German turnover down, foreign sales up

Turnover further up, but earnings down after nine months
The poor economic circumstances of our core market, Germany, have also continued in the third quarter of the current fiscal year 2004. Due to favorable growth abroad we have been able to improve turnover to a slight extent in spite of this problematic environment. However, profits have been burdened by the ongoing price slump and margin pressure in the consumer electronics industry in Germany.

In the first nine months of the current business year MEDION has been able to raise sales by 4.0 % from EUR 1,497.3 M to EUR 1,557.3 M. Domestic sales shrank to EUR 910.3 M after nine months compared to EUR 961.7 M in the previous year. EBIT totalled to EUR 61.4 M (previous year: EUR 85.3 M). Net earnings amounted to EUR 35.9 M. Consequently earnings per share decreased from EUR 1.03 to EUR 0.74.

Foreign business
The proportion of foreign sales amounted to 41.6 % (previous year: 35.8 %), which reflects a significant improvement. In total MEDION has achieved foreign turnover of EUR 647.0 M (EUR 535.6 M the year before) in the first nine months of the current business year. This corresponds to an increase by 20.8 %. Particularly positive has been the development on European markets, where turnover could be raised by 21.2 % from EUR 478.0 M to EUR 579.2 M. US business has been able to grow from EUR 9.7 M to EUR 15.6 M in the third quarter due to a successful back-to-school campaign.

The double-digit sales and earnings increases in our foreign European and overseas markets show that our successful business model has received a high degree of acceptance there. In Central and Eastern Europe, too, the sale of our products increasingly gains momentum.

In contrast to the optimistic expectations at the beginning of the year the German retail industry has, up to now, not received any growth support from the general economic upswing in Germany.

We are confident that our foreign business will continue to develop positively for the remainder of the year. However, in our home market, Germany, we are confronted with a weaker consumer confidence than last year. Under these circumstances we foresee group sales to reach EUR 2.5 to EUR 2.6 bn and EBIT to range between EUR 95 and EUR 105 M in the current fiscal year.

The future development of MEDION will be influenced by a couple of important factors: Besides a normalization of consumer business in Germany and the further expansion of foreign business, progress for our company will particularly require a high degree of creativity and innovative strength within our product management activities.

High creativity and flexibility, and the fast transformation of new product ideas into a marketable status in the areas of mobile computing, home cinema, telecommunication and wireless home networks, will be the core elements of MEDION’s positive future development.

In addition to this is the enlargement of our product portfolio by offering services such as digital photographic development services for our customers as well as the start of our music downloading portal "" in the fourth quarter of 2004.