02/14/2007

Schuler lays foundation for profitable growth

Göppingen/Stuttgart - Consolidated sales of the Schuler Group remained steady at € 563.4 million in its fiscal year 2005/06 as major customers in the automotive industry continued to hold back investments in new capital equipment. With its new corporate program, SPEED, Schuler successfully reacted to the needs of its changing markets. The resulting one-time factors of € 17.9 million led to a negative Group result of € 9.5 million. The Board of Management and Supervisory Board therefore recommend that no dividend be paid out to shareholders for the Group’s fiscal year 2005/06. With the expansion of its non-automotive and supply business, coupled with improvements in efficiency and the launch of new products, Schuler believes it has now laid the foundation for future profitable growth. The Board of Management expects a return to profitability in the current fiscal year.

Sales at prior-year level

In the past fiscal year, consolidated sales of the Schuler Group amounted to € 563.4 million, compared with € 561.6 million in the previous year. There was an increase in European sales (excluding Germany) of 37.8% to € 149.1 million. In Germany, sales remained steady at € 161.2 million, while in America they fell slightly to € 182.2 million. Following two years of strong Asian sales, there was a slight decline to € 69.2 million in the period under review. The proportion of Group revenues generated outside Germany rose to 71.4%, compared with 70.9% in the previous year.

Slight dip in new orders

Consolidated new orders were down 5.8% in the period under review, from € 547.7 million to € 515.7 million. Car manufacturers remained reluctant to invest in new equipment, particularly in Europe (excl. Germany) and Asia. Orders from non-German customers in Europe fell by 29.9% to € 119.9 million, while in Asia orders were down 20.9% to € 56.6 million. In Germany, new orders increased by 5.1% from € 152.4 million to € 160.3 million. There was even stronger growth in new orders from America, which were up 14.8% to € 174.2 million. The proportion of new orders received from customers outside Germany amounted to 68.9%, compared with 72.2% in the previous year.

Positive EBIT without special items

In the past fiscal year, the Schuler Group generated earnings before interest and taxes (EBIT) of € 16.9 million (without one-time factors), representing an increase of 28% over the prior-year figure of € 13.2 million.

Result affected by non-recurring charges

In its fiscal year 2005/06, Schuler made great efforts to raise profitability. This involved a deliberate decision to accept short-term effects for the benefit of long-term strategic measures. One-time factors of € 17.9 million in connection with the corporate program SPEED, launched in May 2006, resulted in a negative EBIT of € 1.1 million and a negative consolidated result after taxes of € 9.5 million. At the same time, net borrowing was reduced by 37.6%, from € 164.8 million to € 102.8 million as of the balance sheet date (September 30, 2006).

No dividend payment

Due to the negative consolidated result, the Board of Management and Supervisory Board of Schuler AG will propose to the Annual General Meeting on March 29, 2007, that no dividend be paid for the fiscal year 2005/06.

Fall in headcount

As of September 30, 2006, the Schuler Group employed a total of 3,606 people (including apprentices). Total headcount was thus down 91 on the previous year. The reduction was caused mainly by adjustments to capacities as a consequence of adverse market conditions. Approximately 75% of staff were employed by the Group's German subsidiaries, where headcount was reduced by 79 to 2,700. The number of staff employed by the Group's foreign subsidiaries fell by 12 to 906, as of the balance sheet date.

Outlook

The Schuler Group does not expect any significant improvement in investments of car manufacturers and their suppliers in the fiscal year 2006/07. The main focus of activity with regard to the expansion of press shop capacities will be in Mexico, India, Eastern Europe and China. Thanks to its excellent international alignment and expertise in reliable project management around the world, Schuler is well positioned to benefit from the creation of new press shop capacities in the emerging nations. There are also good opportunities in the field of services – especially for the retrofitting and modernization of existing lines – as well as in replacement parts. Due to the high number of lines it has already installed, Schuler enjoys a strong position in these business fields. Demand for press shop equipment is growing considerably among part suppliers in the car industry, as their proportion of value added continues to rise. Schuler also intends to continue the targeted expansion of its non-automotive business.
In total, the Board of Management expects business in fiscal year 2006/07 to develop at a similar level to that of the previous year. As a result of the cost-cutting measures already introduced and the expansion of its growth areas, Schuler is well prepared for the future and therefore expects positive earnings again in the current fiscal year.