Pfeiffer Vacuum bucks the weak economy, holds its own in a difficult environment

Positive development in Germany, Europe and Asia all but offsets weak

U.S. business

The sustained sluggishness of the semiconductor industry and the general

weakness of the American economy have led to sharp shortfalls in sales in the

United States. During the first 9 months, U.S. sales declined from € 46.5 million

in 2000 to € 35.9 million in 2001. Encouragingly, during the same period sales in

Germany advanced from € 30.4 million to € 34.9 million and in Asia and the rest

of the world from € 13 million to € 16 million, especially in the market segments

of vacuum coating and analytical applications.

The negative development of new orders, first and foremost in the United States,

was heightened by the events of September 11. There would appear to be a

significant variance in the comparison figures relative to the 3rd quarter of the

previous year; however this needs to be put into perspective, as there had been

an extremely high level of new orders during the 3rd quarter of 2000 due to the

boom the semiconductor industry was experiencing during that period. By

comparison with the first 9 months of 1999, new orders in fact rose by 17 %

during the first 9 months of 2001.

Profitability again demonstrated

Strict cost management and the institution of further efficiency-enhancing

measures at the new production facility produced an EBIT margin of nearly 18

%; in spite of the decline in sales, this is only around 1 % lower than the margin

during the comparable prior-year period. Thanks to a more favorable tax rate,

after-tax income rose by a strong 10.8 % year to year. With an 11 % return on

sales, the company is one of the most profitable on the Neuer Markt Stock

Exchange.

Ready for the future

The company is putting a major effort into developing new products. During the

period under review, R&D expenditures rose by 6.9 % year to year, from € 5.8

million to € 6.2 million. In the analytical industry, further customers were able to

be won for the successfully launched Splitflow turbomolecular pump. Additional

business was also generated in Service, which has traditionally offered good

prospects during times of economic weakness. Customer intimacy is assured by

a close-knit sales and service network.

As already reported, the company anticipates sales for the full fiscal year to lag

some 8 - 10 % behind the level posted in record year 2000. At Headquarters,

flexible human resources measures, like the termination of employment

contracts for temporaries and the reduction of overtime work, are being used to

adjust capacities to reflect current needs. At the same time, sales and marketing

activities have been strengthened, e.g. through the recruitment of qualified sales

engineers and marketing specialists for the semiconductor and analytical

industries in order to be ready for the future.

Share prices hold their own in a difficult stock market environment

Thanks to the company’s strong financial position, Pfeiffer Vacuum shares –

traded at the NYSE and the German Neuer Markt - did well during the current

fiscal year’s difficult stock market environment. While the Nemax 50 suffered

dramatic setbacks this year (from 2,642 to less than 700 points at times), the

price of Pfeiffer shares declined only from € 45 to € 24, and presently stands at

€ 34 again.