Sales down 5 % in the first four months – optimizing production capacities

    Gränichen, Switzerland, 3 June 2009 – Zehnder Group, with international operations in the indoor climate sector (radiators and comfort ventilation), reported a 5 % drop in sales compared to the first 4 months of 2008. This relatively moderate decline so far will become more pronounced during the course of the year as Zehnder Group's business is late-cyclical. Production capacities and sales organisations will be streamlined further to enhance profitability.

    In the first 4 months sales reached EUR 136 million, down 5 % compared to the first 4 months of the prior year. The organic and currency-adjusted decline was also 5 %, although this varied according to business segment. In the comfort ventilation segment, sales were up 8 %. Conversely, sales in the radiator segment were down 9 % and in the AsiaAmerica segment 7 %. The effects of the recession on sales development were still relatively moderate because Zehnder Group's business is late-cyclical. Sales in the past few months were largely generated through customer projects launched before the crisis started.

    Consequently, management expects sales decline to become more pronounced in the next few months. However, it is very difficult to make a forecast for the entire year because sales development in the period from early summer to late autumn impacts decisively on Zehnder Group's business development. The short-term nature of the Group's business make a forecast on sales development all the harder.

    In 2008 various steps were taken to enhance long-term profitability. Thus Zehnder Group sold two production plants and one sales company for aluminium radiators in Italy and France. These measures were also triggered by the Group's strategy of focusing on its high-end niche markets: steel radiators and energy-efficient ventilation systems.

    Since the middle of 2008, production, marketing and administration capacities in the radiator segment have continually been adjusted for the ongoing decline in demand. Redundancies have been kept to a minimum through introducing short-time work and cutting back on temporary staff. Since end 2008, the total number of employees has been adjusted downwards by about 4 % reaching a total of just under 2,900 at end April 2009.

    Currently, Zehnder Group is launching further decisive measures to streamline production capacities and thus improve competitiveness sustainably.

    In Germany, production of semi-finished products is being transferred from Riegel to the Group's main facility in Lahr, some 30 kilometres away. This will lead to a noticeable improvement of efficiency in the production of steel radiators. Zehnder Group is investing some EUR 7 million in the infrastructure and technology in Lahr. This is a clear commitment to Germany as a production location. No jobs will be lost through this merger. The property in Riegel is to be divested.

    In China, production in Tianjin will cease and the operations will be integrated into the Beijing facility. Thus the numerous synergies can be fully exploited.

    The production plants in France will be more closely synchronised and also optimised with production in Switzerland. As a result, various competences and product lines will be transferred.

    The sales organisations will also be streamlined. In the U.K., Belgium and Switzerland various companies were merged and placed under one operational management per country. This reorganization is ongoing.

    The Group will continue to invest substantial resources in the development of energy-efficient components and systems. Zehnder Group will further enhance its position as the technology leader in the comfort ventilation and customised steel radiator segments.

    Management assumes that the economic environment will only pick up noticeably in 2011 at the earliest. However, management is also convinced that given its leading market position and the measures launched, Zehnder Group will not only weather the crisis but will come out of it stronger than ever.

    René Grieder
    Moortalstrasse 1
    5722 Gränichen

    Chief Financial Officer

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