Order intake for tools increased by 70 % in the first half of 2010 - Machines by 105 % - Sales improvement of 30,6 % to EUR 85 millions - EBITDA fourfold - EBITDA margin 17,0 % - Net profit EUR 6,0 millions - Successful financial year 2010 anticipated – In-crease in dividend announced

Order intake of Winterthur Technology Group (WTG) for consumer goods (tools) recorded an average increase of 70 % in the first half of 2010. The grinding machine tools business achieved a growth rate of 105 %. WTG realised sales of EUR 85 million in the first half of FY 2010, corre-sponding to an improvement of 30.6 %. EBITDA margin came in at 17.0 %, close to the numbers achieved in the boom years of 2007 and 2008. Net profit in H1 FY 2010 amounted to 7.0 % of sales or EUR 6.0 million. Equity amounted to 52,5 %. A favourable order backlog situation prompts WTG to anticipate a very successful course of business for the full financial year 2010. A substantial increase in the dividend is announced.

For the Winterthur Technology Group (WTG) the first two quarters of financial year 2010 were particularly marked by the gradual recovery of the global economy in the aftermath of the severe recession of 2009. In the company’s view, the realisation that order intake has been persistently robust at the outset of the third quarter as well is particularly meaningful. While orders emanating from the steel industry dominated at the beginning of the first half-year 2010, the trend in the automotive industry and ultimately in the cutting tool industry too slowly started to pick up. The impressive success of the first half-year is not attributed to the rebuilding of inventories. Instead, the robust trend apparently came on the heels of the actual demand on the part of the industry, gains in market share by WTG worldwide and the tremendous reception of innovations in the realm of high-precision products have received.

These statements are based on consumer goods (tools) business. In the area of grinding machine tools – where WTG is the world’s market leader in insert manufacturing – order intake in the first half-year was held in check by delayed investments in the industry. Especially pleasing to note that the month of July has been the strongest month of 2010 to date for the machine business.

Costs-savings in the administrative and sales segments are sustainable and should now pave the way for the margins to quickly close in on the numbers achieved in the boom years of 2007 and 2008. Sales costs were increasing by only 0,7 % versus the level of the first half of 2009. As of 30 June 2010 the size of the workforce employed was down slightly versus the same relevant cut-off date of the previous year; in absolute terms 1304 employees at 30/06/2010, excluding the joint venture in India.

Order intake for consumer goods recorded increases of between 62 % and 79 % in the first half of 2010. The grinding machine tools business realised a growth rate of 105 %, which nonetheless will not show positive effects on the sales side until 2011. The ratio of order intake to sales increased to 116 % as of 30/06/2010, compared with a ratio of just 87 % as of 30/06/2009. Order backlog rose by more than 18 %. Backlog for consumer goods was up more than 53 % on a year-on-year basis as of 30/06/2010, order backlog for machine tools was down 25 % as of the same cut-off date versus 30 June 2009.

WTG realised sales of EUR 85 million in the first half of FY 2010, compared with sales of EUR 65 million in the first half of FY 2009, corresponding to an improvement of 30.6 %. The consumer goods business posted a surge in sales of between 35 % and 43 % versus a decline in sales of machine tools of 22 %. Machines accounted for 9 % of total sales. The gross margin amounted to 40.9 % of sales in the first half of 2010, compared with 34.4 % in the comparable previous year’s period.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to EUR 14.4 million in the first half of 2010, thereby outperforming the previous year’s figure of EUR 3.6 million fourfold. The EBITDA margin came in at 17.0 % in the first half of 2010, compared with 5.6 % in the comparable previous year’s period. Earnings before interest and taxes (EBIT or operating income) totalled EUR 9.1 million, versus a negative figure of EUR 1.8 million the previous year. The EBIT margin amounted to 10.7 % in H1 FY 2010, compared with –2.8 % in H1 FY 2009. Noteworthy is that the precautionary amortisation charges on intangible assets – particularly resulting from the acquisition of Wendt Group – of unchanged EUR 2.3 million for the first half of 2010 are considered. This is a cash-neutral item. Net profit in H1 FY 2010 amounted to 7.0 % of sales or EUR 6.0 million, in contrast to the net loss of EUR 2.9 million or 4.6 % of sales posted in H1 FY 2009. A substantial increase in the dividend is announced.

Equity amounted to 52,5 % as of 30 June 2010. This compares with 47,2 % the year before.

Net debt was reduced from EUR 58.7 million as of 30/06/2009 to EUR 41.4 million as of 30/06/2010 through amortisation of debts that, in many cases, was carried out ahead of time.

The persistently robust order intake in the third quarter of 2010 as well as the favourable order backlog situation prompts WTG to anticipate a very successful course of business for the full financial year 2010. Strong cash flow should pave the way for continuing the process of reducing debt levels and further strengthening the Group’s equity ratio. Market share shall be gained thanks to product innovation. The patent registrations in 2010 paint a clear picture of the high-quality R&D activities of WTG.

The full report of H1 FY 2010 can be downloaded from www.winterthurtechnology.com.


Winterthur Technology Group Profile

Winterthur Technology Group (WTG), with registered office in Zug, is a leading international supplier of complex grinding technology with production facilities in Switzerland, Germany, Austria, Sweden, Belgium, the USA, Russia, China and South Korea. The Group holds a 40 % equity interest in the stock exchange-listed company Wendt (India) Ltd. WTG is a holding company incorporated under Swiss law and listed on the SIX Swiss Exchange. It employed a staff of over 1,300 and realised sales of more than EUR 137 million in 2009 (2008: over 1,500 employees and more than EUR 219 million sales). In close cooperation with its customers, the company develops and manufactures complex, high-margin consumer goods in the grinding technology segment with a high-technology content, in particular bonded grinding tools used in the cutting tool, automotive, turbine, machine tool and steel industries. The Group’s main brands are Winterthur, Wendt, Rappold and SlipNaxos. WTG products – ceramic grinding wheels, synthetic resin bonded grinding wheels, cut-off wheels, diamond and CBN grinding and dressing tools, together with grinding machine tools – are distributed in all the relevant markets of Europe, North and South America as well as Asia.