KRONES AG — Interim / Quarterly Report 2008

Apr 29, 2008

Interim report for the period from 1 January to 31 March 2008

q¹ .2008

Dear shareholders and friends of krones,

The outlook for the global economy has deteriorated in the wake of the mortgage and lending crisis in the United States. krones is not unaffected by this. However, unlike many machinery and industrial equipment manufacturers, we are not heavily dependent on economic cycles. Demand in our industry is rising steadily. We view positively the fact that the process of consolidation in the packaging industry is in a very advanced stage. For instance, the Salzgitter Group, whose original business is steel, has entered the market as a competitor to krones by buying out khs and sig Beverages. We welcome the competition and will continue to do everything we can to supply our customers with better, more efficient machines and lines.

Acquisitions that expand our range of products and services are also an option for krones. However, any potential takeover candidate's price must be in reasonable proportion to its profitability.

The figures for the first quarter of 2008 confirm that we are not under pressure to expand through acquisitions and that krones is already very well positioned. Sales were up 17.9% on the previous year, to €595.2m. At €45.6m, earnings before taxes (ebt) were up 26.3% year-on-year. Our ebt margin improved from 7.1% to 7.7%. A strong first quarter has us well on our way to another record year at krones.

Volker Kronseder Hans-Jürgen Thaus Chairman of the Executive Board Deputy Chairman of the Executive Board

		Q1	Q1	Cha nge
		200 8	200 7
Sale s	€ m	595 .2	505 .0	17.9 %
ord ulat ive, inclu ding Life cycl e Se rvice New ers, cum	€ m	607 .3	557 .1	9.0%
Ord n ha nd a ch, i nclu ding Life cycl rvice t 31 Mar e Se ers o	€ m	903 .0	798 .8	% 13.0
ital ndit Cap expe ures	€ m	15.7	17.6	-10 .8%
Emp loye t 31 Mar ch es a
ldw ide Wor		9,85 3	9,24 1	6.6%
Ger man y		7,94 2	7,59 0	4.6%
sha re * Earn ings per	€	0.98	0.72	36.1 %
ebit da	€ m	57.1	46.9	% 21.7
ebit	€ m	45.4	35.9	26.5 %
ebt	€ m	45.6	36.1	26.3 %
ings afte r tax Earn es	€ m	30.7	22.9	34.1 %
Cash flow , gro ss	€ m	42.4	33.9	% 25.1

Figures adjusted for stock split * diluted/undiluted

Financial crisis weighs on global economy

The repercussions of the credit crunch and mortgage crisis in the United States had a negative impact on the economy worldwide in the first months of 2008. Economic growth in the us was only marginal in the first quarter of 2008. The Federal Reserve is trying to prevent the us economy from sliding into recession by drastically cutting interest rates. Whether this will work remains to be seen. In any event, the global economy will suffer under the effects of the financial crisis. The International Monetary Fund (imf) is forecasting that global economic growth will lose speed in 2008 and will likely amount to 3.7% (previous year: 4.9%). Strong growth in countries like China, Russia, and India will keep the global economy from performing even more poorly.

Prospects for growth are also dimmer in Germany. The ifo business confidence index for manufacturing shows that, while the current business situation is still being viewed positively, expectations for the future are declining. For the year 2008 as a whole, economic experts at the imf are forecasting gdp growth of 1.4%. Germany's federal government is more optimistic, most recently predicting 1.7% growth. In 2007, Germany's gdp grew 2.5%.

Machinery sector continues to move forward

The economic risks for the German machinery sector are impossible to ignore. Apart from the general economic risks, the us dollar's weakness against the euro presents a threat for German companies. Nevertheless, the sector continued to boom in the first months of 2008. In February 2008, new orders among German machinery and industrial equipment manufacturers were up 10% year-on-year. The German Engineering Federation (vdma) is forecasting 5% output growth this year over 2007. Though this would mean far slower growth than in 2007, when output expanded by 11%, it would nevertheless be the fifth consecutive growth year. The last time the sector experienced such a long growth spurt was around 50 years ago.

Revenues up sharply

krones has got 2008 off to an excellent start. First-quarter sales jumped 17.9% year-on-year, to €595.2m. That means our business growth picked up speed once again. We benefited from the continued strong business trend in the sector and from our position as the only supplier on the market to have mastered our customers' entire value chain. This position secures considerable advantages for us over our competitors since more and more customers prefer to get all of their products and services from a single source.

Plastics technology once again contributed a major portion of krones' growth during the reporting period. In this segment, we supply machines and lines for producing and filling bottles made of pet (polyethylene terephthalate).

The pet boom continues unabated and pet is expected to experience the strongest growth among packaging materials in the years ahead. Water is increasingly being bottled in pet. In countries like Romania and the Commonwealth of Independent States (cis) beer, too, is increasingly being bottled in lightweight, unbreakable pet containers. krones is the world leader in this segment.

Sales by region

Sales were up in many regions in 2008. The fact that revenues were down by one-third in Germany compared with the same quarter of 2007, to just under €66m, is due to the extraordinarily high sales figure for Q1 2007 as well as invoice timing. The domestic share of consolidated sales shrank from 20.7% to 11.1%.

krones benefited from the economic boom in regions like China, Russia, and Vietnam, where international beverage companies are expanding their capacities. Sales revenues increased especially sharply in our Asia/Pacific, Russia/Central Asia, China, and Eastern Europe sales regions. The biggest individual market in the first quarter was Western Europe, where sales climbed around 37% to €136.8m.

krones continued to grow in the first three months of 2008. Sales were up 17.9% year-on-year.

Sales 1 Jan – 31 March 2008: €595.2^m

Sales 1 Jan – 31 March 2007: €505.0^m

Strong orders inflow

Brisk demand for machines and lines from krones remained unabated in the first three months of 2008. New orders were up 9.0% on the year-earlier period, to €607.3m. Demand for aseptic (germ-free) filling lines for beverages like juice and milk was stronger than average. These lines are technologically sophisticated.

