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Böhler-Uddeholm announces results for the 2007/08 financial year:

• Robust demand continues
• Order intake remains at high level
• Sales and earnings demonstrate strong growth
• Weak US-Dollar represents major risk factor
  

The Böhler-Uddeholm Group recorded sound development during the 2007 calendar year, with a substantial improvement in sales and earnings. The favorable economic climate stimulated organic growth in all four divisions, and the robust demand for specialty steel and materials led to a noticeable rise in sales volumes. This strong growth also continued during the first three months of 2008. Order intake remained at a high level in all Group divisions, with no recognizable signs of weakness in the general economic climate. The first three months of 2008 also brought a further improvement in sales and earnings. The increase in alloy prices will be passed on to the market through the so-called alloy surcharge.

As in the previous quarters, the primary drivers for the development of business were the energy generation, aircraft construction, oil field services, offshore and machinery construction sectors. In Germany, the most important market for the Böhler-Uddeholm Group, the demand for specialty steels and materials was dynamic. The operating environment in most of the other European countries and in South America and in Asia also remained generally friendly. The only exception was North America, where Böhler-Uddeholm faced a continuation of the difficult market conditions during the first three months of 2008.

The unfavorable exchange rate between the US-Dollar and the Euro, the Brazilian Real and the Swedish Krone represents a major risk factor for the development of business. This situation was problematic throughout 2007 and became even more difficult during the first three months of 2008. Böhler-Uddeholm is affected by the weak US-Dollar not only through direct exports, but to an increasing extent indirectly through customers that deliver to US-Dollar regions.

The 2007/08 business year in figures (15 months)
Order intake rose from 2,737.3 m€ in 2006 by 24% to 3,391.8 m€ in the 2007 calendar year and reached 4,232.6 m€ in the 15-months reporting period. Order backlog increased from 906.9 m€ as of 31 December 2006 by 40% to 1,268.2 m€ as of 31 March 2008. Sales recorded by the Böhler-Uddeholm Group rose from 3,090.2 m€ by 18% to 3,637.1 m€ in the 2007 calendar year and totaled 4,579.7 m€ for the 15-months reporting period.

A regional analysis of sales for the reporting year shows the following picture: the EU countries represented the most important market for Böhler-Uddeholm with a 62% (60%) share of sales, followed by North and South America with 19% (20%), Asia with 12% (13%), other European countries with 4% (4%), Australia with 2% (2%) and Africa with 1% (1%). The classification of Group sales by core business shows the High Performance Metals Division with 69.8% (69.2%), followed by the Welding Consumables Division with 13.9% (13.4%), the Precision Strip Division with 9.0% (9.9%) and the Special Forgings Division with 7.3% (7.5%).

Earnings before interest and tax (EBIT) rose from 376.0 m€ in 2006 by 27% to 476.0 m€ in the 2007 calendar year and reached 575.5 m€ for the 15-months reporting period. This led to an improvement in the EBIT margin from 12.2% (2006) to 12.6% (2007/08). Earnings before tax (EBT) grew from 345.5 m€ in 2006 by 29% to 444.1 m€ for the 2007 calendar year and reached 527.8 m€ for the 15-months reporting period. Net income increased from 248.1 m€ in 2006 by 31% to 325.6 m€ for the 2007 calendar year and totaled 377.2 m€ in the 15-month reporting period.

As of 31 March 2008, voestalpine AG held 90.65% of the voting rights in Böhler-Uddeholm AG. In accordance with the Austrian Minority Shareholder Squeeze Out Act, voestalpine AG will now offer a reasonable cash settlement to the remaining minority shareholders. This includes retained earnings from the 2007 calendar year and the abbreviated financial year from 1 January to 31 March 2008. Therefore, the Management Board of Böhler-Uddeholm AG will recommend that the Annual General Meeting on 23 June 2008 approve the full carryforward of retained earnings.

Outlook
It should be noted that uncertainty over the pace of global economic growth has risen substantially. It is also uncertain if – and to what extent – the subprime crisis will spread to other sectors of the economy. This could influence expectations for the operating environment in the steel and specialty steel industry. Management also views the development of exchange rates as an additional risk factor. If the US-Dollar remains as weak as at the beginning of 2008 for a longer period of time, negative effects for Böhler-Uddeholm would be possible.

The management of Böhler-Uddeholm AG expects a good year in 2008/09 that will roughly match the development of business in the comparable period. Demand will again be driven primarily by the energy generation industry, aircraft construction, oil field technology, offshore and machinery manufacturers. This high level of demand in these sectors will also be reflected in the above-average utilization of capacity throughout the Group during the coming year. Although expansion programs have eliminated a number of capacity bottlenecks in recent years, further investments are required to successfully accompany the growth of the market. The Böhler-Uddeholm Group is therefore planning to realize investments of approximately 300 m€ in 2008/09.

