Feintool - Feintool Group's business results for financial year 2008/09: Turbulent year for the Feintool Group

As a result of the collapse of production and sales in the international automotive markets, the Feintool Group ended financial year 2008/09 with a 35% year-on-year fall in sales to CHF 370 million and net earnings of CHF -67.5 million. The results were heavily burdened by one-off costs of CHF 40 million. The operating result (EBIT) came to CHF -58.7 million.

As a result of the collapse of production and sales in the international automotive markets, the Feintool Group ended financial year 2008/09 with a 35% year-on-year fall in sales to CHF 370 million and net earnings of CHF -67.5 million. The results were heavily burdened by one-off costs of CHF 40 million. The operating result (EBIT) came to CHF -58.7 million.

Net debt rose by nearly 12% on the previous year to CH

Order intake slumped at the beginning of the financial year, but stabilized at a low level in the course of the year. A modest recovery began to appear in certain sectors towards the end of the financial year. Overall, order intake fell 49% to CHF 282.5 million. Orders in hand fell 45.1% to CHF 120.9 million.

The steps that the company has initiated or already implemented will enable it to benefit from any recovery in its markets. The Feintool Group anticipates sales of CHF 340 to 350 million in financial year 2009/10. Making allowance for the closure of one production site, this represents a slight increase. A slightly negative operating result is expected.

Key financial figures at a glance:

Figures in CHF Change 30.09.2009 30.09.2008 in % (CHF m) (CHF m) Fineblanking/Forming sales -34.7 239.8 367.2 Automation sales -32.8 94.8 141.0 Plastic/Metal Components sales -42.3 35.9 62.2 Feintool Group sales -35.0 370.0 569.2 Earnings before interest, tax, -29.6 56.1 depreciation and amortization (EBITDA) Operating profit (EBIT) -58.7 33.9 Net earnings -67.5 20.1 Total assets -21.8 371.7 475.3 Shareholders' equity -30.5 142.3 204.6 Net debt 11.9 64.8 57.9 Orders received -49.0 282.5 553.5 Orders backlog -45.1 120.9 220.1

Chairman of the Board of Directors Alexander von Witzleben summarized financial year 2008/09 as follows:

"The difficult situation on the international automotive markets was directly reflected in the Feintool Group's figures. The result was a double-digit slump in sales for the System Parts segment and a dramatic fall up to 70% in incoming orders for the Technology and Automation segments.

Our object was - and is still - to respond to these drastic developments in a systematic manner. The measures taken dominated the business year and have left obvious traces. We succeeded in implementing key improvements and securing long-term financing in financial year 2008/09. With a significantly lower cost base and adjusted capacities we are equipped to deal with the challenges that lie ahead and restore the Feintool Group to a profitable growth trajectory."

Summary of financial year 2008/09 In financial year 2008/09, the economic situation had an obvious impact on the Feintool Group as a leading technology and systems provider in fineblanking/forming and assembly automation, as well as a global supplier of fineblanked metal components to the automotive industry. The operating result (EBIT) came to CHF -58.7 million owing to the 35% year-on-year fall in sales to CHF 370 million and the attendant decline in the contribution margin at gross profit level due to order shortfalls in the United States and one-time expenses amounting to CHF 40.0 million. The company's net earnings totalled CHF -67.5 million.

Order intake virtually halved to CHF 282.5 million. Orders in hand fell similarly heavily by 45.1% year-on-year, totalling CHF 120.9 million on 30 September 2009. At the same time net debt rose 11.9% to CHF 64.8 million. With shareholders' equity at CHF 142.3 million, the equity ratio fell to 38.3%.

Little cash outflow despite loss

Cash flows from operating activities were modest at CHF -4.6 million despite the high net loss. This was helped by the positive effect of the reduction in net working capital (CHF 21.0 million). Investment was reduced to a minimum owing to the business situation. This was reflected in cash flows for investing activities of only CHF 8.1 million. Despite these measures, cash drain in financial year 2008/09 came to CHF 12.7 million.

Dividend

At the Annual General Meeting on 26 January 2010, the Board of Directors will be proposing that no dividend be paid owing to the challenging economic environment.

The Feintool segments at a glance:

Differing reactions in press and series parts business Sales and earnings in Fineblanking/Forming, which comprises the presses and systems business area and the parts manufacturing business area, slumped as a result of global economic developments in the segment's core markets in the automotive industry. Sales fell 34.7% on the previous year's record level to CHF 239.8 million. This represents 64.7% of Group sales.

In the press and systems business, the economic crisis made its impact felt around three to six months later than in series parts production, where sales had started to fall substantially in October 2008. By contrast, press orders virtually dried up towards the end of the financial year, whereas series parts staged a partial recovery.

In Japan in particular, monthly sales showed a year-on-year increase in the final quarter. At CHF -20.2 million, the segment's EBIT was significantly lower than in the strong financial year 2007/08 (CHF 32.1 million). At CHF 84.0 million on 30 September 2009, orders in hand were 44.1% lower than the previous year, while order intake was 50.5% lower at CHF 178.1 million.

