SHW AG / Key word(s): Interim Report/Half Year Results06.08.2013 / 07:08---------------------------------------------------------------------PRESS RELEASESHW AG achieves pleasing quarterly result   - Group sales [1] outperform the market: +7.3 percent to EUR 91.8 million  - Group EBITDA margin [2] up to a pleasing 12.0 percent Aalen, 06 August 2013. Today, SHW AG, one of the leading suppliers ofCO2-relevant pumps and engine components, as well as brake discs, publishedits half-year report, including figures for the second quarter and firsthalf-year of 2013.As a result of SHW's broad product portfolio of highly efficient componentsfor engine and gearbox applications, the company was also able to uncouplefrom the continued negative market trend in the second quarter of 2013 -new car registrations in the EU were down by 3.5 percent - and remains onits growth track.The increase in Group sales of 7.3 percent from EUR 85.6 million to 91.8million is mainly the result of a newly-launched oil-/vacuum pump for awell-known European automotive manufacturer as well as the high demand forelectrical gearbox oil pumps for start-stop and high-quality compositebrake discs.At EUR 11.0 million, Group earnings before interest, tax, depreciation oftangible assets and amortisation of intangible assets (adjusted EBITDA) forthe period April to June 2013 were 17.1 percent higher than the comparableamount of EUR 9.4 million in the previous year. The EBITDA margin was upfrom 11.0 percent to 12.0 percent.'We're pleased that the second quarter has been so successful', stated Dr.Thomas Buchholz, new CEO of SHW AG since 01 August 2013 and responsible forthe Pumps and Engine Components business segment. 'Our innovative productand process solutions have been rewarded with new orders again in the firsthalf, and provide a sound basis for further profitable growth over the nextfew years.'Pumps and Engine Components: EBITDA above previous year levelBased on new product launches and a significant rise in demand, sales inthe Pumps and Engine Components business segment were up by 9.2 percent toEUR 68.8 million in the second quarter of 2013 (previous year: EUR 62.8million). The Passenger Car division benefited from high demand forvariable oil pumps and electrical gearbox oil pumps, and achieved a 13.7percent rise in sales to EUR 54.8 million (previous year: EUR 48.2million). The Truck & Off-Highway division continued to suffer from thedifficult market environment for commercial vehicles, recording sales ofEUR 6.7 million (previous year: EUR 7.3 million). At EUR 7.1 million, thePowder Metallurgy division was not quite able to achieve the previousyear's sales figures of EUR 7.3 million due to reduced demand from Truck &Off-Highway customers.The Pumps and Engine Components business segment achieved segment earningsbefore interest, tax, depreciation and amortisation (adjusted EBITDA) ofEUR 8.8 million (previous year: EUR 8.3 million) in the second quarter of2013, putting it back on track for success. The EBITDA margin of 12.8percent is roughly on par with last year's figure of 13.2 percent.Brake Discs: EBITDA margin up from 7.7 percent to 11.1 percentSales in the Brake Discs business segment rose by 2.1 percent in the secondquarter of 2013 to EUR 23.2 million (2012: EUR 22.7 million) as a result ofa significant increase in sales of composite brake discs compared to thesame period in the previous year.In the second quarter of 2013, the number of composite brake discs soldrose by 34.8 percent to approximately 54,600 (previous year: 40,500 units).The sales figures for monobloc brake discs remained almost at the previousyear level, down to 968,200 units from 977,000 units. The total number ofbrake discs sold rose by 0.5 percent to 1.02 million units.A combination of factors including an improved product mix, high-end brakediscs, increased productivity and lower quality control costs led to a risein segment earnings before interest, tax, depreciation and amortisation(adjusted EBITDA) in the second quarter of 2013 of 48.4 percent, from EUR1.7 million to EUR 2.6 million. The EBITDA margin was up from 7.7 percentto 11.1 percent.Weaker first quarter puts strain on half-year resultsGroup sales were up by 3.2 percent to EUR 176.4 million in the firsthalf-year of 2013, compared to EUR 171.0 million for the same period in theprevious year. The adjusted EBITDA is EUR 17.5 million, equivalent to a 7.6percent decline. This drop in earnings is attributable to the weaker firstquarter 2013, which was adversely affected by temporary performance losses(SAP launch related operating costs for consultants, special shipments, andthird-party processing orders), product mix shifts, higher start-up costsand IT expenditures as well as inventory differences.Turnaround of free cash flow despite more than doubling capitalexpendituresAt EUR 11.2 million, SHW considerably improved its cash flow from operatingactivities from continued and discontinued operations in the second quarterof 2013, both compared to the previous quarter (EUR -10.9 million) andcompared to the same quarter of the previous year (EUR 7.1 million). Cashflow from investment activities increased - particularly in conjunctionwith numerous new product launches in the Pumps and Engine Componentsbusiness segment - up by 125.3 percent to EUR -9.0 million in the periodfrom April to June 2013 (previous year: EUR -4.0 million). Despite theseextensive investments in growth, free cash flow experienced a considerableturnaround when compared to the previous quarter - from EUR -19.1 millionto EUR 2.2 million. 'Measures introduced to improve the free cash flow arebeginning to show results', said Sascha Rosengart, CFO at SHW AG since 06May 2013. 'Based on the above, we will be putting a particular focus onreducing working capital over the coming months. 