Walter Meier AG (SWF:WMHN) Walter Meier: Organic Sales Growth, Lower Net Income In The First Half Of The Year

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* Decrease in net sales by 6.9 percent to CHF 382 million due to divestments and the weak US dollar * Organic sales growth of over 5 percent thanks primarily to strong demand for machines and tools in Switzerland and Eastern Europe * Weakening of the EBIT margin from 6.5 to 5.9 percent chiefly as a result of divestments and an increase in prices for raw materials * Fall in net income of 12.1 percent to CHF 18.1 million or CHF 8.91 per -A- registered share
"In the first half of 2008, Walter Meier was able to achieve a satisfactory result in an extremely difficult environment characterized by a weak US dollar, rising raw materials prices and a cooldown in the American economy," comments CEO Silvan G.-R. Meier. "Provided the global economic situation does not deteriorate substantially, we expect stable growth through the end of the year at the level of the first six months."

Group In the first half of 2008, the climate and processing engineering group Walter Meier recorded a decline in net sales of 6.9 percent to CHF 381.8 million. Net of the previous year's sale of three business units and exchange effects, organic growth amounted to 5.3 percent. The main driver for this was the demand for machines and tools in Switzerland and Eastern Europe, which is still growing strongly. Negative effects on organic growth came above all from declining demand in the USA during May and June. EBIT decreased in the first half of 2008 by 15.7 percent to CHF 22.6 million (net of exceptional effects 2007). Organically, EBIT grew by 0.4 percent, while the EBIT margin fell from 6.5 percent to 5.9 percent. The sale during the previous year of two high-margin business units was responsible for about half of this. The remaining fall in margin is due chiefly to the increasing prices of raw materials, which have accelerated since the start of the year, and to the shift in sales in the Climate Division. In the first half of 2008, one-time costs due to the rebranding and merger project were offset by one-time book profit as a result of a change in estimates of receivables and inventories. Both exceptional effects were of a similar size, which is why adjusted figures are not being published for 2008. Net income amounted to CHF 18.1 million, which is 12.1 percent less than in the same period for the previous year. Capital employed has increased by 4.3 percent to CHF 171.2 million since the beginning of the year principally due to seasonal reasons. Compared with the start of the year, equity was reduced by CHF 26 million to CHF 147.3 million. This was attributable to the record payment in the form of dividends and nominal value repayments as well as foreign exchange losses. Liabilities to banks increased by CHF 26.6 million to CHF 51.6 million primarily due to the financing of dividend payments. At the end of June 2008, Walter Meier had 1730 employees, 40 fewer than at the end of 2007. The reason for this is the optimization of the Chinese purchasing organization in the Processing Division.

January 1 to June 30

Absolute Organic change change in CHF million 2008 2007 in % in % 1)

Net sales 381.8 410.3 -6.9 5.3 EBIT 22.6 26.8 -15.7 0.4 2) in % of net sales 5.9 6.5 Net income 18.1 20.6 2) -12.1 per -A- registered 8.91 9.85 -9.5 share in CHF Cash flow from operating -11.0 1.1 activities

1) Net of exchange and consolidation effects 2) Net of exceptional effects 2007: Profit from the sale of Charles Hasler, merger and rebranding costs

Climate In the Climate Division, Walter Meier generated net sales of CHF 215.6 million, 2.9 percent less compared to the same period in the previous year. In organic terms, net sales rose by 3.2 percent. The Swiss business unit, which was responsible for more than half of sales in the Climate Division, recorded a single-digit percent increase in net sales on a year-on-year basis. The main drivers for this were the continued robustness of the construction industry in Switzerland and the accelerating demand for solar thermal installations. Thanks to a much strengthened team, Walter Meier was able to acquire market share in the future market of cool ceiling systems. As a systems supplier for the largest solar-based cooling plant in Switzerland, Walter Meier helped achieve a milestone in Geneva in terms of an energy efficient future. Offsetting these trends was the slump in demand for oil burners in the renovation business. The sales and service companies in France and the United Kingdom achieved double-digit sales growth during the first half of 2008, while in Germany sales fell: the record-breaking bad weather in May and June caused demand for portable air conditioners and split units to fall sharply compared to the same period during the previous year. In all other areas, especially chillers and humidification equipment, the German business unit increased net sales. Net sales of humidification equipment and systems in the USA and Canada fell in the first half of 2008 mainly due to weak demand for industrial humidification solutions. EBIT in the Climate Division amounted to CHF 20.3 million in the first half of 2008, 6.5 percent less than in the previous year. The EBIT margin fell from 9.8 to 9.4 percent. On the one hand, the sale of a high-margin business unit as of April 19, 2007, had a negative impact. On the other hand, higher purchasing and transport costs and a shift in sales away from high-margin products depressed the EBIT margin.

