Key Highlights
Revenue decreased 43% from $413.0 million in Q2 2008 to $233.4 million in Q2 2009; H1 2009 revenue was $479.5 million
EBITDA[1] decreased 79% from $63.4 million in Q2 2008 to $13.0 million in Q2 2009; excluding Timminco, EBITDA was $22.2 million in Q2 2009; H1 2009 EBITDA excluding Timminco was $38.0 million
EPS on a fully diluted basis decreased to ($0.36) compared to Q2 2008 of $0.92 EPS. EPS, adjusted for non-recurring items was ($0.35) in Q2 2009
Advanced Materials Division was particularly impacted by the global economic slowdown, generating revenue of $96.5 million and EBITDA of ($2.0) million, in Q2 2009
Engineering Systems Division's produced solid results, generating revenue of $91.2 million and EBITDA of $22.5 million, in Q2 2009
Timminco generated $18.4 million in revenue and EBITDA of ($9.2) million as prices and volumes declined for most products during Q2 2009
Graphit Kropfmühl contributed revenue and EBITDA of $27.3 million and $1.7 million, respectively in Q2 2009
As of June 30, 2009 cash on hand was $110.1 million, net debt was $139.2 million, of which $54.1 million related to Timminco; Q2 2009 free cash flow[2] was ($12.9) million, of which Timminco comprised ($4.3) 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, 12 August 2009 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported second quarter 2009 revenue decreased 43% to $233.4 million from $413.0 million in the second quarter 2008.

Net loss attributable to shareholders for the second quarter 2009 was ($9.7) million, or ($0.36) per fully diluted share, compared to net income of $25.3 million or $0.92 per fully diluted share for the second quarter 2008. EBITDA declined 79% to $13.0 million in the second quarter 2009 from $63.4 million in the second quarter 2008. Excluding Timminco, AMG's EBITDA was $22.2 million for the second quarter 2009.

In commenting on results, Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The difficult operating environment experienced during late 2008 and early 2009 continued during the second quarter of 2009. During the second quarter 2009, Advanced Materials, volumes increased slightly over the first quarter 2009, but both volumes and prices remain significantly affected by the unprecedented slowdown in global industrial activity. Engineering Systems backlog enabled it to deliver solid results during the quarter despite low levels of order intake. Despite some signs of a bottoming of economic activity, it is still early to declare that the markets are turning around, and AMG continues to limit capital investment and is reducing costs to preserve free cash flow."

He added, "AMG's majority owned subsidiary, Timminco Limited, continued to face multiple market and operating challenges during the quarter. Timminco is addressing those issues. Despite the ongoing decline in the transportation market, Graphit Kropfmühl delivered marginally profitable operations through its silicon metal division."

Key Figures
In 000's US Dollar
Q2'09 Q2'08 Change

Revenue $233,370 $413,005 (43%)
Gross profit 33,541 92,002 (64%)
Gross margin 14.4% 22.3%

Operating income (6,763) 40,880 (117%)
Operating margin (2.9%) 9.9%

Net Income attributable to
shareholders
(9,718)
25,273
(138%)

EPS- Fully diluted (0.36) 0.92 N/A
Adjusted EPS-Fully diluted[1] (0.35) 1.16 N/A

EBITDA[2] 13,002 63,392 (79%)
EBITDA margin 5.6% 15.3%

Notes:
[1] Adjusted for non-recurring, restructuring charges at Timminco
[2] EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items


Operational Review

Advanced Materials Division

Q2'09 Q2'08 Change
Revenue $96,473 $226,452 (57%)
Gross profit
Operating income 8,412
(8,014) 46,860
26,859 (82%)
(130%)
EBITDA (2,008) 30,528 (107%)
Capital expenditures 2,089 6,005 (65%)


The Advanced Materials division's second 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. Revenue decreased by $130.0 million or 57% to $96.5 million.

Gross margin percentage decreased from 21% of revenue in the second quarter of 2008 to 9% in second quarter of 2009. This was caused by a sharp decline in end product prices and lower volumes, particularly in ferrovanadium from the second quarter of 2008. The decrease in revenue and margins was primarily caused by ferrovanadium, with reference prices decreasing by 74% and volumes declining by 5% over the second quarter 2008. Titanium master alloys, vanadium chemicals, ferronickel-molybdenum, ferrotitanium and antimony products were also impacted by falling end market prices. Even more significant were the decreased volumes as the result of inventory destocking and decreased global demand. Aluminium master alloys volumes decreased 57% and titanium master alloys volumes declined by 68% during the second quarter 2009 compared to the second quarter 2008. The global recession continued to impact industrial production across all markets.

The Advanced Materials division incurred $0.5 million in inventory write-downs related to ferrovanadium. The Division's working capital remained relatively constant during the second quarter 2009, after decreasing by over $23 million since December 31, 2008. Advanced Materials also reduced full time equivalent (FTEs) headcount by approximately 20% since September 30, 2008. These and other cost saving measures reduced SG&A expenses by approximately 19% from the second quarter 2008.

