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KHD Humboldt Wedag International Ltd. Reports Third Quarter and Nine-month Results

11/14/2006

- Earnings Before Taxes Exceed Guidance by 19% & Order Backlog Increases by 88% -

HONG KONG, Nov. 14 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. ("KHD") (Nasdaq: KHDH) announces its results for the nine months and third quarter ended September 30, 2006. The growth trends in sales, order intake and backlog continued in the third quarter and earnings exceeded guidance.

KHD continued to progress towards its goal of becoming an industrial plant engineering and equipment supply company. Our transition began with the distribution of a substantial portion of the financial services operations, Mass Financial Corp., to our shareholders on January 31, 2006 and has continued over the course of this year.

To provide shareholders with information most indicative of the going forward operating business, the following disclosures of revenues and earnings before taxes ("EBT") are based on our industrial plant engineering and equipment supply related operations and do not include the revenues from KHD's other operations.

For comparative purposes, all amounts for order intake, backlog and sales were translated from Euro to U.S. dollar at 1.1841, the exchange rate prevailing on December 31, 2005.

Revenues for the first nine months of 2006 reached $251.5 million, an increase of 7 percent over the corresponding period of 2005. EBT for the industrial plant engineering and equipment supply services segment was $27.6 million, an increase of 52 percent over the corresponding period in 2005.

Revenues for the third quarter of 2006 were $100.7 million. EBT for the industrial plant engineering and equipment supply segment for the third quarter of 2006 was $12.7 million.

Certain 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.

KHD is raising its full-year guidance on EBT, to $39.0 million. KHD is also adjusting its $424.6 million guidance for 2006 revenues to $416.6 million due to project delays primarily driven by our customers. In a business such as industrial plant engineering and equipment supply that depends on sequential events, a delay affecting revenue recognition timing in the short term will be recouped at a later stage in the project schedule.

Based on the period average exchange rates for the nine-month period ended September 30, 2006, the Canadian dollar increased by approximately 8.1 percent, 11.0 percent and 9.7 percent against the U.S. dollar, the Swiss franc and the Euro, as compared to the same period in 2005. As the majority of our revenues are denominated in Euros and U.S. dollars, the material depreciation of such currencies has an impact on our operating results.

Order intake is defined as the total value of all orders received during the respective period, while order backlog is the value of orders received but not yet fulfilled.

Order intake for the first nine months of 2006 was $475.3 million, an increase of 75 percent over the corresponding period of 2005. 30 percent of order intake through the nine months ended September 30, 2006 came from the emerging Asia region, 26 percent from the Americas, 26 percent from Europe and 9 percent from the Middle East.

Order intake for the three months ended September 30, 2006 was $90.7 million, compared to $79.2, an increase of 15 percent over the same quarter of 2005. 20 percent of the order intake during the third quarter came from the emerging Asia region, 20 percent from the Americas, 21 percent from Europe and 26 percent from Africa.

Order backlog as at the end of the third quarter of 2006 was $563.3 million, an increase of 88 percent over the third quarter of 2005.

CEO Jim Busche commented, "Our strong increase in order backlog shows that our efforts to extend our reach globally are paying off. This backlog, in addition to our globalization efforts and margin improvement program will help us to continue to have a strong performance next year."

Results for KHD as a whole, i.e., including results for the industrial plant engineering and equipment supply operations as well as all the other KHD operations, follow. Total revenues for the first nine months of 2006 were $291.9 million. Net income for the first nine months of 2006 was $20.6 million, or $1.36 per share. For the quarter ended September 30, 2006, revenues were $102.9 million. Net income for the 2006 third quarter was $10.3 million, or $0.67 per share.

Michael Smith, Chairman of KHD, stated, "The transition to an industrial plant engineering and equipment supply business is almost complete. The major projects yet to be completed are the disposition of redundant assets that relate to the old financial services business. A major effort is underway to rationalize these assets which clearly do not contribute to earnings in any substantial manner and are a distraction to our on-going business operations. We ended the third quarter with $231 million in cash and securities, $423 million in current assets, and a current working capital ratio that exceeds 2:1. Our equity grew to $288 million.

