Dürr AG — Interim / Quarterly Report 2007

Nov 16, 2007

Interim report January 1 − September 30, 2007

Contents

• 3 Key figures
• 4 Highlights
• 5 Management report
• 20 Consolidated income statement
• 21 Consolidated balance sheet
• 22 Consolidated statement of changes in shareholders´ equity
• 23 Statement of recognized income and expense
• 24 Consolidated cash flow statement
• 25 Notes to the consolidated financial statements
• 31 Responsibility statement by management
• 32 Financial calendar
• 32 Contact

Cover photo:

The new EcoRP robot generation travels on traversing rails. This makes it extremely flexible and allows for shorter installation times and smaller spray booths.

Key figures for the Dürr Group (IFRS)

(Continuing operations)

		9 M 2007	9 M 2006	Q3 2007	Q3 2006
Incoming orders	€ m	1,307.1	1,160.8	394.7	315.5
Orders on hand (September 30)	€ m	1,088.5	890.0	1,088.5	890.0
Sales revenues	€ m	1,015.0	984.0	364.7	357.6
EBITDA before one-time expenses	€ m	41.4	34.2	21.0	14.1
EBIT before one-time expenses (Operating earnings)	€ m	27.4	19.3	16.1	9.6
Earnings after tax	€ m	5.7	0.1	5.7	3.4
Cash flow from operating activities	€ m	-32.7	-79.8	-9.4	-28.0
Cash flow from investing activities	€ m	-11.4	15.5	-4.6	-2.3
Cash flow from financing activities	€ m	2.4	-16.0	16.5	-6.3
Balance sheet total (September 30)	€ m	1,107.3	1,063.4	1,107.3	1,063.4
Equity (with minority interests) (September 30)	€ m	247.9	242.7	247.9	242.7
Net financial debt (September 30)	€ m	170.5	164.4	170.5	164.4
Net working capital (September 30)	€ m	204.3	223.1	204.3	223.1
Employees (September 30)		5,869	5,667	5,869	5,667
Dürr stock ISIN: DE0005565204
High1)	€	34.09	26.90	34.09	21.50
Low1)	€	20.20	17.14	27.75	18.50
Close1)	€	29.86	19.25	29.86	19.25
Number of shares (September 30)	k	15,728	15,728	15,728	15,728
Earnings per share (diluted / basic)	€	0.38	0.00	0.35	0.21

1) XETRA

Immaterial variances may occur in this report in the computation of sums and percentages due to rounding.

Highlights

• Strong third quarter compared with previous year: − Incoming orders +25.1% •
• − Orders on hand +22.3%
• − Operating earnings (EBIT before one-time expenses) +67.2%
• Operating cash flow much improved but still negative. Temporary build-up of net working capital prevents stronger improvement •
• Factory Assembly Systems: Focus on faster growing and more profitable business areas •
• Turnaround at Cleaning and Filtration Systems stronger than expected •
• US turnaround on target •
• Continued positive outlook for 2007; forecast for incoming orders raised: at least +10% now expected •

Management report Major events

In the reporting period

Strategy process "Dürr 2010" initiated

The Group-wide FOCUS program was completed at the turn of the year 2006/2007, and parts of it were transformed into a continuous improvement process. Building on the improvements achieved with FOCUS the Board of Management has initiated the strategy review process "Dürr 2010" for the Group and its business units as the next step. This is due to be finalized shortly. We will be reporting on the detailed results when we present our annual financial statements on March 20, 2008.

Key objectives of the strategy review process are:

• Raising the rates of return to the level of leading, structurally comparable companies in the mechanical and plant engineering industry (benchmarking)
• Tighter control according to risk and return on capital employed
• Further globalization of engineering and production
• Implementation of selective growth initiatives

Realignment of Factory Assembly Systems

A first result of the strategy review process is the repositioning of the Factory Assembly Systems business unit:

• Factory Assembly Systems will be focusing more on fast growing and high return business areas. The business in systems for aircraft assembly for instance is to be considerably expanded. We are well positioned in this area as the aviation industry is looking more and more to strong partners with turnkey competence. For instance we are currently engaged on a joint project with the engineering company EDAG for the design and construction of the assembly line for the new Airbus plant in Tianjin, China.
• The turnkey business as a system supplier of complete final assembly lines for the automobile industry will be pursued more selectively and with a stronger focus on profitability. That means: we will only take on projects with a balanced opportunity/risk profile. In this connection the conveyor systems activities in Stuttgart are being realigned.
• We will be pushing the further development and marketing of the FAStplant® assembly and conveyor system concept. The system has good market potential, and we also have a technology lead over the competition in this area.
• We will be concentrating the consulting business (e.g. factory planning) at a separate company. The consulting services will be offered increasingly on a cross-divisional basis.

Campus project: Dürr is bundling its activities in Bietigheim-Bissingen

In Germany, we will be concentrating our paint, final assembly and environmental systems activities in Bietigheim-Bissingen. This process will be completed by the year 2009 within the framework of the Campus project. The concentration of the activities at the one site will make for still more efficient internal processes and will improve the communication and collaboration between the individual business units.

The Bietigheim-Bissingen site, the headquarters of our painting robot and application technology business with about 600 employees, will be considerably expanded in the course of the Campus project. We are building a new technology and office complex providing state-of-the-art workplaces for around 1,500 employees. Among other things, it will include a new customer center for training on our products. The development center at the site will also be considerably expanded so as to create more space for research and development and thus underpin our market and technology leadership. Some 900 employees will be relocated to Bietigheim-Bissingen from the Stuttgart location. This is expected to take place in mid-2009. Dürr AG's legal domicile will continue to be situated in Stuttgart.

Neighboring Porsche AG will be taking over Dürr's site and buildings in Stuttgart-Zuffenhausen. A corresponding agreement was signed by Dürr and Porsche on July 5, 2007. We will be investing around € 50 million in Bietigheim-Bissingen. The new technology and building complex will probably be leased. The resulting financial costs are likely to be slightly higher than the current leasing instalments in Stuttgart and Bietigheim-Bissingen; however, this will be set against considerable efficiency potential.

After the reporting period

No events of major importance occurred after the end of the reporting period.

