05/23/2006

Schuler launches group-wide SPEED program to strengthen profitability

Results for first 6 months of fiscal year 2005/06 (IFRS)

Göppingen – The Schuler Group has laid the foundation for a sustained strengthening of its profitability. The group-wide SPEED program, presented yesterday to the Supervisory Board, is designed to strategically align the company with changes in its markets. In the medium term, Schuler aims to achieve a return on sales before taxes of 5%. Business development in the first half-year 2005/06 was restrained.
From October 1, 2005, to March 31, 2006, Schuler received new orders worth € 234.4 million, compared with € 247.6 million in the same period last year. The reason for this decrease was the growing restraint of car manufacturers to invest in new capital equipment, and especially in large-scale press shop equipment. Consolidated sales revenues fell by € 11.1 million to € 250.0 million. Earnings before interest and taxes (EBIT) amounted to € 5.1 million (prior year: € 5.1 million), while net loss reached € 2.5 million (prior-year loss: € 1.6 million). This result was strongly influenced by the development of the large-scale press and die construction segments, which failed to meet expectations.
"The result of the first half-year shows that we must strengthen our profitability. SPEED aims to do exactly that, in order to secure our long-term competitive edge," said Dr. Peter Zeller, Chairman of the Board of Management of Schuler AG. SPEED represents Schuler’s reaction to changes in its markets, which are currently characterized by the increasing cost orientation of its customers and the resulting price competition among competitors.
Designed to last two years, the SPEED program will focus on three main areas:
1. Cost reduction: Schuler aims to achieve sustained cost savings of over € 30 million. One main area of focus will be material procurement. Furthermore, personnel expenses will also be carefully examined and discussions with worker representatives are to be held shortly.
2. Exploiting part supplier market: Schuler will exploit the increasingly important automotive part supplier market more intensively and more systematically in future. In addition to a dedicated sales organization, the company will also focus on developing its corresponding product range. Schuler will concentrate in particular on the development of economic standard modules.
3. Growth: Schuler aims to expand in business fields with growth prospects, such as service, plant modernization and automation. Expansion is also to be accelerated in the non-automotive sector.

Outlook

In view of the increasingly difficult market environment and the growing investment restraint of the automobile industry, business development in fiscal year 2005/06 is currently expected to remain under the level of the previous year. The restructuring costs connected with the SPEED program will probably result in negative EBIT in 2005/06. With the implementation of the planned measures, Schuler aims to achieve a return on sales before taxes of 5% in the medium term.
Schuler has prepared its interim financial statements as of March 31, 2006, for the first time according to International Financial Reporting Standards (IFRS); the comparative pre-year figures were also calculated according to IFRS. The full report for the first six months of the fiscal year 2005/06 is available at investor relations pages on this website.

About Schuler

The Schuler Group is the technological and global market leader in the field of metalforming. The company supplies machines, production lines, dies and know-how for the metalworking industry. Clients include car manufacturers and their suppliers, the electrical industry, the household equipment industry and mints. In its fiscal year 2004/05, Schuler’s 3,697 employees generated sales of € 561.6 million.