Key Highlights
Revenue was $205.4 million in Q3 2009; YTD 2009 revenue was $636.1 million
EBITDA[1] was $18.6 million in Q3 2009; YTD 2009 EBITDA was $56.7 million
EPS on a fully diluted basis was ($0.76) in Q3 2009
Advanced Materials Division performance improved, generating revenue of $110.1 million and EBITDA of $5.0 million, in Q3 2009
Engineering Systems Division was impacted by the global slowdown, generating revenue of $61.6 million and EBITDA of $11.0 million, in Q3 2009
Graphit Kropfmühl revenues and EBITDA improved to $33.7 million and $2.6 million, respectively in Q3 2009
Timminco was deconsolidated during the quarter as AMG's ownership dropped below 50% due to Timminco's issuance of additional shares
As of September 30, 2009 cash on hand was $124.4 million, net debt was $77.9 million; Q3 2009 free cash flow[2] was $8.8 million
[1] EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items
[2] Free cash flow is defined as EBITDA less change in working capital and maintenance capital expenditures


Amsterdam, 11 November 2009 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported third quarter 2009 revenue of $205.4 million, a decrease 45% from $371.0 million in the third quarter 2008.

Net loss attributable to shareholders for the third quarter 2009 was ($20.3) million, or ($0.76) per fully diluted share, compared to net income of $20.8 million or $0.75 per fully diluted share for the third quarter 2008. EBITDA declined 71% to $18.6 million in the third quarter 2009 from $63.7 million in the third quarter 2008.

In commenting on results, Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The decline in market conditions moderated during the third quarter 2009. During the quarter, Advanced Materials prices and volumes increased slightly from the lows of the second quarter 2009, but both volumes and prices remain adversely affected by the unprecedented slowdown in global industrial activity. The Engineering Systems Division's financial performance was significantly impacted by the low levels of order intake and seasonal slowdowns. Graphit Kropfmühl improved profitability during the quarter due to a slight rebound in silicon metal prices. Despite the apparent bottoming of economic activity, the recovery process may be slow and uneven. AMG continues to limit capital investment and is reducing costs to preserve free cash flow."

Accounting Note
AMG owned less than 50% (47.9%) of Timminco as of September 30, 2009, and therefore going forward AMG will account for Timminco under the IFRS equity method of accounting. For purposes of this release, this accounting treatment requires AMG to deconsolidate its investment in Timminco and include Timminco's quarterly and year to date financial results as one line item - "discontinued operations" on the profit and loss statement. The carrying value of AMG's investment in Timminco is included as an "Investment in Associate" on the asset portion of AMG's balance sheet. As such, the Key Figures below except for net income attributable to shareholders exclude the financial performance of Timminco during the period and all prior year figures have been restated to exclude Timminco.

While AMG no longer owns more than 50% of Timminco, Timminco remains a strategic asset of AMG.


The Advanced Materials division's third quarter 2009 financial results were impacted by continued weak demand for the majority of its products, most notably in the steel, superalloy and titanium markets. Third quarter revenue decreased 45% to $110.1 million from the third quarter 2008.

Gross margin percentage decreased from 21% of revenue in the third quarter of 2008 to 14% in the third quarter of 2009. This was caused by a sharp decline in end product prices and lower volumes, particularly in ferrovanadium, from the third quarter of 2008. The decrease in revenue and margins was primarily caused by ferrovanadium, with reference prices decreasing by 59% and volumes declining by 42% over the third quarter 2008. Titanium master alloys, vanadium chemicals, ferronickel-molybdenum and ferrotitanium products were also impacted by falling end market prices. Even more significant were the decreased volumes as the result of decreased global demand. Aluminium master alloys volumes decreased 43% and titanium master alloys volumes declined by 77% during the third quarter 2009 compared to the third quarter 2008. The global recession continued to impact industrial production across all markets, although less so than in the second quarter of 2009.

The Division's working capital increased slightly during the third quarter 2009, after decreasing by over $18 million since December 31, 2008. To mitigate the decrease in revenue, the Advanced Materials Division has reduced SG&A expenses by approximately 21% from the third quarter 2008.

The third quarter 2009 EBITDA decreased by $20.4 million to $5.0 million, compared to the same period in 2008. This was the result of the decrease in revenue and gross margin, which were slightly offset by a decline in SG&A. Sequentially, third quarter 2009 EBITDA improved by $7.0 million over the second quarter 2009 driven by cost saving measures.

Capital expenditures were $1.9 million for the third quarter 2009, 75% less than the comparable period in 2008. The Division was only performing maintenance capital investment during the quarter because of the cost containment measures.

Financial Review
Tax
AMG recorded a tax expense of $5.7 million in the quarter ended September 30, 2009 as compared to a tax expense of $11.9 million in the quarter ended September 30, 2008. A tax benefit for the pre-tax losses was not booked in the third quarter 2009 due to the losses being generated in jurisdictions where AMG already has significant net operating losses.

Outlook
The markets continue to be challenging. Although signs of an ongoing bottoming of the severe drop in demand are evident, it is still undetermined if the markets are improving. Demand and prices remain fragile and are both subject to near term economic swings. Engineering Systems' order intake continues to be sluggish as companies delay investment decisions into the new year. Advanced Materials prices have rebounded from historic lows, but demand and pricing increases have moderated and they continue to be far below normal market conditions. AMG continues to address this situation by adjusting production levels, limiting capital investment and cost reduction programs. These actions position AMG to take advantage of opportunities as markets improve.