All market segments served by Bucher Industries were affected by the global economic slump during the first half of 2009. Sales slipped by 19% or currency-adjusted 13% to CHF 1 179 million, and order intake plunged by 41% to CHF 819 million. This decline is due to the credit crisis and aggressive destocking by our customers and throughout the value chain. Operating profit was CHF 59 million, falling by CHF 73 million year on year, while group profit for the period decreased by 53% to CHF 42 million. Bucher Industries expects considerably lower full-year sales, operating profit and net profit for 2009.

The global economic crisis that began in the fourth quarter of 2008 continued unabated through the first half of 2009, reaching all market segments served by Bucher Industries. Even the agricultural machinery sector, which had remained robust until the end of 2008, was hit hard. The banks' restrictive practices in lending to finance customers' projects, coupled with large movements in exchange rates, brought capital spending in Eastern Europe and Russia to a near halt. The main markets in Western Europe and North America did not escape the downturn either. With the abrupt reversal from the previous years of strong continuing growth to a worldwide recession, customers and the distribution organisations were left with excessive inventories. This additionally weakened demand and heightened the competitive pressure as inventories were sold off. Furthermore, substantial currency movements were unfavourable to the Swiss franc, in particular against the British pound and euro. To preserve expertise and resources, the Group responded judiciously and cut capacities selectively. Excluding acquisitions, the Group reduced manpower by 13% from the beginning of the year to the end of June 2009. This represents 409 permanent employees, 431 temporary workers, and 215 full-time equivalents through the introduction of short-time work. Despite the recession, Bucher Industries increased the number of trainees and apprentices by 14% compared with the same period last year.

All the divisions and regions were affected by the downturn, albeit to varying degrees. Bucher Industries posted an 18.7% decline in sales to CHF 1 178.9 million for the first half of 2009, a decrease of 12.7% when adjusted for currency fluctuations. Acquisitions had an impact of 7.7%. Order intake was additionally adversely affected by customers cutting back their high inventories and dropped by 40.8% to CHF 819.0 million. Excluding acquisition and currency effects, the order book shrank to CHF 509.1 million, down 35.2% compared with the same period last year. In the divisions, the decline in the order book ranged from 26% to 51%, with Bucher Hydraulics recording the largest decrease and Bucher Process the smallest. Operating profit was 55.5% lower year on year at CHF 58.7 million, while group profit for the period fell by 53.2% to CHF 41.8 million. The Group attached particular importance to ensuring liquidity and reduced not only capacities but also capital expenditure to an appropriate level looking into the future. Capital expenditure amounted to CHF 27.1 million versus CHF 65.1 million in the same period last year. Despite the poor economic conditions, expenditure on research and development was increased by 6.3% to CHF 38.8 million.

Equity grew by CHF 32.0 million during the first half of 2009 to CHF 878.1 million, with an equity ratio at 39.8%. Net debt rose by CHF 257.2 million to CHF 367.8 million compared with the year end 2008, due in particular to CHF 170.9 million for the acquisition of Kuhn-Geldrop, the dividend payment of CHF 45.2 million and the increase in working capital. The Group's liquidity and funding are ensured by long-term bank loans and committed credit facilities of about CHF 700 million.

During the first half of 2009, farmers had to contend not only with the credit crunch but also with plummeting milk prices, which additionally curbed capital spending. This led to a shift in the product mix away from large batches of standardised hay harvesting machines to large agricultural machinery manufactured in small batches. The effects varied greatly from region to region. In particular, demand in the growth markets of Eastern Europe and the CIS came to a virtual halt. Farmers in the USA responded to the situation at once, triggering a drastic slump in demand for hay harvesting and feed mixing machinery. Too high preseason purchases and lower dealer sales caused inventories to swell and made it necessary to adjust production planning. Bolstered by the acquisitions, the division increased sales in local currencies by 6.2%, recording a slight decrease of 1.1% to CHF 600.8 million after translation into Swiss francs. Excluding acquisition and currency effects, sales were 11.6% lower than in the same period last year. Order intake dropped by 43.5% to CHF 276.7 million, down 52.0% when adjusted for currency fluctuations and acquisitions. Operating profit fell by 37.4% year on year to CHF 41.3 million. The integration of the acquired sprayer and baler operations progressed well. Sprayer sales benefited from the Kuhn dealer network, outpacing the year-ago period despite the poor economic conditions. Excluding the baler acquisition, Kuhn Group reduced manpower by 12% in the first half of 2009. The division is planning manufacturing requirements cautiously for the second half of the year to avoid excessive inventories in the supply chain.

