Eastern Europe Helps Pfleiderer Grow Sales

Neumarkt, Germany, Nov. 9, 2011 -- The Pfleiderer Group, which is going through a major restructuring and has its North American operations up for sale, issued a half year report.

Group revenue from continuing operations in the second quarter was $399 million, which is 6.0% higher than the $376 million in the prior-year quarter.

Revenue in the first half of 2011 was $810 million, an increase of 9.4% compared with the prior-year period. Once again, the growth driver was Eastern Europe.

Pfleiderer once again posted a loss for the period of $102 million for the first half of this year, compared with $25.9 million for the first half of last year.

The loss primarily reflects a financial expense of $90 million, because the debt reduction of more than $954 million agreed upon this year but not yet implemented.

Assuming that the actions for financial restructuring had already been implemented, the Group's result of continuing operations before taxes would break even for the first half of the year.

The Western Europe region posted a decrease in second-quarter revenue of 2.0%, despite the closure of three plants in Germany

In terms of its products, Pfleiderer faced a decline in demand for raw panels with the exception of home-improvement stores.

Unit sales of surface-finished panels increased, however, especially in the furniture industry. The successful implementation of a new sales strategy focusing on the expansion of the product range in the medium price segment resulted in volume growth for laminate flooring of approximately 4% in Europe.

Second-quarter revenue generated in the Eastern Europe region grew by 28.6%. Increases in raw-material costs, were more than offset by volume growth and higher prices. Wood prices for example increased by almost one third.

Eastern Europe was thus the growth region in the second quarter, accounting for 33.5% of the revenue of continuing operations and further increasing its importance for the Pfleiderer Group.

The North American business, which is available for sale and presented as discontinued operations, recorded a revenue decrease in the second quarter of 13.4%.

Exchange-rate effects were mainly responsible for the decrease, reducing revenue by $31 million.

Overall, demand in the North American market was higher than in 2009 but weaker than in 2010. Another factor was that the competitive environment became more difficult due to cheap imports of laminate flooring from Asia, although Pfleiderer is deliberately withdrawing from this low-price segment.