Pfleiderer to Build New MDF/HDF Plant in Russia

Neumarkt, Germany & Novgorod, Russia, July 6, 2007-- Pfleiderer AG said it plans to establish nearby the existing particleboard plant in Russia a new plant for medium-density and high-density fiberboards (MDF/HDF) at its site in Podberesje (Novgorod).

Pfleiderer already operates one of Russia's most up-to-date particleboard plants in Novgorod. In the fall of 2006, the state-of-the-art facility for particleboard production and surface coating went into operation with an annual capacity of around 500,000 cubic meters particleboard.

In the next stage of the site's development, an ultramodern plant for the production of MDF and HDF boards with an annual capacity of well over 400,000 cubic meters is about to start production in the course of Q3/ 2009.

This investment in a MDF/HDF plant in Russia will make Pfleiderer a full-range supplier in Eastern Europe and enable full utilization of synergy potentials with existing plants.

'The decision to build a state-of-the-art MDF/HDF plant at our site in Novgorod is the next step in Pfleiderer Group's growth strategy in Eastern Europe. This gives us not only access to a new product segment, but we also notably profit from the economies of scale of a megasite,' explained Dr. Robert Hopperdietzel, Executive Board Member Technology/Operations at Pfleiderer AG, with regard to corporate strategy.

Eastern Europe's rapidly growing markets for engineered wood have been among Pfleiderer's key growth markets for a long time now, and are gaining importance due to their dynamic growth rates and earnings potential. 'We anticipate an EBITDA margin of at least 35% for our Russian MDF/HDF plant,' stated Dr. Hopperdietzel, who also has Executive Board responsibility for Eastern Europe, with regard to operating targets.

The production facility in Novgorod is strategically well positioned to supply the Russian market and to export to Poland and the Baltic countries.

In the same way as the thin-MDF factory in Poland, the Novgorod plant is to operate as a 50-50 joint venture between a 100% subsidiary of Pfleiderer AG and the majority-owned Polish subsidiary Pfleiderer Grajewo S.A.