2024/25 Financial Half-Year Statements

KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

Dear Shareholders,

Your Company, the KLINGELNBERG Group, has been able to operate successfully and achieve a positive operating result in the first half of the 2024/25 financial year. As the Company usually generates most of its profits in the second half of its financial year, this shows how well the Company is performing. Not least, KLINGELNBERG was able to continue its sustained positive development.

During the first six months of the financial year, your Company increased net sales by 20% to roughly EUR 127 million. While the economy as a whole was under significant pressure in key parts of the world and many companies in the mechanical engineering industry, in particular, reported negative developments, KLINGELNBERG, thanks to a healthy order backlog, was once again able to improve its key performance indicators, surpassing the high levels already achieved in the previous financial year. KLINGELNBERG benefits equally from its broad and globally leading position, its cutting-edge technological products and its strong innovative drive. These factors combine to provide KLINGELNBERG with stability in a difficult and uncertain market environment.

KLINGELNBERG remains successful even in an environment of temporary market slowdown, as the high order backlog ensures steady utilization of existing capacities and security that extends far into the future.

At the same time, KLINGELNBERG was able to further increase its already high level of efficiency. Despite an increase of 7,6% in the number of employees compared to the first half of the previous financial year and a rise in wages and salaries due to updated collective agreements, KLINGELNBERG has managed to reduce the personnel expense ratio by almost 2 percentage points. This is definitely no matter of course and underlines, on the one hand, the quality of the management and, on the other hand, the Company's ability to counteract higher costs at our manufacturing locations through measures such as further automation.

KLINGELNBERG's early identification and implementation of the right strategic direction continues to pay off: the Company benefits above-average from global megatrends. KLINGELNBERG will continue to benefit from the ongoing growth of electric mobility, particularly in Asia, from hybrid drive concepts in the rest of the world, and from the growth of renewable energies and the associated industrial infrastructure. KLINGELNBERG's clear strategic positioning, innovative products, cost efficiency and lean management have contributed to the Company's excellent position as a world market leader in important categories and in promising growth markets.

Despite the increasing global economic uncertainty, KLINGELNBERG is confident about the rest of the 2024/25 financial year, while remaining cautious as usual. KLINGELNBERG is aware that the successes achieved cannot be taken for granted.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

The markets are aware of KLINGELNBERG's strengths. Whenever solutions are needed where the Company could play a pivotal role, KLINGELNBERG is one of the first choices. KLINGELNBERG is ideally positioned, its products are leading in terms of quality and innovation, and it caters to strong and sustained demand in the most important future markets.

KLINGELNBERG will know how to take advantage of the opportunities that come with this.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

Financial report

Segments and markets

In the first half of the 2024/25 financial year, the KLINGELNBERG Group had to face a wide range of economic and even political challenges. The global economic expansion that began in spring increasingly lost momentum over the year. The service sector fueled that expansion, and industrial production recovered in parts, particularly in the emerging markets.

While the pace of expansion in China was slowed down by persisting structural problems such as the ongoing real estate crisis, the economy in the United States also lost momentum over the summer. Driven by private and public consumption and supplemented by government-subsidized corporate investment, economic momentum in the US initially proved quite robust in the first half of 2024. However, weak labor market data, declining construction investments, and increasingly gloomy private consumption slowed the accelerating momentum in the United States at the outset of the second half of the year.

In the eurozone and the United Kingdom, economic output rose slightly in the first half of the year after a prolonged period of sluggishness. Strong real wage growth and rising employment have led to a revival in private consumption in Europe. While the manufacturing sector remained weak, the services sector benefited. Overall, the economic recovery varied greatly from country to country and was weaker in countries with a large industrial sector than in those where services account for a large share of the economy. While the gross domestic product in the eurozone increased by 0,3%, as in the previous quarter, it rose again by 0,6% in the United Kingdom - thereby noticeably reducing the pronounced economic disparity between the United States on the one hand and Eu- rope on the other. Inflation proved to be sticky, falling only to 2,9% in the US by August, while it fell slightly more sharply from 2,8% to 2,2% in the eurozone over the same period.

In addition to the economic developments, geopolitical tensions and potential trade conflicts were simmering in various global regions. The resulting geopolitical uncertainties sparked volatility in oil and gas prices. Decarbonization, digitalization, and demographic change shaped the prevailing world economy in the first half of the financial year and increasingly triggered structural adjustment processes in the individual industries.

In this diverse spectrum of global challenges, the KLINGELNBERG Group was nevertheless able to hold its own and once again significantly increase its sales by EUR 21,5 million compared to the same period of the previous financial year. Net sales at the end of the first half of the financial year thus totaled EUR 126,9 million. After the record numbers of order intakes in the last financial years, the order level has cooled off and reached a total value of EUR 101,2 million at the end of the first half of the financial year. Nevertheless, the KLINGELNBERG Group reported a histori-

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

cally very high order backlog of EUR 241,7 million, well above the average of the last five financial half-years.

