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orDer intake

In fiscal year 2012, order intake in the medical division remained stable (net of currency effects). A drop in Germany, the rest of Europe and the Americas region was offset by strong growth in orders from the Asia/Pacific and Other Countries regions. There was a slight increase in orders in the fourth quarter.

In terms of products, order intake grew in particular in Lifecycle Solutions, Ventilation and Infrastructure Projects. Lifecycle Solutions, which specifically encompasses the service business as well as accessories and consumables, grew in all regions. In Ventilation, business increased in particular in Japan, China and the Americas region. Infra- structure Projects, the area in which Dräger provides gas management systems, supply units and workplace solu- tions in hospitals, grew due to strong demand, particu- larly from Saudi Arabia, Mexico and Japan. This more than compensated for weaker business in the rest of Europe and in Germany. In Anesthesia, order intake fell slightly after a strong previous year. Growth in Russia was more than offset by a drop in business in most other European countries. In Neonatal Care, order intake grew in Russia and China, among others. However, this was not sufficient

to compensate for the drop in the Americas region and the Other Countries region. In these regions, Dräger won major tenders in the previous year in Venezuela and Iraq. In Monitoring, Systems and IT, there was a double-digit decline in order intake reflecting weaker demand in North America and in the rest of Europe, but also in Ger- many.

In Germany, strong order intake in Anesthesia and Life- cycle Solutions did not compensate for the drop in Monitor- ing, Systems and IT, and Infrastructure Projects, where business is mainly project-related. In Germany, there was an increase in order intake in the fourth quarter, again due to strong demand in Lifecycle Solutions.

In the Rest of Europe region, order intake declined sig- nificantly both for the whole year and in the fourth quarter. Demand fell particularly steeply in some South Euro- pean countries, such as Italy and Spain. Business was also weaker in the Netherlands, Poland and Sweden com- pared to the previous year. There was a clear rise in order intake in Russia, although business in that country did weaken in the fourth quarter in comparison with the very strong prior-year quarter.

orDer intake

Fourth quarter Twelve months

€ million 2012 2011 Change in % Net of currency effects in % 2012 2011 Change in % Net of currency effects in % Germany 81.6 78.3 +4.2 +4.2 308.3 311.5 (1.0) (1.0) Rest of Europe 157.7 169.2 (6.8) (7.8) 518.9 548.0 (5.3) (6.1) Americas 89.4 76.9 +16.3 +12.2 321.0 314.4 +2.1 (2.8) Asia / Pacific 75.4 68.7 +9.7 +6.7 276.2 233.0 +18.5 +10.5 Other 28.8 28.2 +2.1 +2.7 134.0 111.9 +19.8 +18.5

84 BuSINeSS perFOrMaNce OF The MeDIcal DIVISION

In the Americas region, order intake decreased slightly year- on-year (net of currency effects) despite increases in Brazil, Argentina and Peru. However, Dräger had received large projects in the US and Venezuela in 2011. There was an increase in order intake of 15.5 percent (net of cur- rency effects) in the US in the fourth quarter, particu- larly for anesthesia devices. Order volume grew in Brazil in the last quarter as well.

Order intake in the Asia/Pacific region increased signifi- cantly both for the full year and in the last quarter. Business in Japan showed positive growth following the decline on account of the natural and nuclear disaster in the prior- year. There was also a clear increase in orders in China and India compared to the previous year.

In the Other Countries region we achieved double-digit growth in order intake of 18.5 percent (net of currency effects). One of the factors contributing to this was a clear increase in order volume for the improvement and mod- ernization of the healthcare system in Saudi Arabia. Dräger won a major contract for a series of products in Ghana.

orDers on hanD

On December 31, 2012, orders on hand in the medical division were EUR 310.5 million, down 2.4 percent (net of currency effects) on the prior-year’s figure of EUR 319.8 million.

Order intake declined, particularly in the Rest of Europe region and in Germany. In the Americas region and the Other Countries region, order intake declined in the fourth quarter, partially due to strong net sales growth. In the Asia/Pacific region, in contrast, orders on hand continued to rise due to constant high demand in China and India. Equipment orders on hand covered a 2.6 month period at the balance sheet date, based on net sales for the past twelve months (December 31, 2011: 2.9 months).

net sales

In fiscal year 2012, net sales in the medical division in- creased by 2.3 percent (net of currency effects). A drop in Germany and in the Rest of Europe region was more than offset by a clear increase in net sales in the Asia/ Pacific and Other Countries regions. In the fourth quarter, net sales growth was 0.4 percent (net of currency effects). In terms of products, net sales increased, particularly in Ven- tilation, Lifecycle Solutions and Neonatal Care. Dräger’s business in products for the care of premature babies in- creased in every region outside Germany. There was a particularly strong increase in deliveries to customers in Iraq, Russia, Saudi Arabia and Ghana. Ven tilation net sales increased in every region, with strongest growth in the Other Countries and Asia/Pacific regions, as well as the

orDers on hanD

€ million December 31, 2012 December 31, 2011 Change in % Net of currency effects in % Germany 38.1 41.6 (8.4) (8.4) Rest of Europe 92.1 95.9 (4.0) (5.2) Americas 76.2 82.0 (7.1) (5.2) Asia / Pacific 71.0 63.3 +12.1 +13.9 Other 33.2 37.0 (10.3) (9.7)

US. Lifecycle Solutions, with its accessories, consumables and service business, also rose across the board. A drop was recorded in the Anesthesia business. Growth in Russia and the Asia/Pacific region was not sufficient to compen- sate for lower net sales in the US and the Rest of Europe region in this product area. Net sales also fell in Monitor- ing, Systems and IT, particularly due to a drop in deliveries in the rest of Europe and Germany.