In regional terms, the first quarter of 2008 saw especially strong orders intake from China and the Asia/Pacific region. One order, which we received from a customer in China, was for 18 complete pet bottling lines. We received the first order for our pet bottle-to-bottle recycling system in the first quarter of 2008.

Customers in Vietnam also placed more large orders valued in the double-digit millions during the reporting period. Vietnam was already one of krones' strongest markets in 2007. We also received several major orders from Europe in the first quarter.

Orders backlog of more than €900m

At 31 March 2008, krones had an orders backlog of €903.0m. At the same time last year, orders on hand totalled €798.8m. That translates to a 13.0% increase in orders on hand. This orders cushion serves as the basis for continued growth and offers improved planning security for 2008.

krones workforce is growing

As our business expands, so too does our workforce. At the end of the first quarter of 2008, krones employed 9,853 people worldwide (31 March 2007: 9,241), of which 7,942 were in Germany. That is a year-on-year increase of 612 employees. Since the end of 2007 alone, krones added 265 employees. On 31 March 2008, krones was training 401 young people.

Demand for krones products was high in the first quarter of 2008. The company has a comfortable orders backlog.

1 January – 31 March

Profitability improves further

At €45.6m, earnings before taxes (ebt) were up 26.3% year-on-year (Q1 2007: €36.1m). The ebt margin, the ratio of earnings before taxes to sales, advanced from 7.1% to 7.7%. Thus, we achieved our margin target of more than 7% in the first three months of the year.

Demand in the beverage and packaging industries has been high for several quarters now, which has a positive impact on price quality. Also contributing to our improved margins were the various measures krones has taken to improve cost-effectiveness, such as more flexible working hours and strict cost management.

Our tax rate declined from 36.6% in 2007 to 32.7% in the first quarter of 2008. As a result, after-tax earnings increased more sharply than earnings before taxes, by 34.1% to €30.7m (previous year: €22.9m).

Earnings per share up 36% to €0.98

Since the 3-for-1 stock split took effect on 22 August 2007, the number of krones shares outstanding is now 31,593,072. On the basis of this share volume, earnings per share amounted to €0.98 in the first quarter of 2008. The adjusted value for the year-earlier period was €0.72.

ifrs	200 8	200 7	Chan ge
	onth 3 m s	onth 3 m s
Sale s rev enu es	595 .2	505 .0	17.9 %
Cha f fin ishe d go ods s in inve ntor ies o nge
and rk in wo pro gres s	5.4	33.4
ds a nd s ervi hase d Goo ces purc	-31 0.5	-28 8.1	7.8%
el ex Pers onn pen ses	-16 0.8	-14 9.0	7.9%
Oth me ( ) ting inco er o pera expe nses
and rk ca pita lised ow n wo	-72 .2	-54 .4	32.7 %
ebit da	57.1	46.9	21.7 %
d w dow Dep recia tion ortis atio rite- , am n, an ns
nt a sset on n on-c urre s	-11 .7	-11 .0	6.4%
ebit	45.4	35.9	26.5 %
(ex se) Fina ncia l inc ome pen	0.2	0.2
ebt	45.6	36.1	% 26.3
Taxe inco s on me	-14 .9	-13 .2	12.9 %
Net inco me	30.7	22.9	34.1 %

The abridged income statement shows that sales revenues in the first quarter of 2008, which were up 17.9%, grew considerably more sharply than key expenses. For instance, goods and services purchased increased only 7.8% to €310.5m (previous year: €288.1m) since the situation on the steel markets relaxed in the first quarter of this year. We also benefited from more favourable purchasing conditions. The ratio of goods and services purchased to total operating revenue (€600.6m; previous year: €538.4m),, decreased from 53.5% to 51.7%.

Personnel expenses were up 7.9% year-on-year to €160.8m (previous year: €149.0m). However, the ratio of personnel expenses to total operating revenue declined from 27.7% to 26.8%. krones employed temporary workers in the first quarter on an as-needed basis. This is also reflected in the lower personnel expense ratio.

The fact that the negative balance of other operating income and expenses and own work capitalised increased by nearly one-third to €72.2m was due primarily to higher travel and freight costs associated with international sales.

krones group earnings structure, in € ^m

With a return on sales of 7.7%, we exceeded our margin target in the first quarter.

Consolidated cash flow statement, in € m

Cash flow from operating activities decreased by €0.6m in the first quarter compared with the year-earlier period. The fact that cash flow from operating activities was negative (–€22.8m) despite higher earnings before taxes was due to an increase in provisions and the build-up of working capital in the first three months of 2008. While trade receivables increased less than proportionately to sales, our inventories were around a quarter higher than a year earlier. This is due in part to the fact that complete lines make up a larger share of krones business and these lines entail longer production lead times. We reduced trade payables. Higher tax prepayments also cut into cash flow from operating activities.

From January through March 2008, krones invested €15.7m (previous year: €17.6m) in property, plant and equipment and intangible assets. A large portion of this spending went toward new production machinery. Free cash flow improved €1.2m, from –€39.2m to –€38.0m.

krones took on financial liabilities totalling €27.1m in the first quarter. This borrowing is negligible compared with total assets and equity.

Accounting for changes arising from exchange rates, krones had cash and cash equivalents totalling €42.7m at 31 March 2008 (previous year: €44.3m).

ifrs	1 Jan —	1 Jan —	Chan ge
	31 M ar 08	31 M ar 07
ebt	45.6	36.1	9.5
Cash flow from ratin tivit ies ope g ac	-22 .8	-22 .2	-0.6
Cash flow from inve stin tivit ies g ac	-15 .2	-17 .0	1.8
h flo Free cas w	-38 .0	-39 .2	1.2
Cash flow from fina ncin tivit ies g ac	26.7	25.6	1.1
Net cha in ca sh a nd c ash ivale nts nge equ	.3 -11	-13 .6	2.3
Cha in ca sh a nd c ash ivale risin nts a nge equ g
from han ates exc ge r	0.2	0.2
Cash and h eq lent the uiva s at cas
f the beg inni iod ng o per	53.8	57.5	-3.9
Cash and h eq uiva lent the end of t he p erio d s at cas	42.7	44.3	-1.6

Improved sales boosted the krones group's total assets 14.6% over the total for the year-earlier period, from €1,529.6m to €1,752.2m at the end of March. At the end of 2007, total assets were up 4.1% to €1,684.0m.

