On April 15, 2005, the Executive Board of IWKA Aktiengesellschaft issued an adhoc announcement, cautioning about a deterioration of the order situation and increasing margin erosion for the Automotive Technology and Robot Technology Divisions as a result of a drop in capital spending by the automotive industry. At that time, the Executive Board also stated that in 2005 operating profit generated by these two divisions would come in below that achieved during the prior year. The above conditions have further deteriorated since the announcement was published. As a result, operating profit generated by the Automotive Technology and Robot Technology Divisions during the 2005 financial year will be weaker still than the prior year. The EX-CELL-O Group is experiencing substantial cost overruns in the course of executing current major project orders. Orders that the Robot Technology Division had expected to receive are increasingly being postponed. The IWKA Group's EBIT margin for the year 2005 could therefore be about 2% of sales revenue.
As announced at the company's annual general meeting on June 3, 2005, the Executive Board is in the process of comprehensively streamlining the company's portfolio and is carefully examining every Group company that risks not achieving its profit targets. The objective is to systematically focus the IWKA Group on its core businesses, which are companies that have a promising future and the potential to generate profit.
In this context particularly the EX-CELL-O Group is being examined. 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 one-time negative impact on profits in the double-digit millions of euros. Notwithstanding the above mentioned operating profit, the above developments will make it difficult for the IWKA Group and IWKA Aktiengesellschaft to achieve positive year-end results in the 2005 financial year.
The Executive Board has informed the Supervisory Board on the above during the extraordinary Supervisory Board meeting on July 15, 2005, which had been scheduled on June 3, 2005 after the company's annual general meeting.
Karlsruhe, 15 July 2005
The Executive Board