LEONI AG managed to increase consolidated sales in the first quarter of 2004 despite the persisting weakness of key markets. At EUR 283.8 million, external sales were thus about three percent above the previous year’s figure of EUR 274.7 million. After adjusting for exchange rates, the Company achieved an increase of about six percent. As expected, there was a drop in earnings from continued operations before interest and taxes (EBIT) of about 47 percent to EUR 8.6 million (from EUR 16.3 million in 2003). This is attributable especially to the substantial advance spending for the Wiring Systems Division’s large-scale orders. After the successful start of series production for General Motors/Opel in the Ukraine, the main areas requiring capital investment in the first three months of 2004 were the new facilities in Romania and in Slovakia. Production of cables harnesses for DaimlerChrysler’s new A-Class as well as for BMW’s 1 and 3 Series will start in the course of this year.

Earnings in the second quarter of 2004 can also be expected to be well down on the previous year because of further, substantial advance spending in the Wiring Systems Division. A slight upturn is not set to occur until the third quarter, then to be followed in the fourth quarter by a significant rebound as compared with the previous year. For fiscal 2004 as a whole, the Company still anticipates an increase in consolidated sales of about ten percent on the previous year’s figure as well as net income of at least EUR 30 million.

Although the German automotive industry had to contend with muted demand in the first few months of 2004, the Wiring Systems Division managed to increase its external sales compared with the same quarter of last year (EUR 140.4 million) by almost five percent to EUR 146.8 million. This is due not least to the successful launch of the new Opel Astra, for which LEONI supplies the cable harnesses from the Ukraine. At EUR 1.6 million, the earnings for the first quarter of 2004 were in line with expectations. This significant, 80 percent decline (from EUR 8.2 million in 2003) was due above all to spending on setting up the new facilitates in eastern Europe, where stocks of materials were built up and employees were recruited on a large scale in the first quarter.

The underlying economic conditions for the cable industry have changed little compared with the same period last year. Accordingly, the Cable Division’s external sales of EUR 113.0 million almost matched the previous year’s figure of EUR 114.1 million. In terms of EBIT, the division had to cope with a 25 percent decrease to EUR 6.8 million as compared with the exceptionally profitable first quarter of 2003 (EUR 9.1 million). This is attributable above all to weaker business involving special cables for the capital goods industry as well as an unexpectedly sharp increase in the price of copper in the first two months of the current financial year.

The trend of global demand for wire products, especially in China and in the United States, was highly encouraging. As a result, the external sales of LEONI’s Wire Division in the first quarter of 2004 came to EUR 24.0 million, roughly 19 percent above the previous year’s figure of EUR 20.2 million. This good operating result of the Wire Division was, however, largely cancelled out by costs arising from the shutdown of wire and strand production at LEONI Felisi in Italy. Earnings before interest and taxes thus amounted to EUR 100,000, which equates to a 75 percent year-on-year decrease.