PWO anticipates stronger growth abroad over coming years

Progress-Werk Oberkirch AG will be presenting its report for 2005 at today's annual results press conference. The definitive results are comparable to the preliminary figures announced on February 13, 2006. The PWO Group recorded a 9.2 per cent increase in revenue in the 2005 financial year, taking this figure to EUR 219.7 million (2004: EUR 201.1 million). Total output, i.e. net sales plus inventory changes plus work performed by the enterprise and capitalised, grew by 11.9 per cent to EUR 221.1 million (2004: EUR 197.5 million).

Growth was driven by all segments within the PWO Group. PWO AG, i.e. PWO's German-based operations, recorded revenue growth of 3.4 per cent, taking its total to EUR 183.2 million (2004: EUR 177.1 million). PWO Canada Inc. registered a particularly impressive growth rate of almost 25 per cent, thus propelling revenue up to EUR 31.1 million (2004: EUR 24.9 million). Here, new series production contracts translated into improved capacity utilisation. UNITOOLS CZ a.s., the Czech-based subsidiary acquired in early 2005 and included in the consolidated group effective from April 1, 2005, generated revenue of EUR 6.8 million in the period from April to December.

Earnings before interest and taxes (EBIT) climbed to EUR 15.5 million in the Group, compared with EUR 14.4 million a year ago. This represents an increase of 7.6 per cent. The Group's Ca-nadian operations proved to be a powerful driving force behind earnings growth; here, EBIT was lifted from EUR 0.8 million in FY 2004 to EUR 1.8 million in the 2005 financial year. Higher ex-penses, particularly in connection with the company's new share issue as well as price increases associated mainly with raw materials, had an impact on PWO AG, Oberkirch. The latter recorded a decline in EBIT from EUR 14.1 million in FY 2004 to EUR 13.6 million in the 2005 financial year. The new subsidiary UNITOOLS CZ a.s. showed a solid performance, achieving EBIT of EUR 0.4 million. In doing so, the Czech-based subsidiary made a positive contribution to con-solidated earnings within the first year of its inclusion in the Group, which is all the more impressive considering that it had to contend with the usual costs of integration following the acquisition.

Owing to the slight improvement in the net finance result, earnings before taxes (EBT) grew by 10.5 per cent to EUR 12.6 million (2004: EUR 11.4 million). Consolidated net profit rose by 11.3 per cent to EUR 7.9 million (2004: EUR 7.1 million). As a result of a capital increase, the weighted average number of shares increased from 2.00 million to 2.08 million. On this basis, earnings per share amounted to EUR 3.80 in 2005 (2004: EUR 3.56). Despite the surge in raw material prices and the concomitant increase in current assets, cash flow from operating activi-ties totalled EUR 16.3 million in 2005 (2004: EUR 22.3 million). As a result of earnings and pro-ceeds from the issuance of new shares towards the end of 2005, equity rose by EUR 21.2 mil-lion, i.e. 49.9 per cent, to EUR 63.6 million in 2005, compared with equity of EUR 42.4 million in 2004. The equity ratio thus increased to 40.7 per cent, up from 33.0 per cent recorded a year ago.

In his outlook for the current financial year and fiscal 2007, Karl M. Schmidhuber, spokesperson of the Management Board, emphasized the Group's commitment to an incisive strategy of inter-national growth, as underlined by PWO's accelerated expansion in the Czech Republic in 2005. While global market conditions are unlikely to improve significantly over the next two years, PWO's foreign subsidiaries are expected to contribute more noticeably to Group output and earnings in the same period and beyond than domestic operations. The strategy of international expansion is to continue in 2006, with the Group extending its activities to China and Mexico.

With the successful integration of the Czech Subsidiary, now trade under the style of PWO UNITOOLS CZ a.s., PWO has successfully completed its market entry in Eastern Europe. The aim is to expand PWO UNITOOLS CZ a.s. as a manufacturing location, thus adding to its core competence of tool production. Initial serial production has now commenced on two new presses. Additional production equipment will be installed in 2006 and 2007, in line with corpo-rate planning. The target for PWO UNITOOLS is to double total output by the year 2007 and make a suitably high contribution to Group earnings.

The plan for the Group as a whole is to raise consolidated earnings with the help of further pro-ductivity improvements in 2006 and 2007. Within this context, earnings are to be increased at a faster pace than revenue and total output. Overall, Group revenue for 2006 is expected to be slightly higher than in 2005. Volume growth of approx. four per cent within the area of serial pro-duction is likely to be counterbalanced to a certain extent by price adjustments due to the year-on-year reduction in raw material costs. Capital expenditure within the PWO Group is budgeted at EUR 17 million for 2006 (2005: EUR 11 million).

Oberkirch, March 27, 2006
The Executive Board


Progress-Werk Oberkirch AG
Industriestraße 8
77697 Oberkirch
Germany

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