Economic environment

The world economy developed positively on the whole in the first three quarters. However, first spillover effects from the subprime crisis on the real economy were felt towards the end of the period. The pace of growth in the USA weakened sharply, which urged the US Fed to make two interest rate cuts. In Europe, the growth in gross domestic product was stronger than expected, especially in Germany. In Asia, the dynamism continued; China, which is acquiring ever greater importance for the global economy, was the biggest growth driver.

The economic research institutes generally predict weaker economic growth for 2008. This is among other things in view of higher raw material and producer prices. In Europe, the weakness of the US dollar and the yen are additional factors pointing to slower growth.

For 2007 we expect growth of about 3% in global light vehicle production. The development of demand in the automobile markets has been very mixed from region to region so far this year. While unit sales in the USA, Western Europe and Japan came under pressure above all from factors such as high fuel prices and the effects of the subprime crisis, the emerging markets witnessed, in part, strong growth. Above all, India, China and Eastern Europe including Russia are moving increasingly to the fore in the automobile industry as these markets are not only growing fast but by now also offer large volumes in absolute terms. The Volkswagen Group, for instance, sold as many cars in China as it did in its home market of Germany for the first time in the third quarter. More and more customers worldwide are buying cheaper, smaller, fuel-saving vehicles. There is also a growing focus on a motor vehicle's environmental balance; the automotive industry for instance is working hard to reduce CO2 emissions.

Capital spending in the automobile industry mirrors the fast rising demand for cars in the emerging markets. The automobile industry is building up its capacities strongly in these markets. This trend is likely to continue in the coming years, although there are a number of new plant projects in the pipeline in Western Europe and North America, too. Additionally, the modernization business is continuously growing, as many manufacturers are investing in older facilities to make them more flexible and efficient.

Business developments*

Incoming orders strongly improved

The Dürr Group's incoming orders have developed very well so far this year. Orders worth € 1,307.1 million were booked in the first nine months of 2007 (9M 2006: € 1,160.8 million); this is another strong increase of +12.6% after Dürr had already achieved growth of 18% in the first nine months of 2006. In the third quarter of 2007 we were even able to improve our order intake compared with the same quarter last year (€ 315.5 million) by as much as 25.1% to € 394.7 million.

Orders in the Paint and Assembly Systems division rose by 13.0% between January and September 2007. The strongest growth was witnessed in the Factory Assembly Systems and Paint Systems business units. Environmental and Energy Systems posted further growth in orders, while order intake in the Application Technology business unit was more or less level with the previous year.

* Unless indicated otherwise, all figures and statements in this interim report refer to the continuing operations of the Dürr Group. These interim financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS).

The Measuring and Process Systems division increased its order intake by 11.2% in the first nine months of 2007. Both business units achieved strong growth. At Cleaning and Filtration Systems this is all the more respectable as this business unit had booked an exceptionally large order in the second quarter of last year. Balancing and Diagnostic Systems continued its strong upward trend in the third quarter.

Order intake in Germany picked up significantly. Orders from other EU countries were also appreciably above the high level in the same period last year. Sizeable orders were received from Poland and the Czech Republic, whereas a year earlier there had been strong growth above all in orders from Italy. In Eastern Europe, the Russian market was particularly dynamic. Order intake from Asia declined in the first nine months due to a temporary lull in China. In India, on the other hand, there was a strong increase of 40.0%.

Moderate growth in sales revenue

Sales revenue rose by 3.2% to € 1,015.0 million in the first three quarters of 2007 (9M 2006: € 984.0 million); the growth in the third quarter was 2.0%. Sales in the Paint Systems and Application Technology business units were still slightly down, while the other four business units partly posted double digit growth rates. Cleaning and Filtration Systems managed to more than catch up the year-on-year sales shortfall that had existed at the six-month mark.

The fall in the US dollar compared with the end of September 2006 impacted sales revenues negatively by almost 1.5%. The effects on earnings are limited since the cost of sales is largely incurred in the region where the sales are realized ("natural hedge"). 59.0% of our sales revenues came from Europe (including Eastern Europe), 20.6% from Asia and 20.4% from North and South America. At 1.3, the book-to-bill ratio, that is the ratio of new orders to sales revenues, was above the year-earlier figure (1.2) also at the end of the third quarter. Orders on hand amounted to € 1,088.5 million at September 30, 2007, an increase of € 198.5 million compared with a year earlier (September 30, 2006: € 890.0 million) and € 283.3 million versus the end of 2006. Our reach of orders has therefore further improved.

The cost of sales rose in the first nine months of 2007 by 3.7%, and therefore slightly more-than-proportionally relative to sales revenues. As a result, the gross margin declined from 16.5% to 16.0%. However, at 15.8% in the third quarter of 2007 it was 0.1 percentage point higher than in the second quarter and 0.3 percentage points above the figure for the same quarter last year. Project delays in India, which we had discussed in our report for the first half of 2007, burdened our gross profit on sales in the third quarter, too, by a sum in the mid-single-digit millions. We responded immediately to the delays in the second quarter with a comprehensive package of measures and consider the earnings burdens from this effect to be over now. In addition to the delays, gross profit was also squeezed by the execution of paint technology and assembly projects which had been taken on at poorer margins in the first half of 2006.

Overhead costs under control

Despite the growth in incoming orders selling expenses were down 2.7% in the first nine months – an indication of the efficiency of our sales organization. Administrative costs were held stable. The growth of 20.1% in research and development costs is due mainly to the fact that we stepped up our development activities in many sectors. Other operating income and expenses shows a positive net balance of € 14.3 million after the first nine months of 2007 (9M 2006: € +5.6 million). This resulted mainly from lower expenses but was also due to book gains from asset disposals, the release of provisions and extraordinary income in connection with the Campus project.

Earnings situation much improved

EBITDA before one-time expenses rose to € 41.4 million in the first nine months of 2007 (9M 2006: € 34.2 million). Operating earnings (EBIT before one-time expenses) also improved strongly: from € 19.3 million to € 27.4 million. In the third quarter they were up 67.2% on the same quarter last year (€ 9.6 million) to € 16.1 million. Apart from the higher gross profit on sales this was mainly due to the improved net balance of other operating expenses and income.

