2007 was a successful year for IFCO SYSTEMS. Following a challenging 2006, IFCO SYSTEMS further successfully expanded its RPC Management Services business and almost recovered the profitability of Pallet Management Services. The overall operating profit improved, even though IFCO SYSTEMS 2007 results still continued to recover from the 2006 ICE investigation.

 

In 2007, IFCO SYSTEMS increased its reusable packaging business development initiatives not only in existing markets, products and services, but additionally in new product lines and new global markets. This geographic and product line expansion positions IFCO SYSTEMS as a global provider for all reusable packaging needs, aiming to enhance IFCO SYSTEMS' leadership and strategic positioning.

 

Revenues grew by US $45.3 million, or 7.0% (currency adjusted 3.6%), to US $692.5 million in 2007. Revenues in the RPC Management Services business grew by 16.1% (currency adjusted by 8.0%), whereas revenues in the Pallet Management Services business segment were flat overall as compared to 2006. However, the year-over-year revenue development of the Pallet Management Services segment has improved in recent quarters as a result of the Company's focus on volume growth after recovering its full production capacity following the ICE investigation in Q2 2006.

 

Gross profit increased by US $13.6 million, or 12.5%, to US $122.6 million, following absolute gains in both business segments.

RPC Management Services' overall gross profit margin dropped from 24.8% to 23.2% in 2007. Gross profit margin in RPC Europe was overall flat. RPC Europe generated higher volumes in more profitable countries and positive economies of scale offset by the one time accrual, in the amount of US $3.3 million, for the costs related to the recollection of crates used by a retailer until December 2007 (contract terminated following the end of 2007). The overall RPC gross profit margin was further negatively impacted due to the accelerated depreciation of the CHEP USA RPC pool. Eliminating this accounting effect, RPC Management Services' overall gross profit margin would have been flat compared to prior year.

Pallet Management Services' gross profit margin improved by 2.0 percentage points to 12.6% in 2007, as this segment's productivity and cost efficiency continues to recover.

 

EBITDA increased during 2007 by US $10.8 million, or 11.2% (currency adjusted 4.9%), to US $107.1 million, and EBITDA margin grew to 15.5% in 2007 from 14.9% in 2006.

 

EBIT increased by US $4.2 million, or 6.8%, to US $66.5 million. The smaller increase in EBIT as compared to EBITDA was primarily the result of the accelerated depreciation of the CHEP USA RPC pool acquired during 2006.

 

Net profit decreased by US $10.2 million, or 27.3%, to US $27.1 million in 2007. The reduction is primarily caused by non operating items such as higher 2007 deferred income tax provision and the non-recurring 2006 gain resulting from the RPC pool adjustment following the phase out of the old generation RPC pool.

 

Operating cash flows from continuing operations before income tax payments increased by US $25.2 million, or 27.2%, to US $117.8 million in 2007, as a result of higher operating profit levels and improved working capital performance. The improved working capital was the result of increased trade payable and refundable deposit levels, partially offset by higher accounts receivables.

 

Capital expenditures decreased by US $23.8 million, or 23.5%, to US $77.5 million, largely due to the acquisition of the CHEP USA RPC assets in Q1 2006. Excluding both the CHEP USA RPC asset acquisition in Q1 2006 and the Q3 2007 acquisition of the shares in IFCO SYSTEMS Argentina S.A., capital expenditure levels decreased by US $2.2 million, or 2.9%, as compared to 2006.

 

ROCE from continuing operations decreased to a level of 17.2% in 2007 after 18.4% in 2006. ROCE was positively affected by the improved operational performance in 2007. However, Capital Employed increased significantly, primarily as the result of the continuing investments in IFCO SYSTEMS' RPC pool.

 

Outlook: IFCO SYSTEMS anticipates that the economies in Western Europe will soften in 2008 as compared to 2007. Although IFCO SYSTEMS sees significant short-term risk in the United States economy, the company expects to outpace overall economic growth in 2008.

IFCO SYSTEMS does not anticipate significant changes in its overall strategies in the near term and expects that the business development which has existed in recent years to remain in place during 2008. The company believes that the above trends will result in increased revenues and operating profits during 2008 as compared to 2007.

 

Financially, IFCO SYSTEMS is in a sound position and plans its businesses so that it is able to fund its capital, operational and debt service requirements through its own operational cash flows.

For further explanations, please see IFCO SYSTEMS' annual report, which will be filed with the Deutsche Börse AG on or about February 21, 2008, and will be available on the Company's website www.ifcosystems.com or www.ifcosystems.de.

This release contains forward-looking statements that reflect Management's current view with respect to future events. All statements contained in this release that are not clearly historical in nature or necessarily depend on future events are forward-looking. The words "anticipate", "believe", "expect", "estimate", "planned" and similar expressions are generally intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections of the Management on currently available information. Many factors could cause the actual results, performance or achievements to be materially different from those that may be expressed or implied by such statements. We do not assume any obligation to update the forward-looking statements contained in this release.