"The business case for KHD is that we generate positive cash from all new projects and that we require no significant amount of fixed assets for the business, which allows KHD to grow with out capital constraints.

"While KHD believes that our financial performance through the third quarter is encouraging, we recognize the need for continuous improvement and remain committed to capitalizing on the strong market conditions while implementing further cost controls and improving margins. Shareholders are encouraged to read our entire Form 6-K report for a greater understanding of our industrial plant engineering and equipment supply business, which is now available on our website."

All figures on the following tables are in US dollars and earnings per share amounts are on a diluted basis. The consolidated balance sheet and income statement for September 30, 2006 were translated from Canadian dollars into U.S. dollars at U.S. dollar 1 = Canadian dollars 1.1153 (equivalent to Euro 1 = U.S. dollars 1.2687).

About KHD Humboldt Wedag International Ltd.

KHD Humboldt Wedag International Ltd. (the "Company") owns companies that operate internationally in the industrial plant engineering and equipment supply industry, and specializes in the cement, coal and minerals processing industries. To obtain further information on the Company, 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. 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. These assumptions, which include, management's current expectations, estimates and assumptions about certain projects and the markets the Company operates in, the expressed or implied by the forward-looking statements, including, but not limited to: (1) a downturn in general economic conditions in Asia, Europe, the United States and internationally, (2) a decreased demand for the Company's products, (3) a decrease in the demand for cement, minerals and related products, (4) the number of competitors with competitively priced products and services, (5) product development or other initiatives by the Company's competitors, (6) shifts in industry capacity, (7) fluctuations in foreign exchange and interest rates, (8) fluctuations in availability and cost of raw materials or energy, (9) delays in the start of projects included in our forecasts, (10) delays in the implementation of projects included in our forecasts, disputes regarding the performance of our services, (11) the uncertainty of government regulation and politics in Asia and the Middle East and other markets, (12) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, and (13) 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 6-K filed with the Securities and Exchange Commission and our MD&A filed with Canadian security regulators.

Contact Information: Allen & Caron Inc
Joseph Allen (investors)
(212) 691-8087
joe@allencaron.com
or
Len Hall (media)
(949) 474-4300
len@allencaron.com
Rene Randall
KHD Humboldt Wedag International Ltd.
(604) 683-8286
rrandall@bmgmt.com
-FINANCIAL TABLES FOLLOW-

