Technology Division

1) Incl. sales in own segment and to other corporate divisions

International mechanical engineering is still on a growth curve, though momentum will slow somewhat. The Verband deutscher Maschinen- und Anlagenbau e.V. (German Engineering Federation) has forecast growth of 5 % for both Germany and other countries. One of the main reasons for the lower growth rate in a year-on-year comparison is the above average utilization of manufacturing capacities. Owing to bottlenecks in raw materials and incoming products and the shortage of qualified staff, these capacities cannot be ramped up at short notice. There is strong demand for machinery, especially from countries such as China, India and the emerging economies of Eastern Europe. The increasing population and the general improvement in living standards in these countries is boosting demand for better quality food and beverages and, consequently, for machinery for the requisite packaging. On the other side, the recession tendencies in North America naturally also affect the capital expenditure propensity of the local consumer goods industry.

The Technology Division concentrates its activities on filling and packaging technologies which is the segment in which the KHS Group operates. With global demand growing at a rate of approximately 6 % p.a., the market development of this segment is positive in the long term. The purchase of SIG-Beverages and subsequent measures, which involved the integration of PET stretch-blow molding technology into the plants and facilities of KHS AG, will enhance the product range considerably. In future, turn-key plants for plastic bottle technology can be offered from a single source. Demand for rubber injection molding machines and shoe machinery is also developing well, and remains stable for machinery for the confectionery industry.

New orders of the Technology Division continue to run at a high level. In the first quarter of 2008, total sales of € 264.8 million were achieved.

The division’s EBT came to € 4.2 million as per March 31, 2008. The obligatory purchase price allocation for the first three months of 2008 under IFRS, incurred by the acquisition of the majority holding in Klöckner-Werke, stood at € 0.9 million and has been included in this result.

Further information on the Klöckner-Werke and its performance can be obtained from the company website at the following address: www.kloecknerwerke.de