EPCOS to sell tantalum business

For EPCOS the sale of its tantalum activities - and thus a part of its business with standard components - is a further step in the reorganization and repositioning of its business. For several years the industry has experienced overcapacities and a high pressure on prices which makes business with commodity products increasingly difficult. EPCOS has made great strides with its measures to adapt the company to the changing market conditions and to strengthen its competitiveness: EPCOS already creates approximately 50% of its value added in low-cost countries. The company operates ten manufacturing sites in Asia, six of them in China. The Surface Acoustic Wave Components segment has completed the transfer of its entire multimedia business to Asia. The productivity of the new manufacturing facilities in Asia and Eastern Europe was increased especially in the past fiscal year 2005. The cost structure of the company has thus been continuously improved, and the targeted cost reductions of the COMPETE program (COst Management, Process Excellence, Time Efficiency) are showing results. Furthermore, EPCOS is concentrating more on customer- and application-specific products and solutions. In 2004 the ferrites activities were streamlined and repositioned. More than ever, its focus is now on specific market segments, in particular on applications in automotive and industrial electronics and in telecommunications. The decision to sell the Tantalum Capacitor Business Unit is also a part of this repositioning of the product portfolio. The various offers and discussions in the context of the sales talks resulted in a valuation of the tantalum business below the book value of the assets applied to the tantalum business. This results in an impairment write-down of between EUR 40 and 50 million. EPCOS expects that the proceeds from the sale will accrue in the new fiscal year 2006 and then improve the net cash flow by at least EUR 70 million.