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Jenoptik Group posts a significant rise in earnings in the 1st half-year 2008

(PresseBox) (Jena, ) 4.3 percent growth in sales to 264.5 million euros. Group EBIT up by 22.9 percent to 16.1 million euros, earnings after tax increased following improvement in the financial result to 6.1 million euros. Forecasts for the full year reaffirmed.

Key figures in terms of sales, results, order intake and order backlog in the 1st half-year 2008 increased in comparison with the previous year - despite disinvestments, a deteriorating economy and the weak dollar exchange rate.

The driving force behind the 4.3 percent growth in sales to 264.5 million euros (prev. year 253.7 million euros) was the Defense & Civil Systems segment. The figures for the other two segments remained just below the same period in the previous year. The consequences of the loss of sales following the disinvestments and the weak dollar had a greater impact here than in the Defense & Civil Systems segment. Following a cautious start in the 1st quarter during which sales stagnated, in the 2nd quarter Jenoptik posted an 8.3 percent increase in sales, with contributions coming from all segments. Approx. 56 percent and therefore more than half of the total half-year sales came from abroad.

The sustained improvement in the quality of the earnings is the result of measures within the framework of the Group's strategic reorientation: of the disposal of loss-making marginal business activities, the focus on growth areas, a stronger sales orientation as well as the new financing structure following the repayment of the high-yield bond at the end of 2007.

The result from operating activities before interest and taxes (EBIT) rose by 22.9 percent to 16.1 million euros (prev. year 13.1 million euros) and therefore at a clearly higher rate than sales. A leap in the results of the Defense & Civil Systems segment compensated for the anticipated still negative EBIT reported by the Metrology segment, which, however, in the 2nd quarter did post a small positive result as planned. The Lasers & Optical Systems segment achieved the high level of the previous year.

In addition, the Group EBIT had to take into account a 2 million euro fall in the capitalization of research and development costs which, although is currently having a negative effect on the Group, in future will reduce the risk of depreciation. Costs arising from the weak dollar, approx. 1 million euros higher than in the previous year, were also offset.

The continued development of the Group into a focused technology group generating profitable growth was also reflected in the reduction of the burden on the financial result which improved overall by 4.8 million euros and therefore 38 percent, to minus 7.8 million euros (prev. year minus 12.6 million euros). There was a significant increase in both the net interest as well as the investment result following the disposal of businesses and development themes which hold no future prospects for Jenoptik, as well as the new financing structure following the repayment of the high-yield bond in 2007. Thanks to the increased operating and financial result Jenoptik posted earnings after tax of 6.3 million euros (prev. year 0.6 million euros).

Rise in the order intake despite a slowdown in economic activity.

Despite the growing signs of weakening economic activity, particularly in the semiconductor equipment market, the order intakes in the 1st half-year 2008 increased by 6 percent to 267.6 million euros. Both the Defense & Civil Systems and the Metrology segments posted marked rises. In this area of business - in addition to a strong order intake recorded by the Industrial Metrology division as a result of its now global presence as a systems provider - there have also been signs of a slight pick-up in international demand in the Traffic Solutions division since May this year. The stagnation of the order intake in the Laser & Optical Systems segment was due to a fall in the volume of orders from the semiconductor sector. At 441.4 million euros the Group order backlog was at the same level as of end 2007 (as at December 31, 2007: 439.5 million euros).

Continuing strong positive cash flow from operating business activities.

Cash flow from operating business activities in the sum of 16.5 million euros (prev. year 21.9 million euros) represented a continuation of the positive cash flow balance generated in 2007. The main reasons for the reduced cash flow compared with the previous year are the stronger expansion of the working capital during the year and the reduction in other liabilities, particularly arising from sales tax payments as a result of the strong growth in the 4th quarter 2007. The free cash flow before interests and taxes rose from 9.2 million euros in the first half of 2007 to now 10.5 million euros.

Following a rise in the 1st quarter, the net debt of the Jenoptik Group fell again as of end June 2008 to 192.0 million euros (as at December 31, 2008: 191.7 million euros). Cash inflows were used to repay current loans in the 2nd quarter 2008.

With a balance sheet total virtually unchanged at 695.6 million euros (as at December 31, 2007: 697.3 million euros) and a small rise in the shareholders' equity to 285.8 million euros thanks to the net profit for the quarter (as at December 31, 2007: 280.9 million euros) the shareholders' equity ratio has now risen to 41.1 percent (as of December 31, 2007: 40.3 percent).