The financial result deteriorated in the first nine month 2007 by € 3.5 million to € -17.3 million compared to the previous year´s period. This was due to the slightly higher average debt in the current period and extraordinary income in 2006. The average tax rate will probably be around 40% in 2007. This average rate has also been applied in the first three quarters. The higher than planned tax rate is due to one-off effects of the tax audit which has been completed; write-downs in the tax accounts were not fully recognized. However, the higher tax rate has no influence on the actual tax payment. It is estimated that the effects of the German tax reform, which is due to enter into force in 2008, will increase earnings in 2007 by € 2.3 million.

Earnings after tax of the continuing operations improved to € 5.7 million in the first nine months after € 0.1 million in the year earlier period; in the third quarter alone we achieved a net profit of € 5.7 million.

Financial position

Cash flow from operating activities improved*

Compared with the same period last year cash flow from operating activities improved in the first nine months of 2007 by € 47.1 million to € -32.7 million. However, cash flow is still influenced by the moderate revenue development in the year so far but this should improve significantly in the traditionally strong fourth quarter. In the reporting period there were additionally cash outflows for taxes and FOCUS measures (FOCUS: € 8.7 million). Prepayments received developed nicely in line with the growing volume of orders. They rose by € 16.3 million compared with the end of 2006 to € 142.5 million at September 30, 2007. Another consequence of the higher volume of business is the temporary rise in inventories and trade receivables. As a result, net working capital was € 49.6 million higher than at December 31, 2006 in constant currency. This, consequently, put a strain on cash flow.

Cash flow from investing activities in the first nine months of 2007 amounted to € -11.4 million (9M 2006: € 15.5 million). As planned, there was a strong increase in investment in intangible assets: from € 4.8 million in the same period last year to € 10.5 million. This was largely attributable to our project for Group-wide IT standardization (among other things, software licenses, capitalized project costs). At € 7.0 million, capital expenditure on property, plant, and equipment was also higher than the year-earlier figure (€ 5.4 million). The increase in capital expenditure was partly offset by proceeds from the disposal of non-current assets, mainly real estate no longer needed. The cash inflow posted in the same period last year had resulted in the main from an out-of-court arbitration settlement.

Cash flow from financing activities amounted to € 2.4 million in the first three quarters of 2007 (9M 2006: € -16.0 million). Main factors of influence were interest paid and the increase of € 25.8 million in bank liabilities.

Balance sheet expands due to growth in business

Net financial debt at September 30, 2007 amounted to € 170.5 million as compared with € 96.5 million at the end of 2006. Our financing requirements were met from cash and cash equivalents as well as from a temporary increase in bank liabilities. Cash and cash equivalents decreased by € 40.3 million versus December 31, 2006 to € 61.2 million. Financing requirements at Dürr are typically higher during the year than at the end of the year.

* Exchange rate effects have been eliminated in the cash flow statement. For this reason, the changes shown here can only be seen in the balance sheet to a limited extent.

The balance sheet total expanded by 6.5% compared with the end of the past fiscal year to € 1,107.3 million (December 31, 2006: € 1,040.1 million). Contributing factors were the build-up in inventories and trade receivables discussed earlier. Also conspicuous was the growth in other receivables and other current assets, which is mainly due to higher turnover taxes receivable.

At 22.4%, the equity ratio at September 30, 2007 was slightly lower than at the end of 2006 (23.6%). The biggest change on the capital and liabilities side was the increase in trade payables to € 353.8 million (December 31, 2006: € 303.6 million) due to the larger volume of business. The reason for the rise in bank liabilities compared with the end of 2006 was the higher financing requirements during the year mentioned earlier.

Current and non-current liabilities

	Sept. 30, 2007	Sept. 30, 2006	Dec. 31, 2006
Amounts in € m
Financial liabilities	47.0	35.4	20.5
Corporate bond	191.4	189.3	189.8
Trade payables	353.8	273.3	303.6
of which prepayments received	142.5	110.3	126.2
Income tax liabilities	25.2	21.9	25.7
Other liabilities	86.2	105.9	90.8
Total	703.6	625.8	630.4

R&D and capital expenditures

Direct expenses for research and development (R&D) recognized in the income statement for the first nine months of 2007 amounted to € 16.8 million (9M 2006: € 14.0 million). The R&D ratio, that is the ratio of R&D expenses to sales revenues, was 1.7%. If project-related development costs which arise in connection with customer orders are included, both R&D spending and the ratio were much higher.

At our one-week "Open House" in Bietigheim-Bissingen in September we presented a number of innovations designed to lower costs per unit in automotive painting: ranging from the paint-saving "HD" and "ICC" atomizer models in the EcoBell2 series, to the EcoCharge D piston-dosing system, to the EcoRP L interior painting robot. Other highlights included fully automated application solutions for insulation mat injection and sealing hemflange seams. With these solutions we intend to step up growth further in the business area of sealing. Under the rubric "Digital Factory" we presented the integration of process and material flow simulations into the 3D visualization of paint shops.

In our assembly systems technology we presented Dürr's mobile test unit, x-cal, for the calibration of roller test stands. In air filtration technology the focus of our efforts this year is on developing our systems for new applications, for instance in the chemicals, pharmaceuticals, printing and woodworking industries. These sectors are showing lively interest for our technologies.

In balancing and diagnostic systems technology we presented the new VIRIO vertical balancing machine at the "EMO" trade fair in Hanover. VIRIO enables disc-shaped rotors to be corrected directly on the machine. In cleaning systems technology we took advantage of the high-profile "parts2clean" trade fair in Stuttgart to present a number of new products. This included the EcoCSpeed which makes it possible for the first time to clean complex geometrical workpieces during the manufacturing cycle using non-halogenated hydrocarbon.

Capital expenditures

€ 17.5 million was invested in property, plant, and equipment, and intangible assets, which was € 7.3 million more than in the same period past year. The main focus was our project for global IT harmonization. As a result, we invested considerably more in intangible assets (€10.5 million, up from € 4.8 million a year ago) than in property, plant, and equipment.

