Condensed Statement of Income

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

Q2/2012

Revenue

The overall higher order volume for new trucks had a positive effect on our revenue in Q2/2012, which in total grew by 6%, or €70 million, to €1,166 million, compared to €1,096 million in Q2/2011. We mainly benefited from growth in our home market of Germany which grew by 9%. China, which grew by 3%, is still one of our major growth drivers in the emerging markets.

The new truck business contributed revenues of €653 million in Q2/2012, which is an increase of €63 million, or 11%, from €590 million in Q2/2011. The new truck business remained our strongest absolute revenue driver in Q2/2012. Due to our continuously growing installed base of more than one million trucks, we were also able to slightly grow our service business from €462 million in Q2/2011 to €469 million in Q2/2012. Within the service business after sales business reported the highest revenue growth rate of 9% compared to Q2/2011. Revenue in the ‘Other’ category, which includes advisory services, IT solutions and warehouse technology systems, increased by 38% to €30 million in Q2/2012 compared to Q2/2011.

Cost of Sales

The cost of sales in Q2/2012 increased by 5% to €838 million, from €796 million in Q2/2011. Compared to our 6% revenue growth, cost of sales rose at a lower rate. This was due to further efficiency gains in the production process and a higher overall capacity utilisation.

Gross Profit and Gross Margin

Our gross profit rose by 9% to €328 million in Q2/2012, from €300 million in Q2/2011. This was due to the higher business volume and an under-proportional increase of cost of sales compared to our revenue growth due to economies of scale and further improved operating performance across the main product categories. Consequently, gross margin rose from 27.4% in Q2/2011 to 28.1% in Q2/2012.

Selling Expenses

Our selling expenses increased by €7 million, or 5%, to €138 million in Q2/2012, from €131 million in Q2/2011. The increase in selling expenses reflected the higher business volume and related direct selling expenses. As a percentage of revenue, selling expenses were further reduced from 12.0% in Q2/2011 to 11.8% in Q2/2012.

Research and Development Costs

In Q2/2012, our research and development expenses remained stable at €29 million compared to Q2/2011. The costs incurred mainly related to research and development of new products, facelifts of existing trucks as well as to research and development of new technologies, such as the hybrid IC technology.

General and Administrative Expenses

Our general and administrative expenses increased by 7% to €76 million in Q2/2012 compared to €71 million in Q2/2011. As a percentage of our revenue, our administrative expenses remained almost stable at 6.6% in Q2/2012.

Other Income and Expense

Other income and expense primarily consists 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 are included. Our net other income decreased by €6 million to €13 million from €19 million in Q2/2011. In the prior year period, net other income had mainly been related to the remeasurement of purchase price obligations in connection with the acquisition of outstanding shares in UK dealers (mostly Linde Sterling) of €11 million. Similarly, in Q2/2012 we recognized a Non-recurring gain of €4 million for Linde Creighton.

Profit from Equity Investments/Other Financial Result

Profit from equity investments consists of all gains and losses that we realise on associates and joint ventures, which we account for under the equity method and for which we have no controlling interest. The profit from equity investments/other financial result amounted to €8 million in Q2/2012 compared to €11 million in the prior year period. The revaluation of our existing equity investment of 49% in our UK dealers due to the acquisition of the remaining 51% of outstanding shares resulted in a Non-recurring gain of €3 million in Q2/2012 (Linde Creighton) and of €4 million (Linde Sterling) in Q2/2011. The other financial result remained relatively stable at €1 million in Q2/2012 compared to the prior year period.

Q1-2/2012

Revenue

Notwithstanding the challenging macro environment, we experienced a high demand for our new trucks and service offerings during the first six months of 2012. We increased our order intake for new trucks, service offerings and hydraulics by 2% to €2,410 million for Q1-2/2012, compared to €2,353 million for Q1-2/2011. The strong demand, mainly from Germany, Eastern Europe and China, had a direct impact on our revenue in Q1-2/2012. Group revenue grew by 9%, or €198 million, to €2,311 million, compared to €2,113 million in Q1-2/2011. This increase was visible in both business segments, LMH and STILL, and across most product categories. The new truck business reported a strong growth of 13%, from €1,130 million in Q1-2/2011 to €1,277 million in Q1-2/2012, turning it into our biggest driver of revenue also in the first six month of 2012. Hydraulics reported a sustained development of 11% in the first six months of 2012. Our service offering accounted for revenue of €941 million in Q1-2/2012, compared to €899 million in Q1-2/2011, an increase of 5%. Highest absolute growth within the service business came from after sales with a contribution of €568 million in revenue in Q1-2/2012, which represents a plus of €48 million compared to Q1-2/2011.

