IFCO SYSTEMS' Results Rebound in Q2 2007

IFCO SYSTEMS (FWB:IFE1): Q2 2007 revenues 5.2% above prior year levels due to volume growth in RPC-Management-Services Q2 2007 EBITDA 11.5% above prior year levels mainly due to the continuing recovery of the Pallet-Management-Services business segment IFCO SYSTEMS acquired 51.0% of the shares of IFCO Argentina S.A. in July 2007, now owning 100.0% of the share capital €44.0 million Working Capital Facility renewed until July 2010 Executive Management service agreements extended through December 31, 2011 IFCO SYSTEMS’ Q2 2007 reported EBITDA and EBIT exceeded prior year levels, after three consecutive quarters of declining year-over-year EBITDA and EBIT levels following the Q2 2006 ICE (U.S. Immigration and Customs Enforcement) investigation. This development is mainly driven by the continuing operational recovery of the Pallet-Management-Services business segment. Revenues increased by 5.2% to US $177.2 million in Q2 2007 (H1 2007, 2.1% to US $337.9 million). RPC-Management-Services’ revenues increased significantly by 13.2% (currency adjusted 7.1%) to US $81.7 million in Q2 2007 compared to Q2 2006. Pallet-Management-Services’ revenues decreased by 0.7% to US $95.4 million in Q2 2007 (H1 2007, 7.8% to US $184.2 million), due to lower revenues in the custom crating division, partly offset by increased revenues in the pallet services division. This result in Pallet-Management-Services is a significant improvement from the 14.4% decline in Q1 2007 compared to Q1 2006 and is largely the result of the Company’s focus on volume growth after recovering its full production capacity post-ICE. Gross profit margin increased by 2.4 percentage points to 19.2% in Q2 2007 (H1 2007, declined 1.0 percentage points to 17.1%). The gross profit margin increase in Q2 2007 is largely due to the continued operational recovery from the effects of the ICE investigation in the Pallet-Management-Services business segment. Although the gross profit margin of Pallet-Management-Services has again improved in the reporting period to 12.0% in Q2 2007 after 11.7% in Q1 2007, 8.4% in Q4 2006 and 5.8% in Q3 2006, the segment’s gross profit margin has not yet fully rebounded to pre-ICE levels, as the Company continues to focus on improving labor productivity, raw material utilization, transportation efficiencies and other operational matters. RPC-Management-Services’ gross profit margin declined by 1.5 percentage points to 27.5% in Q2 2007 compared to Q2 2006. However, the margin decrease was caused by gross profit margin decline in the US business as a result of the one-time capitalization of certain costs incurred in Q2 2006 to clean and transport the CHEP USA RPCs acquired late in Q1 2006. Eliminating these accounting effects, RPC-Management-Services’ gross profit margin would have grown by 3.1 percentage points in Q2 2007. European margins improved in Q2 2007 as a result of favorable country mix, further positive economies of scale, and lower relative depreciation levels. EBITDA increased by 11.5% to US $29.0 million in Q2 2007 (H1 2007, declined by 5.6% to US $48.7 million) and LTM Q2 2007 EBITDA reached a level of US $93.4 million. Reported EBITDA in RPC-Management-Services business segment grew slightly by 0.2% in Q2 2007 compared to Q2 2006. However, excluding the one-time capitalization of certain costs incurred in Q2 2006 to clean and transport the CHEP USA RPCs acquired late in Q1 2006, EBITDA would have increased 16.1% (currency adjusted by 9.7%) in Q2 2007, and EBITDA margin would have improved from 29.1% in Q2 2006 to 29.8% in Q2 2007. As described above, the impacts of the ICE investigation resulted in sharply lower operating profits in the Pallet-Management-Services business segment beginning Q2 2006. EBITDA levels have since rebounded from mid-2006 levels, resulting in an EBITDA increase of 82.5% in Q2 2007 as compared to Q2 2006 in this business segment EBITDA margin improved to 5.7% in Q2 2007 compared to 3.1% in Q2 2006. Operating cash flows from continuing operations before income tax payments decreased in Q2 2007 by US $10.3 million, or 19.2%, to US $43.3 million, compared to Q2 2006. This decline was largely the result of