Capital expenditures*

	9 M 2007	9 M 2006
Amounts in € m
Paint and Assembly Systems	13.7	8.3
Measuring and Process Systems	3.6	1.9
Corporate Center	0.2	0.0
Total	17.5	10.2

* in property, plant, and equipment, and intangible assets

Employees

Number of employees rises in response to good order situation

Owing to the good order book situation we have increased the number of employees within the Group to 5,869 at September 30, 2007. This is 3.9% more than at the end of 2006 (5,650). On balance, 33 additional employees were taken on in the third quarter. The increase was primarily in the growth region of Asia, where the number of employees has risen by 20.0% to 721 since the beginning of 2007 (December 31, 2006: 601). Additional personnel were hired in all Asian countries where we have companies. The strongest growth was in India, where the number of employees was increased by 40.5% to 236 so as to be able to cope reliably with the growing volume of business. 44 employees, mainly engineers, were recruited in Germany in the first nine months of 2007. This is an increase of 1.5%. The first-time consolidation of the two companies CPM S.p.A. (Italy) and Dürr Systems Limited Şirketi (Turkey) added another 45 employees. The expansion of the global service business has had an impact on our headcount as well. The number of service employees rose to 661 at September 30, 2007, 163 more than a year ago.

Employees

	September 30, 2007	September 30, 2006	December 31, 2006
Paint and Assembly Systems	3,964	3,764	3,786
Measuring and Process Systems	1,861	1,862	1,821
Corporate Center	44	41	43
Total	5,869	5,667	5,650

Overview of the divisions

Paint and Assembly Systems

		9 M 2007	9 M 2006	Q3 2007	Q3 2006
Incoming orders	€ m	1,048.5	928.2	297.8	248.0
Sales revenues	€ m	794.6	793.2	282.0	295.0
EBITDA	€ m	22.1	28.8	10.1	12.0
EBIT	€ m	13.2	20.6	6.8	9.7
Employees (September 30)		3,964	3,764	3,964	3,764

Paint and Assembly Systems was able to increase its order intake in the first nine months of 2007 to € 1,048.5 million (9M 2006: € 928.2 million). Among other things, this was due to large paint systems orders from the Czech Republic, Russia and India. Investment activity in the USA has stabilized; in Mexico, we were able to win two large contracts. The large orders ensure a good level of capacity utilization at Paint Systems and Environmental Systems, especially in Germany and Asia. Order intake at Factory Assembly Systems has also increased strongly during the year so far.

Operating earnings (EBIT) were adversely affected by the delays in India discussed earlier. Another factor was the execution of paint technology and assembly projects which had been taken on in spring 2006 at poorer margins. Both of these factors weighed on earnings in the third quarter for the last time.

Measuring and Process Systems

		9 M 2007	9 M 2006	Q3 2007	Q3 2006
Incoming orders	€ m	258.6	232.6	96.9	67.5
Sales revenues	€ m	220.4	190.8	82.8	62.7
EBITDA	€ m	13.8	-3.1	6.3	-1.2
EBIT	€ m	9.5	-6.8	5.0	-2.4
Employees (September 30)		1,861	1,862	1,861	1,862

On the back of a very strong third quarter incoming orders at Measuring and Process Systems were up 11.2% in the first nine months of 2007. In the third quarter Cleaning and Filtration Systems more than made up for the modest order development in the first six months, helped also by the new EcoLution and EcoBase product lines launched in spring 2007 which have met with a good market acceptance. At Balancing and Diagnostic Systems order intake continued to develop steadily and very encouragingly.

Sales revenues, too, were up at Measuring and Process Systems in the first nine months, with the upward trend accelerating in the third quarter. Also encouraging is that in absolute terms incoming orders comfortably exceeded sales revenues in the first nine months. EBIT at both business units was positive in the reporting period. This was due to improved internal processes and the optimized product mix. Cleaning and Filtration Systems has achieved an impressive turnaround so far this year.

Corporate Center

Corporate Center (Dürr AG) EBIT for the first nine months of 2007 rose to € 4.3 million (9M 2006: € 0.4 million), which was partly due to extraordinary income from the Campus project. The Corporate Center felt the benefits of the organizational improvements achieved through FOCUS and lower material costs.

Opportunities and risks

In the reporting period we were exposed to the risks which are typical of our business. This includes pricing pressure in the automobile industry, differing regional demand trends and risks in order execution. A detailed description of these and other risks can be found in our annual report for 2006.

In the second and third quarters there were delays on a project in India as a result of troubles and delivery postponements at local suppliers. We have therefore engaged new suppliers and sourced more supplies than planned from Germany. These problems should no longer burden earnings in the fourth quarter. We are well equipped for future projects in India and other emerging markets as we have considerably strengthened our local organization. For instance, we expanded capacities and dispatched experienced employees to provide support especially in the areas of sourcing and site management.

The US dollar's weakness against the euro continues to have a negative impact on our sales figures. However, owing to our global value-added structure this has little effect on earnings. The yen's weakness against the euro is making itself felt, too, as an important competitor in the paint systems business comes from Japan.

We consider the risks for the fourth quarter of 2007 to be manageable. No risks are discernible that could present a substantial threat to our outlook for the full year 2007.

The opportunities we see for our business are largely as we discussed in our annual report for 2006. Good potential is presented not only by the growing demand in Eastern Europe but also by the expansion of our services and revamp business, where we have a good starting position as our systems technology is in widespread use. Further opportunities for us are presented by the growing model diversity in the automobile industry since this is increasing the demand among our customers for highly flexible solutions so as to be able to produce the ever wider range of models and variants cost efficiently. We are profiting additionally from the rising demand for environmentally compatible production processes and the closer integration of suppliers into the value chain in the automobile industry. We also expect an additional boost to demand in response to the new products we presented at our "Open House" (paint technology, September) and at the two high-profile trade fairs "EMO" (metalworking industry, September) and "parts2clean" (cleaning technology, October).

We confirm our sales, earnings and cash flow forecasts for the full year 2007. We now expect incoming orders to be up by at least 10%. We had previously reckoned with order intake at the same level as last year.

From today's vantage point, consolidated sales should be 5% to 10% above the 2006 level in 2007. We reckon with a strong improvement in earnings in 2007. In the fourth quarter we expect significantly higher sales revenues and an appreciable improvement in the gross margin. At the same time, administrative and selling costs should remain more or less stable. A margin of 3.5% should be achieved at the operating level in 2007, after 2.9% last year. Our net interest position will not improve in 2007 since this had included extraordinary income in 2006 and we had higher financing requirements in the course of this year.