At €350.2m, property, plant and equipment account for the lion's share of the Group's €425.7m in property, plant and equipment, intangible assets, and financial assets. Compared with the balance sheet date for 2007, this balance sheet item is virtually unchanged. Due to an increase in inventories and trade receivables, current assets were up 5.3% to €1,273.3m (31 December 2007: €1,208.8m).

At the end of March 2008, the krones group had non-current liabilities totalling €159.7m. That is up 3.3% compared with the end of 2007. Current liabilities were up 4.4% to €857.2m (31 December 2007: €821.4m). While customer prepayments were down, provisions were higher at the end of March 2008 than they were at the balance sheet date for 2007.

At the end of the first quarter of 2008, krones had €735.3m in equity (31 December 2007: €708.0m). The equity ratio remained virtually unchanged at 42.0%. Thus, krones has a solid capital structure and sufficient scope for investing in further growth.

krones group asset and capital structure, in € m

krones has a solid balance sheet structure. The equity ratio was 42% at the end of March 2008.

ifrs	31 M ar 20 08	31 D ec 20 07	31 D ec 20 06	31 D ec 20 05
Non rent ts -cur asse	479	475	430	403
of w hich pert y, pl ant and ipm ent, pro equ
inta ngib le as , and fina ncia l ass sets ets	426	422	374	357
Curr ent ts asse	1,27 3	1,20 9	1,04 2	880
of w hich h an d eq lent uiva cas s	43	54	58	57
Equ ity	735	708	629	572
l deb Tota t	1,01 7	976	843	711
liab ilitie Non rent -cur s	160	155	147	155
liabi litie Curr ent s	857	821	696	556
Tota l	1,75 2	1,68 4	1,47 2	1,28 3

Prod uct f illin d de tion g an cora	1 Jan to	1 Jan to
	arch 31 M 2008	arch 31 M 2007
€ m ebit	44.4	36.3
€ m ebt	44.7	36.8
gin % ebt mar	9.0	8.5
duct ion/ echn olog Beve ess t rage pro proc y	1 Jan to	1 Jan to
	31 M arch 2008	31 M arch 2007
€ m ebit	1.3	-1.5
€ m ebt	1.4	-1.5
gin % ebt mar	1.8	-2.7
kosm e	1 Jan to	1 Jan to
	arch 31 M 2008	arch 31 M 2007
€ m ebit	-0.3	1.1
€ m ebt	-0.5	0.8
gin % ebt mar	-2.5	4.3

Sales by segment

krones' biggest-earning segment by far, »machines and lines for product filling and decoration,« did well in the first three months of 2008. Sales were up 15.5% year-on-year to €497.6m (previous year: €430.8m). The segment contributed 83.6% of consolidated sales (previous year: 85.3%). A major portion of these sales were machines and lines for producing and filling pet bottles. The pet boom continued in the first quarter of 2008. Demand for machines and lines for cold aseptic filling was especially high.

The »machines and lines for beverage production/process technology,« increased sales 38.7% from €55.8m to €77.4m. That means we have made further progress with our strategy of expanding process engineering in the first quarter of 2008. The segment contributed 13% to consolidated sales in the first quarter of 2008, up from 11% in the year-earlier quarter. One reason for the considerable increase in revenues is that many new breweries are being built in Asia and Africa. Demand for machines and components for producing dairy drinks, juices, and other non-alcoholic beverages was also strong.

Our smallest segment, »machines and lines for the low output range (kosme),« grew less than proportionately. Nevertheless, we are not dissatisfied with the development of sales in this segment, as demand on the market was still primarily for powerful machines and turnkey lines. Sales in the first quarter of 2008 were up 9.8% to €20.2m (previous year: €18.4m).

Segment earnings

Improved price quality and further progress in streamlining our production processes resulted in a noticeable increase in earnings in the »machines and lines for product filling and decoration« segment. At 31 March 2008, earnings before taxes (ebt) in our core business segment amounted to €44.7m, up 21.5% on the year-earlier figure (€36.8m). The segment's ebt margin improved from 8.5% to 9.0%.

Earnings were up considerably in the first quarter of 2008 in the »machines and lines for beverage production/process technology« segment. After -€1.5m in the same quarter of the previous year, ebt was up to €1.4m for the reporting period. The ebt margin was 1.8% (previous year: 2.7%). Thus, our restructuring efforts have paid off. In addition, low-margin business with goods purchased for resale made up a smaller portion of segment revenues. We want to further increase our own value chain in order to improve profitability.

Our smallest segment, »machines and lines for the low output range (kosme),« posted a €0.5m loss before taxes for the first quarter. In the same period of the previous year, kosme generated earnings before taxes of €0.8m. The segment slipped into the red in the second half of 2007 because it accepted orders that required the production of costly prototypes. This was a departure from the company's strategy of focusing on standardised stand-alone machines. kosme has since gotten back on strategy and is well on its way to achieving a break-even result for 2008.

Sales 1 Jan – 31 March 2008: €595.2^m Sales 1 Jan – 31 March 2007: €505.0^m

Sales increased considerably in all segments in the first quarter.

krones achieved a turnaround in process technology in the first quarter of 2008.

krones bucks the downtrend

In the first quarter of 2008, the equity markets performed poorly as a result of the subprime mortgage crisis. Massive write-downs by international banks and fears of recession dragged share prices downward. On 31 March 2008, Germany's dax index was down by around one-fifth from its closing level for 2007, to 6,535 points. That means Germany's leading share index lost almost all of its gains from 2007 in the first quarter of 2008.

The mdax fared better, losing only 10.9% in the first quarter of 2008. The krones share performed better than its peer index. At the end of March, the share price was €51.70, down only around 6% from its 2007 closing price.

Analyst and investor interest in krones remained high in the first quarter of 2008. krones presented itself to institutional investors at road shows in the uk, Germany, and France.