                    KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED BALANCE SHEETS
            As of September 30, 2006 and December 31, 2005
            (Unaudited)
            (amounts in U.S. dollars; in thousands)
            ASSETS
            2006           2005
            Current assets
            Cash and cash equivalents                       $216,353       $194,313
            Restricted cash                                   21,024         22,016
            Securities                                        14,384         16,265
            Loans                                              2,513         10,638
            Receivables, commodities transactions                  0         10,450
            Receivables, industrial plant engineering
            and equipment supply                             32,144         34,588
            Receivables                                       20,119         25,533
            Commodity inventories                                  0         24,356
            Inventories                                       53,362         38,641
            Real estate held for sale                         28,630         27,479
            Contract deposits, prepaid and other              22,891         11,201
            Future income tax assets                          11,826          7,594
            423,246        423,074
            Non-current assets
            Securities                                           795          7,893
            Loans                                             10,906          9,436
            Properties, plant and equipment                   11,038         10,835
            Investment in resource property                   31,687         30,312
            Goodwill                                           9,640         12,987
            Equity method investments                            907         16,021
            Future income tax assets                          11,523         12,496
            Investment in preferred shares of a former
            subsidiary                                       81,131              0
            157,627         99,980
            $580,873       $523,054
            LIABILITIES
            Current liabilities
            Accounts payable and accrued expenses           $168,611       $159,628
            Notes payable, commodities transactions                0          9,890
            Notes payable, industrial plant engineering
            and equipment supply                                563          2,944
            Long-term debt, current portion                    4,419          1,606
            Pension liabilities                                1,269          1,489
            Deposits                                           9,356         17,327
            Provision for warranty costs                      27,251         20,527
            Future income tax liability                            0            303
            211,469        213,714
            Long-term liabilities
            Long-term debt, less current portion              15,628          6,253
            Pension liabilities                               27,802         25,584
            Provision for warranty costs                       6,426          4,427
            Future income tax liability                        9,276         10,154
            Other long-term liabilities                          203            575
            59,335         46,993
            Total liabilities                            270,804        260,707
            Minority interests                                  22,298         18,088
            SHAREHOLDERS' EQUITY
            Common stock                                      76,457         62,481
            Contributed surplus                                1,206              0
            Equity component of convertible debt                  80            125
            Retained earnings                                239,502        209,416
            Cumulative translation adjustment                (29,474)       (27,763)
            287,771        244,259
            $580,873       $523,054
            Note: 2005 numbers include the financial services segment which was
            distributed to our shareholders on January 31, 2006.  As a result, the
            December 31, 2005 results are not a true comparison of KHD at September 30,
            2006.
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED STATEMENTS OF INCOME
            For the Three Months Ended September 30, 2006 and 2005
            (Unaudited)
            (amounts in U.S. dollars; in thousands, except per share data)
            2006           2005
            Revenues                                          $102,934       $199,142
            Expenses
            Cost of revenues                                  83,315        180,559
            General and administrative                         5,656         10,728
            Stock-based compensation                             799              0
            Interest                                             533          1,792
            90,303        193,079
            Income before income taxes                          12,631          6,063
            (Provision for) recovery of income taxes              (174)           376
            12,457          6,439
            Minority interests                                  (2,129)        (1,264)
            Net income                                         $10,328         $5,175
            Earnings per share
            Basic                                              $0.68          $0.38
            Diluted                                            $0.67          $0.38
            Weighted average shares outstanding
            Basic                                         15,263,913     13,629,935
            Diluted                                       15,420,207     13,768,343
            Note: 2005 numbers include the financial services segment which was
            distributed to our shareholders on January 31, 2006.  As a result, the
            September 30, 2005 results are not a true comparison of KHD at September 30,
            2006.
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED STATEMENTS OF INCOME
            For the Nine Months Ended September 30, 2006 and 2005
            (Unaudited)
            (amounts in U.S. dollars; in thousands, except per share data)
            2006           2005
            Revenues                                          $291,937       $618,830
            Expenses
            Cost of revenues                                 236,786        537,639
            General and administrative                        24,367         44,189
            Stock-based compensation                           1,206              0
            Interest                                           2,225          5,663
            264,584        587,491
            Income before income taxes                          27,353         31,339
            Provision for income taxes                          (2,142)        (2,427)
            25,211         28,912
            Minority interests                                  (4,626)        (4,387)
            Net income                                         $20,585        $24,525
            Earnings per share
            Basic                                              $1.37          $1.80
            Diluted                                            $1.36          $1.79
            Weighted average shares outstanding
            Basic                                         15,051,234     13,602,260
            Diluted                                       15,194,868     13,747,605
            

Note: 2005 numbers include the financial services segment which was distributed to our shareholders on January 31, 2006. As a result, the September 30, 2005 results are not a true comparison of KHD at September 30, 2006.

                    KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            FINANCIAL SUMMARY
            As of September 30, 2006
            (Unaudited)
            (amounts in U.S. dollars; in thousands, except per share data and ratios)
            Cash and securities                            $230,737
            Working capital                                 211,777
            Total assets                                    580,873
            Shareholders' equity                            287,771
            Book value per share                              18.85
            Current ratio                                       2:1
            Long-term debt to equity ratio                     0.05
            

SOURCE KHD Humboldt Wedag International Ltd. CONTACT: Investors, Joseph Allen, +1-212-691-8087, joe@allencaron.com,
or Media, Len Hall, +1-949-474-4300, len@allencaron.com, both of Allen & Caron
Inc, for KHD Humboldt Wedag International Ltd; or Rene Randall of KHD Humboldt
Wedag International Ltd., +1-604-683-8286, rrandall@bmgmt.com
Web site: http://www.khdhumboldt.com
CO: KHD Humboldt Wedag International Ltd.
ST: Hong Kong
IN: MNG
SU: ERN

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