SURTECO AG focuses on ambitious targets

The turbulence in the international financial markets triggered by the real estate crisis in the USA also impacted negatively on SURTECO AG during the third quarter of the current business year. The specialist for surface technologies based on paper and plastic is one of the leading suppliers worldwide to the construction and furnishing industries. The Group was confronted by a drastic cutback in new-build activities, particularly in the case of its subsidiaries in the USA and Canada. SURTECO AG also faced a similar scenario in Germany where planning approvals for private residential construction have witnessed a collapse of approximately 50% since the end of 2006. Although this background is far from favourable, SURTECO AG has not had to adjust its ambitious goals for the year and continues to assume a slight rise in sales and an associated improvement in results. This is due to a series of measures designed to consolidate and expand its strong market position and these have already begun to produce results in the third quarter.

For example, the Group established SURTECO DEKOR A. Ş. in September to create a dedicated sales and finishing company in Turkey and support its presence in this region. Over the medium term, the company is also planning to serve this future market with a dedicated production facility in Turkey.

Since 1 September SURTECO AG has controlled – and consolidated – 100 % of Gislaved Folie AB, a leading manufacturer of decorative plastic foils for marine construction and the furniture industry in Sweden. This acquisition for the first time places SURTECO AG in the position to offer foils based on plastics, a product segment which belongs to the future and turns the Group into a true full-line supplier of high-quality surface foils.

SURTECO AG also generated new initiatives at Bausch Decor GmbH which permit additional expansion of its market position in coating products based on technical papers. Within the Group, this company within the Strategic Business Unit Paper has specialized in the production of decorative prints based on specialist technical papers. Based on a € 13 million investment focused on the core of two additional printing machines, the production capacities of this operation have been significantly expanded.

The fact that the efforts of SURTECO AG to achieve stability and growth are also the focus of the international financial world and have been given a very positive reception there has been demonstrated by a privately floated loan in the form of a private placement amounting to approximately € 150 million in the USA and Germany: The transaction volume had to be increased on account of multiple oversubscription. The enthusiastic response of investors to this new form of finance for SURTECO allowed the company to continue its strategy of profit-oriented growth.

Sales revenues and income grow to record level

Over the past nine months, SURTECO AG generated consolidated sales amounting to € 312.3 million and this put the Group 3 % ahead of the comparative figures for the year-earlier period, despite the currency-related decline in North American business (minus € 3.3 million) and rationalization of the product portfolio in do-it-yourself goods held for resale (minus €1.7 million). The SBU Plastics has the biggest proportion (59 %) of sales with an increase of 6 % to € 185.3 million in 2007 after three quarters. Despite the familiar difficulties on foreign markets, export business increased by 8 % to € 120.1 million. The SBU Paper has to contend with a market that is weak overall where sales at € 127 million for the first nine months are lagging by 2 % behind the comparative figures for 2006. While sales for this segment in Germany have remained virtually constant at € 46.5 million, export sales fell back by 4 % compared with the year-earlier figures. SURTECO AG is optimistic about this division on the basis of the decor printing business line. During the first three quarters of 2007, this segment generated sales growth of 18 % and the start-up of the new printing units places this segment in an ideal position.

After nine months, the slight increase in sales at the SURTECO Group contrasts with a significant improvement in earnings. EBT improved by 9 % to € 36.7million in the reporting period compared to the previous year. Consolidated net income increased by 12 % to € 23.2 million. SURTECO is again anticipating another record for sales and earnings in the business year 2007. Group sales amounting to € 403.2 million (+2 %) and a profit of € 28.8 million (+32 %) means that SURTECO AG had the best year throughout the company’s history in 2006.