Condensed Statement of Income

Revenue

Group revenue in Q3/2012 amounted to €1,128 million, a growth of 8% compared to €1,044 million in Q3/2011. Revenue growth in Q3/2012 mainly came from the UK, France and North America.

New truck business - our largest product category - contributed revenues of €620 million in Q3/2012, an increase of €65 million, or 12%, from €555 million in Q3/2011. Revenue from the hydraulics business decreased by €3 million and amounted to €39 million in Q3/2012. Service offering improved from €447 million in Q3/2011 to €469 million in Q3/2012. Within the service business, the after sales business performed best and grew by 6% from €268 million in Q3/2011 to €285 million in Q3/2012.

Cost of Sales

The cost of sales in Q3/2012 rose by 7% to €818 million from €764 million in Q3/2011 and therefore at a lower rate than our revenue. This reflects our constant efforts to realise further efficiency improvements.

Gross Profit and Gross Margin

Our gross profit rose by 10% to €310 million in Q3/2012 from €281 million in Q3/2011. This came as a result of the higher business volume and an under-proportional increase in cost of sales compared to our revenue growth. Gross margin improved from 26.9% in Q3/2011 to 27.5% in Q3/2012.

Selling Expenses

Along with the revenue growth, selling expenses increased by €9 million, or 7%, to €135 million in Q3/2012 from €126 million in Q3/2011. As a percentage of revenue, selling expenses were slightly reduced from 12.0% in Q3/2011 to 11.9% in Q3/2012.

Research and Development Costs

In Q3/2012, our research and development expenses amounted to €29 million and remained stable compared to the prior year period. The costs incurred mainly related to research and development of new products, facelifts and series support of existing trucks as well as to research and development of new technologies, such as the hybrid IC or the Li-Ion technology.

General and Administrative Expenses

Our general and administrative expenses increased by 15% to €80 million in Q3/2012 compared to €70 million in Q3/2011. As a percentage of revenue, our administrative expenses increased from 6.7% in Q3/2011 to 7.1% in Q3/2012 mainly due to a higher number of employees.

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. These items are included in the line item “Other” in the condensed income statement. Additionally, gains and losses related to the sale, disposal or impairment of long-lived assets are included. Our net other income increased by €3 million to €9 million from €7 million in Q3/2011.

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, which we account for under the equity method and in which we have no controlling interest. These items are included in the line item “Other” in the condensed income statement. Due to an improved performance of our equity and other investments, the profit from equity investments/other financial result grew to €4 million in Q3/2012 compared to €1 million in Q3/2011.

Revenue

The growing demand from all regions, particularly from the European countries and Asia supported our revenue expansion in Q1-3/2012. Group revenue grew by 9%, or €282 million, to €3,439 million from €3,157 million in Q1-3/2011.

The new truck business reported a strong growth of 13%, from €1,685 million in Q1-3/2011 to €1,897 million in Q1-3/2012, being our biggest driver of revenue in Q1-3/2012 again. In Q1-3/2012, hydraulics reported a sustained development of 5% to €132 million in Q1-3/2012 (Q1-3/2011: €125 million). Our service offering accounted for revenue of €1,410 million in Q1-3/2012 compared to €1,346 million in Q1-3/2011, an increase of 5%. The highest absolute growth within the service business came from the after sales business with a contribution of €853 million of revenue in Q1-3/2012, which represents an increase of €65 million compared to Q1-3/2011.

Cost of Sales

The cost of sales grew to €2,481 million in Q1-3/2012, an increase of 8% compared to Q1-3/2011, when the cost of sales had been €2,302 million. The growth of the cost of sales was below the revenue growth in Q1-3/2012 of 9%.

Gross Profit and Gross Margin

Our gross profit rose by 12%, or €103 million, to €957 million in Q1-3/2012 from €854 million in Q1-3/2011. Gross margin rose from 27.1% in Q1-3/2011 to 27.8% in Q1-3/2012.

Selling Expenses

Our selling expenses increased by €23 million, or 6%, to €409 million in Q1-3/2012 from €386 million in Q1-3/2011 due to the higher business volume and related direct selling expenses. The selling expenses as a percentage of revenue, however, decreased slightly from 12.2% in Q1-3/2011 to 11.9% in Q1-3/2012.

