Knorr-Bremse Continues to Grow in 2008

In the 2008 fiscal year, the Knorr-Bremse Group reported a 4% increase in sales, which totaled €3.38 billion (2007 figure: €3.25 billion). After adjustment for foreign exchange effects, this equates to operating growth of 6%. The rise in sales, which was achieved despite a turbulent market environment in the commercial vehicle sector, was attributable to strong sales growth in the rail vehicle systems division.

For the commercial vehicle systems division the year under review comprised two very different halves: Following a positive start in the first half-year, as a result of the financial and economic crisis the second half brought a sharp downturn in commercial vehicle production worldwide and in Europe in particular.

The Knorr-Bremse Group divides its operations into three main regions: Europe, the
Americas and Asia / Australia. In the 2008 fiscal year these regions made the following contributions to the development of consolidated sales.

Europe

In the European region, sales rose to €2.46 billion (2007 figure: €2.36 billion). This positive development was due in particular to the activities of the rail vehicle systems division, which benefited not only from the ongoing buoyancy of the market but also from deliveries to other regions.

In addition, 2008 brought the successful conclusion of strategically important framework agreements with leading manufacturers. The commercial vehicle systems division posted only slight growth. After a strong first-half increase in the production of commercial vehicles, the second half-year brought a massive downturn in the market.

The Americas

For the Americas as a whole, the Knorr-Bremse Group returned sales of €772 million in 2008 (2007 figure: €791 million). In local currency terms, this equates to a slight increase in sales across the region.

In North America, both divisions were confronted with a weaker market environment in 2008 than in the previous year. The widely anticipated recovery of the commercial vehicle market, after the substantial downturn on account of the 2007 introduction of stricter exhaust emissions legislation in the US, failed to take place in 2008.

In South America both divisions reported healthy growth.

Asia / Australia

The Group companies in the Asia-Pacific region closed their books on the 2008 fiscal year with sales of €376 million, an increase of 14% over the previous year (2007 figure: €330 million). The rail vehicle systems division reported a further increase in sales in 2008, following on from strong double-digit growth in the previous year.

The main growth driver was once again China. In the Chinese market, Knorr-Bremse won orders to the value of approximately €360 million in 2008, from both the mainline and mass transit sectors. The company’s five joint ventures and its own production plant in Suzhou mean that Knorr-Bremse is able to comply with local content requirements.

In the commercial vehicle systems division, sales showed strong growth due to the positive development of the market in the first half of 2008, although this was followed by a second-half decline. In the key Japanese, Indian and Chinese markets, Knorr-Bremse is firmly established with its own local production plants.

Outlook for 2009

In the 2009 fiscal year, the Knorr-Bremse Group is anticipating a further sharp drop in worldwide commercial vehicle production, bringing with it a downturn in sales for the commercial vehicle systems division. In contrast to this, to date the global economic crisis has had only a moderate impact on the rail vehicle sector, which should continue to expand, particularly in Asia. Negative effects are only expected after a certain time lag. In overall terms, the scope of the worldwide economic crisis, as well as its duration and its impact on Knorr-Bremse’s key markets, cannot currently be predicted.

The company’s financial statements press conference will take place in Munich at 10am on March 31, 2009.

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