Pfleiderer posts positive EBITDA in 2009 – decrease in revenue as expected, with a net loss for the year 2009 – business gaining momentum with high capacity utilization

• Revenue down by 20.4 percent to 1.4 billion euros due to lower unit sales, price falls and currency exchange rates
• Achieved cost savings of approximately 100 million euros exceed planning by a substantial margin
• Market ranking improved from third to second place

Neumarkt/Munich, March 19, 2010 – In a market environment affected by the economic crisis, MDAX-listed Pfleiderer AG (ISIN DE0006764749) was unable to avoid the negative trends in the engineered-wood indus-try. The Pfleiderer Group’s revenue fell by 20.4 percent from 1.74 billion euros in 2008 to 1.38 billion euros in 2009. Of that decline, 10 percent-age points are accounted for by falling unit sales, 7 percentage points by falling prices and 3 percentage points by exchange-rate effects. These effects could not be absorbed despite successful structural adjustments and cost savings of approximately 100 million euros, which substantially exceeded the planned 80 million euros. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to 100.4 million euros. Com-pared to 223.7 million euros in the prior year, this represents a decrease of 55.1 percent.

Excluding the restructuring expenses that became necessary last year, Pfleiderer would have posted EBITDA of 117.9 million euros. Adjusted for restructuring costs, the EBITDA margin was 8.5 percent (7.3 percent including restructuring costs), compared to 12.9 percent in 2008. EBIT amounted to minus 16.1 million euros, compared to plus 97.6 million euros in 2008. In addition to the cost of restructuring activities, this was due also to impairment charges of 6.7 million euros. Excluding restructuring expenses and impairments, EBIT amounted to plus 8.2 million euros.

Net financial expense improved significantly from 80.0 million euros in 2008 to 48.8 million euros last year. This was the result of generally lower market interest rates, favorable margin spreads and positive cur-rency effects of 2.7 million euros, which reduced the interest expense, as well as breakeven on other financial income/expense. In 2008, other financial expense of 28.4 million euros was incurred.

The Group posted a loss from continuing operations before income taxes of 64.9 million euros in 2009, compared to a profit of 17.6 million euros in the prior year. The balance of tax payments and tax income as a result of the capitalization of deferred taxes on loss carry forwards at Pfleiderer’s subsidiary Pergo was a net tax income of 8.2 million euros. This resulted in a loss for the period (including discontinued operations) of 56.7 million euros, compared to a profit of 28.8 million euros for the prior year.

After minority interest and profit attributable to hybrid capital investors, the loss attributable to the shareholders of Pfleiderer AG for the year 2009 amounted to 69.8 million euros, compared to a profit of 5.8 million euros in 2008. Profit attributable to hybrid capital investors is shown in the income statement for the interest payments on the hybrid bond, be-cause those investors are entitled to subsequent payment of the interest in accordance with the terms and conditions specified in the prospectus. A liability for this item has been recognized in the balance sheet. Diluted and basic earnings per share from continuing operations amounted to minus 1 euro and 42 cents, compared to plus 24 cents in 2008.

“The year 2009 was very challenging, especially in the second quarter, which saw declines of 30 percent in some areas. We are anything but proud of the numbers we are presenting today. While we started at an early stage to prepare the Group for the worsening crisis, the severity of the market slump or its scope was not to be foreseen. The positive as-pect of this is the fact that we have moved up worldwide from third to second place in terms of installed capacities for particleboard and fiber-board. This means that we will benefit from rising market share when the crisis abates,” stated Hans H. Overdiek, Chairman of the Executive Board of Pfleiderer AG, at the presentation of the Group’s results for the year 2009.

Pergo resists price pressure in Western Europe

The revenue generated by the Western Europe region fell by 21.6 per-cent to 741.9 million euros. Approximately nine percentage points of the revenue decline are accounted for by falling prices and 13 percentage points are accounted for by falling unit sales. Unit sales of flooring also fell in Europe, whereby underutilization of capacity put pressure on prices in the lower and middle market segments. Pergo, with its products in the upper market segment, was largely able to resist this pressure on prices. EBIT in the region fell from 112.5 million euros to 1.3 million eu-ros. This includes restructuring costs and impairments of 13.7 million eu-ros. The EBIT margin fell from 11.9 percent to 0.2 percent in 2009. Pflei-derer reacted to the difficult market situation with capacity reductions by means of short-time work, savings of 30 million euros for example through productivity improvements, the socially responsible reduction of approximately 160 jobs, and new, innovative products.