'Management team further strengthenedBesides the appointment of Dr Thomas Buchholz as the new CEO, SHW hasmanaged to further strengthen the management team of the Pumps and EngineComponents business segment. The company was able to hire Mr. ErwinGößwein, the new Head of Passenger Cars as of 01 July 2013 from ixeticGmbH, a subsidiary of Magna Powertrain, one of SHW's major competitors inthe market. Mr. Peter Klomann, another former ixetic manager joined thecompany as Head of Quality Management for the Pumps and Engine Componentsbusiness segment as of 01 June 2013.Good start into the third quarter: slight increase in expected salesSHW had a good start into the third quarter of 2013. At EUR 29.9 million,Group sales in July 2013 were only slightly down on last year's high figureof EUR 30.2 million. The Pumps and Engine Components business segment wasable to maintain the positive trend in the sale of fuel saving pumps,achieving sales of EUR 22.5 million (previous year: EUR 22.9 million). TheBrake Discs business segment was even able to increase sales slightlycompared to the previous year, up from EUR 7.3 million to 7.4 million.Assuming that order intake continues to develop steadily, SHW AG nowexpects Group sales of between EUR 330 million and EUR 345 million(previously: EUR 325 to EUR 340 million). Due to further new productlaunches - in particular two more oil-/vacuum pump which are used in new3-cylinder engines of two well-known European automotive manufacturers -and a shift in the product mix towards more complex pumps, sales in thePumps and Engine Components business segment is now expected to reachbetween EUR 240 and EUR 255 million (previously: EUR 235 to EUR 250million). In the Brake Discs business segment, SHW is aiming to furtherincrease the proportion of ready-to-install brake discs and high-endcomposite brake discs in order to achieve sales of around EUR 90 million.'Besides product innovations, we will be focussing mainly on optimising ouroperational performance and business processes during the second half ofthe year', emphasised Dr. Thomas Buchholz. Despite the weaker firstquarter, the company still anticipates that if it achieves the plannedgrowth in sales, Group earnings before interest, tax, depreciation andamortisation (adjusted EBITDA) will also be better in fiscal year 2013 thanlast year.-----[1] STT Technologies Inc., which until the end of October 2012 had beenincluded in the consolidation on a pro-rata basis, has now, further to itssale, been classified as a 'discontinued operation' within the meaning ofIFRS 5. Sales, expenses and earnings for the second quarter and first sixmonth of 2012 were adjusted accordingly.[2] Adjusted for special effects, Q2/2013: EUR 0.7 million costs inconjunction with changes in the Management Board; adjustments pursuant IAS8.41; see comment in this press release on page 5 as well as the half year report on page 24.-----Adjustments pursuant IAS 8.41As part of the half year financial statements as at 30 June 2013, specialeffects ascertained were corrected in the first quarter of 2013 inaccordance with IAS 8.41 (see half-year report on p. 24). The reason forthis includes the insufficient SAP launch in the first quarter of 2013 aswell as the inadequate training level of the staff at the time that SAP wasrolled out which led to errors in material posting . In addition, for thefirst time in several years full inventories were carried out at bothplants in Bad Schussenried and Aalen-Wasseralfingen in the second quarterof 2013, which led to inventory corrections.The correction of cost of sales of EUR 0.9 million is largely due toinventory differences attributable to previous periods. Further adjustmentsconcern the allocation of R&D expenses and selling expenses on an accrualbasis. A correction of the Consolidated Financial Statements as at 31December 2012 was waived on account of the fact that the materiality limitswere not met. About SHWThe enterprise was established in 1365, making it one of the oldestindustrial enterprises in Germany. Today, SHW AG is a leading automotivesupplier with products that contribute substantially to a reduction of fuelconsumption and consequently CO2 emissions. In its Pumps and EngineComponents business segment, the SHW Group develops and produces pumps forpassenger cars and truck and off-highway applications, e.g. trucks,agricultural and construction vehicles, stationary motors and wind powerstations. The Brake Discs business segment develops and produces monoblocventilated brake discs made of cast iron and lightweight brake discs madefrom a combination of an iron friction ring and an aluminium pot. Customersof the SHW Group include leading automobile manufacturers, manufacturers ofcommercial, construction and agricultural vehicles and other automotivesuppliers. The SHW Group currently has four manufacturing sites in Germany.These are located in Bad Schussenried, Aalen-Wasseralfingen,Tuttlingen-Ludwigstal and Neuhausen ob Eck. With slightly more than 1,000employees, the SHW Group generated sales from continuing operations in 2012of EUR 325 million. Further information is available at: www.shw.deContact personMichael SchicklingHead of Investor Relations & Corporate CommunicationsSHW AGTelephone: +49 (0) 7361 502 462Email: michael.schickling@shw.deFuture-oriented statementsThis press release contains certain future-oriented statements that arebased upon current assumptions and forecasts made by the management of SHWAG. Various known and unknown risks, uncertainties and other factors maylead to the actual results, financial position, development or performanceof the company deviating considerably from the appraisals specified here.The company assumes no obligation to update future-oriented statements ofthis nature or adapt them to future events or developments.NoteThis announcement does not constitute an offer to sell securities in theUnited States of America, Canada, Australia, Japan or any otherjurisdictional territory where offers are subject to statutoryrestrictions. The securities named in this announcement may only be sold oroffered for sale in the United States of America following their priorregistration in accordance with the provisions of the version of the USSecurities Act of 1933 currently in force (the 'Securities Act') or,without prior registration, only on the basis of an exemption. Unlessprovided for by certain exceptions within the Securities Act, thesecurities named within this announcement may not be sold or offered forsale in Australia, Canada or Japan, nor may they be sold or offered forsale to or for account of residents of Australia, Canada or Japan. Noregistration of the offer or sale of the securities named in thisannouncement will take place, as stipulated by the relevant statutoryprovisions in Canada, Australia and Japan. 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