BWT – first quarter 2003 results: Sales and earnings decline

Sales

EUR 97.9 million, -4.2% y.o.y.

In the first three months consolidated sales declined by 4.2% from EUR 102.2 million to EUR 97.9 million. While the Aqua Ecolife Technologies division posted a year-on-year sales increase of 0.4% to EUR 63.4 million sales in the Aqua Systems Technologies division declined year-on-year by 11.4% from EUR 38.9 million to EUR 34.4 million.

Divisional sales developed as follows (in EUR million, without internal sales):

In the AET division, a good development of earnings was prevented by the continuing difficult situation on the German market. BWT Germany posted a 10.7% sales decline against the previous year, while France (+5.6%), Austria (+3%), Italy/Spain (+2.6%) and Eastern Europe (+21.3%) all posted pleasing growth rates.

Sales declined as expected in the AST division, which was unable to decouple itself from the continuing high investment restraint, particularly in the semiconductor industry, and to the end of March were down 11.4% year-on-year. The negative impact was felt particularly strongly at the Christ Group which registered a sales decline of 25%. On the other hand, the van der Molen Group, operating in the beverages industry, and Aqua Engineering, which operates in municipal water and wastewater treatment, posted gains of 31.3% and 4.6% respectively, but were not able to offset the above mentioned declines. It was pleasing that the Eng-lish company Christ-Kennicott reported an increase in total operating performance for the first time for some time, with incoming orders in the first quarter confirming the turnaround.

The trend was still weak at FCMT. In this area the BWT subsidiary, FUMATECH, develops and markets high-quality membranes for deployment in fuel cells. In the first three months year-on-year sales declined from TEUR 219 to TEUR 88.

Order book: EUR 125.1 million, -3% y.o.y.

As of the end of March the order book level at the BWT Group of EUR 125.1 million declined 3% on the EUR 129.0 million of the previous year. The key factor impacting this figure was Christ, which reported a downturn of the order book against the previous year of almost 25%. On the other hand, the order book at Aqua Engineering and in the van der Molen Group again improved.

Group result: EUR 2.9 million, -23.8% y.o.y.

EBIT: EUR 4.9 million, -35.4% y.o.y.

In the first three months of 2003, the development of earnings at the BWT Group was marked by declining total operating performance in the AST division, particularly in the semiconductor industry. In the first quarter, EBIT declined 35.4% y.o.y. to EUR 4.9 million. Increased pressure on the margins, particularly in projects relating to the semiconductor industry, compounded the earnings situation in the AST division. In this division EBIT of EUR -2.0 million was generated after EUR +0.3 million in the previous year. In the AET, the EBIT margin at 11.4% reached almost the level of the previous year. Higher advertising expenditure resulted in a strong increase of other operating expenses, while material expenses were maintained at the level of the previous year and personnel costs even declined by 2%. The FCMT division posted a negative EBIT of EUR 0.4 million after EUR 0.3 million in the previous year.

Segment results (EBIT – in million EUR):

The financial result reflects the strong reduction of interest-bearing liabilities and active cash management. Lower interest paid resulted in an improvement of the financial result from EUR – 1.4 million to EUR – 0.7 million. Earnings before tax were EUR 3 million, 24.5% down on the previous year’s EUR 4.0 million and the consolidated result at EUR 2.9 million was down 23.8% on the previous year (EUR 3.8 million) due to a lower tax rate than the previous year.

Cash flow from business activities: EUR +3.8 million (PY: EUR -0.2 million)

Gearing 70.3%

Cash flow from business activities continued to develop very positively. As a result of the “Cash-positive Program” it was improved from EUR –0.2 million in the previous year to EUR +3.8 million, allowing a further reduction of gearing to 70.3%. In the first three months, cash flow from the result declined from EUR 7.4 million to EUR 6.4 million. There was a further decline in interest-bearing financial liabilities and the equity capital moved up to EUR 125.8 million or 34.7% of the balance sheet (previous year: 30.6%).

Investments: EUR 1.4 million (PY: EUR 1.4 million)

Investment activities at the BWT Group remained unchanged in comparison to the previous year. To March 2003 EUR 1.4 million was invested in fixed assets.

Number employed as at March 31, 2003: 2,454 persons

Staff numbers in the BWT Group at 2,454 employees were down by 12 persons against December 31, 2002 and by 56 persons against March, 31st 2002. The AET segment employs 1,706 persons, the AST segment 731 and the FCMT segment 17 persons. The decline of 11 persons in the AET segment related primarily to the German BWT activities.

Outlook

The results of the first quarter confirm the expectations of the Management Board for the 2003 financial year. In the Aqua Ecolife Technology division, a slight sales upturn against the previous year is realistic, despite the weak situation on the German market. In the industrial business, it will not be possible to fully compensate the depressed order situation in the semiconductor industry with increases in the food and beverages area and in the municipal business. Capacity adjustments have already been initiated. The further reduction of financial liability and with it the reduction of gearing to under 65% are key objectives in the current financial year.