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Draegerwerk Reports 2008 Results

Draegerwerk Aktiengesellschaft (Draegerwerk), a Gemany based medical devices company, has reported net sales of EUR1.9 billion for the full year of 2008, compared with the net sales of EUR735.8 million in the previous year-end. It reported net profit of EUR46.6 million, or EUR2.59 earnings per limited preferred share, for the full year of 2008, compared with the net profit of EUR60.8 million, or EUR3.66 earnings per limited preferred share, in the previous year-end.

Drager achieves revised forecast

EBIT (before non-recurring expenses) as expected at EUR 130.5 million

Non-recurring expenses of EUR24.7 million, as planned

Increase in equity to 31.3%

Dividend of EUR0.35 per preferred share proposed

On the basis of the provisional, unaudited financial statements, Drägerwerk AG & Co. KGaA has achieved the forecast revised as of December 12, 2008. Net sales rose by 5.8% to EUR1,924.5 million (2007: EUR1,819.5 million), EBIT (before non-recurring expenses) amounted to EUR130.5 million (down 14%). In its ad hoc report dated December 12, 2008, Dräger adjusted earnings expectations and forecast an approximately 15% lower Group result (EBIT before non-recurring expenses) than in the prior year (forecast figure: EUR152 million). As expected, the pressure on customers to cut costs, the strength of the US dollar and bad debt allowances on receivables in foreign countries made a dent in earnings. These effects had a particularly heavy impact as the medical division typically generates more than 50% of total net earnings for the year in the fourth quarter. In 2008, non-recurring expenses of EUR24.8 million were in line with the original expectations which ranged between EUR20 million and EUR25 million.

Division results

The medical division posted an increase in net sales of 2.8% to EUR1,243.8 million. At EUR88.4 million, however, EBIT was 15.1% lower than in the prior year due to the effects forecast in the ad hoc report. In contrast, the safety division exceeded its net sales target with growth of 11% and met target earnings with a steady EBIT (before non-recurring expenses) of EUR69.1 million (down 0.4%). At 9.8%, the Dräger Group’s EBIT margin was on a par with the original forecast figure.

Equity base strengthened further

The company’s financial position and results of operations are stable: the cash inflow from operating activities amounted to EUR97.5 million in 2008 and the Drager group’s equity rose by EUR12.2 million to EUR517.6 million in the fiscal year. The equity ratio increased to 31.3% (2007: 30.9%).

Dividend proposal: EUR0.35 per preferred share

In light of the EBIT performance, the Executive Board proposes to the Supervisory Board a lower dividend than in the prior year of EUR0.29 per common share and EUR0.35 per preferred share.

Outlook

Due to the current economic environment and the related uncertainties which may have an impact on the markets for medical and safety technology, a specific forecast of the Drager Group’s net sales and EBIT development for the current fiscal year is not possible. At present, the company anticipates a decrease in net sales of approximately 5%. On the basis of a resolute savings program, however, the Dräger Group still anticipates a positive EBIT, even in scenarios where net sales fall by up to 15%.

Drager will continuously report on the company’s current development and announce a detailed forecast for fiscal year 2009 at a later date if necessary.

The Drager Group’s medium-term goal is to achieve a net sales increase which is at least in line with the market, an EBIT margin of 10% and an ROCE of 20%.