working capital development, especially of accounts receivable growth in Q2 2007, partially offset by higher operating profits in Q2 2007. H1 2007 operating cash flows increased by US $1.9 million or 5.3% as compared to H1 2006. Capital expenditures decreased by 19.9% to US $21.7 million in Q2 2007 compared to Q2 2006, largely as a result of lower RPC pool investments. Half year capital expenditure levels were reduced in 2007 by 52.5% due to the lower RPC pool investments mentioned above and the acquisition of the CHEP USA RPC assets in Q1 2006. ROCE from continuing operations, on an LTM basis, decreased to 15.6% as of June 30, 2007, compared to 26.4% as of June 30, 2006, although it increased slightly since Q1 2007. US $ in thousands, except per share amounts   Q2 2007 Q2 2006 % Change H1 2007 H1 2006 % Change LTM Q2 2007   Revenues 177,181 168,387 5.2% 337,901 330,970 2.1% 654,167 Gross profit 33,951 28,300 20.0% 57,882 59,820 (3.2%) 107,028 Gross profit margin 19.2% 16.8% 17.1% 18.1% 16.4% EBITDA 29,007 26,025 11.5% 48,661 51,552 (5.6%) 93,383 EBITDA margin 16.4% 15.5% 14.4% 15.6% 14.3% EBIT 18,937 17,297 9.5% 29,626 35,219 (15.9%) 56,696 EBIT margin 10.7% 10.3% 8.8% 10.6% 8.7% Net profit 10,005 12,889 (22.4%) 12,334 23,605 (47.7%) 26,016   Net profit per share – basic 0.18 0.24 (22.5%) 0.23 0.45 (49.5%) 0.48 Net profit per share – diluted 0.18 0.23 (21.8%) 0.23 0.44 (49.0%) 0.47   Operating cash flows from continuing operations 43,347 53,628 (19.2%) 38,494 36,561 5.3% 94,215 Capital expenditures from continuing operations 21,703 27,111 (19.9%) 31,318 65,874 (52.5%) 66,744   Return on capital employed (ROCE) 15.6% 26.4% In addition to the new RPC services agreement with Carrefour Spain, the Company is pleased to announce that Penny Market Italia, one of the fastest growing retailers in Italy, has signed an agreement with IFCO SYSTEMS to become its RPC services provider for fruits and vegetables. On July 19, 2007, the Company acquired 51.0% of the shares of IFCO Argentina S.A. As a result, the Company now owns 100.0% of the share capital of IFCO Argentina S.A. On July 27, 2007, IFCO SYSTEMS’ €44.0 million Working Capital Facility was renewed with improved terms and an extended maturity date of July 2010. Furthermore, the service agreements with the members of IFCO SYSTEMS’ Executive Management Committee, Karl Pohler (CEO), Michael W. Nimtsch (CFO), Wolfgang Orgeldinger (COO) and David S. Russell (President North America), were extended through December 31, 2011. Outlook: IFCO SYSTEMS expects that the economy in Europe will slightly improve, while IFCO sees indications that economic growth in the United States is slowing moderately. The Company continues to estimate good market conditions for both of its business segments. The Company expects RPC-Management-Services to maintain its growth rates shown in H1 2007 for entire 2007, due to continuing strong demand for its services. The Company anticipates that the recovery in the productivity and profitability of the Pallet-Management-Services segment will continue and legal costs related to the ICE investigation will decline in future periods. As a result, the Company expects improved operating income for fiscal 2007 as compared to fiscal 2006. For further explanations, please see IFCO SYSTEMS’ quarterly report, which will be filed with the Deutsche Börse AG on or about August 09, 2007, and will be available on the Company’s website www.ifcosystems.com or www.ifcosystems.de. This release contains forward-looking statements that reflect Management's current view with respect to future events. All statements contained in this release that are not clearly historical in nature or necessarily depend on future events are forward-looking. The words "anticipate", "believe", "expect", "estimate", "planned" and similar expressions are generally intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections of the Management on currently available information. Many factors could cause the actual results, performance or achievements to be materially different from those that may be expressed or implied by such statements. We do not assume any obligation to update the forward-looking statements contained in this release.