Walter Meier: new record result5

Group results Net sales of CHF 832.5 million correspond to a rise of 7.6 percent compared with the previous year. Net of exchange and consolidation effects, the increase amounts to 11 percent. EBIT of CHF 72.8 million achieved in the reporting period was influenced by two opposing exceptional effects. On the one hand, the sale of investments in asubsidiary led to extraordinary income of CHF 23 million. On the other hand, extraordinary rebranding and merger expenses of CHF 7.6 million depressed EBIT . Net of these exceptional effects, EBIT amounted to CHF 57.4 million, which equates to an increase of 19.8 percent. Net income amounted to CHF 60.1 million. Net of exceptional effects, net income reached CHF 43.1 million, which corresponds to an improvement of 18.1 percent. A profit payment per -A- registered share of CHF 15 (2006: CHF 10) is to be proposed to the annual shareholders’ meeting. It consists of a dividend payment of CHF 5 gross (CHF 5) and a nominal value repayment of CHF 10 (CHF 5).

Cash flow from operating activities of CHF 43.4 million (CHF 44.2 million) and a positive net cash flow from divestment activities of CHF 19.9 million resulted in free cash flow of CHF 63.3 million (CHF 29.9 million). The balance sheet was strengthened further. Cash of CHF 41.8 million (CHF 31 million) is offset by financial liabilities of CHF 25 million (CHF 40.4 million). The equity ratio rose from 40.4 percent in the previous year to 45.6 percent. The return on equity also improved to 35 percent (25.2 percent).

Climate

The Climate Division enjoyed a good year in 2007 with many changes taking place. Net sales rose by 5 percent to CHF 460.7 million. Net of exchange and consolidation effects, the increase amounted to 9.4 percent. The bright economic position in key markets had a positive impact on business. In Switzerland, Walter Meier gained market share in the area of heating while the indoor climate market recorded positive development. A consistently high level of performance was achieved in Swiss servicing activities. The markets of Germany, France and Great Britain experienced strong growth during the first half of the year before growth weakened in the second half as a result of the comparatively cool summer. International business, which is focused primarily on air humidification, stagnated in 2007 at the previous year’s level. From an organizational point of view, the financial year was marked by the merger of the heating, cooling and humidification businesses and the introduction of the Walter Meier brand. Net of these special effects, EBIT for the Climate Division rose slightly by 1.9 percent to CHF 47.1 million. This disproportionately low development was attributable mainly to the deconsolidation of the lucrative affiliated company Charles Hasler at the end of March 2007.

Processing

The Processing Division recorded dynamic growth in 2007. Net sales increased by 10.9 percent to CHF 371.8 million. Net of exchange and consolidation effects, the increase amounted to 13.2 percent. In Switzerland, Walter Meier benefited from the renewed strong growth of the metalworking industry. Net sales rose considerably and market share was gained. This has been made possible by an excellent product portfolio and a focus on machining solutions for precision and high-value workpieces. In the US A, the slump in the real-estate market, the mortgage crisis and the rising price of crude oil have all resulted in serious consumer uncertainty. This trend was noticeable for WMH Tool Group in both the construction and the DI Y customer segments. However, it was possible to continue pursuing this rate of growth in 2007 thanks to persistently robust demand from industrial customers. Once again, the international business of WMH Tool Group with woodworking and metalworking machines as well as hand tools was increased markedly, in particular in Eastern Europe. With EBIT of CHF 22.8 million, the Processing Division more than doubled the previous year’s result.

Group Management strengthened

Starting March 1, 2008, Rudolf Strebel will assume responsibility for Climate Solutions as a Member of extended Group Management. Rudolf Strebel has extensive knowledge of the European heating and climate market. Most recently, he held executive positions within the MTS Group. Up until 1995, he had already spent more than ten years working for Walter Meier, among other positions as head of the international air humidification business. Rudolf Strebel’s return represents a substantial strengthening of Walter Meier’s management team.

Outlook

Excluding any significant deterioration in the global economy, Walter Meier expects slightly better performance figures in 2008 (without taking account of exceptional effects). In addition, efforts to achieve external growth will be intensified through acquisitions.

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