Research and Development Costs

In Q1-3/2012, our research and development expenses amounted to €91 million compared to €86 million in Q1-3/2011. This increase was mainly related to our constant research and development of new products, facelifts and series support of existing trucks as well as to new technological developments, such as the hybrid IC or the Li-Ion technology. Our total research and development spending including amortization expense, depreciation and capitalization amounted to €86 million in Q1-3/2012. As a percentage of revenue, our R&D spending amounted to 2.5% compared to 2.7% in Q1-3/2011.

General and Administrative Expenses

Our general and administrative expenses increased by 12% and amounted to €226 million in Q1-3/2012 compared to €203 million in Q1-3/2011. As a percentage of revenue, our administrative expenses amounted to 6.6% in Q1-3/2012 compared to 6.4% in Q1-3/2011.

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. These items are included in the line item “Other” in the condensed income statement. Our net other income decreased from €31 million in Q1-3/2011 to €28 million in Q1-3/2012. The difference between the two periods was mainly related to a lower income from the remeasurement of purchase price obligations regarding our UK dealers. In Q1-3/2012, this income amounted to €5 million compared to €11 million in Q1-3/2011. Additionally, higher foreign exchange rate losses of €19 million in Q1-3/2012 compared to €14 million in Q1-3/2011 reduced the net other income in the reporting period.

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 in which we have no controlling interest. These items are included in the line item “Other” in the condensed income statement. The profit from equity investments/other financial result grew from €12 million in Q1-3/2011 to €17 million in Q1-3/2012. The remeasurement of our equity investment and the acquisition of outstanding shares in Linde Creighton in Q2/2012 contributed a non-recurring gain of €8 million and resulted in higher profits from equity investments in Q1-3/2012. In Q1-3/2011, the remeasurement of the previously held shares and the full acquisition of Linde Sterling had supported the positive effect with a non-recurring gain of €4 million. The other financial result improved slightly from €1 million in Q1-3/2011 to €2 million in Q1-3/2012 which was mainly due to dividends from other investments.

In Q3/2012, our EBIT amounted to €80 million compared to €63 million in Q3/2011. This €16 million increase is primarily a result of higher volumes and higher capacity utilisation levels in our new truck business. In Q3/2012, we achieved an Adjusted EBIT of €106 million which represents a growth of €22 million, or 26% compared to Q3/2011. The Adjusted EBIT, which excludes Non-recurring items and KION acquisition items, corresponded to an Adjusted EBIT margin of 9.4% in Q3/2012, which was above the Q3/2011 level of 8.1%.

In Q3/2012, Non-recurring items amounted to negative €17 million and related mainly to consulting fees and restructuring expenses. In Q3/2011, EBIT had included Non-recurring charges of €12 million, which had mainly been due to relocation costs, severance payment and consulting fees.

The KION acquisition items had a negative impact of €9 million in Q3/2012 compared to negative €8 million in Q3/2011. These items mainly relate to depreciation, amortization, impairment and administrative charges for KION Holding 1 GmbH.

We achieved an Adjusted EBITDA of €185 million and an Adjusted EBITDA margin of 16.4% in Q3/2012 compared to an Adjusted EBITDA of €160 million and an Adjusted EBITDA margin of 15.3% in Q3/2011. Depreciation and amortization increased from €83 million in Q3/2011 to €88 million in Q3/2012.

Financial Income and Expense

Net finance cost decreased by €27 million from €84 million in Q3/2011 to €56 million in Q3/2012. This decrease was mainly due to net foreign exchange rate gains of €5 million in Q3/2012 compared to net losses of €19 million in Q3/2011. The slight decrease of the EURIBOR had a positive effect on our financing costs. Interest expense from loans amounted to €31 million in Q3/2012 compared to €33 million in Q3/2011. Interest expense for the corporate bond remained stable at €9 million in Q3/2012 compared to Q3/2011.

Income Taxes

In Q3/2012, we reported a net tax expense of €15 million compared to €6 million in Q3/2011. The current income tax expense increased by €7 million to €17 million in Q3/2012 compared to income tax expense of €10 million in Q3/2011. 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 Income for the period

In Q3/2012, we reported a net income of €9 million compared to a net loss of €26 million in Q3/2011. The net income was driven by the stronger EBIT, which was €16 million higher than in Q3/2011, and by net finance cost, which was €27 million lower than in the previous year period. These positive effects were partially offset by income tax expenses, which increased by €9 million compared to Q3/2011.