Conzzeta Group: Annual Results 2008

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Solid result in 2008, but gloomy outlook for 2009

Zurich, March 26, 2009 - The Conzzeta Group can look back on 2008 as
a year of contrasts. Thanks to the still robust economic situation in
the first eight months, consolidated net revenues for the year as a
whole reached CHF 1 472.5 (1 507.0) million (-2.3%), almost on a par
with the previous year's level. Currency had a big impact on revenues
and earnings. Operating profit (EBIT) amounted to CHF 97.8 (132.1)
million, a fall of 26% compared with the previous year. The operating
margin was 6.6%. The dramatic worldwide slump that started in autumn
2008 has had a powerful dampening effect on the Group's outlook for
2009, particularly in machinery and systems engineering. Several
business units had to introduce short-time working at the beginning
of 2009. Conzzeta still has a solid balance-sheet structure. The
Board of Directors' proposal to the Share-holders' Meeting of 23
April 2009 is for a reduced dividend of CHF 60 (70) per bearer share
and CHF 12 (14) per registered share.

The largely robust economic situation during the first eight months
of 2008 enabled the Conzzeta businesses to continue performing
successfully at the same level as the previous year. From the autumn
onwards, the worsening financial crisis had a dramatic effect on the
real economy throughout the world, resulting in a sudden slump in
incoming orders in the machinery and systems engineering sector.
Toward the end of the year, the Foam Materials and Graphic Coatings
business units also began to see a fall-off in orders. The Sporting
Goods and Real Estate businesses were unaffected by the economic
downturn. The effects of the downswing on the 2008 financial
statements were only limited, but revenues and earnings fell owing to
the strength of the Swiss franc.
Consolidated net revenues totaled CHF 1 472.5 million (-2.3%), almost
on a par with the previous year's figure (CHF 1 507.0 million).
Organic growth across the Group's businesses was 2.4%; but this was
eaten away by negative currency translation effects amounting to
-4.5%. In all market regions except Asia, Australia and Africa, sales
were held at the previous year's level or increased.
Operating profit (EBIT) amounted to CHF 97.8 (132.1) million, a fall
of around 26% compared with the previous year. The decrease was due
to negative currency effects and special costs of approximately CHF
10 million for the latex plant closure in the Foam Materials business
unit. Operating profit was also affected by revaluation of goodwill
positions of approx. CHF 6 million as well as costs arising from
expansion of the infrastructure and the international market
presence. Group profit in 2008 amounted to CHF 78.8 million, a result
that is not directly comparable with the previous year (CHF 161.4
million) because the 2007 result contained extraordinary profit of
CHF 54.8 million from the sale of properties with no operational
relevance. With an equity ratio of 75.1% and cash, cash equivalents
and fixed-interest securities of CHF 347.3 million, Conzzeta's
balance-sheet structure remains very solid.

Business units

Sheet Metal Processing Systems (Bystronic) generated net revenues of
CHF 745.1 (793.5) million in 2008. The decrease in turnover was
largely due to currency translation effects, with sales by volume
maintained at the previous year's level. Sales grew in European
markets, particularly Eastern Europe and Scandinavia. In South
America, Brazil led the way with strong growth figures. By contrast,
Asian markets saw declining sales, largely due to the slowdown in
economic growth and increasing pressure from locally based
manufacturers in China. Bystronic expanded its international sales
and service network in 2008, adding new branches in Russia, Mexico
and Canada. In Romania, the business unit opened a center for the
overhaul of used machinery. Bystronic responded rapidly and
decisively to the dramatic slump in orders in the final third of the
year by adjusting capacity through reductions in overtime, unused
vacation and temporary work. This was followed in February 2009 by
the worldwide introduction of short-time working and management
voluntarily sacrificing part of their salaries.

In 2008, Glass Processing Systems (Bystronic glass) increased its
revenues by 3.1% to CHF 244.6 (237.3) million. Several complex,
large-scale projects to build total systems were successfully
completed. Sales rose in Europe and the Middle East. In Russia and
Asia, sales fell short of expectations; while in the USA and Great
Britain, the real estate crisis put a heavy damper on demand. The
insulating glass and laminated safety glass product segments
developed very positively. Further progress in the optimization of
procurement, assembly and material flow processes resulted in
improved profitability. The opening of the production center in
Shanghai (China) and the strengthening of the sales and service
network in the Middle East and Russia continued according to plan
during 2008. Up to the end of the year, capacity at all three
Bystronic glass production facilities was fully utilized. At the
beginning of 2009, however, the business unit had to respond rapidly
to the slump in incoming orders in the last third of the year by
adjusting capacity.

Automation Systems (ixmation) reported sales of CHF 73.6 (76.7)
million in 2008. As elsewhere, currency translation effects had a
significant impact on revenues. The year was marked by strong sales
growth in Asia (sites in China and Malaysia), while ixmation in the
USA secured major orders for assembly systems used to manufacture
solar cells. The traditional core business of production automation
was affected early on by the downturn. Overall, the business unit
achieved a further stabilization and substantial improvement of the
earnings situation. The orientation toward major international
customers enabled ixmation to realize more multi-site projects for
assembly-line automation systems in 2008. The sales teams at all
locations were expanded and a second ixmation site in China was
opened in Tianjin. Up to the end of the year, the level of capacity
utilization remained high. However, as in other sectors, the order
intake slowed in the last third of the year. Consequently, the
Automation Systems business unit had to respond with capacity
adjustments in the new year.

