Condensed Statement of Income

Our revenue growth can be broken down by product category as follows:

Revenue

Notwithstanding the moderate economic environment in the markets that are most important to our business such as Germany, France, China, Brazil and Eastern Europe, we outperformed the market development in the new truck business in Q1/2012. In addition, the increased truck utilisation levels accelerated the replacement cycle and had a positive impact on demand for our service offering. The total value of our order intake for new trucks, service offering and hydraulics increased on a year-over-year basis by 4% to €1,207 million for Q1/2012, compared to €1,157 million for Q1/2011.

The overall higher order intake in Q1/2012 had a positive impact on our revenue, which grew by 13%, or €128 million, to €1,144 million, compared to €1,016 million in Q1/2011. This increase was visible in the business segments, LMH and STILL and across all product categories. The new truck business reported a strong revenue growth of 16%, from €540 million in Q1/2011 to €624 million in Q1/2012, making it our most important revenue driver in absolute value in Q1/2012. Hydraulics performed strongly generating a 25% increase to €49 million in Q1/2012. Our service offering accounted for revenue of €472 million in Q1/2012, compared to revenue of €437 million in Q1/2011, which is an increase of 8%. The growing number of our trucks in the market and higher capacity utilisation levels led to a higher demand for services and spare parts. We have also experienced higher demand for rental and used trucks. Revenue in the ‘Other’ category, which includes advisory services, IT solutions and warehouse technology systems increased by 16% to €27 million in Q1/2012.

Cost of Sales

The cost of sales increased by 11% to €825 million in Q1/2012, from €742 million in Q1/2011. Compared to our 13% revenue growth, our cost of sales rose at a lower rate. This is mainly due to efficiency gains in production, higher overall capacity utilisation, and improvements in revenue across all product categories.

Gross Profit and Gross Margin

Our gross profit rose by 17% to €320 million in Q1/2012, from €274 million in Q1/2011. This was caused by a lower rate of increase of our cost of sales in Q1/2012 compared to our revenue growth in Q1/2012. This positive development is due to the continued improvement in our capacity utilisation, production efficiency gains and better operating performance across all product categories. Consequently gross margin rose from 27% in Q1/2011 to 28% in Q1/2012.

Selling Expenses

Our selling expenses increased by €7 million, or 6%, to €137 million in Q1/2012, from €129 million in Q1/2011 due to the improved sales performance and related direct selling expenses. Selling expenses as a percentage of revenue decreased from 13% in Q1/2011 to 12% in Q1/2012 and was disproportionately low compared with revenue growth.

Research and Development Costs

In Q1/2012, our research and development expenses amounted to €33 million. In Q1/2011, research and development expenses amounted to €27 million. This 21% increase was mainly related to research and development of new products, new facelifts of existing products and other new technologies, including hybrid IC technology.

General and Administrative Expenses

Our general and administrative expenses increased by 13% to €70 million in Q1/2012 compared to Q1/2011. As a percentage of our revenue, our administrative expenses were 6% in Q1/2012 and Q1/2011, both.

Other Income and Expense

Other income and expense primarily consist of gains and losses related to foreign exchange rate differences resulting from the measurement of financial assets and receivables denominated in a foreign currency. Additionally, gains and losses related to the sale, disposal or impairment of long-lived assets as well as profit from the release of deferred lease profits are included. Our other income and expense amounted to €6 million in Q1/2012 and remained approximately stable, compared to €5 million in Q1/2011.

Profit from Equity Investments/Other Financial Result

Profit from equity investments consists of all gains and losses that we realize on associates and joint ventures that we account for under the equity method and for which we have no controlling interest. The profit from equity investments amounted to €5 million in Q1/2012 and approximately nil in the prior year period. As a result of the remeasurement of the existing shares owned by KION (49 per cent) in our UK dealer Linde Creighton Ltd. which were held prior to the acquisition of the remaining 51 per cent on 28 February 2012, €5 million was recognized in the income statement as a Non-recurring Item and reported as profit from equity investments. Other financial results amounted to €1 million in Q1/2012 compared to approximately nil in Q1/2011.

Earnings Before Interest and Taxes (EBIT), Adjusted EBIT, Adjusted EBITDA

The following tables show the adjustments to calculate Adjusted EBIT and Adjusted EBITDA:

Our EBIT amounted to €91 million in Q1/2012, compared to €60 million in Q1/2011. This  €31 million increase is primarily a result of a further positive revenue increase in the major developed markets and the positive revenue increase in our target growth regions of China and Eastern Europe, as well as improved capacity utilisation levels both in our new truck business and our hydraulic components business. Our Adjusted EBIT, which excludes Non-recurring Items and KION acquisition items, increased by €27 million to €101 million in Q1/2012. The increased Adjusted EBIT corresponds to an Adjusted EBIT Margin of 8.9% in Q1/2012, which was impacted by a strong operating performance and better capacity utilisation due to our successful restructuring programme. This includes among other measures the closure of the plant in Basingstoke, United Kingdom as well as the downsizing of our plants in Reutlingen, Germany and Kahl, Germany. In Q1/2012, Non-recurring Items in total amounted to negative €2 million, driven by restructuring expenses and consulting fees. The Non-recurring Items include a gain of €5 million due to the remeasurement of shares, representing a 49 per cent ownership in Linde Creighton Ltd., which were held prior to the acquisition of the remaining shares on 28 February 2012. Additionally, in Q1/2012 we sold property due to the closure of the plant in Basingstoke, United Kingdom, with a positive impact of €3 million. In Q1/2011 EBIT included Non-recurring Items of negative €6 million, which were mainly driven by relocation costs, severance payments and general headcount reductions.

The KION acquisition items had a negative impact of €9 million in Q1/2012, compared to €8 million in Q1/2011. These effects of the purchase price allocation in connection with the KION acquisition primarily include depreciation, amortization and impairment as well as administration charges for KION Holding 1 GmbH.

We achieved an Adjusted EBITDA of €176 million and an Adjusted EBITDA margin of 15.4% compared to an Adjusted EBITDA of €149 million and an Adjusted EBITDA margin of 14.6% in Q1/2011. Depreciation, amortization and impairment charges increased from €81 million in Q1/2011 to €83 million in Q1/2012.

Financial Income and Expense

Net finance cost increased by €3 million from €49 million in Q1/2011 to €52 million in Q1/2012. This increase is mainly due to the corporate bond issued in April 2011. While the interest expense from loans (including interest rate derivatives) decreased in Q1/2011 from €37 million to €31 million in Q1/2012 the interest expense from the corporate bond amounted to €9 million compared to nil in Q1/2011. The net foreign currency exchange rate gains (including gains and losses on hedging instruments) remained relatively stable at €7 million in Q1/2012, compared to €6 million in Q1/2011.

Income Taxes

In Q1/2012, we reported a net income tax expense of €23 million, compared to a net tax expense of €15 million in Q1/2011. Driven by the increased earnings before taxes, the current income tax expense increased by €7 million to €20 million in Q1/2012 compared to a current income tax expense of €13 million in Q1/2011. Despite the positive results of operations, management's previous estimate of the possibility to utilize unused tax losses in future profitable years has not changed and, thus, previously unrecognized deferred tax assets were not recognized. Net deferred income tax expense remained relatively stable at €3 million, compared to a net deferred tax expense of €2 million in the corresponding prior year period.

Net Income for the Period

In Q1/2012 we reported a net income of €16 million, compared to a net loss of €4 million in Q1/2011. This increase of €20 million was mainly driven by the higher EBIT of €31 million and partially offset by an increase of net finance cost of €3 million and by an €8 million increase in income tax expenses as described above.