AMG Reports Strong Third Quarter in Face of Challenging Economic Conditions

Market Wire, November, 2008

Key Highlights

  * Revenue increased 49% in the third quarter 2008 compared to the
    third quarter 2007; year to date increase 40%
  * EBITDA increased 121% in the third quarter 2008 when compared to
    the third quarter 2007; year to date increase 99%
  * EPS on a fully diluted basis increased to $0.75 compared to the
    third quarter 2007 to ($0.94), EPS, excluding non-recurring
    charges, increased to $1.19
  * Advanced Materials' third quarter revenue and EBITDA improved by
    17% and 120% compared to the third quarter of 2007
  * Engineering Systems' third quarter revenue and EBITDA improved by
    70% and 54% compared to the third quarter of 2007
  * Timminco's third quarter revenue increased by 56% to $66.6
    million and EBITDA increased to $7.4 million in the third quarter
    of 2007
  * Graphit Kropfmühl contributed $36.4 million to revenue and $4.1
    million to EBITDA during Q3 2008
  * Strong balance sheet; cash on hand of $154.2 million, net debt of
    $79.6 million with no significant debt maturities until 2012;
    $114.8 million year to date free cash flow [1]

[1] Free cash flow is defined as EBITDA less change in working capital and maintenance capital expenditures

Amsterdam, 12 November 2008 --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported third quarter 2008 revenue increased to $437.6 million in the quarter ended 30 September 2008, from $292.9 million in the third quarter 2007, a 49% increase.

Net income attributable to shareholders for the third quarter 2008 was $20.8 million, or $0.75 per fully diluted share. Excluding the non-recurring asset impairment expenses at AMG's 50.4% owned subsidiary, Timminco, and non-recurring acquisition purchase accounting at Graphit Kropfmühl, net income attributable to shareholders for the third quarter 2008 was $32.8 million, or $1.19 per fully diluted share. Adjusted net income was $9.4 million or $0.35 per fully diluted share for the third quarter 2007. EBITDA rose 121% to $71.1 million in the third quarter 2008 compared with $32.1 million in the third quarter 2007.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, commented: "I am pleased to report our best quarter to date. Both the Advanced Materials and Engineering Systems divisions increased revenue and earnings driven by the solar, energy and superalloy end markets. AMG's majority owned subsidiary, Timminco Limited, continued to increase production of the solar grade silicon ramp up during the third quarter, shipping 300 metric tonnes, a 36% improvement over the second quarter 2008. Through AMG's diversified business model, conservative balance sheet and significant cash position, AMG is well positioned to endure the economic fallout from the global credit crisis. Demand and pricing for some of our major products are clearly being impacted by the growing uncertainties in the global economy. We are responding to these uncertainties by adjusting production levels on some of our products and increasing our cost containment measures. AMG is focused on protecting free cash flow in 2009."

Key Figures


In 000's US Dollar
                                       Q3'08         Q3'07 [1] Change

Revenue                             $437,561          $292,897    49%
Gross profit                          94,601            49,585    91%
Gross margin                           21.6%             16.9%

Operating income                      47,665            23,902    99%
Operating margin                       10.9%              8.2%

Net Income attributable to            20,769          (25,630)
shareholders

EPS- Fully diluted                      0.75            (0.94)
Adjusted EPS-Fully diluted  [2]         1.19              0.35

EBIT [2]                              52,805            27,818    90%
EBITDA [2] [3]                        71,118            32,119   121%
EBITDA margin                          16.3%             11.0%


Notes:
[1] Q3 2007 Revenue has been restated due to an adjustment at
Timminco
[2]  In 2008, adjusted for non-recurring, restructuring and
impairment charges at Timminco and non-recurring purchase accounting
at GK.  In Q3 2007 adjusted for debt extinguishment
[3] EBITDA is defined as earnings before interest, tax, depreciation
and amortization and excludes nonrecurring items



Operational Review

Advanced Materials Division


                                  Q3'08    Q3'07 Change
Revenue                        $199,396 $170,981    17%
Gross profit                     42,702   23,426    82%
Operating income                 22,621    6,701   238%
EBITDA                           25,427   11,560   120%
Capital expenditures              7,643    5,684    34%

The Advanced Materials division's third quarter 2008 financial results were driven by continued strong pricing and solid volumes in ferrovanadium and certain other key products. Revenue increased by $28.4 million or 17% to $199.4 million. Gross profit improved by $19.3 million or 82% to $42.7 million. As a percentage of sales, SG&A expenses decreased despite additional corporate infrastructure. EBITDA increased by $13.9 million, a 120% improvement over the third quarter 2007 to $25.4 million.