Steady organic growth, special circumstances impacted negatively on earnings

    Gränichen, Switzerland, January 23, 2009. – Zehnder Group, with international operations in the indoor climate sector (radiators and comfort ventilation systems), reported total sales of EUR 454 million for the financial year 2008 (not audited; EUR 444 million in 2007), an increase of approximately 2 percent. Organically and with exchange rates at the prior year's level, the increase would have been 7 percent. In 2008 Zehnder Group successfully implemented major strategic measures. The Group focused even more strongly on the niche markets for high-end and customized design steel radiators, whilst the sector for energy-efficient ventilation systems was expanded further through organic growth as well as through acquisitions. In the first six months of the year, the Group sold its Italian production company for aluminum radiators – Faral S.p.A., and acquired a British and a Swiss company – Greenwood Air Management and Cesovent AG respectively. In the second half of the year a further small production plant and a sales company were sold to an industrial purchaser. The operations of these two companies, both domiciled in France, focused on the aluminum radiator market.

    Growth slower in second half of year

    Compared to the first six months of 2008 and despite the global economic crisis, Zehnder Group grew by 6 percent in the second six months. This reflects the basic business pattern of the past few years, where the second half of the year has always tended to be stronger. Compared to 2007, overall organic and exchange-rate adjusted growth slowed down (10 percent in the first six months, 7 percent for the entire year). Year on year, there was 5 percent organic, exchange-rate adjusted growth for radiators and 17 percent for comfort ventilation in Europe. On account of the Olympics, sales in China were up substantially in the first half but, as expected, sales volume fell noticeably in the second half of the year. However, overall growth in the AsiaAmerica region reached some 9 percent. Through organic growth and the acquisitions made, comfort ventilation increased its share of total sales to some 23 percent (2007: 15 percent) and has now passed the EUR 100 million mark. In three of the Group's four largest markets (France, Germany and Switzerland) sales were up on the prior year; acquisition adjusted, they were slightly under the prior year's level in the U.K. Exchange rate developments, particularly the GBP and the USD against the EUR reduced sales growth by approximately 2 percent.

    Result impacted negatively by extraordinary expense

    Management confirms its estimate that operating EBIT before extraordinary expenses will be slightly higher than in 2007.

    As reported earlier, the divestment of the Group's Italian production company for aluminum radiators led to an extraordinary, largely non-cash charge of just under EUR 19 million, which negatively impacted the result for 2008 substantially. However, the strong operating results more than compensated for the net loss in the first six months of 2008. Given the extraordinary expense incurred, the positive result for the year is clearly lower than for 2007 (EUR 26 million).

    Cautious forecast for 2009

    It is extremely difficult to make a forecast for the current business year. Management assumes that the overall economic environment will continue to impact negatively on the Zehnder Group. Consequently, some sales decline is anticipated, though at the present time it is not possible to be more precise.

    René Grieder
    Moortalstrasse 1
    5722 Gränichen

    Chief Financial Officer

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