Foam Materials (FoamPartner) faced another difficult year, closing
2008 with sales of CHF 146.3 (156.5) million. The decline in revenues
was due to the sale of the protective packaging business and the
shutdown of the plant manufacturing natural latex foam products, but
also to the marked decline in orders toward the year-end. The
business with mattress cores proved relatively robust, with sales
only slightly down on the previous year. Sales in the Industry
segment and the US market fell short of the targets. The new foam
plant was opened in Changzhou (China). Jointly operated with the Otto
Bock Group, Germany, the production of this facility is geared to the
Chinese market. The acquisition of Kureta GmbH & Co. KG,
Stadtallendorf (Germany), at the end of 2008, extended FoamPartner's
know-how in processing special foams. In addition to the impact of
high raw material prices, which only began to fall back toward the
end of the year, the business unit's result was affected by the
shutting down of natural latex foam production. The special costs for
the plant closure and additional value adjustments on assets reduced
the business unit's annual result by CHF 10 million. In view of the
decline in demand and the order intake, FoamPartner also had to
introduce short-time working in February 2009.

Sporting Goods (Mammut Sports Group) increased sales by 8.8% to CHF
192.6 (177.1) million. Without currency translation effects, growth
would have reached double figures. Overall, Mammut Sports Group can
look back on a pleasing year. The early onset of winter resulted in a
powerful end-spurt as 2008 drew to a close. Sales of Mammut brand
products grew by 16% year-on-year, thanks primarily to buoyant demand
for clothing and technical products. The revamped Raichle footwear
collection will be relaunched under the Mammut brand and made
available through specialist retailers from spring 2009. Mammut
Sports Group strengthened its distribution channels in 2008. The
takeover of a distributor in Great Britain opened the way for the
establishment of a Group-owned sales company. In collaboration with
specialist retailers, a second franchise store was created in
Germany, as well as a number of shops-in-shop. The first Mammut
flagship store in Japan opened its doors at a prime location in
Tokyo. From today's perspective, on the evidence of advance orders
for summer 2009, the Sporting Goods business unit can look forward to
2009 with confidence.

In 2008, Graphic Coatings (Schmid Rhyner), previously consolidated
under Other Industrial Activities, increased its sales by 7.8 % to
CHF 47.5 (44.1) million. Up to the end of October 2008, the high
level of demand for overprint varnishes and laminating adhesives
continued unbroken. Sales developed well in the main European
markets. More intensive market coverage and expansion of the offering
in the dispersions product segment contributed significantly to this
growth. Demand weakened toward the end of the year and the business
unit was unable to maintain the high level of sales growth achieved
the previous year. It can be expected that the downturn in the world
economy in 2009 will also affect Schmid Rhyner's business. However,
the slowdown will probably be less marked than in the capital goods
sector.

Changes in Group Executive Board
As of April 2009, Robert Suter, who was selected by the Board of
Directors in October last year, will take over as Group Chief
Executive Officer from Heinrich M. Lanz, who is stepping down. The
Board of Directors wishes to thank Mr. Lanz for his great commitment
and expert contribution over the last seven years. Under his
leadership, the Conzzeta Group has adapted to changes in the market
environment, expanded worldwide and strengthened its structures.
Heinz Dürrenberger, Head of the Foam Materials business unit, is
retiring at the end of 2009 after 18 years with the Conzzeta Group.
The search for a successor is already underway. As a result of the
reclassification of Schmid Rhyner as the Graphic Coatings business
unit, its head, Serge Entleitner will become a member of the Group
Executive Board with effect from April 2009.

Trends and outlook
It is impossible in the present circumstances to make reliable
predictions about business developments in 2009. Already clear is
that the machinery and systems engineering sector faces a massive
slump in demand and there is a marked fall in sales of foam products
for industrial applications. The effects of the economic crisis on
consumer confidence, and therefore in particular on the Sporting
Goods business, are still difficult to estimate. Another important
factor is the trend in exchange rates. All these factors together
point to a loss in the current business year. However, the Conzzeta
Group has a sound financial structure which will enable it to pursue
its long-term goals despite the recession. Maintaining
competitiveness and innovation potential remains a high priority,
even in these difficult times.

For further information, please contact:
Carlo Menotti, Head of Corporate Services
phone +41 44 468 24 84
media@conzzeta.ch

The Conzzeta Group is an internationally active industrial holding
company, with over 3,700 employees worldwide. Its core activities are
in the areas of machinery and systems engineering, foam materials,
sporting goods, graphic coatings and real estate. Conzzeta's shares
are listed on the SIX Swiss Exchange (SWX:CZH).

The News Release including consolidated income statement can be
downloaded from the following link:

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Conzzeta AG
Giesshübelstrasse 45 Zürich Switzerland

WKN: 265798;
ISIN: CH0002657986; Index: SPI, SSCI, SPIEX;
Listed: Main Market in SIX Swiss Exchange;
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