Difficult start to the year for SURTECO as expected

Buttenwiesen-Pfaffenhofen, 11 May 2012 – SURTECO SE started the business year 2012 with virtually identical sales to the equivalent year-earlier quarter. During the first three months, Group sales amounted to 107.3 million euros and were therefore only one percent below the value for the previous year. The sales distribution in the domestic market and abroad can be described as equally stable. While sales in Germany underwent a slight increase of one percent to 36.8 million euros, international sales eased by one percent to 70.5 million euros.

Undoubtedly very difficult economic framework conditions have impacted on the performance of SURTECO SE. There remain hopes of an upturn in the global economic situation and an increase in sales for the German furniture industry by two to three percent. However, the sustained price rises for important raw materials do not permit confident perspectives for the future. These price rises exert significantly negative impacts on the development of earnings.

The Strategic Business Unit (SBU) Plastics succeeded in increasing sales by four percent to 62.9 million euros ultimately on the basis of successful introduction of innovations. The edgings segment developed even more positively and this represents a share of 58 percent in total sales of the SBU Plastics. Sales here increased by six percent to 36.5 million euros. The concentration of production facilities at the location in Batam/Indonesia resulted in a fall in sales in Asia of 30 percent to 2.8 million euros, although completion of these restructuring measures is projected to more than compensate for this downturn.

The development of the Strategic Business Unit Paper was less gratifying since it sustained a decline in sales of six percent to 44.3 million euros in the first quarter of 2012. The main causes for this fall were the unsatisfactory capacity utilization of some purchasers in Germany and ongoing savings measures being taken by consumers in European countries outside Germany.

The unfavourable development of the costs of materials was the main cause of a significant fall of 26 percent in the operating result (EBITDA) to 13.5 million euros compared with 18.2 million euros in the first quarter of 2011. The EBITDA margin fell from 16.9 percent to the present level of 12.6 percent. The pre-tax result (EBT) reached 5.7 million euros and this was 35 percent below the amount for the equivalent year-earlier period. Consolidated net profit amounted to 3.8 million euros at the end of the first quarter of 2012 and this was below the figure for the previous year (5.6 million euros).

The performance of the SURTECO share was characterized by a strong recovery in the first quarter of 2012. The quarterly increase of approximately 23 percent exceeded even the significant positive performance of the German comparative indexes DAX and SDAX of plus 18 percent in each case.

SURTECO has described the attainment of the level of sales from the previous year as a major challenge for 2012. Since the middle of 2011, a weakness in growth has been a pervading feature in different markets and this trend is likely to continue during the current business year. The Group is countering this development by implementing an intensive marketing campaign accompanied by strict cost management in all areas.
High prices for raw materials are projected to continue impacting negatively on margins during the current business year. However, since one-off effects similar to those incurred during the previous year are not currently envisaged, an improvement in the pre-tax result appears to be a possibility.