Key Highlights
- Revenue was $318.0 million in the first quarter 2011, a 35% increase overthe same period in 2010
- Operating profit was $17.4 million in the first quarter 2011, a 48% increase over the same period in 2010
- EBITDA[1] was $26.2 million in the first quarter 2011, a 19% increase over the same period in 2010
- EPS on a fully diluted basis was $0.25 compared to $0.00 in the first quarter 2010; excluding Timminco, EPS was $0.41 in the first quarter 2011, compared to $0.11 in the first quarter 2010
- The Advanced Materials Division generated revenue of $210.8 million and EBITDA of $14.6 million in the first quarter 2011
- The Engineering Systems Division generated revenue of $64.9 million and EBITDA of $5.3 million in the first quarter 2011
- Graphit Kropfmühl generated revenue of $42.3 million and EBITDA of $6.3 million in the first quarter 2011
- As of March 31, 2011 cash on hand was $66.1 million; net debt was $201.0 million

Amsterdam, 11 May 2011 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported first quarter 2011 revenue of $318.0 million, a 35% increase from $235.8 million in the first quarter 2010.

EBITDA increased 19% to $26.2 million in the first quarter 2011 from $22.0 million in the first quarter 2010. Net profit attributable to shareholders for the first quarter 2011 was $7.0 million, or $0.25 per fully diluted share. This was up from breakeven, or $0.00 per fully diluted share, in the first quarter 2010. Excluding AMG's share of Timminco's net loss in the first quarter, AMG's net profit attributable to shareholders for the first quarter 2011 was $11.4 million, or $0.41 per fully diluted share compared to $0.11 in the first quarter 2010.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The business performed well in the first quarter 2011. Improved pricing in a number of Advanced Materials products such as antimony, chromium and tantalum resulted in increased earnings. Engineering Systems' order intake was encouraging, however, revenue was flat compared to the same period in the prior year and EBITDA decreased. Increases in silicon metal prices and natural graphite demand resulted in significant improvements in Graphit Kropfmühl's revenue and earnings during the quarter. AMG's implementation of vertical raw material strategies, horizontal consolidation and continued investment in technology has contributed to the Company's positive start to 2011."

[1] EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items

Key Figures
In 000's US Dollar
Q1'11 Q1'10 Change
Revenue $317,999 $235,793 35%
Gross profit 59,780 42,584 40%
Gross margin 18.8% 18.1%
Operating profit 17,406 11,787 48%
Operating margin 5.5% 5.0%
Net profit (loss) attributable to shareholders6,972(64)N/A
EPS- Fully diluted 0.25 0.00 N/A
Adjusted EPS- Fully diluted (1) 0.41 0.11 273%

EBIT (2) 18,854 15,866 19%
EBITDA (3) 26,168 22,047 19%
EBITDA margin 8.2% 9.4%

Note:
(1) Adjusted to exclude all Timminco results including equity losses which accounted for $0.16 in EPS in Q1 2011

(2) EBIT is defined as earnings before interest, tax and excludes nonrecurring items

(3) EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items

Operational Review
Advanced Materials Division
Q1'11(1) Q1'10 Change
Revenue $210,845 $140,534 50%
Gross margin 32,380 21,136 53%
Operating profit 9,153 4,301 113%
EBITDA 14,563 8,499 71%
Capital expenditures 5,554 3,321 67%

(1) Results include KB Alloys LLC from the February 18, 2011 date of acquisition

The Advanced Materials division's first quarter 2011 financial results were positively impacted by the acquisition of KB Alloys LLC, increasing chromium metal and aluminum master alloy volumes and a rise in antimony prices. Revenue increased by $70.3 million or 50% to $210.8 million. The increase in revenue was specifically the result of $11.0 million of revenue from KB Alloys LLC, which was acquired in February 2011, and a 37% and 34% increase in chromium and non-KB Alloys aluminum revenue, respectively.

The first quarter 2011 gross margin of 15% of revenue was consistent with the first quarter of 2010. Increased economies of scale were offset by unfavourable changes in product mix, specifically increased lower margin aluminum products revenue, resulting in consistent gross margins.