Capital expenditure projects for the coming year will focus on the expansion of open-die forging capacity in Kapfenberg (Austria), Hagfors (Sweden), Sumaré (Brazil) and Wetzlar (Germany). Above-average demand from customers in the energy generation branch has led to a sizeable global shortage of open-die forging capacity. Other projects involve the enlargement of re-melting capacity for special materials and the production capacity for strip steels used in saw manufacture. Böhler-Uddeholm also intends to strengthen its sales force and further increase machining and heat treatment capacity in Brazil, Russia, India and China during the coming year. The acquisition of smaller or mid-sized companies is also not excluded.

Overview of core businesses
The High Performance Metals Division closed the 2007 calendar year with new records for sales and earnings. This dynamic growth continued without interruption during the first three months of 2008. A further increase was recorded in sales volumes, while prices remained stable at a high level. Demand was particularly strong in Europe and Asia, as well as in smaller markets like South Africa and Australia. In North America demand remained weak, while South America – above all Brazil – reported a high level of domestic demand. However, the unfavorable exchange rate made exports from Brazil to the US-Dollar region increasingly difficult. The abbreviated 2008 financial year brought sound development in the major product segments – specialty steel, tool steel, high-speed steel, valve steel and special engineering steel. This supported significant growth in sales, earnings and order intake for 2007/08, compared with the 2006 business year.

The Welding Consumables Division recorded substantial growth in sales and earnings during the 2007 calendar year, which was supported by sound and sustained demand. The first quarter of 2008 brought no signs of a change in this stable operating environment. Growth was driven primarily by the energy generation and apparatus construction sectors, petrochemical industry, agricultural machinery construction and the offshore segment. Demand in Europe, Asia and South America continued at a high level. In the USA, project-related orders from the petrochemical and power plant construction sectors remained intact, but business in all other end-user segments was slowed by the weak US-Dollar and the general economic downturn. This division was confronted with higher raw material prices during the first three months of 2008, but was able to offset these increases with price adjustments. Sales volumes rose steadily throughout the reporting year as a consequence of sound demand. The result was an improvement in sales, earnings, order intake and profitability in 2007/08 compared to the 2006 business year.

Order backlog in the Precision Strip Division remained good throughout the 2007 calendar year, with the European market serving as the primary driver for this development. The positive development of business also continued during the first three months of 2008. Sales volumes rose steadily and prices remained stable at a high level. This was reflected in higher demand for strip steels for the manufacture of saws that are used by the construction industry and metal processors. Sales of precision cold rolled strip steel to the paper, automotive and watch industries also increased. In addition, the acquisition of the razor blade steel business from Outokumpo substantially strengthened the global market position in this segment. The division recorded sound development in sales of hot rolled strip steel, but rule die steel again remained below expectations. Since roughly one-half of the sales for this niche product were registered in the US-Dollar region, the unfavorable exchange rate had a negative effect on results. The Precision Strip Division was able to increase sales and earnings for the 2007/08 reporting period, and recorded the highest profitability in the Böhler-Uddeholm Group.

The demand for forged components remained high in all relevant markets during the 2007 calendar year, and supported a sizeable improvement in sales, earnings and profitability for the Special Forgings Division. However, it should also be noted that earnings include insurance compensation for the damage caused by the fire at the Wetzlar plant (May 2007). This positive operating environment continued during the first quarter of 2008. The sound growth in sales volumes was underscored above all by developments in the aircraft construction, energy generation and utility vehicle manufacturing sectors. In addition, sales of marine diesel valves showed strong recovery after a period of weakness. Price increases were also successfully implemented on the market in 2007/08. The continuing low level of the US-Dollar had a notable effect on earnings, in particular because this division generates approximately 40% of its sales in US-Dollar regions. In spite of this situation, sales, earnings and profitability improved in comparison with the 2006 business year.

For additional information contact: BÖHLER-UDDEHOLM AG
Telefon: +43 1 798 69 01-22052

Key Figures in Overview		2006	2007	Change 06/07	07/08
Net sale	m€	3,090.2	3,637.1	18%	4,579.7
EBITDA	m€	476.6	586.1	23%	723.0
EBITDA margin		15.4%	16.1%		15.8%
EBIT	m€	376.0	476.0	27%	575.5
EBIT margin		12.2%	13.1%		12.6%
EBT	m€	345.5	444.1	29%	527.8
Net income before minority interest	m€	248.1 2.4	325.6 0.9	31% (63%)	377.2 0.6
Order intake	m€	2,737.3	3,391.8	24%	4,232.6
Order backlog	m€	906.9	1,246.7	37%	1,268.2
Employees		14,324	15,217	6%	15,453

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