftertreatment as
well as diesel particulate filters for stationary and mobile
applications.

In future, Hug diesel particulate filter systems are to be combined
with the ElringKlinger CleanCoat coating material for soot reduction
and will be used within the commercial vehicle sector, in off-road
vehicles as well as in stationary applications.

The Swiss-based Hug Group anticipates sales revenue of around EUR 46
million in fiscal 2010/11. The majority acquisition could
potentially be transacted in the short term. The parties involved
have agreed not to disclose details of the purchase price.

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

Further inquiry note:

ElringKlinger AG
Investor Relations /Corporate Communications
Stephan Haas
Tel.: +49 (0) 7123 724 137
E.Mail: stephan.haas@elringklinger.com

Branche: Automotive Equipment
ISIN: DE0007856023
WKN: 785602
Index: MDAX, CDAX, Classic All Share, Prime All Share
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