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Successful Year With Many Facets

Endress+Hauser increases sales and results in 2004, creates new jobs and invests all over the world.

For the Endress+Hauser group (Reinach,Switzerland), 2004 was a successful year. The specialist for instrumentation and automation solutions for process engineering industries improved in every respect: Endress+Hauser increased sales and results, gained further market share and created new jobs. The number of patent applica-tions reached a new record. High investments strengthened traditional locations and opened new markets for the group which is operating worldwide. The independent family enterprise was again able to increase its equity capital base.

The Endress+Hauser Group achieved sales of about 784.5 million Euro in 2004, 6.8 percent more than during the previous year. “We even surpassed our 2003 anniversary year, our best year so far,” CEO Klaus Endress was glad to state at the presentation of the business report in Basel. The operating result (EBIT) grew by 15.0 percent to 66.7 million Euro. The result be-fore taxes (EBT), affected by higher exchange rates and interest, rose by 12.3 percent to 62.9 million Euro. The result after taxes grew by 14.8 percent to 41.6 million Euro. Com-pared to 2003, the lower effective tax rate (33.9 percent after 35.3 percent) was noticeable.

“Process automation has profited from a stronger world economy with the delay customary for this industry,” Klaus Endress said. Unfailing growth was witnessed in new markets, i.e. China, India and Russia, and also in South East Asia. After years of stagnation, sales in Japan rose by a gratifying 15 percent. Endress+Hauser achieved a significant increase of more than 20 percent in the United States. The company is also very content about the development in Canada. “Even in Europe – and also in Germany, our most important market – we ended the year with gratifying growth figures,” the CEO reported.

The growth rates of Endress+Hauser surpass the general development of the industry. “This indicates gaining additional market share,” Fernando Fuenzalida, head of finance of the En-dress+Hauser Group, stated. The continuing weakness of the US Dollar which is the key cur-rency in many growth regions did indeed present disadvantages in international competition for Endress+Hauser. The Group faced the growing pressure on margins with increased pro-ductivity and more efficient procurement.

Endress+Hauser improved its cashflow by 13.8 percent to 83.4 million Euro in 2004. The company continued to strengthen its equity capital base and increased the equity ratio from 47.3 to 50.5 percent. “This bears witness to our sound balance sheet and makes us even more independent of external funds,” head of finance, Fernando Fuenzalida, was happy to report.

Investments strengthen traditional locations and open up new markets.

The Endress+Hauser Group invested 50.5 million Euro in the extension of its production sites and its distribution network worldwide last year, an increase of 15.5 percent as compared to 2003. In Cernay (France), the production of flow measuring devices was extended and in Maulburg (Germany) a new administrative building will be occupied this year. In Reinach (Switzerland), work started on the new “Sternenhof” building with office, conference and training facilities. Involving an estimated 30 million Euro it is the biggest single building pro-ject in company history.

Buildings were and are also constructed all over the world: The Canadian sales company oc-cupied a new building in Burlington (Ontario), the branch in Sandton near Johannesburg (South Africa) extended its premises. In the United States, two production sites for analysis instrumentation were combined in one building in Anaheim (California). The enterprise founded a new operation in Greenwood (Indiana) for temperature instrumentation. En-dress+Hauser started the production of flow measurement devices in Suzhou in the vicinity of Shanghai (China). Other Group companies will also settle in this location.

“We have strengthened our European locations and extended our presence worldwide,” Klaus Endress emphasized. Both activities were closely connected. The success of the European plants did not only depend on a closely woven international distribution network but also on the production sites all over the world. “This is the only way to serve our customers in a faster and more flexible way.” The CEO confirmed that Endress+Hauser would not transfer any jobs abroad for reasons of costs in future. “We are producing worldwide, developing know-how specific to countries which is important for lasting success in growth markets. But under no circumstances will we carelessly let go of the know-how and capability developed here for decades.”

101 new jobs in the trinational region around Basel

At the end of 2004, the Endress+Hauser group employed a staff of 6,294 worldwide, 217 more than the year before (plus 3.6 percent). Of this staff, 3,443 members work in the Ger-man-French-Swiss border region around Basel. This region alone added 101 jobs last year.

Endress+Hauser increased its expenditure for research and development by 15.2 percent to 70.2 million Euro last year. This corresponds to 8.9 percent of sales. In 2004, 168 develop-ments were registered as patents, 11 more than during the previous year. In only five years, the number of patent applications has more than tripled.

High growth targets for 2005

According to the CEO, Endress+Hauser is aiming for a growth rate of “7 to 8 percent” for the running year. Klaus Endress continued that the company had almost achieved its target during the first months of 2005. He saw the foundation of two new sales companies in Croatia and Greece, where existing agencies are now continued and extended under Group responsibility, as a sign of being close to customers. Endress+Hauser intends to serve Near East projects more intensively from Greece in future.

Another extension of the plant for flow measurement devices in Alsatian Cernay covers the continually increasing demand for Endress+Hauser products. Also in Suzhou (China), produc-tion is being expanded step by step as planned and extended to other business sectors. With the acquisition of Stip from the American Teledyne ISCO group as at April 1, 2005, En-dress+Hauser has complemented its analysis instrumentation program. The company is domi-ciled in Groß-Umstadt (Germany) and produces analyzers for the environment industry, par-ticularly for water and waste water treatment. Stip’s 50 jobs will be maintained.

Commitment to responsible action

“We want to continue as an independent family business, for it is the only way in which we can pursue our convictions,” Klaus Endress emphasized. “This is also laid down in our family charter on which we are still working.”

He pointed out that it was part of the Endress+Hauser Credo that the company would not shun its economic, social and ecological responsibility. As an exampleof this responsibility, the company is involved in the reconstruction work in south-east Sri Lanka after the devastation of the tsunami. In this region, Endress+Hauser finances the reconstruction of a village.

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