03/21/2003

Vossloh outpaces its own predictions for 2002 / Dividend up 60 percent to €1.20

Sales and earnings set to rise further

The Vossloh Group closed fiscal 2002 even more successfully than predicted back in mid-December 2002. At €744.5 million (forecasted at €725 million), the year-earlier comparable rail business sales of €650.5 million were topped by 14.5 percent. EBIT (forecasted at just under 77 million) advanced by 59.7 percent to reach €78.4 million (up from €49.1 million). Group earnings (forecasted at €50.4 million) came to €52.4 million in 2002 (up from €17.2 million). As to dividend distribution, the Executive and Supervisory Boards' proposed €1.20 per share (up 60 percent from €0.75) will surpass even the ambitious increases already signaled.

On the occasion of this year's annual accounts press conference, Vossloh AG's CEO Burkhard Schuchmann looked back "on what has been very likely one of the most eventful and, at the same time, exciting fiscal periods in Vossloh's 130-year history." As part of its realignment drive in the direction a Transport Technology Group, the first step had been for Vossloh to shed its Lighting division.

Then, with the acquisition of the French Cogifer Group, the tracks were firmly laid in the direction of the "new Vossloh." In a related move, the Company sold its (indirectly held) around 45-percent stake in the Austrian switch manufacturer VAE. With the acquisition of the Kiepe Group, Vossloh next migrated into highly inviting niche markets in the transport technology sector while through the takeover of Skamo, the Polish market leader for rail fasteners, the Group secured for itself the most attractive and biggest individual market for these products in eastern Central Europe. Altogether, these deals represented a volume of over €600 million.

Sales, EBIT, and Group earnings all up
In this year of realignment, Vossloh succeeded in outgrowing its like-for-like year-earlier rail business sales by 14.5 percent, advancing from €650.5 million to €744.5 million. The Transport Technology divisions accounted for €743.6 million of total sales, Vossloh AG as Group holding company generating an additional €0.9 million in the form of rental income.

Despite the loss of the Lighting division sales, which in 2001 had run to just under €253 million, the Group's EBIT was raised 59.7 percent to €78.4 million. The adjusted year-earlier EBIT had amounted to €49.1 million. The EBIT for fiscal 2002 also includes gains from that period's partial sale of the VAE stake as well as provisions amounting to a net €14.4 million. "Adjusted for these amounts, we still arrive at a respectable 30.3-percent gain in EBIT. This pleasing improvement is above all due to the much healthier earnings position in locomotive manufacture and Engineering Systems," explained Schuchmann to the press assembled in Düsseldorf.

Group earnings in 2002 added up to €52.4 million (up from €17.2 million) the year before. This, in fact, is the all-time high in the history of Vossloh. The aggregate effect of all these transactions and provisions including the tax effects is around €24 million. Group earnings of €52.4 million are equivalent to an EpS of €3.85, more than triple the 2001 figure of €1.20.

The Executive and Supervisory Boards of Vossloh AG will propose to the annual stockholders' meeting to resolve the distribution of a 60-percent higher cash dividend of €1.20 (up from €0.75) per share for fiscal 2002. "In so doing, we want to express that the level of earnings achieved in 2002 is firmly budgeted to rise over the years ahead," stated Schuchmann.

Good progress by the subdivisions
As part of its realignment drive, Vossloh has made certain changes to its organizational structure. The former Railway & Transport sector now has become Rail Technology, comprising three divisions: Rail Infrastructure (formerly Rail), Motive Power (formerly Railbound Vehicles & Maintenance), and Information Technologies (formerly Engineering Systems).

Sales by the former Rail division climbed 18.2 percent, from €433.1 million to €511.8 million. EBIT rose 6.9 percent, from €65.5 million to €70.0 million. Due to the major changes in this division's product mix in the wake of the Cogifer acquisition and VAE's disposal, any comparison with the year-earlier figure is of limited relevance. An ROCE of 16.8 percent (down from 20.8 percent) was in the region of Vossloh's self-set benchmarks.

At €194.5 million, sales by Railbound Vehicles & Maintenance were up 10.6 percent over the year-earlier's €175.8 million. EBIT advanced from a negative €4.3 million in 2001 to a black €4.8 million in 2002. At 4.3 percent ROCE was black though far short of the Group's 15-percent benchmark.

Engineering Systems' sales of €37.9 million were 7 percent short of the previous year's €41.0 million for reasons of invoice timing. EBIT progressed according to budget from a red €1.7 million to a black €2.8 million. ROCE came to 22.0 percent.

Bright prospects for 2003 and 2004
Despite the still hostile economic environment, the Vossloh Group expects this year's sales to mount by more than 16 percent to a good €870 million, with EBIT rising as much as over 20 percent to just under €95 million. The latter still includes divestment gains and favorable deconsolidation effects in the region of €14.5 million. Although the tax load ratio will double to a good 30 percent compared with 2002, Group earnings are set to again reach the high level of the previous period.

As to 2004, Vossloh predicts a further increase in Group sales by around 6.5 percent plus a proportionally much higher growth in EBIT, which by then will be solely sourced from operational business. In spite of the expectedly far higher tax burden of almost 40 percent, Vossloh still forecasts another increase in Group earnings. In fact, these earnings predictions suggest that the dividend proposed for 2002 may be repeated over the years ahead.

"We intend to steadily raise our earnings and, in terms of EpS, we are aiming well above the €4 mark. Our plans are for the EBIT margin to continuously reach 10 percent and beyond. Even this year ROCE is budgeted to top 15 percent and thereafter rise well beyond. As to our equity ratio, this should exceed 25 percent throughout our operations," was how Schuchmann formulated the Group's ambitious targets. And even though top priority at present is to integrate the newcomers within the Vossloh Group, this does not mean the Group's most important target of ongoing growth is being backseated.

Werdohl/Düsseldorf, March 21, 2003

Address your inquiries to:
Werner Andree, Vossloh AG, phone (+49-2392) 52407