Schott Reports Substantial Increase in Sales and Earnings

- Sales: 2.233 billion euros (+ 19 %) - EBIT: 193 mill. euros (+ 34 %) - Investment spending of 313 mill. euros reaches record level SCHOTT AG, based in Mainz, Germany, continues on its growth path.

The international technology group expects a significant increase in sales and yet another rise in earnings for its fiscal year 2005/2006 (ended on 9/30). “We succeeded in meeting all of our ambitious goals. In fact, in some areas, we even exceeded them,” explained Prof. Udo Ungeheuer, Chairman of the Board of Management, upon presentation of the preliminary figures. The SCHOTT Group will be holding its annual results press conference on March 8, 2007.

SCHOTT recorded total sales of 2.233 billion euros for the fiscal year. This represents an increase of 19 %. All business segments contributed towards this growth. The development of sales was structurally affected by the complete consolidation of solar activities for the first time ever, following the acquisition of 50 % of the shares in RWE SCHOTT Solar GmbH on October 1, 2005. Sales from laboratory glass activities, an area sold effective March 1, 2005, made no contribution whatsoever towards the results for fiscal 2005/2006. Even without these extraordinary items, SCHOTT still succeeded in growing organically thanks to a 14 % increase in sales.

EBIT improved at an even higher rate than sales. Results of ordinary activities increased by 34 % to 193 million euros. For the most part, this can be traced back to the positive performances of core businesses, such as household technology, specialized tubing glass and pharmaceutical packaging, but also the future venture solar. “SCHOTT Global Competitiveness”, a structural improvement program aimed, in part, at optimizing productivity and global procurement, also had a positive impact.

To strengthen its position as one of the world’s leading technology groups in the area of specialized glasses and related high tech materials, SCHOTT invested the record sum of 313 mill. euros for the fiscal year, 28 % more than in the year before. Approximately 140 million euros went towards projects in Germany. Display glass, solar and glass ceramic were other key areas for investments.

During its last business year, SCHOTT also continued to pursue the modernization process it first started two years ago. “A number of strategic measures were initiated to help us build a stronger foundation for improving our competitive position and, thus, achieve continued growth,” explained Professor Ungeheuer. This includes pursuing even stronger market orientation. Today, SCHOTT is active with its own manufacturing and sales organizations in 38 countries. Only recently, new sales offices were opened in the Czech Republic, Malaysia and Dubai, for the Middle East region. Company management also views maintaining strong presence in Asia to be a key priority. “An increasingly high number of our customers operate manufacturing sites in this region and, as a Business to Business company, they also expect us to manufacture there,” the Chairman of the Management Board emphasized. During the fiscal year that recently ended, expansion of manufacturing capacities for optical glass in Malaysia and pharmaceutical tubing in India, but also entry into a joint venture together with a Chinese company in the area of optical glasses, ranked among the most important activities. SCHOTT succeeded in increasing the share that Asia makes up in its total sales to 19 %. As a result, the company says it is on track to achieve its goal of 30 % by the year 2010.

SCHOTT also made progress with respect to expanding its future ventures. The company is known to be the only European vendor capable of using the float technique to produce up to 0.7 mm thin glass substrates for use in TFT-LCD applications. These high-quality thin glasses are designed for use in flat screen televisions and monitors for computers, as well as laptops. In fiscal 2005/2006, SCHOTT invested 150 million euros in a second melting tank and a production line in Jena and a post-processing plant for these substrates in South Korea in order to assume a leading position in this dynamic high growth market.

SCHOTT is currently the only company in the world that offers products that support all types of solar technologies, including Photovoltaics, solar thermal for heating up water, auxiliary heating and cooling, as well as centralized generation of electrical power. To supplement its existing photovoltaic manufacturing capacities, 60 million euros is now being put towards building a 30 MW manufacturing facility for ASI® thin-film modules in Jena. This technology requires substantially less of the rather expensive raw material silicon. Now that two solar thermal facilities have already been built in Nevada and Andalusia, the prospects for generating energy along the earth’s Sunbelt region have achieved a breakthrough. Here, SCHOTT provides the receivers, a core component of this technology. Only recently, serial manufacturing of these products began in Mitterteich, Bavaria. A second receiver plant is planned for construction in Spain. The investment volume for both manufacturing initiatives amounts to 37 million euros.

Based on the company’s forecasts and the development of business during the first two months of its new fiscal year, SCHOTT expects business to continue to develop positively for the entire year. Here, the company will be focusing on continuing to improve its profit structure. In total, approximately 290 million euros have been budgeted for investments in fixed assets, 150 million of which is earmarked for sites in Germany.

Explanatory note

As of the consolidated financial statements for 2005/2006, the financial accounting of the SCHOTT Group has adopted the International Financial Reporting Standards, IFRS, for short, as its new standard for financial reporting. Reference values from the previous year mentioned in the consolidated financial statements were, therefore, modified accordingly.

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