January 1 to June 30

Absolute Organic change change in CHF million 2008 2007 in % in %

Net sales 215.6 222.0 -2.9 3.2 EBIT 20.3 21.7 -6.5 in % of net 9.4 9.8 sales



Processing Net sales in the Processing Division fell by 11.7 percent to CHF 166.2 million. In organic terms, however, growth was a pleasing 8.1 percent. The main reasons for this difference are the sharp weakening of the US dollar and the deconsolidation of a business unit. In Switzerland, sales of computer-controlled machine tools for precision processing and associated tools once again recorded a double-digit increase following the record-breaking year of 2007. This was due primarily to the Swiss metal-processing industry, which continued to perform in an extremely pleasing manner. Walter Meier's consistent positioning as a provider of customer-specific total solutions including consulting, assembly, programming, automation and service al-lowed for a disproportionately high level of growth. In the rest of Europe, too, particularly in Russia, Ukraine and Turkey, net sales rose into the double-digit range. Unlike Switzerland, the focus of Walter Meier in these countries is on woodworking and metal working machinery for commercial and industrial applications that do not require automation. Following growth measured in local currency during the first quarter, year-on-year sales in the USA dropped considerably during the months of May and June, resulting in an overall fall in net sales for the first half of the year. The rapidly cooling US economy is likely responsible for this trend. EBIT in the Processing Division fell by 16.7 percent to CHF 10.0 million, while the EBIT margin contracted from 6.4 to 6.0 percent. Adjusted for the sale of a lucrative business unit as of December 20, 2007, the EBIT margin remained stable compared to the same period for the previous year. A marked improvement in margin in Switzerland was balanced out by a decline in the USA. During the first half of the year, the US business was exposed to a range of negative external influences. The extent of the factors weighing on the margin, both in number and strength, were unprecedented: a weak dollar, rising purchasing costs due to prices for raw materials (especially for steel, cast iron and plastics), increasing transport costs due to the price of oil, and growing labor costs in China (due, among other things, to the new labor law). To date, Walter Meier has been able to pass these cost in-creases on to its customers to a satisfactory degree, although sometimes only with a delay of up to two months.

January 1 to June 30

Absolute Organic change change in CHF million 2008 2007 in % in %

Net sales 166.2 188.3 -11.7 8.1 EBIT 10.0 12.0 -16.7 in % of net 6.0 6.4 sales

Personnel Since March 1, 2008, Rudolf Strebel has been the Head of Climate Solutions and a Member of the extended Group Management. Patrick Bossart was appointed the new Head of Corporate Communications taking effect May 1. On July 15, Walter Meier announced that Jochen Nutz will be filling the vacant CFO position effective the start of 2009.

Outlook For the second half of 2008, Walter Meier expects stable growth in the Swiss and European business of both Group Divisions. For the USA and Canada, the extremely fragile economic situation and the volatility on the currency and commodities markets means that it is extremely difficult to look too far ahead. However, in North America, Walter Meier does not anticipate any further substantial weakening but rather stable, low-level growth. For the Group as a whole, the previous objective of once again achieving the adjusted results for the previous year will have to be lowered. In fiscal 2008, Walter Meier expects net sales and net income to fall to the same extent as in the first six months of the year while the EBIT margin will remain unchanged. Ongoing acquisition projects could have a positive impact on results as early as the second half of the year.

Further information Patrick Bossart, Head of Corporate Communications +41 44 928 15 24, patrick.bossart@waltermeier.com

Key dates December 31, 2008 Fiscal year closes 2008 February 24, 2009 Annual report 2008 plus Media and Financial Analysts' Conference March 24, 2009 Annual shareholders' meeting

Walter Meier is a globally active service and industrial group focusing on two areas of competence: Climate and Processing. The organization employs approximately 1800 personnel and had sales of over CHF 800 million in 2007. Walter Meier shares are quoted on the SWX Swiss Ex-change (symbol WMN, Security No. 1594024).

The media release can be downloaded from the following link:

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Walter Meier AG Laubisrütistrasse 24 Stäfa

WKN: 1594024; ISIN: CH0015940247; Index: SPI, SPIEX, SSCI; Listed: Main Market in SWX Swiss Exchange;



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Walter Meier AG

http://www.waltermeier.com

ISIN: CH0015940247

Stock Identifier: XSWX.WMN