We expect the turnaround in the Cleaning and Filtration Systems business unit to be much more successful than we had previously assumed. In the US business we should achieve the turnaround as planned. Earnings in the Paint and Assembly Systems division in 2007 are likely to be only slightly better than last year owing to the problems in India discussed earlier and the execution of low-margin older orders. The Measuring and Process Systems division, on the other hand, will show a substantial earnings improvement, to which both of the two business units, Cleaning and Filtration Systems and Balancing and Diagnostic Systems, will contribute.

For 2007 we expect a positive cash flow from operating activities. Net working capital should decline slightly despite rising sales. We will continue to keep a close focus on improving net working capital management. Capital expenditure on property, plant, and equipment, and intangible assets should reach about € 28 million (2006: € 18.0 million). Net financial debt is likely to be slightly higher at the end of 2007 than at the end of last year (€ 96.5 million). By the end of the year there will be about 100 more employees than on September 30, taking the total headcount to almost 6,000. This would be an increase of 6% compared with December 31, 2006, with much of the growth centered on Asia.

We expect a further earnings improvement in 2008. This is supported by the fact that the quality of the orders on hand has improved. The target return for 2008 is 5% based on operating earnings (EBIT before one-time expenses).

Capital stock and capital changes

Dürr AG owns no treasury stock. There was no change in the company's subscribed capital in the reporting period.

Development of Dürr stock

While the equity markets have on the whole shown a positive performance year to date, the third quarter brought a great deal of uncertainty owing to the spillover from the subprime crisis. The central banks reacted swiftly by injecting liquidity, and thus helped to settle the markets. The Dürr stock did particularly well against this, on balance, cheerful backdrop. It gained 42.3% between the beginning of January and the end of September. This compares with gains of just 19.2% for the DAX and 3.0% for the SDAX. There were a number of driving factors for the Dürr stock's good performance. Firstly, the Dürr stock had lagged the general market trend in 2006. Secondly, it received a fillip from its inclusion in the SDAX in January. And, more importantly, we achieved the targets we had announced for 2006, and even exceeded market expectations in some cases. Investors also honored the high level of new orders so far this year and the benefits feeding through from the company's refocusing.

Changes in the shareholder structure

The Dürr family further increased its position as the largest shareholder of Dürr AG in the third quarter of 2007. Heinz Dürr GmbH, Berlin, and the foundation Heinz und Heide Dürr Stiftung, Berlin, together now hold 44.4% of the capital of Dürr AG. Aton GmbH, Fulda, which acquired 10.1% of the shares of Dürr AG in June 2007, is still the second largest single shareholder. It acquired the shares from Süd-Kapitalbeteiligungs-Gesellschaft mbH (5%) and Kreissparkasse Biberach (5.1%). Süd-Kapitalbeteiligungs-Gesellschaft mbH intends to retain a 5% ownership interest in Dürr AG in future.

Stuttgart, November 15, 2007

Dürr Aktiengesellschaft

The Board of Management

19

Consolidated income statement

of Dürr Aktiengesellschaft, Stuttgart, for the period January 1 to September 30, 2007

	9 M 2007	9 M 2006	Q3 2007	Q3 2006
Amounts in € k
Sales revenues	1,015,013	983,977	364,740	357,635
Cost of sales	-852,769	-822,006	-307,218	-302,127
Gross profit on sales	162,244	161,971	57,522	55,508
Selling expenses	-69,546	-71,457	-22,489	-22,052
General and administrative expenses	-62,677	-62,775	-20,058	-20,053
Research and development costs	-16,835	-14,017	-5,195	-4,680
Other operating income and expenses	14,253	5,579	6,292	889
	27,439	19,301	16,072	9,612
Restructuring expenses / onerous contracts	-560	-4,955	-167	-1,279
Earnings before investment income, other
interest and similar income, interest and similar expenses, and income taxes	26,879	14,346	15,905	8,333
Result of associates	789	53	237	500
Other investment income	-	721	-	721
Other interest and similar income	1,956	5,035	423	2,285
Interest and similar expenses	-20,092	-19,623	-7,120	-6,543
Earnings before taxes of continuing operations	9,532	532	9,445	5,296
Income taxes	-3,799	-463	-3,757	-1,909
Earnings from continuing operations	5,733	69	5,688	3,387
Earnings from discontinued operations	197	25	-21	-5
Consolidated profit for the period	5,930	94	5,667	3,382
Profit/loss share of minority interests
Continuing operations	-179	125	142	61
Discontinued operations	-	3	-	-
Dürr Group	-179	128	142	61
Profit/loss share of shareholders of Dürr Aktiengesellschaft
Continuing operations	5,912	-56	5,546	3,326
Discontinued operations	197	22	-21	-5
Dürr Group	6,109	-34	5,525	3,321
Earnings per share in € (basic and diluted)
Continuing operations	0.38	0.00	0.35	0.21
Discontinued operations	0.01	0.00	0.00	0.00
Dürr Group	0.39	0.00	0.35	0.21