The first quarter 2011 EBITDA increased by $6.1 million to 7% of revenue from 6% of revenue in 2010, due to the increase in gross profit, but this was offset by a 44% increase in SG&A due to the acquisition of KB Alloys and long-term incentive expenses.

Capital expenditures were $5.6 million for the quarter, 67% more than the first quarter 2010. Significant growth capital investments made in the first quarter included a $1.1 million investment in the hydropower facility in Brazil.

Engineering Systems Division
Q1'11 Q1'10 Change
Revenue $64,887 $65,313 (1%)
Gross margin 18,464 18,303 1%
Operating profit 2,970 7,169 (59%)
EBITDA 5,256 12,079 (56%)

Capital expenditures 1,544 845 83%

The Engineering Systems division's first quarter 2011 revenue was flat compared to the first quarter 2010 as a slightly higher opening order backlog in 2011 was offset by longer project lead times. The order backlog increased to $195.9 million as of March 31, 2011, up 7% from $183.3 million as of December 31, 2010. The division generated order intake of $65.7 million in the first quarter 2011, a 1.01x book to bill ratio and a 71% increase compared to the first quarter 2010. Order intake of solar silicon DSS furnaces improved 301% from the first quarter 2010, accounting for 43% of total order intake. Demand for vacuum furnaces for specialty steel used in aerospace and energy also increased substantially compared to the same period in the prior year.

Sales of solar silicon DSS furnaces decreased 42% in the first quarter 2011 compared to the same period in 2010, however, sales were still 27% of revenue in the first quarter 2011. Revenue from remelting systems, primarily for the aerospace and specialty steel industries, decreased by 20% to $10.7 million in the first quarter 2011 while the Own and Operate business increased revenue by 57% to $9.8 million.

The first quarter 2011 gross margin of 28% of revenue was flat compared to the first quarter 2010 as a result of level revenue and production cost controls.

First quarter 2011 EBITDA decreased by $6.8 million to 8% of revenue from 18% of revenue in the first quarter 2010 due to increases in long-term incentive expenses and costs associated with the acquisition of the Mono2(TM) technology.

Capital expenditures were $1.5 million, 83% more than the first quarter of 2010. This growth capital investment is creating additional capacity for its U.S. Own and Operate facility to meet increasing demand.

Graphit Kropfmühl
Q1 '11 Q1 '10 Change
Revenue $42,267 $29,946 41%
Gross profit 8,936 3,145 184%
Operating profit 5,283 317 1567%
EBITDA 6,349 1,469 332%
Capital expenditures 1,151 980 17%

Increasing silicon metal prices and natural graphite volumes resulted in significantly improved financial results for Graphit Kropfmühl ("GK") in the first quarter 2011. First quarter 2011 revenue increased by $12.3 million, or 41%, to $42.3 million. Natural graphite revenue increased $5.3 million, or 57%, driven by increases in both volumes and pricing. Silicon metal revenue increased by $7.0 million or 34%, primarily as a result of higher silicon sales prices.

The first quarter 2011 gross margin increased to 21% of revenue from 11% of revenue in the first quarter of 2010. Increased economies of scale resulting in lower per unit production costs of natural graphite and higher sales prices for silicon metal resulted in a significant increase in gross margins.

First quarter 2011 EBITDA was $6.3 million, a 332% increase compared to the first quarter 2010. The EBITDA margin increased to 15% in the first quarter 2011, up significantly from 5% in the same period 2010. The EBITDA margin increase was attributable to the increase gross margins for silicon metal and natural graphite, slightly offset by a 22% increase in SG&A due to incentive plan expenses.

Capital expenditures increased to $1.2 million in the first quarter 2011, 17% more than the first quarter 2010. The increase in capital expenditures was a result of upgrading the high purity natural graphite production facility to meet market demand.

Timminco
AMG's ownership in Timminco was 42.5% as of March 31, 2011. AMG accounts for its investment in Timminco via the equity accounting method. Timminco's loss for the first quarter 2011 is included in share of loss of associates on AMG's income statement and the carrying value of AMG's investment in Timminco of $13.3 million is listed as an asset on AMG's balance sheet. Additional information on Timminco can be found at www.Timminco.com.