Besides this, KLINGELNBERG AG, a KLINGELNBERG Group company, acquired VISPIRON ROTEC GmbH, a specialist in the field of rotational analysis, during the last financial half-year. With the acquisition of VISPIRON ROTEC GmbH, the KLINGELNBERG Group strengthens its leading market position and further expands its successful business.

Bevel Gear segment:

The Bevel Gear segment reported net sales of EUR 37,7 million at the end of the first half of the 2024/25 financial year. This was an increase of EUR 3,3 million (+9,6%) over the same period in the last financial year. The KLINGELNBERG Group's broad product portfolio proved to be a key success factor. Despite the cooling global economy and the slow-down in the transformation to e- mobility, the segment benefited from increased growth in the area of hybrid vehicles in the past financial half-year.

While Asian markets, particularly China, maintained a strong focus on electric vehicles, North America saw notable growth in hybrid vehicles. The KLINGELNBERG Group offers a comprehensive range of technological solutions for both drive concepts and is well-positioned to withstand the current global challenges with its diversified product mix.

At EUR 31,4 million (including tools), incoming orders were down on the same period of the previous financial year (EUR 61,9 million). The majority of incoming orders originated from globally operating customers in the automotive and commercial vehicle industry, the general gear manufacturing industry, and the wind power industry. The healthy target customer mix was unfortunately offset by the weak global economic phase, which presented a challenge for the segment. On the other hand, promising new projects in North America are set to open up further potential in the second half of the 2024/25 financial year.

Cylindrical Gear segment:

The Cylindrical Gear segment reported net sales of EUR 31,5 million at the end of the first half of the 2024/25 financial year - an increase of EUR 4,1 million (+14,9%) over the same period in the previous financial year. Once again, the Asian markets, in particular China and India, were the primary drivers. In the European market, the HÖFLER grinding and testing cell consisting of a Speed Viper 300 and an R 300 Gear Roll Testing machine has been successfully placed with automotive high-volume manufacturers and suppliers. This new milestone for gear grinding and roll testing in a production cell achieved in the first financial half-year of 2024/25 demonstrated that a clear focus on sophisticated process developments could help to meet the high requirements for e-mobility components produced on cylindrical gear machines.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

At the time of the half-year financial statements, order intake had decreased by EUR 31,1 million to EUR 25,9 million compared to the same period of the previous financial year. The decelerated transformation towards e-mobility, coupled with the subdued industrial growth and its impact on the expansion of wind power and general mechanical and gear engineering industries, led to a slowdown in the segment during the first half of the 2024/25 financial year. Fortunately, India continued to see steady demand for cylindrical gear machining equipment. The country is increasingly establishing itself as a supplier for various industries.

Measuring Centers segment:

The Measuring Centers segment generated net sales of EUR 45,8 million, an increase of EUR 11,0 million (+31,7%) over the same period of the previous financial year. The significant increase in sales was achieved during the first half of the 2024/25 financial year, following a period of record incoming orders in recent years and the cross-industry technology leadership of KLINGELNBERG Measuring Centers.

However, the cooling of the market in China and the slowdown in the e-mobility sector were also reflected in the order books of this segment. At the end of the first half of the 2024/25 financial year, incoming orders totaled EUR 34,9 million, down on the previous year's figure (EUR 52,5 million). Nevertheless, the new P 125 and P 152 models have established themselves extremely well on the market. The successful market launch of the P 200 and the continued high level of orders from the aviation industry helped the Measuring Centers segment to defy the current challenging global economic environment.

Further developments in roughness measurement and optical measuring technology were constantly in demand from customers, confirming both the high innovation potential and the broad market acceptance of KLINGELNBERG Measuring Centers. Bolstered by a healthy order book in the after-sales business and growing demand for retrofits, the segment is ideally positioned to capitalize on an upturn.

The measurement capacities required for wind power projects (both completed and still in the planning stages), and the evolving drive concepts for e-mobility and hybrid vehicles suggest that demand for measuring devices will continue to rise.

Drive Technology segment:

With net sales of EUR 10,1 million in the first half of the 2024/25 financial year, the Drive Technology segment achieved growth of EUR 2,6 million compared to the same period of the previous financial year. After years of significant investment cuts in the marine sector (especially tugs and special-purpose vessels), the refurbishment business reported an increase in momentum and contributed to the satisfactory development of the marine propulsion sector in recent months.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

Nevertheless, the slowing pace of economic expansion was reflected in the order books of this seg- ment. Year on year, incoming orders fell slightly by EUR 1,0 million to EUR 7,1 million. The increasing optimization of bevel gear production and a sharpening of the product portfolio strengthened the competitive edge and positioned the Drive Technology segment for an increase in growth momentum.

Despite a sluggish global economy, the consolidated and highly liquid mining market continues to promise catch-up potential for this segment's order books. This is due to the growing importance of rare raw materials needed for the electrification of mobility and in the heating and semiconductor industries on the background of global climate and digitalization policies.

Gross profit

The high order backlog at the end of the 2023/24 financial year led to an increase in net sales of EUR 21,5 million compared to the same period of the previous financial year. The largest increase in sales was recorded by the Measuring Centers segment, where sales rose by EUR 11,0 million. Due in part to the growth in sales, the increase in change in inventory was EUR 4,1 million lower than in the same period of the previous financial year. Accordingly, the total operating performance increased by EUR 17,4 million to EUR 144,4 million (+13,7%).

