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Frequently Asked Questions
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How did Interroll perform in the first half of 2008?
The first half of 2008 got off to a vigorous start for Interroll, with the company completing major projects from the prior year and gaining additional market share in the growth
markets including Eastern Europe, Russia and Brazil. In Germany the new Centre of Excellence for Drum Motors was officially opened, and in Japan Crossbelt Sorters were presented
to a wide range of industry experts. The market for raw materials had a dampening effect however. The rise in the price of steel proved exorbitantly high and was indeed much more
pronounced than originally anticipated. This will continue to have an impact into the second half of 2008.
Massive increases in the price of commodities and rising freight costs can be passed on to customers only partially and following a delay.
Nevertheless, Interroll succeeded in achieving a solid result in the first half of 2008 compared to what was undoubtedly an above-average performance in the same period a year
ago.
Expressed in local currency, sales were up by 10.4 %. At CHF 187.5 million, sales calculated on the basis of Group currency rose by 6.7% year on year (CHF 175.8 million in the
first half of 2007). Total Output in local currency was up slightly from CHF 184.5 million to CHF 186.9 million (+1.3%), while representing a decrease of 2.3 % in the Group
currency.
Numerous projects in the period under review once again confirmed that customers worldwide are increasingly putting their trust in Interroll and choosing the particular benefits
of our core products for materials handling and logistics.
What is your outlook for the current year?
Due to the increasingly volatile state of the markets for raw materials, in the second half of 2008 Interroll anticipates the economic climate to remain subdued. This may impact
on future business. Experts predict further rises in steel prices, with freight costs also rising due to the price of oil. Further productivity gains across all business units,
rigorous cost management and strategic procurement will be leveraged more effectively to maintain and boost profitability.
In terms of our long-term growth strategy, we will increase our level of innovation and continue to apply our brand strategy in order to further strengthen Interroll as the
preferred brand worldwide for core products in the fields of materials handling and automation. Thus, we aim to use our current global market position as a solid basis for
further, long-term growth. Interroll is ideally placed.
Why will the par value be reduced yet again instead of paying a dividend?
The Board of Directors proposed to the Annual General Meeting on May 9, 2008, a par value reduction from CHF 30.50 to CHF 20.00 per registered Interroll share. The par value
repayment (instead of a dividend) of CHF 10.50 per registered Interroll share, which was approved by the Annual General Meeting, is usually tax free for holders of such shares.
The payment will be processed during the 3rd quarter of 2008.
The minimum legal par value of a share allows a reduction in the par value. The advantage of a reduction in the par value compared to the distribution of a dividend: the par value
reduction is paid without withholding taxes and the income is exempted from income taxes for the beneficiary. The equity after reduction in par value corresponds to the same
amount as if a dividend had been distributed.
Interroll acquired Werner Motor in 2007. Is Interroll planning other acquisitions in the near future?
Werner has considerably strengthened our leading position with drum motors for check-out stands in supermarkets. We are committed to healthy growth, i.e. organic growth in
conjunction with well-targeted acquisitions. Above all, these must be fully in line with our overall strategy. For the time being Interroll concentrates on consolidating the
latest acquisition and fully integrate BDL within the Interroll Group.
Within the area of contract logistics, the market is currently witnessing a trend towards decentralized warehouses. In addition, Interroll is a strong proponent of dynamic
storage technology. Will this trend become more pronounced in the near future?
This trend will continue, particularly in view of the fact that the general flow of goods looks set to rise in the wake of ever-increasing globalization. We are well positioned to
reap the rewards. Major dynamic storage projects in the UK and Japan will open up new opportunities for growth. The operators of flow storage systems implemented with the help of
our technology are extremely satisfied with the performance of these "dynamic" solutions (operating on the principle of First-In First-Out), and we are confident that this
technology will prove a particularly attractive proposition to other prospective customers.
Will Interroll be unveiling further innovations within this area?
Interroll Dynamic Storage launched a new product line for all standard and non-standard storage containers, with the express purpose of capturing additional growth potential
through Carton Flow applications. In addition, Flex Flow, a solution tailored to the requirements of the automotive industry, was introduced within this segment's product
portfolio.
Are there likely to be any major changes within Interroll's key growth markets - food, airports, postal services, pharmaceuticals, automotive suppliers - in the future?
We are not anticipating any significant changes in these segments; these industries still offer tremendous growth potential.
