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Märklin further expanded the business in the second half

* Revenue by the End of June 2008 increased by 20% and orders increased by 10%

* Company leaders and union leaders discuss further reduction of costs in order to gain long term profitability

* Axel Dietz (CEO) will leave the company towards the End of 2008 by his own will


Göppingen, 11. August 2008

Toy manufacturer Gebr. Märklin & Cie. GmbH is gaining momentum, but will need to cut costs further, in order to gain long-term profitability. The company increased revenues and order flow in the 1st half of 2008 despite still very difficult market conditions. By end of June the revenue increased from the year earlier by 22% to 47M Euro. Investments in new products accounted for much of the 12.3% increase in confirmed orders which is 94.2M Euro by the End of June.

This increase established itself across all existing scales and brands, and in addition through the acquisition of the brand LGB and Scale I Huebner products. The new segment of MärklinToys with the product lines of Circus Mondolino, Mobile Vision further extend these offerings and they will be available as planned to the dealers in time for the Christmas 2008 business.

The folling miles stones characterized Märklin's business in the 1. Half 2008:

* The purchases of Maerklin and Hübner have been successfully integrated into the Maerklin organization.

* Additional switches were turned effecting part orders, production, and distribution - in Germany as well as outside the country were distribution was restructured in Austria, Benelux, UK and USA.

* Because of the strong growth path of Maerklin, the owners increased the capital in the company. The investment was a two digit million Euro investment and demonstrates the long term commitment of the owners.

"We are heading the right way, the market is honoring our investments and Märklin has after many years now finally momentum again," said CEO Axel Dietz. "But if we want to put Maerklin long term on a profitable track and want to show profits already by 2009, then we need continue to change the cost structure and better our EBIT without hesitation. Only then will we be able to stabilize the economical situation of the company.“

As previously reported, there was a employee meeting in July, were the employees were informed about the need of further cost reduction. Company leadership and union representatives are holding conversations and through the upcoming weeks there is hope that constructive solutions will be found. As is it common practice the Union Leadership has hired a consulting firm for analyzing the business, as does the company leadership.

Independent of these developments, Axel Dietz had asked the board as well as the owners to be released from his job by the end of 2008. He cited personal reasons for his wish to be released. The board agreed in his last meeting to meet the desire of Axel Dietz. They have already started to complete the company leadership, which consists in addition of Axel Dietz of the COO (US equivalent to the German title) Thomas Bauer and VP of Engineering (US equivalent to the German title) Dietmar Mundil. Unitl a replacement has been found, Axel Dietz will continue to be available for the company.