KHD Humboldt Wedag International Ltd. Reports 49% Increase in Net Income for 2007

KHD Humboldt Wedag International Ltd. Reports 49% Increase in Net Income for
2007
Backlog at $919 Million; New Strategic Initiatives for Expansion

HONG KONG, March 31 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag
International Ltd. (NYSE: KHD) today announced results for 2007, when revenues
from continuing operations increased 44 percent to $580.4 million vs $404.3
million in 2006, and income from continuing operations increased 49 percent to
$51.0 million or $1.68 per share, compared to $34.2 million or $1.12 per share
for 2006. Return on sales increased to 8.8 percent from 8.4 percent in 2006.
The Company also announced it would expand its scope in the supply of cement
in Eastern Europe and Russia, and that it plans to distribute securities worth
approximately $92 million to its shareholders. All financial reports treat
the spun-off real estate and financial services operations as discontinued
operations, and are reported in US dollars.
CEO Jim Busche commented, "2007 closed with record sales and order intake,
and we entered 2008 with a record backlog. Most importantly, the contracts in
our backlog are dominated by projects in the world's emerging economies. We
believe that order intake, which was $884 million in 2007, and order backlog,
which stood at $919 million at the end of 2007, are the most accurate
indicators of the strength of our core business."
"This year will be our first full year as an industrial plant engineering
and equipment supply company," he added. "Our focus in 2008 will be to set
the foundation for growth in our traditional markets of cement, coal and
minerals processing and to expand our horizons beyond these traditional
markets to adjacent industries for sustaining our track record of increasing
shareholder value."
During 2007, the Company listed on the New York Stock Exchange, split its
stock 2:1, and announced the distribution of its real estate assets to the
shareholders as it transferred its non-core real estate interests to SWA Reit
and Investments Ltd ("SWA") as of September 25, 2007. Austrian depositary
certificates representing the common shares of SWA were distributed to the
shareholders of KHD on a one-for-one basis. On the distribution date the fair
and book value of net assets transferred to SWA was $56.3 million. For the
year ended December 31, 2007 the loss from these discontinued operations
amounted to $9.4 million or $0.31 per share.
Order intake is defined as the total value of all orders received during
the respective period, while order backlog is defined as the value of orders
received but not yet fulfilled. KHD books orders on the basis of firm
contracts and receipt of the down payments. For comparative purposes, all the
following analyses of amounts for order intake and backlog were translated
directly from Euros to US dollars at 1.4603, the exchange rate as of December
31, 2007.
Order intake for the year ended December 31, 2007 was $883.8 million, an
increase of 19% over 2006 and up 84% over 2005; 34% of the 2007 order intake
came from the Middle East, 29% from the emerging Asia/Pacific region, 21% from
Russia and Eastern Europe, 9% from Europe and 6% from the Americas.
Order backlog as of December 31, 2007 was $919.4 million, up 38% over
December 31, 2006 and an increase of 135% over 2005; 33% of the backlog going
into 2008 is associated with projects in the Middle East, 29% in the emerging
Asia/Pacific region, 24% in Russia and Eastern Europe, 6% in Europe and 6% in
the Americas. As of the date of this release the order backlog exceeds $ 1
billion.
Subsequent to the issuance of our Form 6-K for the nine months ended
September 30, 2007, we identified certain accounting errors that impacted the
previously filed quarterly financial statements as of March 31, June 30 and
September 30, 2007. These errors, which had no effect on the year-end
results, were caused by changes in the consolidation process resulting in
incorrect elimination of certain intercompany transactions and the
implementation of a new software system in a subsidiary. The required
adjustments in thousands of US Dollars through the nine months ended September
30, 2007 are summarized as follows:

As Reported Restated Adjustment
Revenues $418,825 $416,893 $1,932
Cost of revenues $357,968 $356,809 $1,159
Gross profit $60,857 $60,084 $773
Income from continuing
operations $38,639 $38,126 $513