Two internationally renowned institutions, Merrill Lynch and Goldman Sachs, added our share to their watchlists in the first quarter. We now have 22 analysts regularly tracking our share. The majority of experts take a positive view of our share. Only three banks recommended selling the krones share at the end of March 2008.

Executive Board expects new sales and earnings records in 2008

krones intends to increase revenues within the corridor of 5% to 10% annually for the long term. We will continue to systematically expand our range of products and services and to consolidate our technology lead in 2008. In so doing, krones seeks to utilise the existing potential for growth worldwide and to grow faster than the market – despite all economic uncertainties emanating from the us and despite the weak dollar. Given the strong first quarter of this year and the positive outlook, the Executive Board expects sales growth in 2008 to be at the upper end of the forecast corridor and expects revenues to pass the €2.3bn mark.

We want to further improve our pre-tax return on sales (ebt margin) in 2008. It was 7.1% in 2007. Our first-quarter ebt margin of 7.7% has us off to a good start in this direction. Since the company benefits from the reform of Germany's Corporate Income Tax Law, after-tax earnings will grow more steeply than earnings before taxes. Thus, krones is well on its way to achieving its ninth consecutive year of record sales and profit.

krones is targeting a new earnings record for 2008.

The krones share lost »only« 6% in the first quarter, outperforming the mdax index by a wide margin.

krones share mdax (indexed)

krones share 2008

krones group consolidated interim financial statements

nd l iabi litie Equ ity a s	31 M	ar 20 08	31 D ec 2 007
	in € m	in € m	in € m	in € m
ity Equ		735 .3		708 .0
s for ision sion
Prov pen s Defe rred liab ilitie	76.0		75.2
tax s	13.0		10.9
Oth rovi sion er p s	44.1		43.7
Liab ilitie ban ks s to	0.7		0.7
Trad yab les e pa	0.1		0.1
Oth er fi cial liab ilitie nan s	13.4		15.9
Oth er li abil ities	12.4		8.1
liab ilitie Non rent -cur s		159 .7		154 .6
Oth rovi sion er p s	126 .5		110 .5
s for Prov ision tax es	27.0		25.2
Liab ilitie s to ban ks	27.2		0.1
Adv ceiv ed ts re ance pay men	278 .4		286 .0
Trad yab les e pa	137 .9		161 .2
liab ilitie Curr ent tax s	0.3		0.6
Oth er fi cial liab ilitie nan s	37.0		43.1
Oth er li abil ities and rual acc s	222 .9		194 .7
liab ilitie Curr ent s		857 .2		821 .4
Tota l		2.2 1,75		1,68 4.0

Asse ts	31 M ar 20 08		31 D ec 2 007
	in € m	in € m	in € m	in € m
ngib le as Inta sets	60.0		58.4
Prop erty , pla nt a nd e quip t men	350 .2		349 .2
Fina ncia l ass ets	15.5		14.5
, pla nd e quip t, in ible nd f inan cial Prop erty nt a tang ts, a ts men asse asse	425 .7		422 .1
Defe rred tax ets ass	6.5		7.0
Trad ceiv able e re s	28.6		28.2
ivab les Curr ent tax rece	15.6		15.6
Oth sset er a s	2.5		2.3
Non rent ts -cur asse		478 .9		475 .2
Inve ntor ies	525 .2		505 .5
Trad able ceiv e re s	640 .6		583 .7
Curr ent tax ivab les rece	2.8		4.3
Oth sset er a s	62.0		61.5
Cash and h eq uiva lent cas s	42.7		53.8
Curr ent ts asse		1,27 3.3		1,20 8.8
l Tota		1,75 2.2		1,68 4.0

	2008	2007	Chan ge
	1 Jan - 31 M ar	1 Jan - 31M ar
	in € m	in € m	%
Sale s rev enu es	595 .2	505 .0	17.9
Cha s in inve ies o f fin ishe d go ods and rk in ntor nge wo pro gres s	5.4	33.4	-83 .8
l ope Tota ratin g re ven ue	600 .6	538 .4	11.6
Goo ds a nd s ervi hase d ces purc	-31 0.5	-28 8.1	7.8
el ex Pers onn pen ses	-16 0.8	-14 9.0	7.9
Oth (exp s) an d ow rk ca lised ting inco pita er o pera me ense n wo	-72 .2	-54 .4	32.7
recia tion ortis atio d w rite- dow Dep t as sets , am n, an ns o n no n-cu rren	-11 .7	-11 .0	6.4
ebit	45.4	35.9	26.5
fina l inc (ex se) Net ncia ome pen	0.2	0.2
s (eb t) ings bef taxe Earn ore	45.6	36.1	26.3
inco Taxe s on me	-14 .9	-13 .2	12.9
inco Net me	30.7	22.9	34.1
it (lo ss) s Prof hare of m inor ity i nter ests	-0.2	0.1
it (lo ss) s Prof hare of s hare hold f kr ers o one s gr oup	30.9	22.8
sha re (d ilute d/ba sic) Earn ings in € per	0.98	0.72

