24.01.2005

Zehnder Group reports continuing growth

Gränichen, Switzerland, January 24, 2005. – Zehnder Group, with international operations in the indoor climate sector (radiators and comfort ventilation), reached total sales of EUR 372.5 million (1) in 2004 (EUR 362.6 million in 2003), an increase of 3 percent.

As expected, sales growth slowed in the second half of 2004 compared to the first six months of the year. Despite this, the group again reached the record sales level of the second half of 2003. For the entire 2004 business year, the group reports primarily organic sales growth of 3 percent.

This positive sales development is broadly based. Sales revenues were up in most of Zehnder Group's markets. Positive growth rates were achieved in Italy, Spain, the U.K. and Russia. Switzerland, Austria, Belgium, Holland and the U.S.A. also reported higher sales.

In France, the group's main market, the prior year's sales revenues were not reached. Particularly one group company was unfavorably affected by restructuring measures implemented by one of its main customers. Sales revenues in China were also below the prior year's level. Not only has competition with regard to price and volume been stepped up further, but the decline of the Chinese yuan against the euro also contributed to the drop in sales.

As in the previous years, the targeted markets in Germany shrank further. Fortunately, the decline of the market is slowing down. Nevertheless, market shares were defended despite the adverse business environment.

Steep increases in procurement costs for raw materials (sheet metal, steel tubes) and energy impacted negatively on the development of margins in the second half of the year because there is a delay before the operating result reflects the higher sales prices introduced in view of the pressure on costs.

Despite these aggravating circumstances in the second half of the year, group management expects a slight improvement on the prior year's record result (net income in 2003: EUR 28.6 million (2)).

(1) provisional

(2) incl. third-party interest

René Grieder
Moortalstrasse 1
5722 Gränichen
Switzerland

Chief Financial Officer

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