Financial crisis puts brakes on sales and income development

SURTECO SE, leading manufacturer of surface materials based on plastics and technical papers for the international construction and furnishing industry, was unable to build on the record figures achieved in the previous year due to the effects of the financial crisis in the business year 2008. Consolidated sales were therefore down 3 % (after exchange-rate adjustments of 1.2 %) on the value for the previous year of € 414.5 million. By the end of the third quarter, sales revenues were still at the level of the previous year. The Strategic Business Unit Plastics even generated growth of 3 % with € 254.7 million compared with 2007. After adjustment for the Swedish foil manufacturer Gislaved acquired in September 2007, segment sales would have fallen back by 5 %. The activities of the Strategic Business Unit Paper reflected the significant consumer restraint evident throughout the business year. The intensified financial crisis in the second half of the year reinforced this trend so that segment sales at € 148.3 million fell by 11 % in 2008.

Cost efficiency and liquidity management in focus for 2009

The Board of Management of SURTECO SE responded immediately to the change in the macroeconomic environment and introduced a comprehensive restructuring programme. This includes a reduction in the workforce by a total of 320 employees – around 15 % of the group workforce – and increased cost efficiency in all areas. There will also be postponements in the schedule for implementing investment projects. These measures required an increase in expenditure for restructuring programmes from the original figure of € 4 million to € 7.3 million, which impacted negatively on the operating result (EBITDA) of € 58.3 million (2007: € 74.4 million). This and the necessary impairment of € 11.5 million on the package of shares in Pfleiderer AG, Neumarkt, held by SURTECO led to a decline in pre-tax earnings to € 15.8 million (2007: € 46.6 million). In view of these developments and against the background of the difficult environment expected in 2009, the Board of Management and the Supervisory Board believes a prudent approach to be a reduction in the payout to shareholders in SURTECO corresponding to € 0.35 (2007: € 1.10) per share.

A revival of demand is not anticipated for the current business year 2009. It is more likely that the consequences of the crisis will continue to impact negatively on the business activity of the Group until well into the year 2010. However, the SURTECO Group also perceives opportunities in the current crisis. Plant shutdowns, site closures or insolvencies among competitors will bring about consolidation in the sector of surface manufacturers during the next few years. The SURTECO Group continues to maintain an effective technological and commercial platform and is therefore in a position to adjust quickly and flexibly to new market conditions. Against this background, the objective is to continue long-term profitable growth of the company after the unusual economic environment has returned to “normal”, and to continue enhancing market and technological leadership.