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Electronics Production | August 04, 2005

EPCOS sees improved earnings<br> despite weak demand

German based passive component maker, Epcos AG, has released their interim report for the 3rd quarter. Sales of EUR 310 million up 4% sequentially, down 11% year on year. Automotive electronics strongest sales segment for first time.

Similar to the first half of the current fiscal 2005, the third quarter (April 1 to June 30, 2005) was characterized by weak demand and ordering by customers on short notice. That a moderate increase in new orders and sales could be achieved despite these circumstances is due above all to the growing contribution of new products, in particular piezo actuators for automotive diesel injection systems. EPCOS' business has continued to stabilize with slight growth in both new orders and sales being posted in Q3 2005. New orders thus rose 4% from EUR 292 million to EUR 304 million. The largest growth rates were achieved in automotive and consumer electronics. Customers in industrial electronics and distributors have also increased their orders slightly. This more than compensates for the decline in telecommunications. In regional terms, the order intake recovered most vigorously in Germany and Asia. Sales rose 4% from EUR 297 million to EUR 310 million. With the exception of telecommunications, this growth was driven by all industries - in particular by automotive electronics with its double-digit increase. In regional terms, Europe (excluding Germany) was able to reach the level of the previous quarter. In all other regions, EPCOS was able to increase its sales. Comparison with Q3 2004 Overall, business in the third quarter of fiscal 2005 was noticeably weaker than in the previous year. New orders of EUR 304 million in the third quarter of fiscal 2005 fell 8% year on year from EUR 331 million. This decline affected all industries with the exception of automotive electronics, for which double-digit growth rates were achieved. In regional terms, new orders in Germany reached the level of the previous year. In all other regions, in particular NAFTA and the other European countries, new orders decreased. Sales fell 11% over the same period from EUR 348 million to EUR 310 million. In particular business with the telecommunications and consumer electronics industries and with distributors was noticeably weaker than in the previous year. The decline in sales of components for industrial electronics was far less pronounced. By contrast, the increase in sales of products for automotive electronics reached double digits. Thus, for the first time automotive electronics, with a share of 24% in Q3 2005, has advanced to the strongest industry served by EPCOS. Earnings The quarter under review closed with nearly balanced earnings before interest and tax (EBIT) of minus EUR 1 million. Thus, earnings improved significantly against the previous quarter (minus EUR 27 million), which was burdened by special expenses. Major reasons for this positive development were the increased sales volume and improvements in production processes. Earnings after tax for Q3 2005 were minus EUR 8 million (Q2 2005: minus EUR 49 million; Q3 2004: plus EUR 14 million) Besides interest expenses, the negative earnings also included tax expenses of EUR 4 million, which result from the regional distribution of earnings. Earnings per share for Q3 2005 were minus 12 eurocents against minus 74 eurocents for Q2 2005 and plus 21 eurocents a year ago. Read the full report at www.epcos.com About EPCOS EPCOS AG, a manufacturer of passive electronic components headquartered in Munich, is market leader in Europe and number two worldwide. EPCOS offers a comprehensive portfolio of about 40,000 different products. The EPCOS Group has design, manufacturing and marketing facilities in Europe, the Americas and Asia. Passive electronic components are found in every electrical and electronic product - from automotive and industrial electronics through information and communications to consumer electronics. Components from EPCOS store electrical energy, select frequencies, and protect against overvoltage and overcurrent. In fiscal 2004 (October 1, 2003, to September 30, 2004), EPCOS posted sales of EUR 1.36 billion. At September 30, 2004, the company employed about 15,600 people worldwide.
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