SURTECO bucks sector economic trend and weak dollar

Despite the lacklustre economic conditions prevailing in the sector for the third year running, and foreign business burdened by extremely unfavourable currency conditions, SURTECO AG concluded the past fiscal year with better results than expected. The company is regarded as the leading global supplier of surface technologies based on specialist papers and plastics for technical applications. While forecasts were corrected upwards in September, the actual results for the 4th quarter were even better than expected. The balance sheet for 2003 highlights this success in the results for ordinary activities before restructuring expenses, which are reported as € 29.7 million instead of the € 26 million forecast. The Group has thereby only slightly undershot the result for 2002 (€ 30 million). SURTECO AG also succeeded in reducing the financial debts significantly by € 35 million to € 146 million; these debts are mainly related to acquisitions. Difficult framework conditions for two Strategic Business Units SURTECO AG is structured in two strategic business units, SBU Paper and SBU Plastics. The Group generated consolidated sales amounting to € 355 million in 2003, which was 3% below the amount for the previous year (€ 367.6 million). However, after adjustment for currency losses, sales would only be € 0.5 million below the value for the previous year. The share of foreign sales in total sales remains relatively high at 60 % and underpins this perspective. The sustained weakness of the dollar particularly affected the SBU Paper, which concluded 2003 with sales of € 174.4 million and hence fell short of the figure for the previous year by 2 %. Taking into account the change in currency parities, sales would in fact have increased by 1 % - sales of € 117.8 were generated abroad. Although business in Germany at SBU Paper was still depressed as a result of the extremely weak construction sector, SURTECO AG succeeded in keeping local sales volumes of € 56.7 million roughly at the level for the previous year (- 1 %) by developing new "product specialities" and achieving growth in the caravanning segment for 2003. The SBU Plastics also had to address the difficult economic situation in furniture manufacture and in the construction sector. SURTECO AG has placed the companies of the Döllken Group in this business unit. However, an extremely innovative and high-quality product range meant that the Group was able to counter the negative framework conditions and cushion the associated negative effects on sales. Sales of € 180.6 million - of which € 84.5 million were generated in Germany - were 5 % below the level of the previous year, with € 6.1 million alone being attributable to currency losses. SURTECO share brings in return These indicators also influence the operating result of SURTECO AG: EBIT for 2003 fell from € 42.7 to € 37.2. Net consolidated income for the year at € 14.9 million was € 2.7 million below the figure for the previous year. Shareholders of SURTECO AG should also participate in the net income of € 14.8 million. The Board of Management will propose a payout of a dividend amounting to € 0.70 per share at the Annual General Meeting (Munich, 17 June). 2004: Confidence in structural programme and enhanced foreign activities SURTECO AG employed 1,937 employees (of which 1,523 were working in Germany) at the end of the year and is assuming that its market scenarios will not change substantially in 2004. However, the company is optimistic that the current fiscal year will be concluded with figures that slightly exceed the figures for the previous year. A contributory factor will be the Zeus restructuring programme. This has been running for two years now and € 2.6 million were spent on the programme last year. This programme included redeploying machinery at the production sites of SURTECO AG. These measures are intended to increase value added and contribute to consistent quality and punctual delivery. The Group continues to anticipate stimuli abroad where opportunities for growth are perceived and these are also being actively promoted. For example, the 75% stake in Arbe s.r.l. near Venice acquired in December 2003 will significantly strengthen the sales structures of SURTECO AG in Italy. The prospects for the Chinese market are outstanding and the decision taken to set up a dedicated production operation for edging and surface products is beginning to take on concrete shape. The facility is due to be opened in mid-2005.