SURTECO SE confident for the business year 2011

Buttenwiesen-Pfaffenhofen, 29 April 2011 – SURTECO SE – leading global specialist for surface technologies – started the business year 2011 confidently after returning to a profitable growth trajectory. Improved consumer sentiment within Germany and positive stimuli from exports lead the company to expect increases in sales and improvements in earnings despite the anticipated increase in the cost of materials. In the business year 2010, consolidated sales increased by 14 % from € 341.1 million to € 388.8 million by comparison with the previous year. Higher cost efficiency and a significantly improved financial result enabled consolidated net profit to increase by 135 % from € 9.2 million to € 21.7 million. Against this background, the Board of Management and the Supervisory Board of SURTECO SE will recommend to the Annual General Meeting of the shareholders of the company to be held on 17 June 2011 that a significantly increased dividend of € 0.90 (2009: € 0.40) per share should be paid for the business year 2010. This dividend continues the company’s distribution policy in favour of shareholders.

“We can afford to be satisfied with the outcome of the business year 2010. After all, there was a great deal of uncertainty at the beginning of the year. Against that background, the significant improvements in sales and earnings can be regarded as a definite success. In view of the positive business trend, we are also moderately optimistic for 2011, and believe that sales and earnings will increase – despite the anticipated further increase in raw materials,” commented Friedhelm Päfgen, Chairman of the Board of Management of SURTECO SE.

Domestic activities (+5 %) contributed to the significant increase in sales, but foreign business (+19 %) was a particularly strong driver. The export ratio rose correspondingly from 64 % to 67 %. Both business units posted a marked quickening in the pace of demand. The plastics segment generated sales 8 % up on 2009 at € 225.9 million. The paper segment underwent even more dynamic development with growth of 24 % to generate € 162.9 million. There were two opposing developments on the cost side. While the proportion of personnel costs to total output decreased significantly due to the efficiency enhancement measures implemented in previous years, the cost of materials went up significantly on account of the drastic rises in the price of raw materials, particularly plastics. As a result, EBITDA went up by 15 % from
€ 54.3 million to € 62.5 million. The financial result was significantly reduced by € 7.3 million to € -9.6 million, since only a small impairment of € 0.4 million had to be carried out on the shareholding in Pfleiderer (2009: € 6.0 million). Earnings per share went up in line with the improvement in profit after tax from € 0.83 to € 1.96.

While the balance sheet total remained virtually unchanged at € 481.5 million, the equity of SURTECO SE went up strongly by 11 % to € 213.4 million. The equity ratio rose accordingly from 39.8 % to a very robust 44.3 %. After net debt rose only slightly to € 123.2 million, gearing on 31 December 2010 – defined as the ratio of net debt and equity – improved significantly from 0.64 to 0.58. Cash flow in 2010 was defined by the economic revival in business fortunes and the associated increase in working capital (net assets and liabilities). Accordingly and in line with expectations, cash flow from operating activities at € 39.7 million did not reach the level of the previous year (€ 76.2 million).

The recovery in the employment market and the increase in the number of planning approvals are likely to stimulate consumption in Germany and hence exert an effect on domestic sales. The projections for various key foreign markets also provide grounds for optimism. A further slight recovery in demand can therefore be anticipated for the business year 2011. On the cost side, the company is not anticipating any easing of the situation for procurement of raw materials. Renewed price increases cannot be excluded, particularly for plastics. The focus is on measures for increasing productivity, streamlining processes and systems, and a high level of discipline for costs and investments. Thanks to a gratifying start to the new business year, the Board of Management of SURTECO SE is anticipating a further improvement in the consolidated result for the business year.