Ad-hoc Announcement, 29 July 2004

Business affected by weak German consumer climate

Foreign sales further increased

Sales further up, earnings down
Sales in the first six months of 2004 rose by 5.0 % from EUR 1,197.2 M the year before to EUR 1,256.8 M. EUR 964.2 M or 76.7 % of total sales referred to multimedia products (previous year: 75.7 %). Sales in the entertainment and household electronics division amounted to EUR 267.8 M - this matches 21.3 % of total turnover (previous year: 22.4 %). In communications technology we achieved sales of EUR 24.8 M or 2.0 % of total group sales (previous year: 1.9 %).

EBIT went down by 14.7 % from EUR 68.2 M to EUR 58.1 M. As the financial aid to victims of flooding in Germany has been omitted tax ratio has shrunk. Thus net earnings have been shrinking at a lower rate from EUR 39.2 M the year before to EUR 33.9 M. Earnings per share have fallen by EUR 0.11 from EUR 0.81 to EUR 0.70.

Foreign growth further strengthened
Compared to the previous fiscal year, we have been able to raise foreign sales by 22.9 % from EUR 395.9 M to EUR 486.6 M, so that we have augmented our foreign exposure again considerably from 33.1 % to 38.7 %.

In the first six months of 2004 we have improved our European sales by 22.4 % from EUR 359.5 M to EUR 440.0 M. With the growth rate having climbed from 20.3 % in Q1 2004 to 25.6 % in Q2 our European sales have developed very favorably. On our overseas markets we have generated a sales increase in the first six months of 2004 of 27.7 % from EUR 36.4 M to EUR 46.5 M.


Outlook
At the present time we have to expect that the negative consumer climate in Germany, and thus the factors which affect our business, will not improve in the near future. Therefore, we will further strengthen our foreign expansion and will optimize our cost structures. Moreover we will intensify our efforts to make innovative trend consumer electronic products, which offer an optimal cost-benefit ratio, ready for launch on mass markets.

Coming to an overall assessment for the time being, we have to state that the sales and earnings projections we had made at the beginning of the year have proved to be too ambitious. In the case of the overall environment not stabilizing in Germany, declines in both sales and earnings even on a full year basis can no longer be completely excluded.