Interroll has already established a strong presence in Eastern Europe, i.e. in the new EU accession states. What is the future trend likely to be in these markets?
We believe that this region as a whole will continue to generate significant revenue growth of 25 - 30% per annum, e.g. when it comes to investing in logistics centres, simply
because these countries will have to channel considerable funds into development to secure their level of competitiveness and, of course, to fulfill the requisite EU standards. We
have also been witnessing an encouraging trend in the area of belt drives deployed in the food industry. In order to meet stricter EU regulations within this sector, new
technologies are essential.
Today, airport operators only deploy fully automated conveyor systems for baggage and freight handling. What are the chances of Interroll making its presence felt within this
segment?
At present, there are palpable opportunities in Asia - a region with many large-scale construction projects for new airports. In the US, airport X-ray procedures are to be
modernized and automated in the coming years. Operators will be investing several billion dollars within this area. So-called "inline screening" opens up tremendous opportunities
for our product portfolio. In future, once baggage check-in has been completed, all items of luggage will be subjected to full X-ray screening (inline screening). This procedure
is performed in the basement area of the airport, usually in extremely confined spaces. Our newly developed belt curves and other Interroll conveyor modules are the perfect
solution for challenging applications such as these.
Interroll continues to produce many of its components in Europe, a relatively high-cost region for manufacturers. Are you planning to relocate some of your manufacturing
activities to countries with more favourable cost structures?
Our manufacturing activities are focused mainly on those countries and regions in which we have established a particularly strong market presence, simply because "proximity to
customers" is of importance to us. The added advantage of production units in the US and Asia is that we are less susceptible to currency fluctuations and can exploit regional
cost variances, e.g. in comparison with Europe. What's more, our production facilities - particularly in Europe - are operating at full capacity, which also contributes to
cost-effective manufacturing.
Conveyor rollers and belt drives would appear to be relatively mature products when viewed from the outside. Of course, the "interior" of these products remains concealed. Are
there any areas in which conveyor rollers can actually be improved or updated?
There is still plenty of scope for improvement in the area of "intelligent" rollers. Our latest generation of high-performance DC-powered rollers for conveyors with zero-pressure
accumulation represent a major technological advancement. With these rollers, the entire control unit (so-called four-quadrant controller) has been accommodated inside the
component, which opens up a host of new possibilities for applications requiring compact designs; it also substantially reduces the assembly times required during installation.
The sizeable increase in revenues achieved in this area over the course of the current year bodes well for the future. Thanks to our global network, we were able to generate
encouraging sales volumes shortly after rollout. Yet again, our technological prowess and global presence have provided us with a formidable competitive advantage.
Increasingly, products are being copied illegally, e.g. in China, and then sold at knock-down prices. What is Interroll doing to address this issue?
Product piracy is a global phenomenon. Any professional market participant has to take this problem very seriously indeed. Copying a product may be relatively simple in some
cases. However, it is much more difficult to "copy" the many years of management expertise associated with thousands of applications already implemented, a global network of
state-of-the-art competence centres, product-specific engineering, or other more subtle yet equally important factors such as corporate culture and commitment to an incisive
strategy aimed at maintaining a sustainable competitive advantage.
What is the rationale behind Interroll's concept of "Competence Centres"?
In order to retain the position of market leader, one has to focus on very specific elements of business. Working on the basis of this principle, Interroll has structured its
expertise, its know-how in specialised "Competence Centres".
Each Competence Centre is responsible for a specific product or product group worldwide. These responsibilities include product management, research and development, technical
assistance for local assembly and production units as well as strategic purchasing and logistics. Interroll Drives & Rollers has four Competence Centres: Conveyor Rollers
(Wermelskirchen, Germany), industrial Drum Motors (Baal, Germany), Checkstand Drum Motors (Copenhagen, Denmark) and DC RollerDrives (Wilmington/NC, USA). The Competence Centre
operated by Interroll Dynamic Storage for flow storage modules is located in La Roche sur yon, France. All conveyor modules and subsystems within the Interroll Automation unit are
the responsibility of our Competence Centre in Sinsheim, Germany. Our Competence Centre for technopolymer components for the entire Interroll Group is located in Sant'Antonino,
Switzerland. In addition, we have production companies and local assembly units in Canada, South Africa and Asia. These are supervised by the respective Competence Centres.
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