	200 8	200 7
	onth 3 m s	onth 3 m s
	in € m	in € m
bef Earn ings taxe ore s	45.6	36.1
Dep recia tion and ortis atio am n	11.7	11.0
in p rovi sion Incr ease s	20.8	8.9
Defe rred cha ised tax item in i s rec nge ogn ncom e	2.6	-0.7
d int Inte rest t inc exp ense s an eres ome	-0.1	0.2
eed d lo from the disp osal of n Proc nt a sset s an sses on-c urre s	0.1	0.1
Oth ash inco nd e er n on-c me a xpe nses	-1.5	-1.0
in i tori es, t rade ivab les a nd o ther ets Incr ease nven rece ass
ibut able to i ting or f inan cing iviti not attr act nves es	-76 .9	-72 .2
trad yab les a nd o ther liab ilitie Dec e in reas e pa s
ibut able or f not attr to i ting inan cing act iviti nves es	-15 .2	-1.1
Cash ed f erat ratin tivit ies gen rom ope g ac	-12 .9	-18 .7
paid Inte rest	-1.2	-0.6
d an d re fund d Inco me t pai eive s rec axes	-8.7	-2.9
Cash flow from ratin tivit ies ope g ac	-22 .8	-22 .2
Cash ts to uire inta ngib le as sets pay men acq	-5.4	-4.0
eed s fro m th e dis l of i ntan gibl sets Proc posa e as	0.1	0.1
Cash uire y, pl and ipm ts to pert ant ent pay men acq pro equ	-10 .3	-13 .6
eed s fro m th e dis l of , pla nd e Proc erty nt a quip t posa prop men	0.7	0.3
Cash fina l ass ts to uire ncia ets pay men acq	-1.0	0.0
ived Inte rest rece	0.7	0.2
Cash flow from inve stin tivit ies g ac	.2 -15	.0 -17
eed s fro ew b Proc win orro m n g	27.1	25.7
Cash leas e lia bilit ts to ies pay men pay	-0.4	-0.1
Cash flow from fina ncin tivit ies g ac	26.7	25,6
cha in ca sh a nd c ash ivale Net nts nge equ	-11 .3	-13 .6
Cha sh a nd c ash ivale g fro cha in ca nts a risin rate nge equ m ex nge s	0.2	0.2
f the Cash and h eq uiva lent s at the beg inni iod cas ng o per	53.8	57.7
Cash and h eq uiva lent the end of t he p erio d s at cas	42.7	44.3

	hine s and Mac	line s	hine s and line Mac s		hine s and line Mac s		kron es gr oup
	for p rodu ct fil	ling and	for b ever age	prod uctio n/	for t he lo w ou	tput
	deco ratio n		echn ess t proc	olog y	e (ko sme) rang
	200 8	200 7	200 8	200 7	200 8	200 7	200 8	200 7
	onth 3 m s	onth 3 m s	onth 3 m s	onth 3 m s	onth 3 m s	onth 3 m s	onth 3 m s	onth 3 m s
	in € m	in € m	in € m	in € m	in € m	in € m	in € m	in € m
Sale s rev enu es	497 .6	430 .8	77.4	55.8	20.2	18.4	595 .2	505 .0
ebit	44.4	36.3	1.3	-1.5	-0.3	1.1	45.4	35.9
loye ch* Emp t 31 Mar es a	8,46 5	8,04 0	533	531	487	462	9,48 5	9,03 3
les ( ros) ** Retu rn o n sa	9.0%	8.5%	1.8%	% -2.7	% -2.5	4.3%	7.7 %	7.1%
ebt	44.7	36.8	1.4	-1.5	-0.5	0.8	45.6	36.1

* Consolidated group ** Basis: ebt

		Pare nt co mpa ny					Mino rity intere sts	Grou p equit y
	Capi tal	Cap ital	Reta ined	Curr ency	Oth er	Gro up	Equ ity	Equ ity
	stoc k	rese rves	ings earn	diffe renc es	rese rves	prof it
				in eq uity
	in € m	in € m	in € m	in € m	in € m	in € m	in € m	in € m	in € m
At 3 ber 6 1 De cem 200	26.9	103 .7	362 .6	-0.6	0.8	132 .7	626 .1	2.6	628 .7
solid ated Con net inco me Q 1 20 07						22.8	22.8	0,1	22.9
diff Curr ency eren ces				-1.5			-1.5		-1.5
Hed ntin ge a ccou g					0.1		0.1		0.1
rch 2 At 3 1 Ma 007	26.9	103 .7	362 .6	-2.1	0.9	155 .5	647 .5	2.7	650 .2
ied f Amo unt ard to n nt carr orw ew a ccou							0.0		0.0
nt (€ e) Divi den d pa shar 1.60 per yme						-16 .9	-16 .9		-16 .9
ital Cap incr ease	13.1		-13 .1				0.0		0.0
Con solid ated net inco nths me 9 mo 200 7						80.0	80.0	-1.1	78.9
Allo ed e cati on t tain arni o re ngs			60.2			-60 .2	0,0		0,0
diff Curr ency eren ces				-3.6			-3.6		-3.6
Cha s in the olid ated nge cons gro up			-0.4				-0.4		-0.4
Hed ntin ge a ccou g					-0.2		-0.2		-0.2
At 3 1 De ber cem 200 7	40.0	103 .7	409 .3	-5.7	0.7	158 .4	706 .4	1.6	708 .07
solid ated inco 08 Con net me Q 1 20						30.9	30.9	-0.2	30.7
diff Curr ency eren ces				-4.7			-4.7		-4.7
Hed ntin ge a ccou g					1.3		1.3		1.3
rch 2 008 At 3 1 Ma	40.0	103 .7	409 .3	-10 .4	2.0	189 .3	733 .9	1.4	735 .3

Inter-company receivables, liabilities, provisions, revenues, and expenses between consolidated companies are eliminated in the consolidation process.

Inter-company profits from deliveries effected or services rendered between Group companies are not eliminated because the amounts arising from these transactions are not material for the presentation of the group's assets, financial position, and results of operations.

Currency translation

The functional currency for krones ag is the euro.

The financial statements of the consolidated companies that are denominated in a foreign currency are translated on the basis of the functional currency concept (ias 21) using a modified closing rate method. Because the subsidiaries operate primarily independently in the economic environment of their respective countries, the functional currency is always the relevant local currency for each subsidiary. Thus, in the consolidated financial statements, assets and liabilities are translated at the closing rate as on the reporting date, while income and expenses from the financial statements of subsidiaries are translated at average annual rates.

Any exchange differences resulting from these different rates in the balance sheet and income statement are recognised directly in equity. Exchange differences resulting from the translation of equity using historical exchange rates are also recognised directly in equity.

In the separate financial statements of krones ag and its subsidiaries, receivables and liabilities in foreign currencies are translated using the exchange rate at the time of the transaction and exchange differences are recognised in profit or loss at the closing rate. Non-monetary items in foreign currencies are stated at historical cost.

