Press Releases

• Demand stable at satisfactory level
• Moderate growth in sales and EBIT
• Sharp rise in raw material costs
• Weak US-Dollar as major risk factor

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Presentation: First Quarter 2008/09

Report on the first Quarter 2008/09

Böhler-Uddeholm was confronted with a significant increase in the cost of energy and pre-sorted scrap during the reporting period. With the exception of nickel, a slight rise was also noted in alloy prices. The development of business was negatively influenced by the continuing unfavorable exchange rate between the US-Dollar and the Euro, the Brazilian Real and the Swedish Krone. This negative factor has a direct effect on Böhler-Uddeholm through exports as well as an indirect effect through customers who sell to US-Dollar regions. In spite of the increasingly difficult market conditions, Böhler-Uddeholm was able to record moderate sales and EBIT growth and thus confirms the sustainability of its earning power.

Group sales rose from 926.0 m€ in the comparable prior year period to 1,017.1 m€ for the first quarter of 2008/09, which reflects an increase of 10%. A regional breakdown of sales shows the following: the EU countries formed the most important market for Böhler-Uddeholm with 61%, followed by America with 20%, Asia with 12%, other European countries with 4%, Australia with 2% and Africa with 1%. A breakdown by division shows High Performance Metals with 70% of Group sales, followed by Welding Consumables with 14%, Precision Strip with 9% and Special Forgings with 7%.

Earnings before interest and tax (EBIT) rose from 119.1 m€ by 4% to 124.1 m€ for the first quarter of 2008/09, while the EBIT margin weakened slightly from 12.9% to 12.2%. Earnings before tax (EBT) and net income remained nearly unchanged compared to the prior year period at 111.0 m€ and 80.1 m€ respectively.

Outlook.
The management of Böhler-Uddeholm AG expects a certain seasonal effect during the summer months, which will influence the development of business during the second quarter of the reporting year (July – September). In 2008/09 this effect could be somewhat more evident than in previous years. If the economic environment does not weaken significantly during the coming months, order intake for the second quarter of 2008/09 should roughly match the first quarter level. However, recent estimates for the further development of the global economy and, in turn, the steel and specialty steel industry have been connected with growing uncertainty. Böhler-Uddeholm has set an ambitious target for the full 2008/09 financial year – namely to match the sound prior year levels for sales and earnings – but the attainment of this objective will depend to a large extent on the Group’s success in passing on higher raw material costs to the market.

The Böhler-Uddeholm Group plans to implement an extensive investment program during 2008/09, which calls for capital expenditure of roughly 300 m€. The focus of activities will be placed on the expansion of open-die forging capacity in Kapfenberg (Austria), Hagfors (Sweden), Sumaré (Brazil) and Wetzlar (Germany). Other projects include an increase in the re-melting capacity for special materials and the production capacity for strip steel for saws. Böhler-Uddeholm also intends to strengthen its sales organization, machining and heat treatment capability in the growth markets of Brazil, Russia, India and China. Moreover, management does not exclude the acquisition of smaller or mid-sized companies during the reporting year.

Overview of core businesses.
The High Performance Metals Division reported generally stable development for the first quarter of 2008/09. The stormy demand for tool steel calmed somewhat, but continued at a high level. The demand for high-speed steel and special engineering steel remained healthy, and also special steel grades recorded sound sales volumes. However, the growing competition in this segment has begun to have an impact on business. The energy generation, offshore, chemicals and petrochemical branches served as the strongest drivers for demand. There were no signs of weakness from a regional standpoint, above all in Asia and a number of core markets in Europe. In contrast, declines were reported by Spain and Italy and the demand in North America was disappointing. In Brazil, domestic demand was high but the unfavorable foreign exchange situation increased the pressure on exports to US-Dollar regions. The High Performance Metals Division closed the first quarter of 2008/09 with improved sales and earnings slightly above and order intake somewhat below the peak values recorded in the comparable period of 2007/08.

The Welding Consumables Division followed several quarters of sound growth with a continuation of this trend during the reporting period. The main drivers for the development of business were power plant and machinery construction firms, the petrochemical industry, producers of agricultural machinery and the offshore segment. Demand remained at a good level in Europe, Asia and South America. In the USA the project business in the petrochemical and power plant construction sectors was stable, but sales to all other customer segments were slowed by the weak US-Dollar and the general economic decline. Sales volumes and prices are generally high, and the division’s major production facilities are reporting high capacity utilization. This supported an increase in sales, earnings and order intake during the first quarter of 2008/09 in comparison to the prior year period.

The Precision Strip Division recorded solid growth during the first quarter of 2008/09, which was driven primarily by the European market. The development of business in Asia – in particular China – was also good, and was supported mainly by the prospering automobile, construction and packaging industries. Sales volumes were robust above all for strip steel for timber saws, cutting and rule die steel as well as hot rolled strip that is used as a raw material by the cold rolling industry. This also applies to the precision cold rolled strip steel segment, which supplies products to paper and watch producers. Sales and earnings reported by the Precision Strip Division for the first three months of 2008/09 were therefore above the comparable prior year period. In contrast, order intake declined as a result of foreign exchange factors and the general economic weakness in the USA.

In the Special Forgings Division the demand from aircraft and jet engine manufacturers remained stable at a high level, in part due to a renewed increase in construction rates by the producers of business jets and regional jets. This division also benefited from the steady growth of the energy generation sector during the reporting period. Numerous power plants are currently under construction throughout the world, and the pace of replacement investments is increasing. The demand for forged components for utility vehicle producers was satisfactory, but the rising cost of raw materials has increased the pressure on selling prices in this segment. The Special Forgings Division was only able to implement necessary price adjustments to a limited extent during the first quarter of 2008/09. Sales and order intake increased over the comparable prior year period, while earnings decreased compared to the first quarter of 2007/08.

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

Key Figures in Overview		April-June 2007	April - June 2008	Change
Net sales	m€	926.0	1,017.1	10%
EBITDA	m€	147.4	155.2	5%
EBITDA-Margin		15.9%	15.3%
EBIT	m€	119.1	124.1	4%
EBIT-Margin		12.9%	12.2%
EBT	m€	111.3	111.0	0%
Net income before minority interest	m€	80.1 0.4	80.1 0.6	0% 50%
Order intake	m€	884.3	836.3	(5%)
Order backlog	m€	1,150.2	1,272.0	11%
Employees		14,772	15,451	5%

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