Cost of Sales

The cost of sales increased to €1,663 million in Q1-2/2012, a plus of 8% compared to Q1-2/2011, when the cost of sales was €1,539 million. The growth in cost of sales was lower than the revenue growth of 9% in Q1-2/2012 as a result of efficiency gains in production and a higher overall capacity utilisation.

Gross Profit and Gross Margin

Our gross profit rose by 13%, or €74 million, to €648 million in Q1-2/2012, from €574 million in Q1-2/2011. Gross margin also rose from 27.2% in Q1-2/2011 to 28.0% in Q1-2/2012 due to a rise in our capacity utilization especially in the new truck and hydraulics business and better operating performances across all product categories.

Selling Expenses

Our selling expenses increased by €14 million, or 5%, to €275 million in Q1-2/2012, from €260 million in Q1-2/2011 due to the higher business volume and related direct selling expenses in Q1-2/2012 compared to Q1-2/2011. The selling expenses as a percentage of revenue decreased however from 12.3% in Q1-2/2011 to 11.9% in Q1-2/2012.

Research and Development Costs

In Q1-2/2012 our research and development expenses amounted to €62 million. In Q1-2/2011 research and development expenses amounted to €57 million. This increase was mainly related to research and development of new products, facelifts of existing trucks as well as to new technological developments, such as the hybrid IC technology. Our total research and development spending including amortization expense, depreciation and capitalization amounted to €58 million in Q1-2/2012. As a percentage of revenue our research and development spending amounted to 2.5% (4.3% as a percentage of new trucks & hydraulics revenue), compared to 2.7% in Q1-2/2011.

General and Administrative Expenses

Our general and administrative expenses increased by 10% and amounted to €147 million in Q1-2/2012, compared to €133 million in Q1-2/2011. As a percentage of revenue, our administrative expenses remained stable at 6.3% in Q1-2/2011 and Q1-2/2012.

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 are included. Our net other income and expense decreased from €24 million in Q1-2/2011 to €18 million in Q1-2/2012. The decrease was mainly due to the remeasurement of purchase price obligations in connection with the acquisition of outstanding shares in UK dealers. In Q1-2/2011 we recognized a gain of €11 million, mainly in relation to Linde Sterling. In Q1-2/2012 we recognized a gain of €4 million for Linde Creighton.

Profit from Equity Investments/Other Financial Result

Profit from equity investments consists of all gains and losses that we realise 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/other financial result increased from €11 million in Q1-2/2011 to €13 million in Q1-2/2012. The revaluation of the existing 49% equity investment in Linde Creighton and the acquisition of the remaining 51% of outstanding shares resulted in a Non-recurring gain of €8 million in Q1-2/2012 and of €4 million (Linde Sterling) in Q1-2/2011. The other financial result remained stable at €1 million in Q1-2/2012 compared to Q1-2/2011.

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

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

Q2/2012

In Q2/2012, our EBIT amounted to €105 million, compared to €98 million in Q2/2011. This increase of €7 million was primarily the result of the sustained growth in sales volume in our established regional markets as well as the steady demand from China and Eastern Europe. Moreover, further improved capacity utilisation levels, both in our new truck business and our hydraulic components business, also supported this earnings growth. In Q2/2012, we achieved an Adjusted EBIT of €111 million, which represents a growth of €11 million, or 11%, compared to Q2/2011. Adjusted EBIT, which excludes Non-recurring items and KION acquisition items, corresponds to an Adjusted EBIT margin of 9.5% in Q2/2012, which was above the Q2/2011 level of 9.2%.

Adjusted EBIT was driven by a strong operating performance and better capacity utilisation levels due to our successful restructuring programme. In Q2/2012, Non-recurring items amounted to positive €3 million, impacted by the revaluation of our 49% equity investment in Linde Creighton and also by the remeasurement of purchase price obligations in connection with the remaining 51% of outstanding shares. In Q2/2011, EBIT had included Non-recurring items of positive €7 million, which were mainly due to restructuring costs and gains due to the remeasurement of shares in UK dealers.

The KION acquisition items had a negative impact of €9 million in Q2/2012, and remained unchanged compared to Q2/2011. The effects of the purchase price allocation in connection with the KION acquisition primarily include depreciation and amortization as well as impairment and administration charges for KION Holding 1 GmbH.

