Funkwerk expects dynamic growth in the second half of 2007

8/14/2007, 9:00 AM (Source: GlobeNewswire)
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- Q2 sales of some 70 mill. Euro up by 20 per cent on previous year
- EBIT increases to 1.5 mill. Euro (2006: 1.1 mill. Euro)
- Level of orders 155.1 mill. Euro at the end of June (2006: 96.2
mill. Euro)
- Growth dynamics expected to improve in latter half


Kölleda, 14 August 2007. The Funkwerk AG (ISIN: DE0005753149)
increased sales in the second quarter of fiscal 2007 by a good 20 per
cent on the previous year, from 57.8 mill. Euro to 69.7 mill. Euro.
The net earnings (EBIT) rose to 1.5 mill. Euro in the second quarter
(2006: 1.1 mill. Euro). "The synergy effects from the acquisition of
the former Vossloh Information Technologies, the potentials of new
products and the increase in incoming orders will lead to a gradual
increase in both sales and earnings in the latter half of the year.
Consequently, the Executive Board is confident that we will be able
to reach the targets set for 2007, even if a number of potential
risks could not yet be completely eliminated", explained Funkwerk
Chairman Dr. Hans Grundner on presentation of the interim report.

For the first six months of 2007, the revenues of the Thuringian
technology group totalled around 127 mill. Euro and were up by 14 per
cent on 2006 (111 mill. Euro). This increase is due predominantly to
the acquisition of Funkwerk Information Technologies (formerly
Vossloh Information Technologies). In the main, the Traffic & Control
Communication and Automotive Communication segments developed
according to plan. In Enterprise Communication, on the other hand,
various delays in product placements resulted in failure to achieve
the planned targets for the first six months. Dr. Grundner: "Due to
the different customer target group orientation of each segment,
however, this could be partly compensated. In fact, this is one of
the strengths of the Funkwerk business model."

At 1.7 mill. Euro, the net earnings (EBIT) in the first six months
were above the prior-year level (1.4 mill. Euro), regardless of the
fact that the integration and consolidation measures required for the
acquisitions burdened the result. The consolidated surplus rose on
the previous year to 1.2 mill. Euro (2006: 0.7 mill. Euro), so that
the earnings per share stood at 0.15 Euro (2006: 0.09 Euro).

Above-average earnings increase in latter half
Similar to last year, when Funkwerk posted record sales and earnings
as late as in the final quarter, fiscal year 2007 of Funkwerk is once
again defined by a strong asymmetry in terms of sales and earnings
distribution. "Since many orders, customer projects and product
placements will not come to fruition until the third and,
predominantly, the fourth quarter, while start-up expenses are booked
in the first six months, the Executive Board does not consider the
earnings figure as at the end of June representative for the whole
year. The earnings trend in the latter half of the year is expected
to rise significantly and progressively", said Dr. Grundner.

The most profitable sector of Funkwerk in the first six months proved
to be the business with communication, information and management
systems for transport companies, the industry and logistics (Traffic
& Control Communication segment). Dr. Grundner: "We increasingly
experience the positive effects of the restructuring measures
initiated last year here". Thus, the net earnings (EBIT) in the
second quarter continued to rise to 1.4 mill. Euro (2006: -1.7 mill.
Euro), despite the fact that the integration of FIT incurred
additional expenditure. From April to the end of June 2007, TCC
generated revenues of 34.6 mill. Euro (2006: 22.2 mill. Euro). 56 per
cent of this increase was due predominantly to FIT, which was
consolidated for the first time on 8 February 2007. Over the first
half of the year, sales in this segment thus rose to 58.2 mill. Euro
(2006: 42.6 mill. Euro).

Automotive Communication grows with new products - Enterprise
Communication below plan
Funkwerk business with communication equipment for vehicles
(Automotive Communication segment) reported a decline in net earnings
from 2.5 mill. Euro in 2006 to 0.6 mill. Euro. "In addition to
competition-related pricing pressures, this primarily reflects the
drops in sales in the after-sales business as well as increased
efforts in marketing and in the opening of new sales channels. The
launch of new products, however, is expected to result in significant
earnings effects in the latter half of the year", explained Dr.
Grundner.

Due to the new product sectors - telematics and transponders for
aircrafts - the Automotive Communication segment once again saw
business in the second quarter slightly increase on the previous
year. Sales in this quarter totalled 14.3 mill. Euro, up from 13.5
mill. Euro in 2006. Over the first six months, revenues thus rose by
10 per cent to 28.7 mill. Euro (2006: 26.1 mill. Euro).

In the second quarter, the Enterprise Communication segment, which
specialises in network solutions, communication and messaging systems
for companies and institutions remained below target. On the whole,
sales here totalled 20.8 mill. Euro and thus lagged behind the
prior-year benchmark (22.2 mill. Euro). In the first six months of
2007, the segment generated a mere 40 mill. Euro (2006: 42.4 mill.
Euro).

"This drop in sales is due exclusively to the network components
sector. Here, the strategic requirement of creating a uniform
technological platform caused delays in the rollout of new products",
explained Dr. Grundner. As a result, the operative earnings of this
segment in the first six months remained negative at -0.3 mill. Euro
(2006: 0.6 mill. Euro). "The launch of new products and the
concentration of our sales activities is expected to result in a
significant increase in sales and a turnaround of our earnings trend
in the further course of the year."

High level of orders on hand - further growth in sight for 2008/2009
The Executive Board of Funkwerk generally remains confident that the
synergy effects from the acquisitions realised in the first six
months, the potentials of new products, and the increase in incoming
orders (end of June 2007: 174 mill. Euro, 2006: 126 mill. Euro) will
have a positive knock-on effect on Funkwerk's group figures in the
latter half of the year. Based on the existing orders (orders on hand
as at the end of June: 155.2 mill. Euro, 2006: 96.2 mill. Euro) and
current business initiations, Funkwerk anticipates sales in the
latter half to grow to over 170 mill. Euro, the lion share of which
will be attributable to the last quarter.

Funkwerk AG has confirmed its annual projections of 300 mill. Euro in
sales and net earnings (EBIT) of about 15 mill. Euro for 2007.

"On the whole, 2007 is a year of transition and strategic
reorientation for Funkwerk. If the technological innovations,
rationalisations and investments already initiated affect the market
as planned, Funkwerk will once again be able to grow organically and
return to its usual earnings power in 2008 and 2009", said Dr.
Grundner in summary of the group's prospects.

The full interim report of Funkwerk AG is available for downloading
at www.funkwerk.com.

For further information contact


Funkwerk AG
Im Funkwerk 5
99625 Kölleda/Thuringia
Germany
Jörg Reichenbach
Investor Relations
Telephone: 0 36 35/458-346
Fax: 0 36 35/6 00 -507
reichenbach@funkwerk.com

rw konzept GmbH
Emil-Riedel-Straße 18
80538 Munich
Germany
Sebastian Brunner
Tel: 0 89/13 95 96 -33
Fax: 0 89/13 95 96 -34
Mobile: 01 75/5 60 46 73
brunner@rw-konzept.de



--- End of Message ---

Funkwerk AG
Im Funkwerk 5 Kölleda Germany

WKN: 575314; ISIN:
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