Moeller group continues its course of profitable growth

• Revenues rise 13 percent in FY 2005/06
• Strategy: innovation, customer focus and global competitiveness
• Structural alignment in Bonn
• Concept to improve efficiency and optimize production is being developed – securing manufacturing in Germany over the long term

Moeller group, one of the world's leading suppliers of components and systems for energy distribution and automation, is continuing its course of profitable growth. The Bonn-based company increased revenues in the financial year 2005/2006 (per 30th April) by 13 percent year on year to around EUR 880 million.

In the current financial year, Moeller has set its strategic priorities in the areas of in-novation, customer focus and global competitiveness. A constant rise in competitive pressure, however, is now forcing the company to focus increasingly on improving efficiency and optimizing its cost structures. In doing so, Moeller is addressing grow-ing price pressure in its sales markets which would sustainedly impair profitability and thereby erode the foundations for future growth if the company did not initiate appro-priate countermeasures. In addition to this, Moeller also has to improve competitive-ness with regard to costs in its key growth markets in Eastern Europe and the Asia Pacific region if the company is to succeed in competing with local market players. In its traditional markets, Moeller is also up against new competitors mainly emerging from low-wage countries.

Theo Kubat, CEO of Moeller Holding GmbH said: "We have achieved quite a lot over the past three years. Moeller will, however, be taking further steps to sustainedly im-prove its competitive position. Despite all its difficulties, we continue to have faith in Germany as a manufacturing site, but we must further optimize our cost structure to secure as many jobs here as possible over the long term. Compared with our com-petitors, we specifically need to make adjustments to lower our administrative and manufacturing costs, which will also lead to an inevitable loss of jobs at Moeller. We will handle these very carefully and consciously and, over the coming weeks, add further details to the concepts while maintaining our dialogue with the employees' representative bodies. Moeller will initiate the necessary measures to secure its mar-ket position over the long term and strengthen its standing as a leader in innovation and quality."

To this end, the company is currently drawing up concepts primarily covering three areas of action:

• Moeller has launched a company-wide procurement project aimed at sustainedly reducing the cost of materials.
• At its corporate headquarters in Bonn, Moeller will systematically enhance and im-prove the efficiency of its processes and structures. This includes business process automation as well as the outsourcing of specific activities to external partners inso-far as economically expedient. In this context, Moeller will also abolish overcapaci-ties that resulted from the group's drive to focus on its core business over the past few years. In this connection, presumably up to 80 jobs are expected to be lost in Bonn, either through annulment agreements or terminations on economic grounds.
• In the area of production, Moeller will compare the competitiveness of the German manufacturing sites with that of external suppliers; the results will then be used to decide on which manufacturing tasks will remain at the company and which will be outsourced. Moeller is also currently drawing up proposals for process optimization and automation with the goal of further improving its manufacturing processes. A part of this concept will involve merging the production facilities and personnel of the adjoining Dausenau and Holzhausen plants on the Holzhausen site.

These considerations are flanked by specific international growth initiatives: in May, the Bonn-based electrical component manufacturer opened further sales offices in Bulgaria and Serbia. In January, Moeller signed a joint venture agreement with an Indian manu-facturer of low voltage switching gear. In the sales department the company is concen-trating on expanding its traditionally excellent relationships with the international electri-cal wholesale sector and large industrial clients. For the market segments OEM and switch cabinet construction, Moeller is currently implementing an international sales concept.

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