Material expense increased due to the higher total operating performance and closed the half-year at EUR 61,7 million, up EUR 6,1 million on the same period of the previous financial year. Gross profit thus reached EUR 82,6 million, an increase of EUR 11,4 million over the previous financial year.

Personnel expense and employees

Personnel expense amounted to EUR 58,1 million at the end of the first half of the 2024/25 financial year, an increase of EUR 4,5 million on the same period of the previous financial year. In the first half of the 2024/25 financial year, the KLINGELNBERG Group had 1.369 employees, 97 more than in the same period of the previous financial year. In addition, the basic monthly wages of KLINGELNBERG GmbH under the collective agreement increased by 3,3% from 01 May 2024.

Due to the increase in operating performance, the personnel expense ratio fell from 42,2% in the first half of the 2023/24 financial year to 40,2%.

Other operating expense

Other operating expense was EUR 1,9 million higher than in the previous financial year and totaled EUR 22,6 million at the end of the first half of the 2024/25 financial year. The increased costs were mainly performance-related; among other things, the costs for freight and commissions in- creased.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

The other operating expense ratio was 15,6% at the end of the first half of the 2024/25 financial year and was thus lower than the previous financial half-year's level (-0,7 percentage points).

Other operating income

Other operating income amounted to EUR 0,9 million at the end of the first half of the 2024/25 financial year - down EUR 8,7 million on the same period of the previous financial year. The previous year's period included the reimbursement for retroactive damage (flood related) of KLINGELNBERG AG in the amount of EUR 4,1 million and the reconstruction aid paid by the Federal State of "Nordrhein-Westfalen"/Germany in the amount of EUR 5,0 million for flood damage incurred by KLINGELNBERG GmbH in July 2021.

Operating result (EBIT)

The operating result decreased by EUR 4,2 million year-on-year to EUR 0,5 million.

Financial result

The financial result increased by EUR 2,3 million compared to the first half of the 2023/24 financial year to EUR -0,4 million. This positive development was mainly due to a decline in foreign currency losses.

Balance sheet

The balance sheet total of the KLINGELNBERG Group decreased by EUR 5,4 million compared to the annual report as of 31 March 2024 and amounted to EUR 290,7 million on 30 September 2024.

While non-current assets increased by EUR 2,7 million (mainly due to investments, including the acquisition of measurement technology specialist VISPIRON ROTEC GmbH), current assets decreased by EUR 8,2 million. Receivables from goods and services fell significantly by EUR 28,7 million, while inventories rose sharply by EUR 21,3 million.

Equity decreased by EUR 9,8 million to EUR 131,0 million compared to the annual report as of 31 March 2024. This decline is due, among other things, to the KLINGELNBERG Group's net loss of EUR 1,8 million and the dividend payment of EUR 4,7 million for the 2023/24 financial year. As a result, the equity ratio decreased by 2,4 percentage points to 45,1% compared to 31 March 2024.

LiabilitiesincreasedbyEUR4,3millioncomparedto31March2024andamountedtoEUR159,7million as at 30 September 2024. Short-term financial liabilities increased by EUR 16,0 million, while other short-term liabilities decreased by EUR 6,4 million, which was mainly due to a decline in advance payments received.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

Cash flow statement

Cash flow from operating activities decreased by EUR 16,6 million to EUR -3,9 million compared to the first half of the 2023/24 financial year. The main reason for this was the decline in other short- term liabilities.

Investments in fixed assets amounted to EUR 4,6 million. The largest single investment was land purchase in India for EUR 1,6 million. In addition, the KLINGELNBERG Group acquired the measurement technology specialist VISPIRON ROTEC GmbH, which resulted in an outflow for the acquisition of consolidated organizations of EUR -3,5 million. Cash flow from investing activities amounted to EUR -8,2 million in the first half of the 2024/25 financial year (EUR -5,4 million compared to the first half of the 2023/24 financial year).

Compared to the same period of the previous financial year, cash flow from financing activities increased by EUR 12,2 million to EUR 10,1 million. The change in short-term financial liabilities amounted to EUR 16,0 million.

Net change in cash for the first half of the 2024/25 financial year was EUR -2,4 million, a decrease of EUR 9,6 million compared to the same period of the previous financial year.

Outlook

In the 2023/24 Annual Report, a slight increase in sales for the current 2024/25 financial year and an EBIT margin of over 8% were forecasted. The relatively high sales in the first half of the 2024/25 financial year support this forecast.

As mentioned at the outset, the major economies are currently losing momentum and various regions of the world are facing simmering geopolitical tensions and potential trade conflicts, the effects of which on the remainder of the financial year of the KLINGELNBERG Group cannot be accurately estimated. From today's perspective, there are no significant reasons to change the existing forecast.

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KLINGELNBERG GROUP

Financial Half-Year Statements 2024/25

Group key figures *

* For definitions of APMs refer to the consolidated financial statements as at 31 March 2024 (published 20 June 2024).

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