Optics manufacturer increases sales 18.3%

The German Jenoptik Group, reviewing one of its 'most successful years', has recorded double figure increases in 2006, with earnings after tax of its business divisions for the year having quadrupled.

In its continuing business divisions the Jenoptik Group has posted one of the most successful years in the company's history.

Sales and earnings recorded double figure increases in 2006, earnings after tax of the continuing business divisions for the year quadrupled.

The new Jenoptik Group posted very strong growth in 2006.

Sales increased by 18.3% to EUR 485.1 million (previous year EUR 410.1 million).

The result from operating activities was up by 52.5% to EUR 38.2 million (previous year EUR 25.1 million).

"In 2006 we fulfilled all the commitments we gave in April of the year and in some cases have exceeded our forecasts," said the chairman of the Jenoptik executive board Alexander von Witzleben in summarizing the fiscal year just past, simultaneously the last full fiscal year under his leadership.

Together with the member of the Jenoptik executive board Dr Michael Mertin, who will take over as chairman of the Group from July 2007 and Frank Einhellinger, head of Finance/Controlling and, from July, chief financial officer, von Witzleben presented the Group's detailed figures for 2006 in Jena.

The key factors in the increase in sales and earnings of the continuing business divisions were a very good economic development plus competitive advantages in individual markets.

More than 50% of the EUR 75 million overall rise in sales came from organic growth.

In addition, contributions to the rise in sales came from initial consolidations, including the French measurement technology specialist ETAMIC SA as well as smaller R+D project companies.

Jenoptik generated approximately 57% of its total sales abroad.

The Laser and Optics division was the engine that drove growth in 2006, posting an increase in sales of approx.

33% to EUR 199.2 million (previous year EUR 149.7 million.

A stronger boost to sales and earnings came from the areas of high-power diode lasers and high-performance optics.

The Sensors division also produced a 12.6% rise in sales over the previous year, to EUR 153.2 million 12.6% (previous year EUR 136.1 million) - this includes the contribution to sales from ETAMIC in the sum of EUR 7.6 million whose figures were included in the 4th quarter for the first time.

The Mechatronics division posted an 8.1% sales increase to EUR 127.0 million (previous year EUR 117.4 million).

Earnings before interest, taxes and depreciation and amortization (EBITDA), at EUR 69.9 million, were up by 21.1% (previous year EUR 57.7 million).

The result from operating activities increased by 52.5% to EUR 38.2 million(previous year EUR 25.1 million).

This corresponds to an EBIT margin, the ratio between EBIT and sales, of 7.9% (previous year 6.1%).

The main contributors to the growth in earnings were the Mechatronics division with a 29% rise to EUR 10.8 million (previous year EUR 8.4 million) as well as the Laser and Optics division with a 14.6% increase in earnings to EUR 15.3 million (previous year EUR 13.3 million).

The strong rise in earnings from Other (holding company and real estate) is primarily attributable to one-off impairments to real estate which had had a negative effect on the earnings of Other in the previous year.

Jenoptik succeeded in quadrupling the earnings after tax from EUR 4.0 million in the previous year, to EUR 16.1 million.

2006 order intake markedly higher than originally anticipated.

Number of employees increased - particularly abroad.

At EUR 482.9 million euros Jenoptik recorded a 7.4% rise in the order intake compared with the previous year (previous year EUR 449.5 million).

In the previous year two major orders, together totaling more than EUR 60 million, were the key influencing factor on the order intake, such orders are not repeated on a year by year basis.

The Laser and Optics division alone was able to compensate for these EUR 60 million through its strong order intake.

The order backlog, at EUR 438.4 million, was at the same level as in the previous year (previous year EUR 438.7 million).

Approximately half of this order backlog will result in sales in the current fiscal year.

The number of personnel employed in the Jenoptik Group clearly increased by about 350 to almost 3,200 (Dec 31, 2005: 2,835 employees).

The main factors here were new appointments, particularly at the Jena site and an increase in the number of employees as the result of acquisitions and initial consolidations for example of Etamic and the US company MEMS Optical.

The two increased the proportion of employees abroad from 5.7% to 13.3%.