Mr. Busche commented, "Our backlog and order intake continue to grow, and
we ended the year with $370 million in cash and securities. Our latest
innovative grinding and cooling technologies are also gaining further
acceptance by the cement production industry."
He added, "To sustain our growth and decrease our dependence on providing
equipment to cement producers, we have recently focused on strategic
technology partnerships to broaden both our scope of supply to existing
industry customers and also to expand applications and introduce our
technologies to a larger sphere of industries. While we will continue this
effort, we have chosen to launch another diversification strategy that we
believe to be an attractive and effective use of our cash and resources.
"Our approach is to combine our extensive knowledge of cement plants and
our dominant position in the emerging markets of Russia and the CIS to form
partnerships to build, own and operate (BOO) cement plants."
As Mr. Busche described it, the KHD BOO (for "Build, Own and Operate")
intends on partnering with experienced and well-established local entities
that will become active majority shareholders in a series of ventures. These
partners will use their local knowledge and contacts to identify the most
attractive opportunities. KHD, in addition to being a passive minority equity
partner, will design, fabricate, erect, commission and operate these cement
plants. Investment banks will arrange and assist in structuring and arranging
debt financing. We anticipate that we will have the opportunity to generate
earnings on the engineering and equipment supply, as well as on plant
operations and on the downstream sale of the commodity. KHD believes that the
revenue stream from production would be constant and predictable.
He said, "In the past few months we have explored the market for interest
in this concept and are currently negotiating with a number of potential
partners. In our November investor conference call we committed to provide a
plan for our free cash by the end of the first quarter 2008. We have just
described how we plan to deploy free cash, in the BOO operations.
"Additionally, as committed in November, we are pleased to announce that
we intend to distribute to our shareholders the value associated with the
preferred shares of Mass Financial Corp ("Mass"). As part of this
distribution, the preferred shares, through a series of transactions, will be
exchanged for common shares of Mass. The value of the preferred shares at
December 31, 2007 was approximately $92 million. The value of the
distribution will be determined by certain tax requirements and an evaluation
will be conducted to determine a fair ratio for the exchange of the preferred
shares for the common shares. Upon completion those shareholders that prefer
cash may sell the shares and those that prefer equity may hold the shares."
This year we are issuing annual guidance on what we consider two key
indicators: (1) order intake, which we believe to be an accurate measure of
the progress and quality of sustainable growth, and (2) earnings per share as
it is the traditional measure used by our shareholders and analysts. For
2008, we expect order intake to increase to $1.1 billion and we project that
our diluted earnings per share will be in the range of $2.05 - $2.15. Order
intake and earnings per share are not evenly spread among all quarters and
therefore this guidance is for 2008 as a full year. It should be noted that
this guidance does not include the benefits of the planned business expansion
and diversification programs.
Foreign exchange currency rates have a material effect on our business
performance in two ways. As much of our business is transacted in currencies
other than the US dollar a weakening US dollar increases both our revenues and
costs. In addition we hold US dollar cash deposits in certain of our
subsidiaries outside the US. A weakening US dollar results in unrealized
foreign exchange losses on these cash deposits. In preparing our forecast we
used currency assumptions at exchange rates similar to those prevailing at
year-end.
The forecast (guidance) information and other statements in this release
are forward-looking and are subject to risks and uncertainties that may cause
actual results, performance or developments to differ materially. See the
section entitled "Disclaimer for Forward Looking Information" at the end of
this release for a description of those risks and uncertainties.
