euro adhoc: SW Umwelttechnik Stoiser & Wolschner AG / quarterly or semiannual financial statement / SW Umwelttechnik announces first-half interim results for 2006 (E)

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. Revenue up by 5%, order backlog by 11%
. Austrian operations to be concentrated at fewer sites
. Profits impacted by weak forint
. South Budapest works close to completion
. Positive outlook for operating results

Vienna listed SW Umwelttechnik Stoiser & Wolschner AG posted a modest gain in second-quarter revenue from E26.6 million (m) to E27.0m, more than making up ground lost through unusually poor trading in April due to bad weather. Record revenue of E10.0m in June points to an improvement in the second half.

Over the first half of 2006 the group recorded a 4.5% year-on-year cumulative increase in revenue to E36.2m (H1 2005: E34.6m). Revenue from Hungarian operations rose by 8.3% to E24.5m (H1 2005: E22.7m), representing 68% of total sales (H1 2005: 65%). Revenue generated in Austria slipped from 27% to 24% of the total. Other EU member states accounted for 3% of revenue (H1 2005: 6%), and Romania for 5% (up from 2%).

The group's Infrastructure sector put in an outstanding performance in Austria and Hungary, whereas the Engineering sector suffered a fall in revenue which should be cancelled out in the second half. The Infrastructure sector was responsible for 51% (H1 2005: 48%), and the Engineering sector for only 17% of revenue (H1 2005: 23%) while the Water Conservation sector's contribution increased from 29% to 32%.

Earnings before interest and tax (EBIT) remained negative, in line with the normal seasonal pattern. The effects of late starts to construction projects due to bad weather are still being felt. EBIT for the first half was negative by E1.2m compared to a positive figure of E0.8m in the like period of 2005. With EBIT positive to the tune of E1m in both May and June, SW Umwelttechnik looks set for a strong third quarter.

The weak performance in April is also the main reason for the drop in EBITDA from E1.3m to E0.8m.

Finance cost was driven by the weakness of the Hungarian forint, climbing to E3.1m from E0.5m in the like period of the previous year. In consequence the loss on ordinary activities widened to E4.3m (H1 2005. 1.3m). It should be noted that the interim result is based on an exchange rate of HUF 283/E on 30 June 2006, compared with 253 on 31 December 2005. Following the expected 0.5% increase in the Hungarian base rate the exchange rate recovered to HUF 272/E by 31 July 2006.

Operations in Austria are being concentrated at three of the five existing sites in response to disappointing capacity utilisation, especially in the sewerage segment. The outlook for the biogas plant business has now improved due to the determination of new power injection tariffs.

Following a long winter and the closure of a small factory, capacity utilisation in the Infrastructure sector was excellent in Hungary in the second quarter. Capital expenditure is again largely being channelled to this sector, which is launching new agricultural, industrial building and road drainage products. In the Water Conservation sector, flooding continued to obstruct deliveries, but strong order backlog, and improving quality and productivity at the new reinforced concrete plant offered reasons for optimism. The Engineering sector was the only business to trade below expectations.

In geographical terms, investment is now strongly focused on Romania where three factories are planned. Production at the Timisoara works is due to commence in September, while the land for the Bucharest factory has been rezoned and work has begun on the construction of a large central cement mixing plant at the site.

The group's head count rose to 811 (H1 2005: 749). Most of the growth in the workforce was due to the initiation of recruitment in Romania, which added 50 employees.

Order backlog as at 30 June was up by 11% year on year, from E36m to E40m.

Capital expenditure ran at E5.7m in the first half, E2.5m going to the two new Romanian factories and E1.7m to expansion of the South Budapest works. Construction of this greenfield factory - the group's largest - began in 2001, and it has since between steadily expanded. A further E1.5m will be spent this year, largely concluding a E15m investment programme. On completion Hungary's most modern concrete factory will have 21,500 square metres (sqm) of factory buildings, 140,000sqm of paved surfaces, three large mixing plants with capacities of 1,000 cubic metres per day, 20 indoor cranes (capable of lifting up to 31 tonnes), and 200 employees.

Outlook for 2006 as a whole

Due to the good operating results in May and June management is standing by the optimistic guidance for the year as a whole given after the first quarter. Management anticipates further single-figure revenue growth and a disproportionate improvement in EBIT. However the volatile forint exchange rate makes it difficult to predict finance cost.

. In Austria, operations at the five existing production facilities are being concentrated at three sites. These relocation programmes, which are expected to result in one-time costs of E600,000, should bring marked improvements in Austrian operating profits from 2007 on.
. in Hungary, the ambitious investment programme has now almost been completed. Excellent capacity utilisation is anticipated across all business sectors in the second half. The July increase in the base rate has stabilised the forint exchange rate, and the currency is seen strengthening further after the local elections in October due to planned budget stabilisation measures.
. In Romania, completion of the Water Conservation sector works in Timisoara in August will be followed by production start-up in September. Construction of the Infrastructure sector factory in the Bucharest area will begin on schedule in the autumn, and the first stage of the project should be ready for start-up in the second half of 2007. A site for the third Romanian works, in Targu Mures, central Transylvania, is to be acquired this year.

Financial highlights

2nd quarter
|in Em |2006 |2005 |
|Revenue |27.0 |26.6 |
|EBIT |2.1 |2.6 |
|EBITDA |3.1 |3.7 |
|POA |0.6 |2.4 |

1st half
|in Em |2006 |2005 |
|Revenue |36.2 |34.6 |
|EBIT |-1.2 |-0.8 |
|EBITDA |0.8 |1.3 |
|POA |-4.3 |-1.3 |

Further inquiry note:
Dr. Bernd Wolschner, member of the Management Board
Tel: +43 (0)463 32109; fax: +43 (0)463/37667
Michaela Wolschner, Investor Relations
Tel: +43 (0)664 8117662; fax: +43 (0)1 3688686;

end of announcement euro adhoc

emitter: SW Umwelttechnik Stoiser & Wolschner AG
Bahnstraße 87-93
A-9020 Klagenfurt
phone: 0043-463-321090
FAX: 0043-463-37667
ISIN: AT0000808209
indexes: WBI
stockmarkets: Regulated free trade: Börse Berlin-Bremen, Frankfurter Wertpapierbörse, Wiener Börse AG
sector: Technology
language: English