Pfleiderer generates EBITDA of 249 million Euro in 2007

Preliminary figures for fiscal year 2007

• EBITDA of €249 million at top end of target corridor
• Consolidated revenues up 27% to €1.8 billion despite postponed revenues
• Outlook for 2008: Consolidated revenues in the order of €2 billion, EBITDA margin of 15%

Neumarkt, February 21, 2008 – According to its preliminary figures, MDAX-listed Pfleiderer AG (ISIN DE0006764749) generated record consolidated revenues and profit in 2007. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by approximately 20% to €248.7 million. This figure is at the top end of the forecast target corridor of €240 to €250 million. At 13.8%, the EBITDA margin was down from last year’s figure of 14.7%, but this had been expected due to costs for integration and restructuring measures at Pergo and the rationalization program in Western Europe. These costs amounted to €21.6 million in 2007. Consolidated revenues grew by 27% to €1.8 billion, whereby 11 percentage points are attributable to organic growth and 16 percentage points to external growth. Pfleiderer’s own target of €1.9 billion was not achieved due to currency translation effects and postponed revenues in North America. However, since the majority of these postponed revenues will be recovered in 2008 and the order situation is promising, Pfleiderer expects consolidated revenues in the order of €2 billion and an improvement in the Group-wide EBITDA margin to 15% for the new fiscal year (previous year: 13.8%).

“Pfleiderer succeeded in setting new records in revenues and earnings in 2007, despite the problems in North America. We are very pleased with our business in Western and Eastern Europe. We have restructured our business in North America with the Pergo integration and expect positive results in 2008 from the measures we have taken there. We are also confident about this fiscal year for these reasons. We expect to generate consolidated revenues in the order of €2 billion and improve the Group-wide EBITDA margin to 15%. We intend 2008 to be another year of profitable growth,” said Pfleiderer AG’s CEO Hans H. Overdiek, commenting on the Group’s business development.

Earnings at the top end of the target corridor

Pfleiderer substantially improved its consolidated earnings thanks to increasing sales volumes, a proactive pricing policy, and significant cost savings. EBITDA was up by around 20% to €248.7 million (€208.1 million). At 13.8%, the EBITDA margin was down from last year’s figure of 14.7%, but this had been expected due to extraordinary costs of €21.6 million in 2007. EBIT grew by around 3% to €136.8 million (€133.0 million) due to increased depreciation and amortization primarily relating to the acquisition of Pergo. Pre-tax earnings from continuing operations were €90.6 million (€92.4 million) after adjustment for net financial expenses of €46.0 million (€40.3 million), which were affected by the financing for Pergo. The tax rate fell to 12% due to deferred tax income and loss carryforwards, causing after-tax earnings from continuing operations to increase by 19% to €79.7 million. This corresponds to earnings per share for continuing operations of €1.00, in line with the previous year’s figure, after deducting the profit share attributable to holders of hybrid bonds.

Excellent financial strength and solid balance sheet structure

Cash flow from operating activities increased significantly in 2007 from €111.4 million to €198.0 million. The equity ratio rose by two percentage points to 41.7% despite total assets increasing by 40% due to the initial consolidation of Pergo. One of the main reasons for this was that the Pergo takeover was financed by the placement of a €275 million hybrid bond, which is recognized as equity. Net debt was €618.2 million at the end of 2007, compared with €414.6 million in the previous year. Gearing (the ratio of net debt to equity) remained at 0.77 on a par with the previous year.

Segments:

Western Europe records continuing growth

The Western Europe region continued the dynamic growth seen in previous years in 2007. Segment revenues increased sharply by 26% to €986.7 million (€781.5 million). High demand in all product areas and the initial consolidation of Pergo’s European activities contributed to this. This was also reflected in EBITDA, which rose faster than revenues, climbing 55% to over €160.7 million (€103.6 million). Despite one-time expenses of €7.1 million relating to the rationalization program in Western Europe and the integration of Pergo’s Europe activities, the EBITDA margin grew from 13.3% to 16.3%.

Eastern Europe continues on dynamic growth path

Eastern Europe expanded at an uninterrupted pace. The segment’s revenues increased by 31% to €393 million (€300.3 million). The main reason for this was the strong expansion of capacity, reflecting Pfleiderer’s systematic response to the sharp increase in demand in the region. The segment’s EBITDA jumped sharply by 37% to €77.6 million (€56.5 million) despite ramp-up costs incurred in this context at the new plants in Poland and Russia. The EBITDA margin rose from 18.8% to 19.7%.

Challenging market environment in North America

In North America, business was affected by the weakness in the real estate segment and the turbulence on the financial markets in 2007. Resulting consumer uncertainty also depressed sales of laminate flooring and fiberboard. Pfleiderer was unable to escape this challenging environment, although the Company significantly outperformed the industry as a whole. Revenues in North America including Pergo’s activities amounted to €443.0 million, compared with €349.6 million in the previous year.

In addition to strengthening the Company’s strategic position, the Pergo integration is creating substantial synergies that will lead to savings of approximately €30 million in North America in 2008. The rationalization programs in Europe will also lead to cost improvements of an additional €6 million. The necessary restructuring of the North American business in this context required one-time expenses of €14.5 million in 2007. The effects of the weak market environment were also felt, reducing sales in the flooring business area in particular. In terms of profitability, the North America region therefore recorded EBITDA of only €16.6 million, as against €52.5 million in the previous year. This corresponded to a margin of 3.7%, compared with 15.0% in the previous year. However, a double-digit earnings margin was again recorded in North America in the particleboard business.

Further profitable growth in 2008

Pfleiderer expects its strong business performance to continue in Europe on the back of the continued strength of the engineered wood markets there. The Company is again forecasting high revenue growth in Eastern Europe. In particular, a positive factor for Pfleiderer will be the year-round availability of its new plants in Poland and Russia for the first time. An additional laminating press will be put into service in summer 2008 at the Company’s Russian location. Economies of scale will mean that the increasing output volumes in Eastern Europe will also be reflected in a significant improvement in earnings. Pfleiderer is expecting further revenue and earnings growth in Western Europe, reflecting the Company’s investments in enhancing productivity at its German plants in particular. A positive effect will also result from the revenue contribution of Pergo for the full year (previous year: 10 months).

The North American market will remain challenging in 2008. Contrary to the industry trend, however, Pfleiderer is expecting to moderately increase its business volume by gaining market share. The Company is well positioned to do this due to the successful integration of Pergo and the implementation of its extensive restructuring program. As Pfleiderer also has a significantly improved cost structure and does not expect further substantial one-time costs, its earnings in North America will improve considerably in the current fiscal year.

Based on its performance in the regions, the Pfleiderer Group is forecasting revenues in the order of €2 billion in fiscal year 2008. Earnings will also improve for the above-mentioned reasons. Overall, Pfleiderer is expecting its EBITDA margin to increase to around 15%.

Summary of key figures for fiscal year 2007

(in accordance with IFRSs)

For further information:

PFLEIDERER AG, Neumarkt
Gala Conrad
Vice President Corporate Communciations/Investor Relations
Tel.: + 49 (0)9181 / 28 - 8491
Fax: + 49 (0)9181 / 28 - 606
E-Mail: gala.conrad@pfleiderer.com

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