Sales development above expectations

    Gränichen, Switzerland, January 22, 2004. – Zehnder Group, with international operations in the radiator and comfort ventilation sectors, reached total sales of EUR 360 million1 in 2003 (CHF 487 million or EUR 332 million2 in 2002). The reported growth of 8 percent is attributable to the first 12-month consolidation of the StorkAir Group, and the improved business development in the radiator sector compared to 2002. Group management anticipates at least a proportional increase in profit for 2003.

    Business development in the various countries varied. Sales in the Mediterranean markets (France, Italy, Spain) increased again, whereas sales in Germany and the United States declined on account of a continuing recessive market. During spring of the reporting year, the Dutch market environment deteriorated noticeably, thus slowing down the growth of our Dutch company, J.E. StorkAir.

    Our Chinese joint-venture company reported very satisfactory development with growth back to the levels of earlier years and increased sales revenues in local currency. However, the strong decline of the Chinese currency against the euro resulted in lower sales as expressed in our consolidated reporting currency. Sales revenues in Switzerland (reported in CHF) were slightly above those of the prior year.

    Major investment projects were concluded in the reporting year. These include the completion of a new production and administration complex for J.E. StorkAir in Holland, the expansion of the production plant in Poland and taking into operation a modern chroming system there, as well as the enhancement of the Chinese production facilities.

    As roughly four-fifths of Zehnder Group's sales are generated in the euro zone, the board of directors agreed in 2002 to change the former practice of presenting the consolidated results in Swiss francs. From 2003, in order to show business development more clearly, the results are being presented in euro. With the steep decline of the U.S. dollar and the Chinese renminbi against the euro as well as a weaker Swiss franc, exchange rate differences in 2003 again impacted negatively on the group's sales development. Had the exchange rates remained unchanged, sales growth would have been 10 percent instead of the reported 8 percent.

    Group management anticipates higher net income for 2003 than in 2002 (2002: EUR 23.5 million). This increase is primarily attributable to business development in the second half of the year, which was better than anticipated; stringent expenditure discipline throughout the year; the first 12-month profit contribution from J.E. StorkAir (2002: profit contribution from July 1); and the restructuring of the loss making British activities.

    René Grieder
    Moortalstrasse 1
    5722 Gränichen

    Chief Financial Officer

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