Exchange rate differences compared with the previous year arising from acquisition accounting are recognised directly in equity in other retained earnings.

The exchange rates of those currencies that have a material impact on the Group's financial statements have moved against the euro as follows:

General disclosures

Legal basis

The consolidated financial statements of krones ag (»krones group«) for the period ended 31 March 2008 have been prepared in accordance with the International Financial Reporting Standards (ifrs) of the International Accounting Standards Board (iasb), London, applicable on the reporting date, including the interpretations issued by the International Financial Reporting Interpretation Committee (ifric) as adopted by the European Union. No early application was made of ifrss that had not yet entered into force or their interpretations.

Minority interests in group equity are stated on the balance sheet as a special item within equity. Profit or loss shares attributable to minority interests are recognised on the income statement as part of consolidated earnings. The shares of consolidated earnings allocated to equity holders of the parent company and to minority interests are presented separately.

Minority interests have been added to the statement of changes in equity.

The following explanatory notes comprise disclosures and remarks that, under ifrs, must be included as notes to the consolidated financial statements in addition to the balance sheet, income statement, statement of changes in equity, and cash flow statement.

The »nature of expense« method has been used for the income statement. The group's reporting currency is the euro.

Consolidated group

Besides krones ag, the consolidated financial statements for the period ended 31 March 2008 include all material domestic and foreign subsidiaries in which krones ag holds more than 50% of the voting rights.

Consolidation principles

The separate financial statements of the companies included in the consolidated financial statements are prepared in accordance with uniform accounting policies and were all prepared as of the reporting date of the consolidated financial statements.

For companies that were acquired after 1 January 2004, acquisition accounting is performed in accordance with ifrs 3 (»Business combinations«), under which all business combinations must be accounted for using the »purchase method« of accounting, whereby the acquired assets and liabilities are to be recognised at fair value.

Any amount by which the cost of acquisition exceeds the interest in the fair values of assets, liabilities, and contingent liabilities is recognised as goodwill and subjected to regular impairment tests. Negative goodwill is immediately recognised in profit and loss. Goodwill arising before 1 January 2004 is still recognised in reserves.

Shares in the equity of subsidiaries that are not held by the parent company are reported as »minority interests«.

		Clos	ing r ate	Aver rate age
		31 M ar 20 08	31 D ec 20 07	2008	2007
us d olla r	usd	1.58 1	1.47 2	1.49 8	1.31 0
Briti sh p d oun	gbp	0.79 5	0.73 5	0.75 7	0.67 0
Swis s fra nc	chf	1.57 2	1.65 6	1.60 1	1.61 6
ish k Dan rone	dkk	7.45 7	7.45 8	7.45 4	7.45 2
adia n do llar Can	cad	1.61 7	1.44 5	1.50 5	1.53 5
Japa nese yen	jpy	157 .380	165 .100	157 .732	156 .495
ilian l Braz rea	brl	2.74 0	2.62 1	2.61 2	2.75 9
Chin inbi (yu an) renm ese	cny	11.0 87	10.7 49	10.7 45	10.1 53
Mex ican pes o	mxn	16.9 30	16.0 38	16.2 05	14.4 20
Ukra inia n hr ia yvn	uah	7.89 6	7.42 5	6.93 7	0.15 8

Accounting policies

The separate financial statements of krones ag and its domestic and foreign subsidiaries have been prepared using uniform accounting policies, in accordance with ias 27.

Some discretion has been used in preparing the consolidated financial statements, particularly in terms of measurement of non-current assets, inventories, receivables, pension provisions, and provisions, because their preparation requires some critical estimates and forecasts.

Intangible assets

Purchased and internally generated intangible assets, excluding goodwill, are recognised pursuant to ias 38 if it is sufficiently probable that the use of the asset will result in a future economic benefit and the cost of the asset can be reliably determined. They are stated at cost and amortised systematically on a straight-line basis over their estimated useful lives. The amortisation of intangible assets is carried out over a useful life of between three and five years and recognised under »Depreciation and amortisation of intangible assets and property, plant and equipment.«

Research and development costs

Development costs of the krones group are capitalised at cost to the extent that costs can be allocated reliably and the technical feasibility and a future economic benefit as a result of their use are probable. According to ias 38, research costs cannot be recognised as intangible assets and are, therefore, recognised as an expense in the income statement when they are incurred.

Goodwill

No goodwill was acquired during the reporting period.

Property, plant and equipment

Property, plant and equipment are accounted for at cost less scheduled depreciation on a straightline basis over their estimated useful lives. The cost of internally generated plant and equipment comprises all costs that are directly attributable to the production process and an appropriate portion of overheads. Borrowing costs are not recognised as »cost«. A revaluation of property, plant and equipment pursuant to ias 16 was not carried out.

Scheduled depreciation is based on the following useful lives, which are applied uniformly throughout the group:

In figuring the useful lives, the different components of an asset with significantly different costs were taken into account.

Government grants are only recognised if there is reasonable assurance that the conditions attaching to them will be complied with and the grants will be received.

Apart from grants related to income, which are recognized in their full amount in profit or loss, grants related to assets are deducted in arriving at the carrying amount of the asset on the balance sheet and recognised in profit and loss by way of a reduced depreciation charge in the subsequent

periods.

Leases

Leases in which the krones group, as the lessee, bears substantially all the risks and rewards incident to ownership of the leased asset are treated as finance leases pursuant to ias 17 upon inception of the lease. The leased asset is recognised as a non-current asset at fair value or, if lower, at the present value of the minimum lease payments. The leased asset is depreciated systematically using the straight-line method over the shorter of its »estimated useful life« or the »lease term«. Obligations for future lease instalments are recognised as »other liabilities«.

In the case of operating leases, the leased assets are treated as assets belonging to the lessor since

the lessor bears the risks and rewards.

Financial instruments

Financial instruments under ias 39 used by krones consist of the following:

Financial instruments held for trading (derivative financial instruments)

• Financial assets
• Available-for-sale financial instruments
• Financial receivables and liabilities

For the measurement categories, the carrying amounts correspond to the fair values.

Because there is no active market for the financial assets, they are recognised at amortised cost.