The second quarter 2009 EBITDA decreased by $32.5 million to negative $2.0 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 and conversion expenses. Sequentially, second quarter 2009 EBITDA improved by $6.4 million over the first quarter 2009 driven by cost saving measures and lower inventory write-downs.

Capital expenditures were $2.1 million for the second quarter 2009, 65% less than the comparable period in 2008. The Division was only performing maintenance capital investment during the quarter because of the cost containment measures.

Engineering Systems Division

Q2'09 Q2'08 Change
Revenue $91,179 $99,219 (8%)
Gross profit 34,129 30,465 12%
Operating income 19,129 20,006 0%
EBITDA 22,511 23,392 (4%)
Capital expenditures 1,677 6,687 (75%

The Engineering Systems division continued to deliver good results in the second quarter 2009. Order-backlog was at $223 million on June 30, 2009, down 10% from $247 million on March 31, 2009. The decrease was primarily due to a significant reduction in orders for solar furnace systems to $4.5 million. Overall, order intake was $53.5 million during the second quarter 2009, up from $29.4 in the first quarter 2009. The backlog consists primarily of melting and remelting systems for the titanium and specialty steel industries and solar silicon DSS furnaces.

Second quarter 2009 revenue decreased by $8.0 million or 8%. Sales of solar silicon DSS melting furnaces for the photovoltaic industry increased 64% in the second quarter 2009 compared to the same period a year ago. During the second quarter 2009, 61% of revenue was generated by sales of solar silicon and melting furnaces, up from 34% in the same period 2008. Revenue from remelting systems, primarily for the aerospace and specialty steel industries, decreased by 50% during the second quarter 2009.

Gross margin increased 6% to 37% of revenue in the second quarter 2009 from 31% of revenue in the same period in 2008. The increase was due to changes in product mix, elimination of reserves related furnace warranties, raw material price decreases and cost reduction measures in the vacuum furnace production process.

Second quarter 2009 EBITDA was $22.5 million, a 4% decrease over the same period in 2008. The EBITDA margin increased to 25% during the second quarter 2009 compared to 24% for the same period in 2008. The EBITDA margin increase was attributable to the improvement in gross margin and the 11% reduction in FTEs since September 30, 2008, slightly offset by an increase in R&D expense.

Capital expenditures decreased to $1.7 million for the second quarter 2009, 75% less than the comparable period in 2008. This decrease was a result of the completion of the expansion of the Berlin facility during 2008 and the focus on minimizing capital investment during the second quarter 2009.

Timminco
Q2'09 Q2'08 Change
Revenue $18,437 $62,710 (71%)
Gross profit 11,883 10,828 (210%)
Operating loss 19,285 8,326 (132%)
EBITDA (9,200) 6,484 (242%)
Capital expenditures 6,746 12,691 (47%)

Timminco continued to be significnatly impacted by the global slowdown in the solar and industrial silicon markets. Second quarter 2009 revenue decreased by $44.3 million or 71% to $18.4 million over the same period in 2008. The decrease is primarily attributable to the sharp decline in sales volumes and prices of UMG Si and silicon metal products. Timminco sold 34 metric tons of UMG Si during the second quarter 2009 at an average price of C$39/kg.

Gross profit decreased to negative $11.9 million in the second quarter 2009 due to the increased costs related to solar grade silicon production and decreased volumes of other silicon metal products. The solar grade silicon production costs were relatively high due to low volumes and operating inefficiencies. All three silicon metal production furnaces were temporarily shut down during the quarter, with one furnace coming back on line in June resulting in lower absorption of fixed costs and lower gross margins.

Timminco incurred negative EBITDA of $9.2 million during the second quarter 2009 compared to EBITDA of $6.5 million in the second quarter 2008, due to lower gross profit and higher selling, general and administrative expenses. The increase in SG&A is primarily a result of the increase in the non-cash stock option expense.

During the quarter ended June 30, 2009, capital investment declined 47% to $6.7 million from $12.7 million in the comparable period 2008. Timminco deferred further capital expenditures other than those that were committed prior to the beginning of the quarter.
Many of Timminco's customers are experiencing low revenues, are demanding a higher quality of Timminco's UMG Si due to the availability and favourable pricing of polysilicon on the spot market, and have reduced or deferred their purchases of silicon metal and solar grade silicon. Timminco has reached agreements with two of its solar grade silicon customers, to terminate or materially reduce contracted volumes under supply contracts and to repay customer advances, and is in negotiations with other customers to materially amend or terminate supply agreements which would also involve repayment of advances and reducing or eliminating contracted future volumes. These repayments, and the slowdown in the economic environment combined with substantially reduced UMG Si shipments, could continue to have a material adverse effect on Timminco's liquidity and ongoing compliance with its debt covenants. These and the other risks identified above create uncertainty about Timminco's ability to realize its assets and discharge its liabilities in the normal course of business. The consolidated financial statements for the second quarter, when filed, will not give effect to any adjustments to recorded amounts and their classification, which could be necessary should Timminco be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different than those reflected in the consolidated financial statements.


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