Financial Review
Tax
AMG recorded a tax expense of $5.0 million in the first quarter 2011 as compared to a tax expense of $3.9 million in the first quarter 2010. Excluding share of loss of associates, for which AMG cannot recognize a tax benefit since these companies are not consolidated, AMG's effective tax rate was 29% in the first quarter 2011.

SG&A
AMG's SG&A expenses were $42.9 million in the first quarter 2011, compared to $30.6 million in the first quarter 2010. The $12.3 million change in SG&A expenses was primarily due to an increase in long-term incentive expenses as well as acquisition costs related to the KB Alloys LLC transaction and the additional SG&A expenses incurred by AMG Idealcast Solar (formerly BP Solar), and KB Alloys LLC.

Currency Fluctuations
AMG transacts business in many currencies other than the US dollar, our reporting currency. As our financial statements are prepared in US dollars, fluctuations in the exchange rates between the US dollar and other currencies have an effect both on our results of operations and on the reported value of our assets and liabilities as measured in US dollars. The decline in the value of the US dollar as of March 31, 2011 resulted in an increase in the assets and liabilities on the balance sheet of $32.5 million and $25.4 million, respectively. The net result of the appreciation in the value of the US dollar quarter over quarter resulted in a decrease in revenue and EBITDA of $2.2 million and $0.3 million, respectively in the first quarter 2011.

Liquidity
March 31, 2011 December 31, 2010 Change
Total debt $267,060 $237,089 13%
Cash & short-term investments 66,071 89,311 (26%)
Net debt 200,989 147,778 36%

AMG had a net debt position of $201.0 million as of March 31, 2011. AMG's net debt position increased $53.2 million since December 31, 2010 primarily due to $16.3 million of cash tax payments, $8.2 million in capital investments, the $24.3 million acquisition of KB Alloys LLC, and a $39.1 million increase in working capital due to increasing material costs, reduced by EBITDA of $26.2 million.

Following the close of the first quarter, AMG refinanced its primary credit facility and secured a $300 million credit facility composed of a Euro denominated, U.S. dollar equivalent, $100 million term loan and a $200 million revolving credit facility. This facility has a five-year term and matures in April 2016.

Cash Flow
Q1'11 Q1'10
Net cash flows used in operations $(13,753) $(14,921)
Capital expenditures (8,249) (5,146)
Acquisitions, net of cash (26,823) (600)
Cash flows used in other investing 2,195 (191)
Net cash flows used in investing activities (32,877) (5,937)
Cash flows generated from financing activities 19,389 7,643

Cash flows used in operations were $13.8 million in the first quarter 2011 as compared to $14.9 million in the first quarter 2010. The cash flows used in operations in the first quarter 2011 are a result of $16.3 million in cash tax payments as well as a $29.0 million increase in working capital and provisions, offset by $26.2 million in EBITDA. The substantial cash tax payments are partially due to the difference between IFRS percentage of completion accounting as compared to completed contract methodology for tax payments in the Engineering Systems division.

Cash used in investing activities was $32.9 million in the first quarter 2011. This increase of $26.9 million from the first quarter 2010 is composed of a $26.2 million increase in acquisitions, primarily for KB Alloys LLC, and a $3.1 million increase in capital investments, slightly offset by a $2.4 million decrease in cash flows in other investing activities due to a decrease in restricted cash for project work at the Engineering Systems division.

Cash generated from financing activities was $19.4 million in the first quarter 2011, an $11.8 million increase from the first quarter 2010. This increase was primarily attributable to $15.0 million in draws on the revolving lines of credit, which were used to fund the acquisition of KB Alloys LLC.

Outlook
The Advanced Materials division is experiencing strong prices for some of its products including antimony trioxide, tantalum and chromium metal and improved operating results reflecting cost improvements made in 2009 and 2010. Requests for new orders in Engineering Systems are slowly increasing. Graphit Kropfmühl's end markets are improving, particularly natural graphite demand and silicon metal prices. Based upon current market conditions, AMG expects to generate EBITDA growth in excess of 20% in 2011.

AMG Advanced Metallurgical Group N.V.

Condensed interim consolidated income statement