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IWKA Executive Board begins actively streamlining portfolio

IWKA Aktiengesellschaft's Executive Board has started a comprehensive program of streamlining the portfolio of the IWKA companies

15 July, 2005

As announced by CFO Hans Lampert at the annual general meeting on June 3, 2005, the Board is currently monitoring "each individual component to ensure that it continues to meet the needs of the Group, or that it is an essential part required for us to achieve our strategic goals".

IWKA has a sustainable strategy, which is to conduct business in the core fields of Automotive Technology, Packaging Technology and Robot Technology. However, this does not mean that each business area must or will remain unchanged. The goal is to further reduce complexity and to sharpen the focus of the existing structure. It will be possible to achieve future growth in all core business areas through further internationalization, pay-on-production models, product-related services or acquisitions. As one of the first and most important steps of the portfolio streamlining the EXCELL-
O Group is being examined. The EX-CELL-O Group is experiencing substantial cost overruns in major project orders it is presently executing. Therefore these companies are currently subject to a strict renewal program and all further options are thoroughly being explored. Any action taken in this regard could result in a substantial one-time negative impact on earnings in the doubledigit millions of euros.

The Executive Board has also concluded that the business situation in 2005 has further deteriorated. Reduced capital spending and cost-cutting programs in the automotive industry are leading to further reductions in prices. As a result, operating profits generated by the Automotive Technology and Robot Technology Divisions during the 2005 financial year will be weaker than the previous year by more than was previously expected. Moreover, orders that the Robot Technology Division had expected to receive are being postponed. The IWKA Group's EBIT margin for the year 2005 could therefore be only about 2% of sales revenue. The above mentioned developments resulting from deteriorating general economic conditions, along with the introduction of the portfolio streamlining process, will make it difficult to achieve positive year-end results of the IWKA Group and IWKA Aktiengesellschaft in the 2005 fiscal year.

Based on project inquiries for the coming year and new model cycles in the automotive industry, expectations are that the situation will stabilize in 2006. In addition, IWKA is consistently implementing the FORproductivity efficiency improvement program to further improve cost structures and the competitiveness of its companies.