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11/05/2010

PAUL WURTH: COMPETITIVENESS THROUGH INNOVATION

Paul Wurth: Competitiveness through innovation

Luxembourg, 11 May 2010. The ordinary General Meeting of shareholders of Paul Wurth S.A., held today, approved the financial statements of the year 2009.

In 2009, the global steel industry suffered one of its worst downturns following a spectacular drop of sales prices and a subsequent massive reduction in production levels. In this very adverse business climate which does all but favour capital expenditure, Paul Wurth was able to soften the impact of the economic crisis on its activity by relying on its technological competences and customer proximity whilst still achieving a strong financial performance. The Group turned 2009 also to good account by intensifying its research and development programmes, mainly for optimizing energy consumptions in steel industry. Finally, Paul Wurth extended its activities by acquiring a 50.4% shareholding in CTI Systems S.A.

Limited impact in a strongly disrupted environment

In an economic climate that is unfavourable to capital expenditure, Paul Wurth had to face in 2009 - after three record years - a sharp drop in the volume of new order intake totalling 420.3 million euros (781.1 million euros in 2008). Given the extent of savings that many customers had to achieve in order to maintain creditworthiness, this volume of new orders is quite noteworthy, evidencing the continuous appeal of Paul Wurth products and services to customers. Considering the tremendous difficulties the European industrial sector had to cope with in 2009, it is remarkable that the Group’s most buoyant market was Germany, which accounted for nearly a third of new orders recorded, followed by India and Brazil.
If at the beginning of the financial year the execution of a certain number of contracted projects was endangered by the collapse of steel prices and the resulting strong production cuts, it is reassuring that schedules for key projects have meanwhile been renegotiated with clients and that only very few contracts were cancelled.

One project not affected by market upheaval was the Hyundai Steel project in South Korea. As a matter of fact, the first of the two blast furnaces in the construction of which Paul Wurth is involved was blown-in on 5 January 2010. With a production capacity of 4 million tonnes per year of hot metal, the new blast furnace integrates all the most advanced technologies, particularly in terms of environmental protection.

Paul Wurth’s expertise in cokemaking was further highlighted with the commissioning of the N°3 coke oven battery, built on a turnkey basis on behalf of Zentralkokerei Saar at Dillingen in Germany. In the recycling technologies sector, the PRIMUS® plant, commissioned in April 2009 at Dragon Steel in Taiwan and designed to recycle 100.000 tonnes per year of iron and steelmaking residues, quickly reached cruising speed.

Given projects under execution and current calls for tender, it is obvious that the economic crisis has speeded up the shift of the steel industry’s target markets to Asia and South America. In order to grasp all business opportunities there, Paul Wurth is continuing to strengthen its commercial and operational teams in these regions and particularly in India, where the Group is presently involved in no less than 5 large-scale blast furnace construction and modernisation projects.

Development through innovation

Since ever, carrying out research and development has been vital to maintain one’s competitive advantages – all the more in a difficult business environment. Above mentioned projects all feature technological developments, which make and maintain Paul Wurth’s reputation as an innovative and reliable partner.

In 2009, a priority R&D direction was to identify or improve, technical solutions for substantially reducing energy consumption in producing pig iron and steel. Furthermore, Paul Wurth continued to focus on developing its technological portfolio. The acquisition of a majority stake (50.4%) in CTI Systems S.A., specialised in the design and manufacture of automated materials handling and heavy-duty storage systems, also allowed to enlarge the business segments of the Group.
Paul Wurth’s intention to leverage available scientific potential in order to strengthen even further its technological lead made the Company sign on 25 February 2010 a collaboration agreement in the field of research and education with the University of Luxembourg. Likewise, Paul Wurth invited about 200 students and pupils to its first Students’ Technology Fair, an event aimed at bringing the world of industry and the job of the engineer closer to young people.

Results for the financial year 2009

Benefiting from a full order book at the beginning of the financial year, the Group’s consolidated turnover fell only relatively slightly in 2009, reaching 620.9 million euros. Although the results of the Group were not as high as in the outstanding year 2008, a sizeable profit of 21.6 million euros was achieved.
Given these results, the General Meeting approved the payment of an unchanged gross dividend of 420 euros per share on account of the 2009 financial year.

Outlook

Although production levels in steelmaking gradually improved and selling prices stabilised in the last few months of 2009, there is likely to be limited capital expenditure in the sector in the next few years, particularly in terms of creating new capacity. Only the markets in Asia, Brazil and Russia show more promising signs of growth and an improvement in the investment climate can already be seen there. However, Paul Wurth’s know-how, its wide variety of competitive services and its local presence in the high-potential markets of the future will enable the Group to face the profound changes brought about by the globalisation of markets.

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PAUL WURTH S.A.

 32, rue d'Alsace

 L-1122 Luxembourg

 LUXEMBOURG

 P.O. Box 2233

 L-1022 Luxembourg

 LUXEMBOURG

 Tel.: (+352) 4970-1

 Fax.: (+352) 4970-2209

 paulwurth@paulwurth.com

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