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Rumors of Sheetfed Divestiture Overblown, Summary of MAN’s Annual Meeting

Press release from the issuing company

June 15, 2004 -- (by WhatTheyThink.com staff, Edited by Cary Sherburne) -- MAN, the truck-making, printing and mechanical engineering group, held its Annual Meeting last week and announced a new CEO, a rebranding initiative, more restructuring and performance details from its printing and trucking divisions. The New CEO As many analysts expected, Hakan Samuelsson will succeed retiring CEO Rudolf Rupprecht. "In Mr. Samuelsson, we have found an extremely competent leader from within the Group to succeed Mr. Rupprecht. The Supervisory Board is certain that Mr. Samuelsson will successfully manage the MAN Group from 2005 and prepare it for future challenges," said Dr. Jung, Supervisory Board Chairman at the Annual General Meeting. Among Mr. Samuelsson’s key achievements during his four years as Executive Board Chairman of MAN Nutzfahrzeuge, was the reorganization of the management and corporate structure, increased profitability in a difficult economic environment and in spite of a declining market, as well as restructuring of the bus activities. Performance in Print Rupprecht stated that business has been solid since the last quarter in 2003. Overall, orders were up 34% in May against the previous year augmented by MAN Roland's performance at the drupa trade fair in Düsseldorf. Earnings before interest and taxes during the first three months of 2004 climbed by EURO 60 million to EURO 72 million. Additionally, MAN will reduce headcount by 500 jobs. The cuts will come from the MAN Technologie division and at the printing subsidiary. The group reduced headcount by 6,000 staff around the world last year. In the Printing Machines sector, Rupprecht reported that the market remained extremely weak throughout 2003. “Publishers and printers were operating on low margins, surplus capacity dominated the market and many printers postponed scheduled investments. This resulted in a very slow demand for printing systems. Due to a recovery at year-end, we were able to marginally increase order intake compared with 2002, but sales again fell significantly, in line with the lower order backlog.” Rupprecht continued, “In spite of introducing fundamental cost-cutting measures, most notably at the sheet-fed sites in the Rhine-Main area, we were unable to prevent the Printing Machines Division slipping into the red with overall pretax earnings of minus 37 million euros. By consistently pursuing our strategies to revive the sheet-fed business, mainly by amalgamating works in the Offenbach area, introducing cost-saving measures, and last - but not least, taking advantage of the return to more encouraging order-intake figures registered since the drupa trade fair, which considerably exceeded our expectations, we have justified hopes that Printing Machines will be able to move back into the black during the course of this year.” Divestiture Rumors At the annual meeting, Samuelsson stated that he had no intention of splitting up the diversified group. At the same time, it was clear from his comments that there was no room for underperforming operations. Samuelsson indicated he would not tolerate divisions subsidizing their poorer performing units, according to a report from the Frankfurter Allgemeine Zeitung. His strong statements reflect the company’s tough upcoming labor union negotiations. Responding to a question about the printing segment and slow growth in the print industry, Rupprecht said the company may examine opportunities for the sheetfed division. including selling the unit to a financial investor. He also indicated that MAN may shift more production for the printing-press and diesel-motor division abroad to lower-cost countries. Several media reports have played up these statements, causing speculation that the divestiture of MAN’s sheetfed division was imminent. This weekend, MAN Roland's CEO in North America Yves Rogivue told WhatTheyThink.com that Rupprecht’s statements have been taken out of context saying, “There is no plan to spin-off MAN Roland’s Sheetfed Division. In answering analysts’ questions, Mr. Rupprecht was simply making the point that no business unit is sacred and each must perform profitably. We anticipate no change in MAN Roland’s product mix in the foreseeable future." Rogivue continued, “As far as speculating what might occur three or four years down the road, that’s open to a wide range of viewpoints. From my perspective, I see MAN Roland perfectly positioned to offer printers what they need most in the years ahead — automated systems that will let them take advantage of the efficiencies of computer integrated manufacturing. “As PrintCity at drupa demonstrated, MAN Roland is the only press manufacturer capable of integrating our presses — both sheetfed and web — into open systems that let the printer select the prepress and finishing solutions that are best for his needs. That results in an enormous competitive edge. “What’s more, we’re finding that an increasing number of our customers run both sheetfed and web presses from MAN Roland. They’re profiting from the fact that we can network their presses, institute common control structures and provide a universal source for parts and supplies. It makes no sense to disrupt that synergy, and we’re not about to." Refining the MAN Brand The company has restructured the MAN brand architecture and modernized the familiar MAN logo. Instead of the blue arc and black lettering, the MAN logo will in the future appear in a three-dimensional, metallic-silver form. Rupprecht stated that this should end the confusing diversity of logos used by various subsidiaries and indirect holdings. In the future, all members of the MAN Group will display the MAN logo only, without any additions directly under the arc, such as "Roland". By WTT Staff, Edited by Senior Editor, Cary Sherburne