Overall significant cost savings and capacity adjustments were achieved. However, there was a time lag in implementing these measures because of the sudden nature of the collapse. This technology-driven segment is vitally dependent on the expertise of its employees, and for that reason headcount was adjusted only where it did not affect any new projects.

Furthermore, a new generation of presses which will stimulate future growth is ready for market launch. To improve transparency, the segment will be divided into Fineblanking/Technology and System Parts as of 1 October 2010 and the two areas' results will be reported separately.

Delayed and varying impact on Automation The Automation segment, which brings together the expertise of leading automation specialists, benefitted from the very good order situation in the first half of financial year 2008/09, but also felt the effects of customers' declining willingness to invest in the second half.

Sales dropped 32.7% to CHF 94.8 million or 25.6% of Group sales, At CHF -6.8 million, the segment's EBIT was also significantly lower than in financial year 2007/08 (CHF 10.2 million). Orders in hand were 54.2% lower than the previous year at CHF 24.9 million due to the modest new order intake of CHF 72.1 million (46.2% below the previous year).

In all areas of the segment, Feintool responded by realigning itself with the lower level of sales. Headcount at all sites was brought into line with the order situation. Furthermore, the unprofitable site in Aarberg (Switzerland) was merged with Afag Automation AG in Huttwil (Switzerland). Sales and servicing activities for the IMA brand in Switzerland will be managed from Huttwil in future. Production at Aarberg will cease at the end of January 2010.

Feintool is continuing to successfully enter the solar and medical technology markets with the aim of permanently reducing its dependency on the automotive industry to under 50%. Afag Automation AG's components business portfolio is being systematically expanded, while Baltec, the world market leader in riveting technology, is also conquering new markets.

Plastic/Metal Components segment being dissolved

The process of closing down the Plastic/Metal Components segment in the form of Mühlemann AG in Biberist (Switzerland) is progressing on schedule and will end on 31 March 2010. As expected, sales fell 42.3% to CHF 35.9 million. EBIT was significantly negative due to high restructuring costs. However, the smallest segment - with a 9.7% share of sales - impacted heavily on the Feintool Group's results.

The Feintool regions Sales by region displayed a varied trend. The year-on-year comparison shows a shift in sales from Europe to North America and Asia. Sales were down 41.1% in Europe, and 22.4% in North America. Sales in Japan fell by only 7.4%. The Feintool Group generated 62.4% of its sales in Europe, 18.5% in North America, 9.8% in Japan and 9.3% in the rest of the world.

Outlook

The steps that the company has initiated or already implemented will enable it to benefit from any recovery in its markets. The Feintool Group anticipates sales of CHF 340 to 350 million in financial year 2009/10. Making allowance for the closure of one production site, this represents a slight increase. A slightly negative operating result is expected.

As things look at the moment, the series part business has bottomed out. After a good start, the indications are that System Parts will continue to develop positively in the second quarter of 2009/10. Other factors - such as a fresh hike in oil prices - remain uncertain. Feintool expects difficult conditions characterized by short-term fluctuations in call-off volumes to continue in the new financial year. Despite this, the Group anticipates a positive operating result in all regions in financial year 2009/10

Feintool's system business is late-cyclical and benefits from economic stimuli after a time lag of around six months. Even with a nascent economic recovery, the current, lower order intake will impact negatively for at least another six months in the new financial year. An investment-driven boost can be expected as soon as the business situation improves.

Within the Automation segment, Afag Automation AG is very well equipped for financial year 2009/10 with new products and successful site optimization. Baltec, the global leader in riveting machines, will strengthen its involvement in the BRIC markets. In the automation systems business, the groundwork has been laid for the move into solar and medical technology. This direction is being pursued rigorously. Feintool has responded systematically in all three business areas of the segment. Despite this, Feintool expects financial year 2009/10 to be difficult due to the time lag in the systems business.

Additional authorized capital

At the Annual General Meeting on 26 January 2010, the Board of Directors will be proposing that authorized capital equivalent to around 25% of existing capital be created by the issue of 191,000 new shares with a nominal value of CHF 50. . This authorized capital will give the Board of Directors additional shareholders' equity if it should require it.

Further information may be obtained from Karin Labhart, Media Spokesperson, at any time by calling 41 (0)32 387 51 63 or e-mailing karin.labhart@feintool.com.

Feintool International Holding AG Industriering 8, CH-3250 Lyss Phone 41 (0)32 387 51 11 Fax 41 (0)32 387 57 81 feintool-fim@feintool.com www.feintool.com

The media release can be downloaded from the following link:

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Feintool International Holding Industriering 8 Lyss Schweiz

WKN: 905428; ISIN: CH0009320091 ; Index: SPI, SPIEX, SSCI; Listed: Main Market in SIX Swiss Exchange;