04/26/2005

Vossloh starting fiscal 2005 as planned

Earnings forecast for 2005 confirmed

Despite the still extremely difficult rail industry situation, the Vossloh Group achieved its budgeted sales and earnings indicators for Q1/2005. At €185.4 million, sales were €11.8 million or 6.0 percent short of Q1/2004, especially due to fewer invitations to bid for diesel locomotives. The shortage could not be offset by sales at the Valencia-based diesel locomotive plant acquired from Alstom since the takeover was only closed as of April 1, 2005. The future Vossloh España will be included in the consolidated financial statements starting from Q2/2005.

The still adverse market trends, in Germany in particular, as well as the surging steel prices (only partly downloadable onto customers), and the further postponement of invitations to bid for diesel locomotives have prompted Vossloh to launch a groupwide efficiency enhancement and cost reduction program. Appropriate provisions have been made for the necessary restructuring and associated workforce retrenchments, above all at Kiel. These one-off burdens, the lower volume of business versus 2004 and the sharp rise in steel prices have, as expected, eroded earnings, especially at the Motive Power division. The Group’s Q1 EBIT fell from €16.7 million a year ago to €11.1 million in 2005, the EBIT margin slipping from 8.5 to 6.0 percent. Q1/2005 group earnings totaled €3.5 million (down from €8.5 million).

As of March 31, 2005, the Vossloh Group employed a worldwide workforce of 4,420, up 2.7 percent or 117 employees from March 31, 2004. The reduction at Motive Power contrasts with the gain at Rail Infrastructure, which is chiefly due to newly consolidated companies.

The divisions

Sales by Rail Infrastructure rose around 12 percent to €126.6 million (up from €112.7 million), EBIT inched up by €0.7 million to €17.9 million.

At €52.2 million, sales by Motive Power fell sharply from the year-earlier €71.8 million. The division’s EBIT shrank from €2.9 million to a negative €3.8 million, mostly due to the sinking sales and the one-off burdens at the Locomotives business unit.

Sales by Information Technologies amounted to €6.7 million, short of the year-earlier €12.6 million due to invoicing postponements. Accordingly, EBIT at a negative €0.7 million fell short of the year-earlier €0.1 million.

Forecast confirmed

For all of 2005, Vossloh is sticking to its budgeted EBIT of €93.4 million (down from last year’s €105.8 million). Group earnings are predicted to reach €47.4 million (down from €57.2 million), with earnings per eligible share then amounting to €3.25 (down from €3.91). Group sales should rise to around €1,060 million, up about 15 percent or almost €138 million over the €922.2 million in 2004. Included in these figures is the Valencia diesel locomotive plant (Vossloh España).

Werdohl, April 26, 2005

For more information contact
Christiane Konrad, Vossloh AG, phone: (+49-2392) 52-249

The complete Q1 report is available at www.vossloh.com