* Further improvement in the key financial and balance sheet figures - as previously announced, Jenoptik succeeded in achieving a further marked reduction in net debt in the fiscal year just past.

It showed a strong improvement of 45.9% from EUR 375.5 million to EUR 203.0 million.

The cash and cash equivalents resulting from the payment of the purchase price for the shares in M+W Zander in May 2006 had a positive effect.

The long-term financial liabilities were simultaneously reduced as the result of the exit from the finance lease for a large property in the center of Jena which was sold.

As a result of the reduction in the balance sheet total from EUR 1,508.3 million to EUR 873.7 million following the sale of the M+W Zander shares, there was a marked increase in the shareholders' equity ratio of the Jenoptik Group - from 20.8% as of the end of 2005 to the new figure of 34.3%.

The dividend policy, for the time being, is intended to reflect the further reorientation of the Group towards a focused technology company.

Therefore, no dividend will be paid for 2006.

With a sustainably shaped profile of being a technology company future profits are to be reinvested primarily in the expansion of the technology and product portfolio and therefore in the further growth of the Group.

* Key projects for the group's further development brought to a successful conclusion in 2006 - in addition to the good business figures, 2006 was also one of the most eventful fiscal years in the 16-year history of the Jenoptik Group.

"With the sale of M+W Zander, the reduction in the share in DEWB AG to 11.13%, as well as the successful outcome of two legal disputes in our favor, we have to date been able to bring virtually all the main topics to conclusion," said von Witzleben.

For example, in May 2006 the DEWB legal dispute was ended in favor of Jenoptik as a result of the BGH (German Federal Supreme Court) ruling.

The arbitration proceedings between Jenoptik MedProjekt and the Free State of Thuringia produced a positive outcome for Jenoptik.

However, the patent litigation with the US company Asyst which has already been litigious for more than 10 years is still unresolved and may possibly continue for some years to come.

* Outlook - emphasis remains on the group's orientation towards its customers and markets for profitable growth.

Over the coming years Jenoptik aims to increase sales further by an average of 10 percent per annum, to include smaller acquisitions.

"The year 2007 has got off to a good start in terms of sales, earnings and order intake.

We expect the 2007 order intake to once again exceed the high level recorded in 2006," stated Dr Mertin, on the current fiscal year.

The emphasis of the Jenoptik Group's short and medium-term objectives will be on profitable growth and an increase in the operating cash flow.

Sales for 2007 are expected to come in at between EUR 510 and 535 million and so distinctly above the EUR 500 million mark.

Jenoptik will be striving for an overall Group EBIT margin of between 7.5 and 8%.

Over the medium term Jenoptik is aiming to increase the EBIT margin to between 9 and 10%.

In this context the growth in earnings is expected to primarily come from the merger of Hommel-Etamic which will essentially be completed in 2007, as well as from the small R+D project companies who are not yet contributing towards or might even reduce the result in the current fiscal year.

The interest expenses for the bond will have a negative effect on the net interest result and consequently also on earnings after tax, for the very last time in 2007.

The plan is to utilize the funds arising from the sale of M+W Zander to repay the bond early in autumn 2007.

During the course of this an early redemption penalty which will have to be paid by Jenoptik will affect earnings after tax.

Research and development remains the basis for our success both in the market and with customers.

In this context, the focal areas of our own development services, from which Jenoptik expects significant contributions to sales and earnings in the future, will be, in addition to others, the EUV beam source for future chip technologies, the so-called laser-annealing for the flat screen industry, as well as laser material processing.

The consistent further development of processes and the organization are also expected to provide an impetus for profitable growth.

The Jenoptik business portfolio will be kept under permanent review and non-strategic activities and assets continue to be reduced in future, stated Dr Mertin at the balance sheet press conference: "In 2007 we will continue to consistently orientate Jenoptik towards its customers and markets".

"Growth potential will also be derived in particular from new business models, for example traffic safety technology, acquisitions that provide a meaningful addition to our portfolio, as well as the continuing process of internationalization.

Over the long term Jenoptik will once again become a billion euro group.

This remains our goal.".

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