PWO with solid start to FY 2006

Progress-Werk Oberkirch AG began the 2006 financial year with a solid performance. In the first quarter, consolidated revenue rose by 11.5 per cent to EUR 57.4 million (Q1 2005: 51.5). Volume-related growth was particularly encouraging, rising slightly beyond PWO's forecast. Having said this, both revenue and output were buoyed by non-recurring effects: in 2005, PWO UNITOOLS was first included in the consolidated group effective from the beginning of the second quarter. This enterprise recorded revenues of EUR 2.2 million in the first quarter. In addition, revenue generated by the Canadian subsidiary was around one million euros higher as a result of foreign exchange differences. Adjusted for these effects, revenue growth within the Group amounted to approx. 5 per cent, which corresponds to the trend in volumes as well as operating activities.

Total output, i.e. net sales plus inventory changes plus work performed by the enterprise and capitalised, increased by 14.5 per cent to EUR 59.2 million at Group level (Q1 2005: 51.7) due to the fact that inventories rose by EUR 1.8 million in this period, as opposed to just EUR 0.2 million in Q1 2005. The increase in inventory levels was attributable to advance tool-related purchases for a number of projects commencing in the coming months. Owing to capacity levels, the majority of these tool-related items had to be sourced from external suppliers, a move which prompted an increase in the percentage share of material costs. Without this effect, these costs would have been slightly lower than in the past. Benefiting from a further improvement in productivity levels, PWO was able to scale back the proportion of staff costs from 28.6 per cent to 28.0 per cent.

Beyond the positive impact of productivity gains, the increase in temporary staff also had a favourable effect. Despite the rise in other operating expense as a result of this recruitment drive, the latter was scaled back considerably from 7.9 per cent to 6.9 per cent of total output. Overall, EBIT of EUR 3.9 million was slightly higher than the figure of EUR 3.8 million posted for the same period a year ago.

With PWO's finance cost remaining unchanged and the tax rate improving slightly, net profit amounted to EUR 2.0 million, after EUR 1.9 million in the first quarter of 2005. Earnings per share receded from EUR 0.90 (adjusted) in Q1 2005 to EUR 0.79 in the period under review. This is due to the fact that ? following the share issue in October 2005 ? the new aggregate of 2.5 million shares (Q1 2005: 2.0) has to be applied as the basis of calculation.

All PWO locations performed well in the period under review. The Oberkirch location recorded an increase in revenue of 7.6 per cent, taking the total to EUR 47.9 million (Q1 2005: 44.5), while total output rose by 11.9 per cent to EUR 49.9 million (Q1 2005: 44.6). At EUR 3.3 million, EBIT was lower than in the same period a year ago (Q1 2005: 3.5) due to the fact that the increase in tool-related purchases was attributable entirely to the Oberkirch plant.

The commencement of serial production projects in Canada in 2005 meant that capacities at this location were well utilised. In the first quarter, revenue amounted to EUR 8.5 million (Q1 2005: 7.0), while total output stood at EUR 8.8 million (Q1 2005: 7.1). Adjusted for the aforementioned currency-related effects, revenue rose by 4.3 per cent, while total output was propelled upwards by 7.0 per cent. There were no significant effects on bottom-line results. EBIT rose considerably to EUR 0.5 million, up from EUR 0.3 million in the same period a year ago. Thus, the profit margin continued to develop well, rising from 4.3 per cent in Q1 2005 to 6.1 per cent in the first quarter of 2006.

The Czech subsidiary PWO UNITOOLS also made significant progress. The enterprise generated revenue of EUR 2.2 million in the first quarter, while total output reached EUR 2.1 million. Despite start-up costs associated with future growth, the Czech subsidiary once again posted a profit in the first quarter.

The balance sheet total of the PWO Group expanded only slighted compared with 31 December 2005, rising by EUR 3.4 million to EUR 159.8 million in Q1 2006. The equity ratio increased marginally by 0.2 percentage points to 40.9 per cent. Despite the increase in current assets due to tool-related purchases, cash flow from operating activities amounted to EUR 4.2 million and thus exceeded net cash used in investing activities, which was scaled back to EUR 0.9 million in line with financial planning. Therefore, additional funds were available for the repayment of loans (EUR 1.7 million).

Overall, the start to the 2006 financial year was favourable. Particularly the increase in volumes would appear to be encouraging for the financial year as a whole. However, there are also several uncertainties, given the fact that a number of price negotiations with customers have yet to be completed. Furthermore, this year's collective wage agreement for the metal-working industry, which was concluded in April, is considered to be substantial. Increased costs associated with this pay deal will have to be compensated for by means of additional productivity gains. PWO hereby confirms its annual forecast, which suggests a slight increase in revenue, output and EBIT.

Oberkirch, May 8, 2006

The Executive Board

Progress-Werk Oberkirch AG

Industriestraße 8

77697 Oberkirch

Germany

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