Demand for municipal vehicles softened distinctly in the first half of 2009. The East European and Russian markets were worst affected. Private sweeper fleet operators held back on capital spending more than local authorities, which fortunately continued to invite tenders for a few major contracts. So far, government economic stimulus programmes have not had an impact on the local authorities' practices in requesting tenders and awarding contracts. As a result of the weaker market environment, sales decreased by 23.5% or currency-adjusted 15.0% to CHF 215.5 million. Order intake amounted to CHF 211.2 million, 25.1% below the same period last year. The markets for winter maintenance equipment in Europe and refuse collection vehicles in Australia remained practically stable and supported the division's performance. Operating profit was CHF 10.5 million, down 34.8% on the first half of 2008. Bucher Municipal has reduced manpower by more than 8% since the beginning of the year. As local government tax revenues are expected to decline, the municipal vehicle business is rather likely to slow down again in 2010. This means that more cost-cutting measures cannot be ruled out.

During the first half of 2009, operations with wine and fruit juice production equipment were largely characterised by the downturn and lack of follow-up orders for major projects. The division generated CHF 45.5 million in sales, a decrease of 46.7% or currency-adjusted 43.7%. Excluding the major contract recognised in the same period last year, sales were down 25.3% year on year. Order intake dropped by 34.7% to CHF 61.7 million. The European Union's subsidies for investments in wine production, which were announced at the end of 2008 but not yet released, had a negative impact in the first half of the year, especially in France. The EUR 600 million subsidy programme for the period 2010 - 2013 will trigger total investments of around EUR 1.5 billion. After a delay of about six months, it was finally released in June 2009. The division therefore expects to see a strong recovery in demand in all wine-growing regions across the European Union starting in 2010. Capital spending on fruit juice processing equipment was curbed by the still high inventories and low world market prices of apple juice concentrate. Bucher Process posted an operating loss of CHF 3.7 million, compared to a profit of CHF 6.4 million in the first half of 2008. To improve efficiency, the division closed down two minor plants for winemaking equipment in Italy and France and integrated these operations into the main French plant in Chalonnes. In its operations with sludge dewatering presses, the division received new orders and attracted more attention for its technology. The 5% reduction in manpower resulting from the closure of the two plants will take hold in the second half of the year.

As a supplier of custom hydraulic system solutions, the division was particularly exposed to the downturn in economic activity. All regions from the USA through Western Europe to China were hit almost equally. Of the key market segments, construction equipment suffered worst, while agricultural machinery was least affected. High inventories across the whole supply chain additionally exacerbated the slump in order intake. The destocking has not yet finished, but is expected to come to an end in the second half of the year. Bucher Hydraulics generated sales of CHF 170.9 million, a decrease of 36.9% or currency-adjusted 35.3%. Acquisitions had an impact of 1.3%. With order intake dropping by 49.6% to CHF 134.4 million from the year-ago level, the division outperformed the industry. Operating profit fell by 72.9% to CHF 10.4 million. The division responded to the downturn with selective lay-offs and by introducing short-time work. It pressed ahead with building up its presence in North America as planned and combined all operations in China at one plant near Shanghai. Manpower has been reduced by more than 20% since the beginning of the year.

The division's performance was characterised by the considerable restraint in capital spending exercised by many customers, especially in Russia and Asia. As a consequence, some orders for new glass container forming machines were deferred, scaled back or cancelled. Sales amounted to CHF 147.9 million, down 28.3% or currency-adjusted 23.2% on the year-ago record high level. The robust spare parts business remained level with the same period last year. Order intake decreased by 46.0% to CHF 135.0 million. The division generated CHF 5.6 million in operating profit compared to CHF 16.1 million a year ago. Emhart Glass reduced its manufacturing capacities in Sweden and the USA, while adding to its portfolio of products in the lower and middle price segment and continuing to industrialise the manufacture of tempered glass containers in a continuous operation. In the first half of the year, the division reduced manpower by 12%.

Forecasts for the current year remain extremely uncertain. Developments in lending practices to finance customers' investments and the effect of the high public sector deficits are still very difficult to gauge. The decline in demand in the principal markets served by Bucher Industries seems to have stabilised at a very low level. Capacities and costs will continue to be reduced accordingly in the second half of the year. Positive signals for Bucher Industries' operations would be a recovery in milk prices, an end to the destocking and relaxed lending practices. The medium-term outlook for these and other factors will determine any impairment charges on intangible assets at the year end. Kuhn Group expects lower sales and considerably reduced profitability for the current year. Bucher Municipal anticipates considerably lower sales and less profitability. Bucher Process expects to generate considerably lower sales and an operating profit, despite the seasonal mid-year loss. Unlikely to see a trend reversal this year, Bucher Hydraulics believes that sales and operating profit will be at a considerably lower level. Emhart Glass anticipates considerably lower sales and reduced profitability. As a result, Bucher Industries expects sales, operating profit and net profit for 2009 to be significantly down on last year.



Niederweningen, 11 August 2009

Kurt E. Siegenthaler
Chairman of the board

Philip Mosimann
Chief executive officer