Technology Division

1) Incl. sales to other corporate divisions

German mechanical engineering is still on a growth path. While the weak economies of the USA and Japan mean that these countries can, for the most part, no longer provide stimulus, international demand is emanating primarily from Asia and the Arab countries. This year the German Machinery and Plant Manufacturing Association (VDMA) estimates a real production increase of 5 %. Production in the second half of the year 2008 has been secured by the high order intake in the first months of the current year. In all likelihood, however, growth is set to slow notably in 2009 in the wake of the cooling global economy.

With around 85 % of sales revenue, the filling and packaging technology business of the KHS Group exerts a major influence on the Technology Division. Excepting the reticence in the North American market, induced by the country’s economic situation, the level of global order intake was satisfactory against the backdrop of fierce competitive pressure. The integration of SIG Beverages as the Beverages Group as per April 1 enables the division to exploit the opportunities that arise in the high-growth market of PET stretch-blow molding technology.

Due to the slackening economy, the high level of new orders received the first three months of the reporting period was not repeated. Including the Beverages Group, consolidated for the first time, the Technology Division disclosed segment sales of € 523.4 million in the first six months of 2008.

The division’s pre-tax result came to € 12.2 million on June 30, 2008. As part of the acquisition of the majority holding in the Klöckner Group and of SIG Beverages, purchase price allocation, as prescribed under IFRS, was carried out. This came to € 2.8 million for the first six months of 2008 and is, as well as the financing costs of the acquisition, included in the result.

Further information on the Klöckner-Werke and its performance can be obtained from the company website at the following address: www.kloecknerwerke.de