SURTECO AG wants to improve the result disproportionately this year

SURTECO AG, a leading global supplier for the construction and furnishing industry, continued to improve its competitive position in the fiscal year 2005 (as at 31 December). The Group also consistently expanded its already strong positions in the Strategic Business Units Paper (including flat foils) and Plastics (including plastic edging tapes and technical extrusions). Even though the Board of Management was unable to report on a “record year” at this year’s Annual General Meeting – as it did last year – the specialist for surface finishes was able to report a successful business year with increased revenues and earnings. This was in the face of increasingly intensive competition and a difficult market environment. Consolidated revenues climbed by 4 percent from 380.4 million euros to 396.4 million euros in 2005.

Opportunities in foreign growth regions

This development is mainly due to business abroad, which went up by 9 percent to a sales share amounting to 253.3 million euros. Full consolidation of the Canadian Canplast Group acquired in October 2004 impacted for the first time and resulted in a 30 percent increase in American business to 71.3 million. However, developments in North America and the Asia/Pacific region, where SURTECO AG posted growth of 6 percent, highlight the wisdom of the corporate strategy directed towards significantly promoting presence in strong growth markets. SURTECO AG also wants to make the most of the opportunities offered here in the future in order to achieve more than simply balancing the lacklustre domestic economy. Sales in the domestic market at 143.1 million euros lagged behind revenues for the previous year by 4 percent. Consequently, the proportion of the domestic share in total business of the Group fell back by 3 percentage points to only 36 percent.

Capital ratio increases scope for manoeuvre

But SURTECO AG again increased earnings from ordinary activities before income tax and special influences – by 15 percent from 36.1 million euros to 41.4 million euros. The consolidated net income increased by 20 percent to 21.8 million euros. In parallel, the Group succeeded in further reducing net debt, bringing it down from 219 million euros in 2002 to 135 million euros. A capital ratio of more than 40 percent means that SURTECO AG again has a high potential for credit and this significantly expands its scope for manoeuvre.

Outlook 2006

SURTECO AG concluded the first quarter with an increase in sales of 4 percent and a rise in earnings before income tax of 8 percent. This provides an indication of what the company is expecting for 2006: organic growth with a disproportionately high earnings performance. This is a goal that can only be achieved if the overall economic framework conditions do not deteriorate and the company is not subjected to further negative effects from the foreign-exchange and commodity markets. Competition is intensifying especially in Europe and this is frequently only price driven. SURTECO AG intends to combat this trend with quality enhancement and the company-specific collective tariff introduced at the beginning of 2006. This will lead to savings on personnel costs amounting to 15 percent each year. The Group believes that this new collective agreement is not only an effective measure for securing its international competitiveness over the long term but also a means of safeguarding the majority of domestic jobs.

Dividend for 2005 at the level for the previous year

In the “record year 2004”, shareholders of SURTECO AG benefited from a dividend increased by 14 percent to 0.80 euros per share. Shareholders can expect the dividend for the past fiscal year to remain unchanged by comparison with the previous year at 0.80 euros.