In Germany, net sales fell by 2.8 percent. An increase in deliveries in Lifecycle Solutions and Anesthesia could com- pensate for the drop in Infrastructure Projects and Moni- toring, Systems and IT only in the fourth quarter, not for the whole year.

Net sales in the Rest of Europe region fell by 3.1 percent (net of currency effects). Even the strong increase in deliveries to Russia could not compensate for the fall in business with Spain and Italy. The double-digit drop in net sales in the fourth quarter can partially be attributed to a large project in Poland in the prior-year.

Net sales in the Americas region remained stable (net of currency effects). An increase in deliveries in numerous countries in South America compensated for the drop in business in the US of 7.3 percent (net of currency ef-

fects). In the fourth quarter there was a clear rise in net sales of 13.8 percent (net of currency effects) for the region in total, whereas in the United States net sales con- tinued to decline.

The strong growth trend in net sales in the Asia/Pacific region continued throughout 2012, with an increase of 10.3 percent (net of currency effects). Dräger recorded net sales growth in China, Japan and Australia. In the fourth quarter, clear increases in net sales in India, Japan and China more than offset a drop in deliveries in Vietnam. At 37.7 percent (net of currency effects), the Other Coun- tries region showed a quite significant growth. This was due above all to high net sales to the Saudi Arabian Minis- try of Health and deliveries to Ghana, Iraq and South Africa.

earnings

In fiscal year 2012, gross profit in the medical division was higher than in the previous year as a result of net sales growth and positive currency effects. The gross margin was nonetheless 0.6 percentage points lower than in the previous year. Low-margin large projects, many in the area of Monitoring Systems and IT, and a change in sales mix, led to lower margins. An inventory allowance in the

net sales

Fourth quarter Twelve months

€ million 2012 2011 Change in % currency Net of effects in % 2012 2011 Change in % currency Net of effects in % Germany 94.0 93.9 +0.1 +0.1 309.1 317.9 (2.8) (2.8) Rest of Europe 185.9 209.3 (11.2) (12.1) 522.6 534.7 (2.3) (3.1) Americas 99.5 85.4 +16.5 +13.8 323.9 309.1 +4.8 (0.3) Asia / Pacific 76.6 72.4 +5.8 +3.0 264.8 223.7 +18.4 +10.3 Other 38.8 25.3 +53.2 +51.7 137.7 99.2 +38.8 +37.7

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lower one-digit million range recorded in the third quarter also had a negative effect on margins. The ratio of net sales from especially profitable business fields was particu- larly high for the end-of-year business, which meant that the gross margin in the fourth quarter was higher than the same quarter the previous year.

Functional costs in this division were significantly higher in 2012 than in the prior-year. Dräger invested heavily in research and development to support future growth and continued to develop the sales organization in emerging markets. Research and development expenses rose by a total of 22.2 percent compared with the previous year (18.9 per- cent net of currency effects). In addition, expenditure for the future product portfolio was significantly increased and Dräger also invested in bringing the current product portfolio in line with the EU directive RoHS-II 1_{. To en-}

sure the targeted exploitation of growth opportunities, we opened new regional headquarters for Latin America and also opened new sales companies in Panama and Morocco. The euro was weaker compared to the currencies of many countries, which had a positive effect on net sales but a negative one on costs.

EBIT fell by a total of 3.5 percent to EUR 185.1 million (2011: EUR 191.8 million). The EBIT margin of 11.9 per- cent was down on the previous year’s value (2011: 12.9 percent).

investments

In fiscal year 2012, Dräger invested EUR 0.8 million (2011: EUR 1.5 million) in intangible assets and EUR 28.3 mil- lion in property, plant and equipment (2011: EUR 33.9 mil- lion). In addition to replacements, Dräger invested EUR 2.1 million in a new production and management building in the Czech Republic, EUR 1.4 million in the initial phase of the construction of a new production and devel- opment building in China and EUR 1.2 million in the new regional headquarter and sales company for Latin

America in Panama. In the prior-year, we invested EUR 6.0 million in the construction of a new production and logistics building for the Infrastructure Projects busi- ness as well as EUR 1.6 million in the new Dräger Design Center in Lübeck.

In fiscal year 2012, depreciation and amortization of non- current assets came to EUR 26.6 million (2011: EUR 25.3 million). Investments covered 109.4 percent of depre- ciation, meaning that non-current assets rose by EUR 2.5 million net.

financial position anD net assets

As of December 31, 2012, capital employed increased by EUR 36.0 million to EUR 583.2 million (December 31, 2011: EUR 547.2 million). The main reasons for this were high inventories and receivables due to increased net sales. Inventories and receivables were also slightly higher than in the previous year in relation to net sales, which had a slightly negative effect on the efficiency of net cur- rent assets: The days working capital (coverage of net current assets) fell by 0.7 days to 117.5 days. Cash flow from operating activities came to EUR 110.9 million at the end of the year (2011: EUR 130.1 million). Reduced cash flow was due to a slight reduction in profit as well as to a lower reduction of working capital.

Dräger value aDDeD

DVA in the medical division decreased in fiscal year 2012 by EUR 8.8 million compared to the previous year, to EUR 135.2 million. This drop in DVA was driven mainly by EBIT, which fell by EUR 6.7 million. Slightly higher aver- age capital employed caused DVA to fall by a further EUR 2.0 million.

88 BuSINeSS perFOrMaNce OF The SaFeTy DIVISION