Brief Report on Business Development in Fiscal Year 2018 and the Expectations for 2019

Continued investments in technological change and new business models

Stable sales on high level – income affected by one-off effects

In FY 2018, corporate sales – at € 3,693.5 million – were slightly below the previous year's record value (€ 3,749.2). The strong growth of 2017 could not be continued; however, sales stabilized on a high level. Growth was recorded by the Metering and Defence corporate divisions which are on a stable growth course. The total number of employees increased by 125 persons to 17,298. The generated EBIT amounted to € 215.3 million (2017: € 274.3 million). The decline was mainly accounted for by one-off expenditures for accruals for pensions and accruals for restructuring measures.

High investments in new business models to help shaping the structural change

In 2018, capital spending amounted to a total of € 118.5 million (after € 104.2 million in 2017). In the multi-year comparison, this was a new record value. R&D expenses also rose distinctly from € 307.3 million in 2017 to € 325.2 million. Diehl invests massively in new products and interesting technologies to help shaping the structural change in various industrial sectors. Besides growth opportunities at Defence, in electromobility and in the business with water and energy providers, Diehl focuses on innovations to ensure stable business development. Examples are the Airbus Innovation Award for Diehl's new galley chiller as well as a large-scale order for cell contact systems in the Metall division. The networked cabin, innovative radio communication with MIOTY or data-based business models for water and energy providers (Metering) are further examples from the world of digitalization.

2019: Although clouds are gathering on the economic horizon, Diehl will push ahead with the changes while maintaining the sales level.

The declining overall economic growth will undoubtedly impair the positive development of the Diehl Group, although there are indications that the group's positioning as a community of opportunities and risks will once again prove its worth. Due to the economic and structural challenges, the group will maintain the sales level in 2019.