We achieved an Adjusted EBITDA of €188 million and an Adjusted EBITDA margin of 16.1%, compared to an Adjusted EBITDA of €173 million and an Adjusted EBITDA margin of 15.8% in Q2/2011. Depreciation and amortization increased from €80 million in Q2/2011 to €85 million in Q2/2012.

Financial Income and Expense

Net finance costs increased by €9 million from €65 million in Q2/2011 to €74 million in Q2/2012 mainly due to an increase of net foreign exchange rate losses of €12 million. Interest expense from loans decreased by €4 million from €33 million in Q2/2011 to €28 million in Q2/2012. Interest expense from the corporate bond increased by €1 million and amounted to €9 million in Q2/2012.

Income Taxes

In Q2/2012, we reported a net tax expense of €21 million, compared to €25 million in Q2/2011. The current income tax expense decreased by €6 million to €14 million in Q2/2012 (Q2/2011: €19 million). Despite the positive results of operations, management's previous estimate of the possibility to utilise unused tax losses in future profitable years has not changed and, thus, previously unrecognized deferred tax assets were also not recognized this time. Net deferred tax expense amounted to €8 million, compared to €6 million in the corresponding prior year period.

Net Income for the period

In Q2/2012, we reported a net income of €9 million, compared to a net income of €8 million in Q2/2011. This was driven by the higher EBIT of €7 million and lower income tax expenses of €4 million. These positive effects were partially offset by higher net finance cost of €9 million.

Q1-2/2012

In Q1-2/2012, our EBIT amounted to €196 million, compared to €159 million in Q1-2/2011. This growth of €37 million was primarily due to higher revenue levels in Q1-2/2012 reflected mainly in the new truck and after sales businesses. Demand from major developed countries and from China and Eastern European countries supported the positive development in the first six months of 2012. Our Adjusted EBIT, which excludes Non-recurring items and KION acquisition items, rose by €37 million to €213 million in Q1-2/2012. The increased Adjusted EBIT corresponds to an Adjusted EBIT margin of 9.2% in Q1-2/2012. Non-recurring items in Q1-2/2012 totalled a positive €1 million, primarily as a result of the share price remeasurement in Linde Creighton amounting to €12 million and due to a property sale in UK amounting to €3 million. These positive effects were largely offset by follow-up costs due to the footprint measures in Italy, France and UK and consulting fees. In Q1-2/2011, net Non-recurring items were also positive €1 million resulting from relocation costs, severance payments and general headcount reductions, which had been offset by positive income effects from our UK dealers amounting to 15 million.

The KION acquisition items had a negative impact of €18 million in Q1-2/2012, compared to €17 million in Q1-2/2011. The effects of the purchase price allocation in connection with the KION acquisition primarily include depreciation and amortization as well as impairment and administration charges for KION Holding 1 GmbH.

We achieved an Adjusted EBITDA of €363 million and an Adjusted EBITDA margin of 15.7% in Q1-2/2012, compared to an Adjusted EBITDA of €322 million and an Adjusted EBITDA margin of 15.2% in Q1-2/2011. Depreciation and amortization increased from €161 million in Q1-2/2011 to €168 million in Q1-2/2012.

Financial Income and Expense

Net finance cost increased by €12 million from €114 million in Q1-2/2011 to €126 million in Q1-2/2012. Due to interest payments for the corporate bond issued in April 2011, the interest expense from loans declined by €10 million to €59 million in Q1-2/2012. Interest expense for the corporate bond was at €17 million in Q1-2/2012, compared to €7 million in Q1-2/2011. Net foreign currency exchange rate losses (including gains and losses on hedging instruments) amounted to €9 million in Q1-2/2012 compared to net foreign currency exchange rate gains of €2 million in Q1-2/2011.

Income Taxes

In Q1-2/2012, we reported a net income tax expense of €44 million, compared to €40 million in Q1-2/2011. Driven by the increased earnings before taxes, the current income tax expense grew from €32 million in Q1-2/2011 by €1 million to €33 million in Q1-2/2012. Notwithstanding the positive results of operations, management's previous estimate of the possibility to utilise unused tax losses in future profitable years has not changed and, thus, previously unrecognized deferred tax assets were also not recognized this time. Net deferred tax expense amounted to €11 million in Q1-2/2012, compared to €8 million in Q1-2/2011.

Net Income for the period

For Q1-2/2012 we reported a net income of €26 million, compared to €4 million in Q1-2/2011. The growth in net earnings of €21 million was mainly driven by the EBIT growth. Net finance cost increased by €12 million and income tax expenses increased by €4 million as described above.