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Brief Report on Business Development in Fiscal Year 2019 and the Expectations for 2020

Diehl Holding

Stabilization of sales in 2019 on high level – Corona Crisis causes noticeable decline in sales in 2020

In FY 2019, the Diehl Group's corporate sales – at € 3,628.5 million – were just below previous year's value (€ 3,693.5 million). In spite of economic and structural challenges 2019 brought along, the further stabilization on a high level could thus be achieved, according to expectations. Growth was as expected at Metering, Defence and Aviation whereas Metall and Controls sales decreased. By the end of 2019, the total number of employees increased by 259 persons, or 1.5%, to 17,557. The generated EBIT amounts to € 121.4 million and was thus € 93.9 million below the 2018 value and fell short of the forecast. The decrease can be explained, besides earnings reductions due to de-clines at Metall and Controls, especially by higher one-off risk management expenditures of un-planned depreciation on tangible assets and impairments on inventories.

Continuously high investments in new business models to push ahead the technological structural change

Corporate investments reached once again a record value in 2019 which added up to a total of al-most € 125 million (after € 119 million in 2018). R&D expenses also remained on a record level and rose from € 352.2 million in 2018 to € 366.6 million in 2019. Diehl invests massively in new prod-ucts and innovations to help shaping the structural change in various industrial sectors. These pri-marily include electromobility and business with water and energy providers as well as growth pro-spects at Defence.

2020: The impacts of the virus on the global economy will noticeably impair the Diehl Group's development as well as the whole German economy

Diehl is currently increasingly focusing on various scenarios in order to be prepared for post-Corona times. The Corona Crisis causes a noticeable decline in sales; it is not yet foreseeable when the de-mand will even out in the markets that are important for Diehl. This is why the instrument of short-time work will accompany the Group probably until the end of the year. The Diehl Group will have to further develop its positioning as a community of opportunities and risks under basic conditions still unknown to us.