Currency effects impact revenue in Eastern Europe

In Eastern Europe, the Pfleiderer Group recorded a 32.2 percent decline in revenue to 285.0 million euros. 60.4 million euros or 14.4 percentage points of that decline were accounted for by exchange-rate effects; the rest was mainly the result of falling prices – by 12 percent for particle-board and by 10 percent for laminated panels in Poland. Due to the measures Pfleiderer took to reduce costs significantly, including head-count reductions, the company was able to further strengthen its com-petitiveness and market position in Poland. In Russia, the demand situa-tion was very difficult in the first half of the year; unit sales fell by ap-proximately 30 percent and particleboard prices were about 20 percent below the prior-year level. Earnings came under particular pressure from the low level of prices in Eastern Europe. EBIT therefore decreased from 28.9 million euros in 2008 to 2.6 million euros in 2009, and the EBIT margin fell from 6.9 percent to 0.9 percent. The construction of an MDF plant in Novgorod has been suspended and will be recommenced only when the market situation improves appreciably.

Stable business in North America sees improved market shares

In North America, the Pfleiderer Group’s revenue of 401.8 million euros was close to the prior-year level (404.9 million euros), although the floor-ing market and the panel market contracted significantly. Exchange-rate effects boosted revenue by 8.9 million euros. Unit sales of laminate flooring increased by roughly five percent, contrary to the market trend, so Pfleiderer’s share of a shrinking market increased again to more than 30 percent. However, unit sales of raw particleboard decreased by 11 percent in 2009, which is still substantially better than the overall market decline of 24 percent. Unit sales of surface-finished board increased by about one percent and of MDF/HDF by nine percent. The Pfleiderer subsidiary Uniboard entered into a cooperative venture with Kustom Ma-terial Laminators in 2009. This cooperation will allow the sale of thermo-fused panels by Uniboard also in the west of the United States. EBIT in the North American market amounted to plus 4.3 million euros in 2009, compared to minus 20.2 million euros in 2008. The EBIT margin was therefore plus 1.1 percent, compared with minus 5.0 percent in the prior year.

Negative cash flow, investment at prior-year level

At the Group level, operating activities resulted in a cash outflow of 13.7 million euros, compared to a cash inflow of 228.4 million euros in 2008. This was primarily due to the fall in EBIT of 113.7 million euros and the decrease in current liabilities (excluding financial debt) of 77.8 million eu-ros. The latter mainly reflects a reduction in trade payables of 54.9 mil-lion euros.

Investment of 157.7 million euros in 2009 was close to the prior-year level, and was thus still significantly higher than depreciation. 16.6 mil-lion euros of the capital expenditure took place in the Western Europe region. 101.1 million euros was invested in North America, mainly for the development of the MDF plant in Moncure, North Carolina, USA. In Eastern Europe, investment of 37.7 million euros largely reflects expen-diture for the development of the MDF plant in Novgorod, Russia.

Pfleiderer’s equity decreased by 11.1 percent to 631.7 million euros, mainly because of the net loss for the period. The equity ratio was still 32.0 percent, however. The Group’s net debt increased compared to the end of 2008 from 635.5 million euros to 854.2 million euros, raising the ratio of net debt to equity (gearing) to 135.2 percent.

Focus on reducing net debt

Pfleiderer AG is planning to reduce its net debt considerably during the coming years. This purpose was also served by the injections of equity capital from the sale of treasury shares and the capital increase carried out in the first quarter of 2010. Profitability is to be improved by further cost savings and structural measures. Nevertheless, the reduction of fi-nancial liabilities will be facilitated in the coming years primarily by the anticipated strong free cash flow.

Further capacity adjustments in excess of the closures in 2009 will be required in the engineered wood industry this year in order to achieve acceptable profit margins. The increases in raw material costs that have occurred since the beginning of the year make price increases inevita-ble. While revenue is expected to remain mainly flat in Western Europe, Pfleiderer anticipates slight revenue growth in Eastern Europe and North America.

The market is not expected to recover before the second half of 2010. Pfleiderer’s investment activity in 2010 will be limited to maintenance and rationalization spending, as sufficient modern plant capacity is available for output growth. Although the outlook has meanwhile im-proved slightly with high capacity utilization, Pfleiderer expects to post a loss again this year at the net profit level, due to the required structural adjustments.

Pfleiderer’s Annual Report 2009 and further information on the Group can be found on the website at www.pfleiderer.com.

Summary of key figures for fiscal year 2009

(in accordance with IFRSs)

Contact:

PFLEIDERER AG, Neumarkt
Fabian Schiffer
Vice President Corporate Communication Tel.: + 49 (0)9181 / 28 - 8491
Fax: + 49 (0)9181 / 28 - 606
E-Mail: fabian.schiffer@pfleiderer.com

Lothar Sindel Vice President Investor Relations Tel.: + 49 (0)9181 / 28 - 8044
Fax: + 49 (0)9181 / 28 - 606
E-Mail: lothar.sindel@pfleiderer.com

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