The fair values and carrying amounts are based on market rates and observable ongoing market

transactions.

Transactions against cash settlement are accounted for using the settlement date. Derivative financial instruments are accounted for using the trade date.

Net gains and losses include impairments and measurement changes for derivative financial

instruments.

The classes under ifrs 7 also include, pursuant to ias 39, cash proceeds and liabilities from finance leases in addition to the categories listed above.

	In ye ars
Buil ding s	14 — 50
Tech l equ and chin nica ipm ent ma es	5 — 16
fixt offi Furn iture and and quip t ures ce e men	3 — 15

Inventories

Inventories are stated at the lower of cost or net realisable value. Cost includes those costs that are directly related to the units of production and an appropriate portion of fixed and variable production overheads. The portion of overheads is determined on the basis of normal operating capacity. Selling costs, general administrative costs, and borrowing costs are not included in the costs of inventories. For inventory risks arising from increased storage periods or reduced usability, write-downs are made on the inventories.

For the sake of convenience in measuring materials and supplies, the FiFo and weighted average

cost formulas are applied.

Construction contracts for specific customers

Construction contracts for specific customers that are in progress are recognised according to the degree of completion pursuant to ias ¹¹ (»percentage-of-completion method«). Under this method, contract revenue is recognised in accordance with the percentage of physical completion of the lines and machines at the balance sheet date. The percentage of completion corresponds to the ratio of contract costs incurred up to the balance sheet date to the total costs calculated for the contract. The construction contracts are recognised under trade receivables.

Deferred tax items

Deferred tax assets and liabilities are recognised using the balance-sheet oriented »liability method«. This involves creating deferred tax items for all temporary differences between the tax and ifrs balance sheet carrying amounts and for consolidation procedures affecting income.

The deferred tax items are computed on the basis of the national income tax rates that apply in the individual countries at the time of realisation. Changes in the tax rates are taken into account if there is sufficient certainty that they will occur. Where permissible under law, deferred tax assets and liabilities have been offset.

Provisions for pensions

Provisions for pensions are calculated using the »projected unit credit method« pursuant to ias 19. Under this method, known vested benefits at the reporting date as well as expected future increases in pensions and salaries are taken into account with due consideration to relevant factors that will affect the benefit amount, which are estimated on a prudent basis. The provision is calculated on the basis of actuarial valuations that take into account biometric factors.

Actuarial gains and losses are only recognised as income or expenses if they exceed 10% of the obligations. These are recognised over the expected average remaining working lives of the em-

ployees.

Financial assets

Financial assets other than securities are recognised at cost, less impairment losses. Non-current securities are classified as »available for sale« and recognised at fair value directly in equity. No assets are classified as »held to maturity.«

Moreover, the »fair value option« provided for under ias 39 is not applied to any balance sheet items within the krones group.

Derivative financial instruments

The derivative financial instruments used within the krones group are used to hedge against currency risks from operating activities.

The primary category of currency risk at krones is transaction risks arising from exchange rates and cash flows in foreign currencies. These currencies are, primarily, the us dollar, Canadian dollar, British pound, and Swiss franc.

Within the hedging strategy, 100% of items denominated in foreign currencies are generally hedged. The primary hedging instruments used for this are forward exchange contracts and, occasionally, swaps, including currency swaps.

The strategy objective is to minimise currency risk by using hedging instruments that are viewed as highly effective and thus both hedging the exchange rate and achieving planning security.

The derivative financial instruments are measured at fair value at the balance sheet date. Gains and losses from the measurement are recognised as profit or loss on the income statement unless the conditions for hedge accounting are met.

The derivative financial instruments for which hedge accounting is applied comprise forward currency contracts and currency swaps whose changes in fair value are recognised either in income (»fair value hedge«) or in equity (»cash flow hedge«). In the case of cash flow hedges, to mitigate currency risks from existing underlying transactions, changes in fair value are initially recognised directly in equity and subsequently transferred to the income statement when the hedged item is recognised in the income statement. The derivative financial instruments are measured on the basis of the relevant commercial bank's forward rates.

They are derecognised only when substantially all risks and rewards of ownership are transferred.

Receivables and other assets

Receivables and other assets, with the exception of derivative financial instruments, are assets that are not held for trading. They are reported at amortised cost. Receivables with maturities of over one year that bear no or lower-than-market interest are discounted. Impairments are recognised to take account for all identifiable risks. The indicators used for this are the ageing of the receivables and the customer's business situation.

Other provisions

Other provisions are recognised when the Group has an obligation to a third party as a result of a past event, an outflow is probable, and a reliable estimate of the amount of the obligation can be made. Measurement of these provisions is computed at fully attributable costs or on the basis of the most probable expenditures needed to settle the obligation.

Provisions with a residual term of more than one year are recognised at the present value of the probable expenditures needed to settle the obligation at the reporting date.

Financial liabilities

For initial recognition, in accordance with ias 39, financial liabilities are measured at the cost that is equivalent to the fair value of the consideration given. Transaction costs are included in this initial measurement of financial liabilities. After initial recognition, all financial liabilities are measured at amortised cost.

Sales revenues

With the exception of those contracts that are measured according to ias 11, sales revenues are recognised, in accordance with the criteria laid out under ias 18, when the significant risks and rewards of ownership are transferred, when a price is agreed or can be determined, and economic benefit from the sale of goods is sufficiently probable.

Sales revenues are reported less reductions.

Segment reporting

Intrasegment transfers are conducted under the same conditions as transfers among third parties.