Consolidated balance sheet

of Dürr Aktiengesellschaft, Stuttgart, as of September 30, 2007

	Sept. 30, 2007	Sept. 30, 2006	Dec. 31, 2006
Amounts in € k
Assets
Goodwill	261,564	264,185	262,296
Other intangible assets	28,108	19,973	22,367
Property, plant, and equipment	100,841	114,313	106,539
Investment property	13,652	12,850	13,269
Investment in associates	10,665	12,234	12,981
Other financial assets	426	4,350	5,221
Trade receivables	2,536	-	1,701
Income tax receivables	64	-	319
Other receivables and other assets	5,542	-	2,727
Deferred taxes	13,757	48,223	19,151
Prepaid expenses	474	247	573
Non-current assets	437,629	476,375	447,144
Inventories and prepayments	69,543	57,160	50,664
Trade receivables	487,364	442,777	408,646
Income tax receivables	7,931	6,076	7,370
Other receivables and other assets	40,518	26,866	21,707
Cash and cash equivalents	61,160	48,639	101,482
Prepaid expenses	3,162	5,550	1,924
	669,678	587,068	591,793
Assets of a disposal group classified as held for sale	-	-	1,129
Current assets	669,678	587,068	592,922
Total assets Dürr Group	1,107,307	1,063,443	1,040,066
Equity and liabilities
Subscribed capital	40,264	40,264	40,264
Capital reserve	160,459	160,459	160,459
Revenue reserves	79,110	65,933	73,021
Other comprehensive income	-33,470	-25,348	-29,257
Amounts recorded directly in equity from assets of a disposal group classified as held for sale	-	-	-495
Equity without minority interests	246,363	241,308	243,992
Minority interests	1,574	1,419	1,708
Equity with minority interests	247,937	242,727	245,700
Provisions for pension obligations	57,187	65,325	60,739
Other provisions	7,554	10,540	7,319
Bond	191,433	189,340	189,840
Other financial liabilities	8,505	11,285	10,639
Income tax liabilities	12,577	14,342	12,585
Other liabilities	12,757	-	13,343
Deferred taxes	21,824	50,386	25,725
Deferred income	1,295	1,560	1,485
Non-current liabilities	313,132	342,778	321,675
Other provisions	65,774	66,467	66,197
Trade payables	353,784	273,276	303,575
Financial liabilities	38,531	24,098	9,869
Income tax liabilities	12,614	7,512	13,070
Other liabilities	73,439	105,905	77,460
Deferred income	2,096	680	2,520
Current liabilities	546,238	477,938	472,691
Total equity and liabilities Dürr Group	1,107,307	1,063,443	1,040,066

Consolidated statement of changes in shareholders´ equity

of Dürr Aktiengesellschaft, Stuttgart, for the period from January 1 to September 30, 2007

	Subscribed capital	Capital reserve	Revenue reserves	Accumula ted other compre hensive income	Amounts resulting from assets held for sale	Equity without minority interests	Minority interests	Equity with minority interests
Amounts in € k
January 1, 2006	40,264	160,459	65,967	-20,140	-	246,550	1,517	248,067
Profit/loss from continuing operations	-	-	-56	-	-	-56	125	69
Profit from discontinued operations	-	-	22	-	-	22	3	25
Accumulated other comprehensive income	-	-	-	-5,208	-	-5,208	3	-5,205
Other changes	-	-	-	-	-	-	-229	-229
September 30, 2006	40,264	160,459	65,933	-25,348	-	241,308	1,419	242,727
January 1, 2007	40,264	160,459	73,021	-29,257	-495	243,992	1,708	245,700
Profit/loss from continuing operations	-	-	5,912	-	-	5,912	-179	5,733
Profit from discontinued operations	-	-	197	-	-	197	-	197
Accumulated other comprehensive income	-	-	-	-4,213	495	-3,718	45	-3,673
Other changes	-	-	-20	-	-	-20	-	-20
September 30, 2007	40,264	160,459	79,110	-33,470	-	246,363	1,574	247,937

Statement of recognized income and expense

in the consolidated financial statements of Dürr Aktiengesellschaft, Stuttgart, for the period from January 1 to September 30, 2007

	9 M 2007	9 M 2006
Amounts in € k
Changes in fair value of financial instruments used for hedging purposes recorded in equity	2,015	697
Adjustment item for currency translation of foreign subsidiaries	-6,684	-5,421
Amounts recorded directly in equity from assets of a disposal group classified as held for sale	495	-
Actuarial gains/losses from defined benefit obligations and similar obligations	2,603	-205
Deferred taxes on revaluations recognized directly in equity	-2,147	-276
Revaluations recognized directly in equity of which attributable to minority interests	-3,718 -	-5,205 3
Profit/loss after tax of which attributable to minority interests	5,930 -179	94 128
Total profit/loss for the period and revaluations recognized directly in equity in the period of which attributable to minority interests	2,212 -179	-5,111 131

Consolidated cash flow statement

of Dürr Aktiengesellschaft, Stuttgart, for the period from January 1 to September 30, 2007

	9 M 2007	9 M 2006
Amounts in € k
Earnings before interest and taxes	27,668	15,120
Income taxes paid	-5,078	-4,844
Result of associates	-789	-53
Dividends from associates	155	155
Amortization and depreciation of non-current assets	14,014	14,906
Net gain on the disposal of non-current assets	-6,865	-521
Non-cash expenses and income	268	-395
Changes in operating assets and liabilities
Inventories	-19,751	-14,728
Trade receivables	-73,610	25,759
Other receivables and assets	-11,993	-4,017
Provisions	778	-14,919
Trade payables	46,167	-68,948
Other liabilities (other than bank)	-3,428	-26,149
Other assets and liabilities	-215	-1,156
Cash flow from operating activities of continuing operations	-32,679	-79,790
Cash flow from operating activities of discontinued operations	4	1,374
Cash flow from operating activities	-32,675	-78,416
Purchase of intangible assets	-10,502	-4,762
Purchase of property, plant and equipment Purchase of other financial assets	-6,991 -	-5,386 -585
Proceeds from the sale of non-current assets	6,994	2,151
Cash received from out-of-court agreement	-	20,000
Acquisitions, net of cash acquired	300	-
Disposal of discontinued operations, net of cash disposed of	-2,945	1,758
Interest received	1,772	2,290
Cash flow from investing activities of continuing operations	-11,372	15,466
Cash flow from investing activities of discontinued operations	-	-3
Cash flow from investing activities	-11,372	15,463
Change in bank liabilities	25,847	6,216
Payment of finance lease liabilities	-612	-657
Change in financial liabilities to associates	-726	-47
Internal financing	-	1,220
Interest paid	-22,137	-22,771
Cash flow from financing activities of continuing operations	2,372	-16,039
Cash flow from financing activities of discontinued operations	-4	-1,238
Cash flow from financing activities	2,368	-17,277
Effects of exchange rate changes	1,357	4,012
Changes in cash and cash equivalents	-40,322	-76,218
Cash and cash equivalents
At the beginning of the period	101,482	124,857
At the end of the period	61,160	48,639

Notes to the consolidated financial statements January 1 to September 30, 2007

1. Summary of significant accounting policies

The Company

Dürr Aktiengesellschaft ("Dürr AG" or the "Company") is headquartered at Otto-Dürr-Strasse 8 in 70435 Stuttgart, Germany. Dürr AG and its subsidiaries ("Dürr" or the "Group") are a worldwide leading supplier of systems, machines and services for automobile production. The offering covers all the main production and assembly stages of a vehicle. As a system supplier, Dürr designs and constructs paint shops and final assembly plants. Dürr also supplies cleaning systems, filtration systems and balancing machines for the manufacture of engines, transmission and vehicle components. Dürr´s main customers include automotive manufacturers and suppliers around the world.

