Zehnder Group: New record high in sales and profit

    Gränichen/Zurich, May 14, 2004 – Zehnder Group, with international operations in the radiator and comfort ventilation sectors, reached total sales of EUR 362.6 million in 2003 (EUR 332.4 million or CHF 487 million in 2002). The 9 percent increase in sales is attributable to business expansion as well as to consolidation effects. Consolidated net income rose by 22 percent to EUR 28.6 million. Shareholders will receive a dividend of CHF 44, up 33 percent on the prior year.

    Very satisfactory business development in a divergent environment

    As in previous years, the business environment in 2003 differed according to region. Although demand fell in the German-speaking markets and in the Benelux countries, our Mediterranean markets (France, Italy and Spain) developed extremely well. Stagnating commercial and industrial construction in the United States impacted negatively on our operations there, whereas business in China picked up noticeably after the SARS crisis.

    Once again, sales in the second half of the year were not only higher than in the first six months but also above expectations. Sales of most radiator product groups increased. However, given the poor situation in industrial and commercial construction, our overhead radiant panel strips suffered a steep decline in sales.

    The market environment for comfort ventilation and ventilation components was recessive, particularly in Holland, our main market. Although the prior year's sales level was surpassed because of good business development in Belgium and Switzerland, the growth targets were not met.

    High pressure on prices and strong competition continued in all our markets. Despite this adverse environment Zehnder Group can report very satisfactory organic growth. The first 12 month consolidation of the Dutch-Belgian J.E. StorkAir company also contributed to further growth.

    With the integration of J.E. StorkAir, the Benelux area has become Zehnder Group's fourth most important sales region after France, Germany and Italy. Switzerland currently ranks fifth.

    Zehnder Group's consolidated sales amounted to EUR 362.6 million in 2003 (2002: EUR 332.4 million). This corresponds to sales growth of 9 percent (in EUR). With unchanged exchange rates and without consolidation effects sales would have been up 4 percent.


    If the Group had continued to report in Swiss francs, sales growth would have been approximately 13 percent because the Swiss franc weakened against the euro.

    Record high in investments

    Investments in fixed assets reached a record high of EUR 31.5 million (2002: EUR 25.3 million). The main individual projects were J.E. StorkAir's new production and administration complex in Holland, an expansion of the production facility in Poland and the opening of a modern chroming plant there. We also expanded our Chinese production plant further. With a cash flow of EUR 43.2 million from operating activities, all investments were fully covered through self-generated funds.

    Apart from enlarging our production facilities, substantial funds were invested in new products, in enhancing product lines and in expanding our sales organization.

    At year end Zehnder Group had 2,543 employees. With more than 700 employees, our French subsidiaries account for the group's highest employment figure.

    High profitability improved again

    Despite unfavorable market conditions in some areas, earnings before interest and taxes (EBIT) rose by 15 percent to EUR 40.0 million (2002: EUR 34.9 million). Thus the EBIT margin amounted to 11 percent (2002: 10.5 percent), which is a top result for our sector of industry.

    After financial and tax expenses, net income1 was up 22 percent to EUR 28.6 million (2002: EUR 23.5 million). This is an above-average return on sales of 7.9 percent (2002: 6.7 percent).

    For Zehnder Group shareholders, earnings per share rose from EUR 76 to EUR 95 (+ 25 percent).

    1 including third-party interest

    Very healthy balance sheet

    The balance sheet total rose from EUR 325.5 million to EUR 332.7 million. Consolidated net equity1 was up 11 percent to EUR 158.7 million (2002: EUR 143.4 million), which corresponds to an equity ratio of 48 percent. There is no capitalized goodwill on the balance sheet. Any goodwill acquired was immediately netted with equity.

    The interest-bearing loans (including financial leasing liabilities) totaled EUR 51.2 million and liquid assets amounted to EUR 74.6 million. Thus, at year end, the group's net liquidity was a positive EUR 23.4 million (2002: EUR 17.0 million).

    1 including third-party interest

    René Grieder
    Moortalstrasse 1
    5722 Gränichen

    Chief Financial Officer

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