Today at 10:00am EDT (7:00am PDT), a conference call will be held to
review the KHD results; this call will be broadcast live over the Internet at
www.khdhumboldt.com or www.earnings.com. An online archive will be available
immediately following the call and continue for seven days or to listen to the
audio replay by phone, dial 1 (888) 286 8010 using conference pass code #
88252142. International callers should dial 1 (617) 801 6888.
About KHD Humboldt Wedag International Ltd.
KHD Humboldt Wedag International Ltd. owns companies that operate
internationally in the industrial plant engineering and equipment supply
business, and specializes in the cement, coal and minerals processing
industries. To obtain further information on KHD, please visit our website at
http://www.khdhumboldt.com
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which
reflect the expectations of management regarding the Company's future growth,
results of operations, performance and business prospects and opportunities.
Forward-looking statements consist of statements that are not purely
historical, including any statements regarding beliefs, plans, expectations or
intentions regarding the future and include, without limitation, the
following: (1) that the Company will distribute securities worth $92 million
to its shareholders by distributing common shares of Mass; (2) that the
Company will form partnerships to build, own and operate (BOO) cement plants;
(3) that these BOO plants will generate revenue and such revenue will be
constant and predictable; (4) that order intake will increase to $1.1 billion;
and (5) that earnings per share for 2008 will be in the range of $2.05 to
$2.15. Such statements are subject to risks and uncertainties that may cause
actual results, performance or developments to differ materially from those
contained in, the statements. No assurance can be given that any of the
events anticipated by the forward-looking statements will occur or, if they do
occur, what benefits the Company will obtain from them. These forward-looking
statements reflect management's current views and are based on certain
assumptions including management's current expectations, estimates and
assumptions about certain projects and the markets the Company operates in.
It is important to note that actual outcomes and the Company's actual results
could differ materially from those in such forward-looking statements. Actual
results could differ from those projected in any forward-looking statements
due to numerous factors. Such factors include, among others: (1) that the
Company will have sufficient paid-up capital and that Mass will have
sufficient exempt surplus to effect the distribution of the common shares of
Mass in a tax efficient manner; (2) that the Company's shareholders approve
the distribution of the common shares of Mass; (3) that the Company obtains
all necessary regulatory approvals required for the distribution of the common
shares of Mass; (4) that the Company identifies appropriate partners to
facilitate the build, own and operate partnerships; (5) that the Company
obtains the necessary regulatory approvals and/or the financing necessary to
build and operate such cement plants; (6) a downturn in general economic
conditions in Asia, Europe, the United States and internationally, (7) a
decreased demand for the Company's products, (8) a decrease in the demand for
cement, minerals and related products, (9) the number of competitors with
competitively priced products and services, (10) product development or other
initiatives by the Company's competitors, (11) shifts in industry capacity,
(12) fluctuations in foreign exchange and interest rates, (13) fluctuations in
availability and cost of raw materials or energy, (14) delays in the start of
projects included in our forecasts, (15) delays in the implementation of
projects included in our forecasts and disputes regarding the performance of
our services, (16) the uncertainty of government regulation and politics in
Asia, Russia, Eastern Europe, the Middle East and other markets, (17)
potential negative financial impact from regulatory investigations, claims,
lawsuits and other legal proceedings and challenges, and (18) other factors
beyond the Company's control. Additional information about these and other
assumptions, risks and uncertainties are set out in the "Risks and
Uncertainties" section in our Form 20-F filed with the Securities and Exchange
Commission and our MD&A filed with Canadian security regulators.
Contact Information:

Allen & Caron Inc. Rene Randall
Joseph Allen (investors) KHD Humboldt Wedag International Ltd.
1 (212) 691-8087 1 (604) 683-8286 ex 224
joe@allencaron.com randall.r@khd.de
or
Brian Kennedy (media)
1 (212) 691-8087
brian@allencaron.com

-FINANCIAL TABLES FOLLOW-

KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
(U.S. Dollars in Thousands)

ASSETS
2007 2006
Current assets

Cash and cash equivalents $354,397 $204,530
Securities 15,510 4,111
Restricted cash 24,116 16,180
Accounts receivable, trade 62,074 67,157
Other receivables 18,585 33,351
Inventories 124,980 85,799
Contract deposits, prepaid and other 33,775 24,069
Future income tax assets 825 763
Current assets of discontinued operations 0 4,301
634,262 440,261

Non-current assets

Securities 0 64
Receivables 0 8,878
Property, plant and equipment 2,957 2,936
Interest in resource property 32,865 29,037
Equity method investments 654 500
Future income tax assets 24,658 27,724
Investment in preferred shares of former
subsidiaries 91,960 77,976
Other non-current assets 1,955 0
Non-current assets of discontinued operations 0 54,544
155,049 201,659

$789,311 $641,920

KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
CONSOLIDATED BALANCE SHEETS (con't)
December 31, 2007 and 2006
(U.S. Dollars in Thousands)

LIABILITIES

2007 2006
Current liabilities

Accounts payable and accrued expenses $147,869 $129,668
Long-term debt, current portion 0 4,596
Progress billing above costs and estimated
earnings on uncompleted contracts 184,830 92,518
Advance payments received from customers 9,190 8,878
Income tax liabilities 20,658 11,088
Accrued pension liabilities, current portion 2,205 1,664
Provision for warranty costs, current portion 31,503 21,868
Current liabilities of discontinued operations 0 964
396,255 271,244

Long-term liabilities

Long-term debt, less current portion 13,920 10,725
Accrued pension liabilities, less current
portion 30,981 28,559
Provision for warranty costs, less current
portion 11,799 7,247
Deferred credit, future income tax assets 15,712 15,539
Future income tax liability 2,593 9,180
Other long-term liabilities 4,931 625
Long-term liabilities of discontinued operations 0 3,047
79,936 74,922

Total liabilities 476,191 346,166

MINORITY INTERESTS 5,926 22,466

SHAREHOLDERS' EQUITY

Common stock 138,359 108,595
Treasury stock (93,793) (64,383)
Contributed surplus 4,319 2,131
Retained earnings 162,633 176,742
Accumulated other comprehensive income 95,676 50,203
307,194 273,288

$789,311 $641,920

KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2007 and 2006
(U.S. Dollars in Thousands, Except per Share Data)

2007 2006

Revenues $580,391 $404,324
Cost of revenues 494,432 338,495
Gross profit 85,959 65,829

Income from interest in resource property 18,132 6,660

General and administrative expense (46,700) (29,802)
Stock-based compensation (4,381) (2,132)
Operating income 53,010 40,555

Interest income 13,155 5,044
Interest expense (2,668) (2,238)
Other income, net 2,308 7,763
Income before taxes from continuing operations 65,805 51,124
Provision for income tax:
Income taxes (8,278) (9,658)
Resource property revenue taxes (4,161) (644)
(12,439) (10,302)
Income before minority interests, continuing
operations 53,366 40,822
Minority interests (2,386) (6,670)
Income from continuing operations 50,980 34,152
Loss from discontinued operations, net of tax (9,351) (2,874)
Extraordinary gain, net of tax 513 0
Net income $42,142 $31,278

Basic earnings (loss) per share
continuing operations $1.71 $1.13
discontinued operations (0.31) (0.10)
extraordinary gain 0.02 0
$1.42 $1.03

Diluted earnings (loss) per share
continuing operations $1.68 $1.12
discontinued operations (0.31) (0.09)
extraordinary gain 0.02 0
$1.39 $1.03

Weighted average shares outstanding - basic 29,895,468 30,162,412
Weighted average shares outstanding - diluted 30,402,130 30,415,452

KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
FINANCIAL SUMMARY
As of December 31, 2007
(U.S. Dollars in Thousands, Except per Share Data and Ratios)

Cash and cash equivalents $354,397

Short-term securities 15,510

Restricted cash 24,116

Working capital 238,007

Total assets 789,311

Shareholders' equity 307,194

Book value per share 10.16

Current ratio 1.601

Long-term debt to equity ratio 0.045

SOURCE KHD Humboldt Wedag International Ltd.

Joseph Allen (investors), joe@allencaron.com, or Brian Kennedy (media),
brian@allencaron.com, both of Allen & Caron Inc., +1-212-691-8087, for KHD
Humboldt Wedag International Ltd.; or Rene Randall of KHD Humboldt Wedag
International Ltd., +1-604-683-8286, ext. 224, randall.r@khd.de