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU as of the balance sheet date, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB ("Handelsgesetzbuch": German Commercial Code). The consolidated financial statements are in line with all IFRSs that have to be adopted by the balance sheet date. Hence applying IAS 34 "Interim Financial Reporting", these interim financial statements do not include all of the information and footnotes required by IFRS for complete financial statements for year-end reporting.

The consolidated financial statements as of September 30, 2007 are not subject to any audit or review.

With regard to the preparation of consolidated financial statements for interim reporting in accordance with IAS 34 the Management Board has to make estimates and judgements, which influence the application of accounting policies within the Company and the reporting of assets and liabilities as well as income and expenses. The actual amounts can differ from these estimates.

The accounting policies used generally correspond to the methods applied in the consolidated financial statements as of December 31, 2006; we refer to our 2006 annual report.

Income that is recorded during the reporting period for seasonal reasons, due to cyclical developments, or only occasionally is not cut off in the consolidated interim financial statements. Expenses that are incurred irregularly during the reporting period have been cut off in those cases where they would also be cut off at year-end.

The income taxes were determined on the basis of an estimated average annual effective income tax rate.

The consolidated financial statements are prepared in euros; all amounts are reported in thousands of euros (€ k), unless stated otherwise.

2. Consolidated group

Besides Dürr AG, the consolidated financial statements as of September 30, 2007, contain all domestic and foreign entities which Dürr AG can control, directly or indirectly (control concept). The entities are included in the consolidated financial statements from the date on which the possibility of control was obtained.

The survey below shows how many companies are included in the consolidated group besides Dürr AG as parent company.

	September 30, 2007	December 31, 2006
Number of fully consolidated entities
Germany	10	11
Other countries	42	39
	52	50
	September 30, 2007	December 31, 2006
Number of entities accounted for at equity
Germany	1	0
Other countries	2	4

The consolidated financial statements contain three entities (December 31, 2006: one) in which minority shareholders hold interests. An associated entity was reclassified during fiscal year 2006 and has since then been reported in the position "Assets held for sale". This entity was sold during the second quarter of fiscal year 2007.

With economic effect as of January 1, 2007, Dürr Special Material Handling GmbH, Wyhlen, was absorbed by Dürr Systems GmbH, Stuttgart.

As of January 31, 2007, Dürr Systems Limited Şirketi in Istanbul, Turkey, was founded.

As of April 30, 2007 Dürr acquired a further percent of the shares of CPM S.p.A., Beinasco, Italy, so that as of September 30, 2007, Dürr held 51% of the shares of CPM S.p.A. Therewith, CPM S.p.A. was fully consolidated in the consolidated financial statements of Dürr AG for the first time effective May 1, 2007. Until April 30, 2007, CPM S.p.A. was accounted for at equity as an associated company.

Because of the first-time inclusion of CPM S.p.A. as fully consolidated company, Stimas Engineering S.r.l., Torino, Italy, at which CPM S.p.A. holds 51% of their shares, has also been included in the consolidated financial statements as fully consolidated entity henceforth.

Furthermore, Polisistem S.r.l., Torino, Italy, was dissolved as of May 2, 2007. The company was accounted for at equity as an associated company.

As of June 8, 2007, Schenck Vaegt- og Maskinfabrik ApS., Copenhagen, Denmark, was dissolved.

As of August 1, 2007, OOO Dürr Systems RUS in Moscow, Russia, was founded.

Dürr Systems GmbH (Dürr) and EDAG Engineering + Design AG (EDAG), Fulda, together founded the Prime Contractor Consortium FAL China (PCC). This consortium develops and constructs the assembly line for the new Airbus plant in Tianjin, China. It has signed a framework agreement with Airbus and its Chinese joint venture partner. This framework agreement regulates the cooperation between Airbus, the Chinese joint venture partner, and EDAG and Dürr. PCC as joint venture is accounted for at equity in the consolidated financial statements.

3. Discontinued operations

Effective March 10, 2006, SRH Systems Ltd., Worcester, Great Britain − which was part of the Development Test Systems (DTS) business unit − was sold to Horiba Ltd., Kyoto, Japan. DTS formed part of the discontinued operations. Furthermore, subsequent effects of the divestments of the DTS, Services, and Measuring and Process Technologies (MPT) business units in 2005 were included in the consolidated financial statements for the first nine months of 2006. The consolidated financial statements for the first nine months of fiscal year 2007 also include subsequent effects of the sold business units, which had a positive impact on net income of € 197 thousand.

4. Earnings per share

Earnings per share are determined pursuant to IAS 33 "Earnings per Share".

They are determined by dividing the earnings share of the shareholders of Dürr Aktiengesellschaft by the weighted average number of shares outstanding. The calculation is presented on the next page. In the periods from January 1 to September 30, 2007 and 2006 there were no dilutive effects.

		9 M 2007	9 M 2006
Profit/loss attributable to shareholders of Dürr Aktiengesellschaft	€ k	6,109	-34
of which continuing operations	€ k	5,912	-56
of which discontinued operations	€ k	197	22
Number of shares outstanding (weighted average)	k	15,728.0	15,728.0
Earnings per share (basic and diluted)	€	0.39	0.00
of which continuing operations	€	0.38	0.00
of which discontinued operations	€	0.01	0.00

5. Liabilities from restructuring measures

Liabilities from restructuring measures have decreased by € 8,163 thousand to € 11,213 thousand compared to December 31, 2006. The decrease is mainly due to the utilization of liabilities formed in prior periods.

Expenses from restructuring measures amounted to € 560 thousand as of September 30, 2007 (September 30, 2006: € 4,955 thousand).

