euro adhoc: ElringKlinger AG / Earnings Forecast / ElringKlinger prepares for further contraction in demand and adjusts sales and earnings expectations

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19.01.2009

Dettingen/Erms (Germany), January 19, 2009 +++ Consolidated fiscal
2008 sales of the ElringKlinger Group are projected to be around 9%
up on the previous year's figure as a result of contributions from
the recently acquired Swiss SEVEX Group and the expansion of the
company's ownership interest in ElringKlinger Marusan. The company
will thus meet the lower end of its 2008 sales estimate that had
recently been down-graded.

Earnings were impacted by negative exchange rate effects equivalent
to EUR 5.0 million, which were associated with financing of the SEVEX
acquisition in Swiss francs, as well as by additional costs
attributable to commodity price hedging. In addition, the one-off
special payment agreed as part of the most recent collective wage
settlement resulted in expenses of EUR 1.1 million in the fourth
quarter of 2008. The extreme downturn in demand for automobiles
prompted a further reduction in volumes requested as part of customer
delivery schedules, which in turn led to noticeably weaker demand
trends also at the Group's international subsidiary and affiliated
companies towards the end of the year.

In view of this situation and on the basis of its preliminary
assessment, the ElringKlinger Group - including the SEVEX Group and
ElringKlinger Marusan whose earnings performances as yet remain
relatively weak when compared to other units within the Group -
anticipates an EBIT margin of 11 to 12% for the 2008 financial year,
adjusted for non-recurring effects that encompass purchase price
allocation (approx. EUR 2.5 million), added value attributable to the
increased stake in Marusan (EUR 5.8 million) and the special payment
associated with the collective wage agreement (EUR 1.1 million).

This includes one-off provisions attributable to long-term commodity
price hedging of alloy surcharges for high-grade steel amounting to
EUR 15.9 million in total, EUR 4.8 million of which in the fourth
quarter. While these costs have an adverse effect on current
earnings, they will ensure that the budgeted procurement prices are
achieved in the medium term. Excluding the provisions attributable to
commodity price hedging, the adjusted EBIT margin for 2008 is
expected to be between 13 and 14%. There will be no significant
hedging costs in 2009.

Against the backdrop of the continued downturn seen in the international
automotive market, the Group has initiated an extensive cost-reduction program
aimed at improving its earnings performance in 2009 and has projected an overall
savings potential of approx. EUR 10.0 million. In general, the company will not
be extending temporary employment contracts. Short-time work has been applied
for at the Group's German plants and is scheduled to be implemented as from
February 1. The Group will achieve additional cost streamlining with the help of
savings in the area of material- and equipmentrelated expenses as well as
through process optimization. The decline in commodity and material prices
recorded for the first time in several years is beginning to have a positive
medium-term effect on the overall cost situation.

Capital expenditure is to be reduced from approx. EUR 95 million in 2008 to EUR
40 - 45 million in 2009. Investments made for the purpose of company
streamlining as well as expenses earmarked for research and development will
remain unchanged.

Projection for 2009

For the coming year, ElringKlinger anticipates a further visible
decline in sales volumes of automobiles and trucks, a trend which
will also impact on the development of growth markets in Brazil,
Russia, India and China. However, owing to the historically
exceptional market circumstances, the issuance of forecasts remains
difficult. In view of the global recession and significant
uncertainties as to the short-term performance of the vehicle sector
as a whole, ElringKlinger is therefore currently making preparations
for several different scenarios in 2009.

These range from a repeat of the sales and EBIT performance of 2008
on the assumption that automotive markets will gradually recover in
the second half of 2009 to the scenario of a decline in vehicle
production by a further 20 to 25% in the markets of North America and
Europe, coinciding with an additional contraction in vehicle sales
within the emerging markets. If this negative scenario were to come
about, ElringKlinger anticipates Group sales of EUR 580 to 600
million for the financial year 2009 as a whole. In this negative
scenario, the EBIT margin is projected to be 8 to 10%.

In 2009, contributions will come from product ramp-ups, particularly
in the United States and Asia, equivalent to approx. EUR 70 million
(projected) as well as the recently acquired SEVEX Group and
ElringKlinger Marusan, which will be included in the consolidated
group for an additional quarter.

An upturn in the automobile market is not anticipated until the
second half of 2009 or the year 2010. Within this challenging
environment, it has become evident that technological expertise,
financial strength and a solid equity base are increasingly important
when it comes to acquiring new customer projects and development
contracts. ElringKlinger has the opportunity to benefit from this
development and enhance its competitive position. Offering a range of
products designed to reduce fuel consumption and CO2 emissions, the
company considers itself well positioned to again generate organic
sales growth of 5 to 7% p.a. in the medium term and, in relative
terms, a slightly more pronounced rate of growth in earnings per
annum.

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

Further inquiry note:

Lena Landenberger

Telefon: +49(0)7123 724 631

E-Mail: lena.landenberger@elringklinger.de

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