10/25/2005

Vossloh: group earnings forecast for 2005 reaffirmed

Sharp surge in third-quarter sales

Despite the still troubled situation in the rail industry, especially within Germany, the Vossloh Group does expect to achieve for all of 2005 its budgeted group earnings of around €47 million. Of the sales in the region of around one billion euros forecasted for 2005, €711.9 million had been generated by September 30, 2005, equivalent to a growth of €72.3 million or 11.3 percent from 3Q/2004. Included in this year’s total are the €62.7 million sales which were posted since April 2005 by the Valencia-based diesel locomotive plant acquired from Alstom.

The difficult situation in the rail industry market, soaring steel prices and the lack of invitations to bid for diesel locomotives had prompted Vossloh at the end of 2004 to initiate a groupwide efficiency-boosting and cost-cutting program. The problems have cast the thickest clouds on Vossloh Locomotives in Kiel and the costs for the restructuring measures necessary in response to the sharp decline in locomotive production have entailed an equivalent burden on this year’s EBIT.

These one-off expenses, rising steel prices and delays in the award of contracts at the Information Technologies division have meant that for the first nine months of 2005 group EBIT at €59.9 million was around 11 percent short of the 3Q/2004 of €67.4 million.

Three-quarter net interest expense at €13.9 million rose €2.9 million from €11.0 million in 2004 and accordingly, 3Q group earnings slipped from the year-earlier €37.5 million to €28.8 million. The heavier expense was chiefly due to the financing of the Valencia-based diesel locomotive plant and slightly higher interest rates versus 2004.

A year-on-year Q3 comparison shows a marked increase in sales: Q3 sales surged 16.4 percent from €234.4 million to €272.8 million whereas EBIT fell around 25 percent from €31.4 million to €23.4 million. Q3 group earnings decreased by €6.0 million or 33.0 percent from 18.2 million to 12.2 million.

As of September 30, 2005, the Vossloh Group employed a worldwide workforce of 4,673, up 9.1 percent or 391 from September 30, 2004, chiefly due to the takeover of the Valencia-based locomotive plant (around 485 employees). Contrasting with this addition is the 77-employee retrenchment in the wake of restructuring at Kiel-based Vossloh Locomotives.

For all of 2005, Vossloh is predicting sales in the region of one billion euros (up from €922.2 million in 2004) and an EBIT of around €90 million (down from €105.8 million). Group earnings should reach about €47 million and earnings per eligible share hence €3.20.

Werdohl, October 25, 2005

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

The complete 3Q/2005 report.