Expectations concerning the development of the global economy are currently characterised by a high degree of uncertainty. The consequences of the economic downturn are not yet entirely foreseeable. As a result, it is exceedingly difficult at present to predict what effects overall economic trends around the world will have on the business prospects of the Demag Cranes Group.

We intend to continue expanding our market position in the markets relevant to us in financial year 2009/2010. However, it must be assumed that we will also feel the effects of our customers’ reluctance to spend in the coming financial year. This development will necessarily have an impact on our revenue and earnings. We have therefore introduced the following countermeasures: with our restructuring programme, we are paving the way to sustainably safeguarding the Group by lowering its break-even point. Overall, we aim to save up to EUR 60 million. However, the effect on earnings will not yet materialise in full in financial year 2009/2010, since a number of measures will not be implemented until financial year 2010/2011. Overall, the restructuring programme aims to produce a substantial reduction in fixed and variable costs in the two business segments Industrial Cranes and Port Technology (for further information, see the segment outlook on Industrial Cranes and Port Technology). Following the conclusion of negotiations, the necessary steps will now be implemented to increase efficiency in the Industrial Cranes and Services segments. In addition, the Management Board will implement the measures already announced to more closely dovetail the entire organisation and unite management of shared services, e.g. IT, human resources and purchasing across the Group. With this restructuring programme, the Management Board has paved the way not only to leading the Group through the crisis, but also to making it more competitive for the future.

It is almost impossible to give a firm forecast in the Industrial Cranes segment, due to the heavy dependence on economic cycles described above. The late cyclical nature of this segment means that a substantial improvement in the overall economic situation will probably only produce a revival in our Industrial Cranes business after some delay. This applies – albeit to differing degrees – to both mature and emerging markets and thus to the entire industrial cranes market. In financial year 2008/2009, we benefited in particular from our healthy order book. As at 30 September 2009, however, it was 43.6 percent down on the previous year. Given that the environment is not expected to improve substantially and sustainably in the near future, we began to implement the restructuring measures mentioned above. The adjustment of capacities, primarily through staff cuts, will generate cost savings and thus lower the break-even point for operating EBIT. In addition, once restructuring is complete, we will be in a position to organise our capacities more flexibly. In this way, we are countering the uncertain market situation and the expectation that the crisis may continue for some time to come.

Future economic development in the Port Technology segment depends squarely on the development of the global economy, since this correlates direct with transport volumes and the associated need for handling equipment. We expect investment activities to gradually start picking up again, but at moderate rates of growth. How our order intake and revenue will develop therefore also depends on decisions for the award of various major port projects, which we cannot predict at present. Hence, the restructuring measures that were necessary to adjust cost structures to the anticipated lower market volumes were also comprehensively introduced in the Port Technology segment at an early stage and the negotiations were successfully concluded. Thanks to the resulting cost savings, we are more flexibly positioned also in this segment and will be able to plan our capacities even better in future.

In the Services segment, we will make further progress in increasing our worldwide presence for our customers. In addition, we plan to further increase the efficiency of all business processes and underpin our sales activities. This continuous improvement process will provide significant impetus for profitable growth. Refurbishment business, just like new equipment, has suffered over the last few months from customers’ reluctance to invest. In future, however, demand is expected to grow gradually when adjustments to plant become necessary as production rises again. The Services segment therefore moves into the new financial year invigorated and will actively exploit the market opportunities that present themselves.

To sum up, we currently assume that revenue in financial year 2009/2010 will be down on financial year 2008/2009. This is due not least to the substantially lower order book in the Industrial Cranes segment as at 1 October 2009 than at the beginning of financial year 2008/2009, especially for Process Cranes and Standard Cranes. In financial year 2009/2010, we expect the Group’s operating EBIT margin to be in the mid single-digit range, depending on the absolute revenue level. We are also confident – subject to all uncertainties concerning the market environment – that the Group will continue to hold its own in financial year 2010/2011.

The Group’s investment volume in financial year 2009/2010 is expected to just exceed the previous-year level, depending on how revenue develops.

The Demag Cranes Group’s sound financial position may create opportunities to turn competitors’ possible financial problems to its advantage and participate more actively in the process of industry consolidation than in previous years.

As the adverse effects of the economic and financial crisis and the restructuring expenses already incurred have had a heavy impact on net income after tax in financial year 2008/2009, the Management Board and the Supervisory Board have jointly decided not to propose a dividend for financial year 2008/2009 at the Annual General Meeting. This decision has been made in particular in light of the fact that the economic environment continues to be strained and uncertain. In principle, attractive dividends are to be paid again in future in line with the Company’s operating performance.