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12. March 2008

SCHMOLZ + BICKENBACH AG achieved record net income in 2007

The adopted strategy of alignment to the production, processing and distribution of high-grade steel products is successful. In 2007, despite the drastic price fluctuations in some raw material prices, SCHMOLZ+BICKENBACH AG achieved record net income.

Increased sales volumes, higher revenues due to alloy prices, and an expanded scope of the consolidation produced strong growth in net sales income compared to last year: it rose to EUR 4,246.9 million after EUR 2,831.5 million in 2006. Operating profit before depreciation and amortisation (EBITDA) increased to EUR 416.0 million (2006: EUR 291.6 million), and EBIT to EUR 327.7 million (2006: EUR 227.0 million). Net income was EUR 184.3 million (2006: EUR 144.6 million).
The Board of Directors will propose to the Ordinary General Meeting a dividend of CHF 1.25 per share (2006: CHF 1.25 per share).

Again in 2007, important acquisition projects were completed that add further strength to our market position for high-grade steels in the international markets. Through the integration of A. Finkl & Sons Group, Chicago, with steelworks and processing plants in the USA and Canada, we have become the world market leader for tool steels. The acquisition of the Swedish company Boxholm Stål AB reinforces our position for bright steels in Scandinavia and the Baltic States. There were also various acquisitions and new establishments of distribution companies in European countries.

A negative impact on the income statement came from the unexpected, and historically unprecedented, wide fluctuations in the purchase price for the alloying element nickel. The all-time record peak price that was attained in the second quarter of 2007 was followed in the second half year by a sharp fall. This caused our customers to postpone take up of ordered volumes, as well as a temporary decline in orders; there was a consequent unforeseeable need for value-adjustment of our inventories, which exerted a substantial negative influence on profit. The valuations that were made on the date of the balance sheet limit future risks to a minimum.

Positive development of key figures
Group revenue rose to EUR 4,246.9 million (2006: EUR 2,831.5 million). EBITDA increased to EUR 416.0 million from EUR 291.6 in 2006. The corresponding EBITDA margin was 9.8% (2006: 10.3%). Operating profit (EBIT) was EUR 327.7 million (2006: EUR 227.0 million), resulting in an EBIT margin of 7.7 % (2006: 8.0%). Group net income (EAT) rose to EUR 184.3 million (2006: EUR 144.6 million).

Solid financial position
Cash flow before acquisitions of Group companies was EUR 41.6 million (2006: EUR –110.9 million). Total assets increased by EUR 377.2 million to EUR 2,465.6 million (2006: EUR 2,088.4 million). The expanded scope of the consolidation caused by acquisition of the A. Finkl & Sons Group and Boxholm Stål AB, together with the high material prices, caused net borrowing to increase to EUR 706.7 million (2006: EUR 568.7 million). The equity ratio was 29.0% (2006: 27.2%). The return on equity (ROE) was 25.8% (2006: 25.4%).
The already existing syndicated credit was extended by the bank consortium until December 31, 2012, with unchanged conditions. The long-term financing of the Group is thus solidly secured.

Proposal for dividend payment

The Board of Directors will propose to the Ordinary General Meeting payment of a dividend of CHF 1.25 per share (2006: CHF 1.25). This will allow the company to again use its earnings for investments to secure its long-term profitability.

Reorganisation of distribution activities
In 2007, the international distribution organisation was reorganised into the three areas Distribution Germany, Distribution Europe, and Distribution International, each with its own holding company. In various European markets, and all overseas markets, the former activities of Deutsche Edelstahlwerke GmbH and Ugitech S.A. have been integrated into the already existing, or renamed, SCHMOLZ+BICKENBACH subsidiaries. In these countries we therefore now present ourselves with a single brand name for all product areas.

Ongoing high investment to secure market position
In our three divisions of production, processing, and distribution, the investment volume of EUR 226.2 million (2006: EUR 132.5 million) was again significant. By means of the investments, the efficiency of our works and distribution channels has been increased, and our offering of high-grade steel categories expanded and adapted to the constantly increasing requirements of the market. This high intensity of investment will continue in the current and following years for reconstruction of the A. Finkl & Sons Co. works in Chicago, and other projects.

Creation of additional jobs
The number of employees in the Group rose by 1,432 relative to the previous year. The increase included 523 new jobs created in the companies that already belonged to the Group at the end of 2006.

Our assessment of the outlook for the steel industry remains positive. Certain uncertainties exist regarding the development and volatility of prices for raw materials, alloying substances, and energies. Based on reports from our customers and the current order backlogs, we expect the capacity utilisation of our works to be good. Our strategic structure, with the three divisions of production, processing, and distribution, gives us a globally strong position in the markets for engineering steel, stainless steels, and tool steels. The completed and ongoing investment projects create opportunities for accessing new markets and for the development of further niche products. No major acquisitions are planned in 2008. Based on our current assessment of the market, we expect revenue and earnings in 2008 to be similar to 2007.

Successful action against false factual allegations on the Internet
Further to our communication to the media of August 16, 2007, relating to Internet pages where for a long time attempts have been made with false allegations, malicious misinterpretations of the annual financial statement, and unfounded speculations to discredit SCHMOLZ+BICKEN-BACH, we can report successful court judgments in our favour. Since the date of the last communication, six temporary injunctions against the operator of the Internet website have been obtained. In four cases, monetary fines have been imposed, because the temporary injunctions were violated. At the request of the defendant, in four cases to date, court proceedings have been held. In two cases, the court has already judged entirely in favour of SCHMOLZ+BICKENBACH. Two further judgements will be declared at 3 pm on March 12. SCHMOLZ+BICKENBACH reserves the right to take legal action against any false allegations that may be made also in the future.

Contact persons for further information are:

Benedikt Niemeyer, CEO, phone +41 41 209 50 40

Dr. Marcel Imhof, COO, phone +41 41 209 51 82

Investor Relations
Axel Euchner, CFO, phone +41 41 209 50 35


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