Tognum specifies growth forecastfor 2012

• Solid order intake of €1,524.1 million in the first half-year
• Revenues increase to €1,415.4 million
• Adjusted return on sales of 9.6%
• Revenue forecast within forecast corridor
• Adjusted return on sales of around 10% predicted

Friedrichshafen, August 7, 2012. The specialist for propulsion and power solutions Tognum has adjusted its forecast for the full year 2012 at the end of the first half-year. The company now anticipates growth in revenues in the lower single-digit percentage range and thus remains within the current forecast corridor. The adjusted return on sales is expected to be around ten per cent by the end of the year. Tognum had previously assumed it would achieve an adjusted return on sales of over ten per cent.

“The macro-economic prospects for the financial year deteriorated significantly in the course of the second quarter. We nevertheless expect to generate higher revenues in the second half of the year than in the first half,” says Joachim Coers, CEO of Tognum AG. “Since uncertainty still prevails on the raw materials and capital markets, we still expect to see fluctuations in demand in the course of the year.
  

Order intake and revenues

Tognum reported a solid order intake in the first half of the year at €1,524.1 million (H1 2011: €1,651.0 million). Revenues were up 5.7% to €1,415.4 million compared with the previous year (H1 2011: €1,338.9 million).

Adjusted EBIT and adjusted return on sales

The adjusted EBIT in the reporting period was €135.4 million (H1 2011: €158.2 million), with adjusted return on sales in the first half of the year at 9.6% (H1 2011: 11.8%). The decrease resulted primarily from the change in revenue mix, reduced capacity utilisation and a scheduled increase in R&D expenditure.

Adjusted gross profit margin and adjusted net profit

An adjusted gross profit of €415.4 million (H1 2011: €420.5 million) resulted in an adjusted gross profit margin in the reporting period of 29.3% (H1 2011: 31.4%). The adjusted net profit amounted to €89.2 million (H1 2011: €108.4 million), resulting in adjusted earnings per share in the first half of the year of €0.68 (H1 2011: €0.82).

Equity ratio, free cash flow and net financial debt

The overall equity ratio improved to 28.2% (December 31, 2011: 28.1%). Free cash flow¹ at the end of the first six months increased to €46.2 million (H1 2011: €25.4 million). Net financial debt increased to €82.6 million (December 31, 2011: €5.0 million) due in part to the dividend payment of €98.5 million.

Segment reporting²
Half-year revenues in the Engines segment amounted to €942.3 million and were thus 1.9% above the level of the previous year (H1 2011: €924.4 million). A strong increase in revenues was reported in the Oil & Gas application area, resulting from higher investing activities due to past increases in prices for raw materials. Revenues were up in the Defense business due to several projects coming to an end. After Sales business remained stable at a high level. The decline in business in government vessels in the Marine application was project related. Business in rail engines in the Industrial application area, as expected, was weaker, following a boom in 2011 relating to tougher emission regulations. The adjusted segment EBIT at the end of the first six months of the year amounted to €112.5 million (H1 2011: €133.2 million).

The Onsite Energy & Components segment generated revenues of €493.4 million in the first half of the year, up 14.6% on the previous year’s level (H1 2011: €430.5 million). In the OE Diesel Systems & Engines application area, business in diesel systems performed positively, while the supply business to OEM customers declined at the start of the year as a result of their high stock levels. The growing demand for gas systems led to an 80.1% increase in revenues in the first half of the year in the OE Gas Power Systems application area amounting to €34.4 million compared with the previous year (H1 2011: €19.1 million). Revenues in the After Sales/Other application area remained stable. The adjusted segment EBIT amounted to €41.0 million (H1 2011: €40.5 million).

The Distribution segment’s revenue volume of €245.1 million remained at last year’s level (H1 2011: €241.0 million ). The adjusted segment EBIT amounted to €11.7 million (H1 2011: €14.0 million).

The interim report valid for the first half of 2012 is available for download at www.tognum.com under “Investors”.

Key figures for the Tognum Group

In € million (except*)	H1 2011	H1 2012	Change	Q2 2011	Q2 2012	Change
Order intake	1,651.0	1,524.1	-7.7%	833.1	752.6	-9.7%
Revenues	1,338.9	1,415.4	5.7%	677.5	730.1	7.8%
Gross profit margin* (adj.)	31.4%	29.3%	-2.1pp	32.9%	29.1%	-3.8pp
EBIT (adj.)	158.2	135.4	-14.4%	86.3	67.7	-21.6%
Return on sales* (adj.)	11.8%	9.6%	-2.2pp	12.7%	9.3%	-3.4pp
Net profit (adj.)	108.4	89.2	-17.7%	57.5	44.8	-22.1%
Earnings per share * (adj.) in €3	0.82	0.68	-17.1%	0.44	0.34	-22.7%
Equity ratio*4	28.1%5	28.2%	0.1pp	28.1%5	28.2%	0.1pp
Free cash flow6	25.4	46.2	81.9%	-41.0	54.6	233.2%
Net financial debt	5.05	82.6	1,652.0%	5.05	82.6	1,652.0%
Employees*7	9,450	10,313	9.1%	9,450	10,313	9.1%

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¹ Free cash flow = cash flow from operating activities and cash flow from investing activities
² All segment data including intersegment relations, i.e., transactions between the segments
³ Earnings per share are determined by the number of shares amounting to 131,375,000
⁴ Shareholder’s equity as a proportion of total assets
⁵ Value on the reporting date December 31, 2011
⁶ Free cash flow = cash flow from operating activities and cash flow from investing activities
⁷ Value in each case on the reporting date June 30