6. Segment reporting

The segment reporting was prepared according to IAS 14 "Segment Reporting". Based on the internal reporting and organizational structure of the Group, the consolidated financial statement data is presented by division. The segmentation aims to make the earnings power and the net assets and financial situation of the activities more transparent.

The primary reporting is based on the divisions of the Group. The Dürr Group is comprised of a management holding and two divisions differentiated by product and service spectrum that each have global responsibility for their products and results.

The Corporate Center mainly consists of Dürr AG.

January 1 to September 30, 2007		Paint and Assembly Systems	Measur ing and Process Systems	Corporate Center	Consoli dation	Conti nuing opera tions	Discon tinued opera tions	Total divisions
External sales revenues	€ k	794,598	220,415	-	-	1,015,013	-	1,015,013
Sales revenues with other divisions	€ k	231	2,987	-	-3,218	-	-	-
Total sales revenues	€ k	794,829	223,402	-	-3,218	1,015,013	-	1,015,013
Earnings before investment income, interest, and taxes	€ k	13,158	9,495	4,259	-33	26,879	201	27,080
Employees (as of September 30)		3,964	1,861	44	-	5,869	-	5,869

January 1 to September 30, 2006		Paint and Assembly Systems	Measur ing and Process Systems	Corporate Center	Consoli dation	Conti nuing opera tions	Discon tinued opera tions	Total divisions
External sales revenues	€ k	793,169	190,808	-	-	983,977	143	984,120
Sales revenues with other divisions	€ k	209	3,583	-	-3,792	-	-	-
Total sales revenues	€ k	793,378	194,391	-	-3,792	983,977	143	984,120
Earnings before investment income, interest, and taxes	€ k	20,568	-6,802	449	131	14,346	-604	13,742
Employees (as of September 30)		3,764	1,862	41	-	5,667	-	5,667

7. Related-party transactions

Dr.-Ing. E. h. Heinz Dürr is Chairman of the Supervisory Board of Dürr AG. Dr.-Ing. E. h. Heinz Dürr is also a member of the Administrative Board of Landesbank Baden-Württemberg. In the first nine months of 2007, expenses of € 263 thousand were payable to Heinz Dürr GmbH, Berlin, of which Dr.-Ing. E. h. Heinz Dürr is general manager, for the reimbursement of office and travel expenses relating to supervisory board activities and for cost reimbursements for the Dürr office in the German capital, Berlin. For his former activity as managing director, Dr.-Ing. E.h. Heinz Dürr also received benefits from the pension pledge of April 2, 1978 (supplemented December 21, 1988) of € 273 thousand.

Mr. Joachim Schielke is a Supervisory Board member of Dürr AG, a member of the Board of Management of Landesbank Baden-Württemberg and Chairman of the Board of Management of Baden-Württembergische Bank. From the current business relationship, there was a balance at Baden-Württembergische Bank of € 7,465 thousand as of September 30, 2007. From transactions with Baden-Württembergische Bank there were interest expenses in the first nine months of 2007 of € 237 thousand. The warranties and guarantees issued by Baden-Württembergische Bank on behalf of Dürr amounted to € 20,721 thousand as of September 30, 2007.

The Board of Management confirms that all the related-party transactions described above were carried out at arm's length conditions.

8. Contingent liabilities and other financial obligations

As of September 30, 2007, there were no material changes in other financial obligations since December 31, 2006.

30

However there was an increase in the volume of contingent liabilities. On one hand, this raise resulted from guarantees, given due to the increased business volume. On the other hand there was an increase of corporate guarantees issued in favour of banks, which is related to remaining contractual obligations from contracts of subsidiaries concerning the sale of several trade receivables to banks on a without recourse basis (forfaiting). Forfaiting is part of the net working capital management of Dürr. The contingent liability taken over by Dürr exists until the fulfilment of the contractual payment obligations through the debtor.

9. Business taxation reform

As a result of the Business Taxation Reform Act 2008, the nominal corporate tax rates for German companies were lowered considerably. Beginning with the assessment period 2008 the corporate income tax rate will be reduced from 25% to 15%.

The base value for trade tax will be reduced from currently 5% to 3.5%. However, the deductibility of the trade tax as operating expenditure is not applicable.

The approval of the Business Taxation Reform Act on July 6, 2007 by the Federal Council of Germany (Bundesrat) and the accompanied revaluation of the deferred tax assets and deferred tax liabilities at some group companies resulted in changes of the expected tax rates.

As of September 30, 2007, the revaluation of the deferred tax assets and deferred tax liabilities had a positive impact on net income of approximately € 2.3 million.

Responsibility statement by management

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year.

Stuttgart, November 15, 2007

Dürr Aktiengesellschaft

The Board of Management

Ralf Dieter Ralph Heuwing Chairman of the Board of Member of the Board of Management Management

Financial calendar

March 20, 2008	Annual press conference, Stuttgart
March 20, 2008	Analysts´ conference, Frankfurt/Main
May 2, 2008	Annual shareholders´ meeting, Stuttgart
May 8, 2008	Interim report on the first quarter of 2008
August 7, 2008	Interim report on the first half of 2008
November 6, 2008	Interim report on the first nine months of 2008

Contact

Please contact us for Dürr AG further information: Günter Dielmann

Corporate Communications & Investor Relations Otto-Dürr-Strasse 8 70435 Stuttgart Germany Phone: +49 711 136-1785 Fax: +49 711 136-1716 corpcom@durr.com investor.relations@durr.com

www.durr.com

This interim report is the English translation of the German original. The German version shall prevail.

This interim report includes forward-looking statements about future developments. As is the case for any business activity conducted in a global environment, such forward-looking statements are always subject to uncertainty. Our information is based on the conviction and assumptions of the Board of Management of Dürr AG, as developed from the information currently available. However, the following factors may affect the success of our strategic and operating measures: geopolitical risks, changes in general economic conditions (especially a prolonged recession in Europe or North America), exchange rate fluctuations and changes in interest rates, new products launched by competitors, and a lack of customer acceptance for new Dürr products or services, including growing competitive pressure. Should any of these factors or other imponderable circumstances arise, or should the assumptions underlying the forward-looking statements prove incorrect, actual results may differ from those projected. Dürr AG undertakes no obligation to provide continuous updates of forward-looking statements and information. Such statements and information are based upon the circumstances as of the date of their publication.