Underlying Conditions - Financial Market Crisis Severely Impacts Overall Economy and Our Industry

• Global Economic Downturn in Second Half of the Year
• Printing Industry Hit with Full Force
• Suppliers Struggling Worldwide with Weak Demand

The financial year clearly demonstrated the extent to which, for commercial printing, the printing press business depends on current and expected economic conditions. As it became evident that the global economy would fall into a deep-seated crisis, firms very quickly and extensively reduced their advertising budgets and severely reduced their orders with our customers for printed advertising material. In particular the overall uncertainty about when the crisis will reach its low point has resulted in a nearly complete freeze in investments in some markets. Moreover, the financing environment for our customers has considerably worsened as a consequence of the financial market crisis, primarily in emerging markets.

Global economic growth is a crucial factor in our business development, with overseas business accounting for approximately 85 percent of annual sales in the past. In the packaging printing sector, which is more robust with regard to cyclical fluctuations as well as in the virtually non-cyclical consumables area, our market share is still considerably lower than in the equipment sector for commercial print shops.

In such economically difficult times, we therefore only see a dim light at the end of the tunnel. Although the exchange rate structures of the euro against the Japanese yen and the US dollar shifted again slightly in favor of European suppliers, we were hardly able to benefit from this development because of print shops' extraordinarily low levels of investments. The presentations of our solutions at trade shows generated considerable interest. We can help our customers even during this crisis with our comprehensive services. We expanded our market shares in the consumables area during the financial year.

As at: July 2009