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Market environment
and business development

In the first six months of the current business year 2013/14, the Metal Engineering Division continued its positive performance at the very good level it had maintained in previous years.

In the Rail business segment, the trend in the past six months persisted at a high and stable level although the market situation in Europe continues to be weak due to budget consolidation in many countries and a competitive climate that has become increasingly cutthroat. As the division is concentrating its production on special products, such as heat-treated, head-hardened rails, the high level of capacity utilization was maintained in the first six months of the current business year. This development was to a high degree the result of strong exports to international markets, such as South America, South Africa, and Russia. The production of standard rails at the site in Duisburg (TSTG) will be shut down as planned toward the end of the calendar year due to continued losses as a result of massive overcapacity in Europe; the agreed upon social compensation plan is already being implemented.

The Turnout business segment also continued to perform at a good level overall in the first half of 2013/14. Declining demand in Europe is being compensated by increasing orders from other economic regions, such as North America, China, and the MENA region, in this segment as well. The economic upturn is resulting in more investments in railway infrastructure, particularly in several countries in Southeast Asia.

As a result of its specific product portfolio that is oriented toward the toughest technical requirements, the Wire business segment was able to counter the generally subdued sentiment on the part of customers in Europe so that capacity utilization in all facilities was satisfactory. As reported in the last letter to shareholders, the new facility for the production of ultra-high-tensile fine wire (UHD cord) started up operations successfully, thus expanding the product portfolio of special products that is oriented toward long-term growth markets.

The performance of the Welding Technology business segment was stable during the first half of the business year 2013/14, albeit at a moderate level, due to the cautious economic situation in the mechanical engineering and energy engineering industries (power plant construction), especially in Europe. Most recently, modest improvements in the power plant construction sector in Southeast Asia and India have become noticeable.

During the period under review, capacity utilization in the Seamless Tube business segment has been very good, so that the segment was able to continue the outstanding performance of the past quarters. As a result of the oil price, which is still high, exploration activities continue to be significant, which in turn is producing brisk demand for oilfield tubes. The smaller segment that manufactures industrial tubes, which are used, for example, in the automotive industry, maintained a satisfactory level with regard to both volumes and prices due to its specific product portfolio.

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  • Share price as of September 30, 2013 (euros) 35.35    EPS – Earnings/share (euros) 0.47    Dividend/share (euros) 0.90
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