Key projects completed on schedule in the 1st half-year 2008.

The Jenoptik Group consistently discontinued themes which no longer form part of its strategic core areas of expertise. In May this year it sold its entire shareholding in Xtreme technologies to the Japanese Ushio Group which had previously held a 50 percent stake in the research company. Jenoptik also sold its 51 percent majority holding in LDT Laser Display Technology GmbH Jena to Rheinmetall Defence, its key client for this business.

By contrast, the formation of a joint venture in India in which Jenoptik has taken the role of lead investor, was an important milestone in the process of internationalization of the Industrial Metrology division which is taking on the role of trailblazer for the Group. Other divisions will follow.

Information on the development of the three Jenoptik segments.

The Lasers & Optical Systems segment performed well in weak market conditions. It almost managed to repeat the same high level of sales and results achieved in the previous year which had been preceded by several periods of double-figure growth rates. The 1st half-year was characterized by continuing weakness in the global semiconductor equipment industry. The segment posted sales in the sum of 107.6 million euros compared with 110.0 million euros in the 1st half-year 2007, due mainly to the loss of sales from discontinued businesses. The result from operating activities (EBIT) came in at 12.1 million euros and was therefore maintained at the high level of the same period in the previous year (prev. year 12.3 million euros). At 112.5 million euros the order intake showed a slight fall in comparison with the 1st half-year 2007 (prev. year 116.7 million euros). This is primarily attributable to weaker demand for high performance optics for the semiconductor equipment industry.

The Metrology segment reported sales of 53.9 million euros, reflecting a slight fall of 4.1 percent (prev. year 56.2 million euros). The main reason continued to be the lack of contributions to sales from the Traffic Solutions division due to the lack of order intakes in 2007. The segment EBIT, at minus 1.0 million euros, remained just in negative territory (prev. year 2.8 million euros). In the 2nd quarter, the segment achieved the turnaround as planned and produced a small positive figure. Costs affecting the results are currently being incurred in the Traffic Solutions division for the intensive expansion of the international Traffic Service Providing.

The order intake of the Metrology segment rose sharply compared with the same period in the previous year, recording an increase of 17.5 percent to 65.8 million euros (prev. year 56.0 million euros). On the one hand, the successes of the integration of Etamic together with the new global presence as a systems provider and the corresponding, significant international orders were evident in Industrial Metrology. On the other hand, since May 2008 the Traffic Solutions division has also been recording small increases in its international order intakes for the equipment business.

In the 1st half-year 2008 the Defense & Civil Systems segment reported high growth rates in sales and results. Growth was achieved across all the business units. Sales of the segment grew by 18.1 percent to 100.7 million euros (prev. year 85.3 million euros). With a rise of 170 percent to 5.4 million euros (prev. year 2.0 million euros) the EBIT developed proportionately at a significantly higher rate. The order intake was up by 11.0 percent to 87.0 million euros (prev. year 78.4 million euros) but can fluctuate to a significant extent from period to period since some of these are long-term major orders, making a comparison on a quarterly or half-yearly basis more difficult.

Growth in Group sales and results in 2008: Forecasts for the full year reaffirmed.

The Jenoptik Group reaffirms the forecasts for the full year 2008 issued at the end of March 2008. This is, however, based on the assumption that the overall economic climate will experience no significant deterioration.

Group sales in 2008 are expected to surpass 550 million euros. The 2008 Group operating result is expected to increase to between 37 and 40 million euros. This figure already takes into account a marked reduction in the capitalization of development costs compared with the years 2006 and 2007.

The Jenoptik Group will benefit from the positive development of the Defense & Civil Systems segment which is showing stronger growth than had originally been forecast. The weakening of the semiconductor equipment market will affect the Lasers & Optical Systems segment. In the Metrology segment the weak order intake in 2007 reported by the Traffic Solutions division will continue to partially impact on the earnings situation in 2008 which will not yet be able to repeat the quality of earnings achieved in 2006 and the years prior to that. Here, in particular the winning of major orders will have an effect on achieving the Group targets. However, since May this year Traffic Solutions is reporting higher order intakes again, which will contribute to sales and earnings from the 2nd half year 2008. The expansion of the international Traffic Service Providing business in the USA and other regions continues to incur high costs.

The increase in the earnings before tax in 2008 will be significantly higher in proportion to the operating result. In addition to the increase in the operating result we expect a marked reduction in interest expenses and consequently an improvement of between 11 and 14 million euros in the net interest result. We already saw the signs of a corresponding positive trend in the 1st half-year 2008.