Neumarkt - The SDAX-listed Pfleiderer AG, with 1,118.4 million euros in the first nine months of 2010, has achieved a revenue increase of 7.6% compared to the previous year. Almost all product groups, with the exception of the laminate flooring business, contributed to this positive development. The foreign share of revenue reached 71.5% in the first nine months after being 72.1% in the previous year period. Due to the marked rise in material costs, the material cost ratio increased to 56.6% from 52.4% in the previous year period. The increase in raw material costs could therefore not be fully passed on to customers. This led to a decline in gross profit from 262.0 million euros to 234.3 million euros. The gross margin fell to 21.0%.

EBITDA decreased in the first nine months of 2010 to 81.7 million euros from 105.5 million euros in the prior year period. The EBITDA margin diminished
to 7.3% in the reporting period after 10.2% in the previous year. EBITDA was boosted by currency gains of 5.5 million euros, particularly from the Canadian dollar and the Polish zloty. EBIT amounted to a 7.5 million euro loss, below that of the previous year period, when a 19.4 million euro EBIT profit was posted. Depreciation charges amounted to 89.2 million euros (86.2 million euros in the previous year).

A substantial revenue increase of 9.8% to 381.4 million euros was also recorded in comparison to the period from July to September. EBITDA also increased in the third quarter, from 26.5 million euros in the previous year to

28.0 million euros currently. This led to a slight year-on-year decline in the EBITDA margin of 7.3% (Q3 2009: 7.6%). At a loss of 1.0 million euros,
EBIT was better than in the same quarter in the previous year in which a 3.2 million euro loss was reported. As a result of seasonal influences in the
Pfleiderer AG financial year, the third quarter is typically the weakest. The very high revenue in September this year could not offset the weaker holiday months of July and August.

Net financial expenses for the first nine months of 2010 amounted to 41.8 million euros (previous year: 37.1 million euros). This includes under interest expense 7.7 million euros of accrued non-cash expenses for the write-off of deferred transaction costs in relation to the Group raising finance. The remaining financial items amounting to 17.6 million euros mainly include income from the valuation of foreign currency loans and hedging instruments.

The loss on continuing activities before income taxes for the reporting period totals 49.3 million euros after a 17.8 million euro loss in the previous year. In the first nine months deferred tax income was posted, which led to total tax income of 3.6 million euros. Discontinued activities reported a loss of 1.6 million euros mainly due to back taxes, included under the loss for the period of 47.3 million euros. The minority interests’ share of the loss amounts to 2.6 million euros. In addition, 13.8 million euros of hybrid-bond investors’ claims are also included in the loss calculation; such claims have not yet been paid and are accrued in the balance sheet as liabilities.

Consequently, Pfleiderer AG shareholders’ share of the loss amounts to 58.5 million euros compared to a 24.6 million euro attributable loss the previous
year. This results in a basic loss per share from continuing activities of 0.99 euros after a 0.48 euro loss per share for the same period last year.

"The clear signs of recovery from the second quarter did not continue, only Eastern Europe was able to be convincing with a jump in revenue. In our
North American markets the economic recovery predicted by all the experts has not occurred. And in Western Europe our profitability is suffering from
structural overcapacity. This does not paint a rosy picture. But we will do everything we can in order to be able to again achieve adequate margins.
With the measures we have introduced to reduce the excess production capacities, we are making a large and painful contribution. "We can already
chalk up our first debt reduction success", confirmed Hans H. Overdiek, Pfleiderer AG board chairman, during the Company results presentation.

"The clear signs of recovery from the second quarter did not continue, only Eastern Europe was able to be convincing with a jump in revenue. In our
North American markets the economic recovery predicted by all the experts has not occurred. And in Western Europe our profitability is suffering from
structural overcapacity. This does not paint a rosy picture. But we will do everything we can in order to be able to again achieve adequate margins.
With the measures we have introduced to reduce the excess production capacities, we are making a large and painful contribution. "We can already
chalk up our first debt reduction success", confirmed Hans H. Overdiek, Pfleiderer AG board chairman, during the Company results presentation.

The segment reporting by regions gives a mixed picture. Western Europe posted a 6.3% revenue increase to 593.9 million euros in the first nine months of 2010 compared to the same period the previous year. Over half of the growth is attributable to rising prices and, to a lesser extent, to higher sales volumes. With EBIT of 11.6 million euros, this was under the level of the previous year (14.1 million euros). The high price increases in raw material costs could not be fully offset even through strict cost management and significant savings.

Business development in Eastern Europe was very pleasing, where a yearon-year revenue increase of 22.1%, to 243.9 million euros was generated in
the first nine months of 2010. Currency gains accounted for 20.7 million euros of this growth. Growth was seen across all product groups. EBIT was 2.9 million euros up from 2.5 million euros a year ago. EBIT includes increases in raw material costs that were offset through volume growth, cost
savings and price increases.

North American markets posted a slight increase in revenue over the previous year of 0.5% to 316.2 million euros, even if this includes currency gains of 30.9 million euros. Sales prices declined for both panels and laminate flooring due to the slowing economic growth. Overall, economic development in general, and the recovery of the real estate market in particular, fell short of expectations. EBIT for the reporting period in North America amounted to a 10.3 million euro loss after a 8.9 million euro profit last year.

The US coating plant was closed in Fostoria, at the end of the quarter in order to save costs, and its production capacity was divided among existing plants.

During the reporting period for the first nine months of 2010, Pfleiderer AG posted cash inflow from continuing activities of 56.3 million euros. This inflow stands against an outflow of 26.3 million euros for the period the previous year. The positive cash flow is mainly attributable to EBITDA for the period of 81.7 million euros. This was primarily offset by an increase in inventories and receivables. The Group's net debt increased by 60.3 million euros to 914.5 million euros compared to December 31, 2009. Due to effective management of working capital as well as currency gains, 48.9 million euros of debt reduction, or some 5%, was achieved compared to the last quarter. The gearing ratio (net debt to equity) increased from 135.2% at year end 2009 to 141.0% at the end of the third quarter of 2010.

Capital expenditure, including advance payments, fell sharply year on year by 32.5% to 58.1 million euros in the first nine months of 2010. Of this amount, 14.4 million euros was accounted for by the Western European region. In North America, 38.9 million euros was invested, of which most concerned the completion of the MDF plant in Moncure. In Eastern Europe, total capital expenditure amounted to 4.7 million euros. The number of employees decreased year on year by 3.4% to 5,445 as of the balance sheet date of 30 September. Compared to the end of 2009, the Group's workforce decreased slightly by 2.6%.

The Company continues to expect that the second half of the year will be stronger than the first. For the full year we maintain the view that 2010 revenue may come in at 1.5 billion euros. The Company continues to assume it will post a loss for the full year. A further sustained improvement in results is expected in 2011.

About Pfleiderer:

SDAX-listed Pfleiderer AG is one of the world’s leading producers of engineered wood. The company employs approximately 5,600 people and operates 22 sites in North America, Western and Eastern Europe producing engineered wood, surface finished products and laminate flooring. Pfleiderer is a preferred partner of the furniture industry, specialist and home improvement stores, and interior design suppliers. In fiscal year 2009, the Group generated consolidated revenues of approximately €1.4 billion and EBITDA after restructuring costs of approximately €100 million.

SOURCE: Pfleiderer AG

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