Intersegment revenues are negligible.

d lo cati f the Nam e an on o com pany	Sha re in ital held cap
	by k g, in % ron es a
sped blin Sped bH, blin Neu trau ition s-Gm Neu trau g, G neu ger erm any	100 .00
chaf es In tern atio nale Coo tion s-Ge sells t mb H, N eutr aub ling , Ge kic k ron pera rma ny	100 .00
ac G ebra ucht chin en G mbH utra ubli ng, G , Ne ecom mas erm any	100 .00
ice G mbH , Col lenb Mai Serv erg/ n, G mai ntec erm any	51.0 0
-la-N , Bel Lou vain gium s.a. kro nes n.v., euve	100 .00
Nord lte, D ark ic Ap S, Ho kro nes enm	100 .00
Hol ark a/s, te, D san der han sen enm	100 .00
.l., Ly on, F kro nes s.a.r ranc e	100 .00
Bolt kro nes uk l td., on, u k	100 .00
Staf ford shir , Bu rton on T rent kosm e uk ltd. e, u k	100 .00
rda (vr) ly ., Ga , Ita kro nes s.r.l	100 .00
Ned erla nd b osko ethe rlan ds .v., B op, N kro nes	100 .00
chaf e Ge sells t mb h, So llen au, A ustr ia kosm	100 .00
Spó lka z , Pol and , Wa kro nes .o.o. rsaw	100 .00
l Equ ipam s Ind iais Lda. gal Port ento ustr , Bar na, P ortu kro nes uga care	100 .00
Fed ., Mo , Rus sian erat ion kro nes o.o.o scow	100 .00
d. s. hare Rom ania Pro Buc st, R nia kro nes r.l., oma	100 .00
wil, land Butt Swi tzer kro nes ag,	100 .00
Iber ica, celo na, S pain , Bar kro nes s. a.	100 .00
ch R blic ., Pra , Cze kro nes s.r.o gue epu	100 .00
Ukra , Uk ine Kiev rain kro nes llc, e	100 .00
, Sof ulga Serv ice e ia, B ria ntec ood mai	51.0 0
bella ly .l., R , Ita kosm e s.r over	70.0 0
Ser vice H, D orf a n de r Pra m, A ustr ia mai ntec ges. m.b.	51.0 0
Surl atin s Air tina ., Bu es, A kro nes a s. a eno rgen	100 .00
ão P aulo zil a., S , Bra kro nes do b razi l ltd	100 .00
, São lo, B razil Pau kro nes s. a.	100 .00
hine ry (T ng) td., T hina Mac aica Co. L aica ng, C kro nes	100 .00
(Taic ) Co Trad ing . Ltd ., Tai , Ch ina kro nes ang cang	100 .00
(Beij ing) chin o. Lt d., B eijin hina Ma ery C g, C kro nes	100 .00
Asia Ltd , Ch ina ., Ho ng K kro nes ong	100 .00
Indi d., B alor dia a Pv t. Lt e, In kro nes ang	100 .00
. Ltd kyo, Japa n Co ., To Japa kro nes n	100 .00
hine . Ltd da Mac ry Co ., Bra mpt on, O ntar io, C kro nes ana	100 .00
And ina Ltda ., Bo gotá , Col omb ia kro nes	100 .00
a Ltd oul, Kore ., Se Kor kro nes ea	100 .00
Mex Mex ico C ity, M exic kro nes s. a . de c. v., o	100 .00
ther n Af (Pro p.) L td., J oha sbu outh Afr Sou rica rg, S ica kro nes nne	100 .00
nkli Inc. , Fra n, W isco nsin kro nes, , usa	100 .00
Maq uina rias de V zuel ., Ca s, Ve ela kro nes ene a s. a raca nezu	100 .00
(Tha d) C ilan d., B kok, Tha ilan d o. Lt kro nes ang	51.0 0
sult ing and inee ring Ltd. gko k, Th aila nd Beve Con Eng . Co. , Ban rage	49.0 0

Following fulfilment of the requirements for application of the German Codetermination Act [Mitbestimmungsgesetz] of 1976 in 1987, the Supervisory Board was extended from 6 to 12 members. Pursuant to § 8 (1) of the articles of association, six members are elected from among the shareholders in accordance with the German Stock Corporation Act (§§ 96 (1) and 101). Six members are elected by the employees pursuant to §§ 1(1) and 7 (1) Sentence 1 No. 1 of the Codetermination Act.

Dr. Lorenz M. Raith Chairman * leistritz ag moll ag prüftechnik ag heitec ag

Werner Schrödl** Chairman of the Central Works Council Deputy Chairman

Ernst Baumann Member of the Executive Board of bmw ag

Herbert Gerstner** Member of the Works Council

Dr. Klaus Heimann** Director of the Youth, Training, and Qualification Policy Division of ig metall *man ag

Dr. Jochen Klein Chairman of the advisory council of döhler holding gmbh * döhler group karlsberg brauerei gmbh hoyer group

Prof. Dr. Ing. Erich Kohnhäuser *max aicher stahl ag

Norman Kronseder kronseder family office * bayerische futtersaatbau gmbh

Dr. Alexander Nerz Attorney

Anton Schindlbeck** Head of sales for lcs

Jürgen Scholz** ²nd authorised representative and treasurer of the ig metall administrative office in Regensburg *vdo automobile ag

Josef Weitzer** Chairman of the Works Council

Volker Kronseder Chairman Personnel Management and Social Affairs Corporate Communications *krones inc., usa

Hans-Jürgen Thaus Deputy Chairman Finance, Controlling, Information Management, and Process Management * kurtz gmbh *krones inc., usa

Rainulf Diepold Marketing and Sales

Werner Frischholz Materials Management and Production

Christoph Klenk Research and Development, Engineering, and Product Divisions *winkler & dünnebier ag

Pursuant to § 8 (1) of the articles of association, six members are elected from among the shareholders in accordance with the German Stock Corporation Act (§§ 96 (1) and 101). Six members are elected by the employees pursuant to §§ 1 (1) and 7 (1) Sentence 1 No. 1 of the Codetermination Act.

*Other Supervisory Board seats held, pursuan^t to § 125 (1), Sentence 3 of the German Stock Corporation Act

**Elected by the employees

In addition, each of the Group companies is the responsibility of two members of the Executive Board.

Supervisory Board Executive Board

krones ag Investor Relations Fax ⁺ 49 9401 70-3786 E-mail investor-relations@krones.de Internet www.krones.com Böhmerwaldstrasse 5 93073 Neutraubling Germany

Olaf Scholz Telephone +49 9401 7011-69