Sonae Industria January-September 2006 turnover up to Euro 1.2 billion

Nov 03, 2006. /Lesprom Network/. Sonae Industria reported increase in turnover in January-September 2006 to Euro 1.2 billion (including 3 months of Hornitex) from Euro 1.1 billion in January-September 2005. Like for like turnover grew by 4% to Euro 1.1 billion. Recurrent EBITDA increased by 7% to Euro 152 million, representing a 12.6% margin on turnover, whereas like for like recurrent EBITDA increased by 1% to Euro 144 million. Carlos Bianchi de Aguiar, CEO said: “I am very pleased to be presenting consolidated results for Sonae Indústria that clearly reflect our continuing efforts to improve the profitability and efficiency of our operations, the strengthening of our market position in our main geographies and the gradual improvement in market conditions in Central Europe. Firstly, I would like to underline that the Sonae Indústria Group has changed significantly since the end of third quarter 2005. The most material effects that should be kept in mind when comparing our third quarter 2006 results with those of third quarter 2005 are: • The acquisition of Hornitex assets in Germany which are consolidated in our accounts as of 1 July 2006; • The acquisition of the Darbo plant in France, consolidated as of 30 September 2006; • The contribution of the Eiweiller plant to the 50%-50% partnership with Tarkett which was formalized on 29 September; Based on like-for-like assets, January-September 2006 turnover and recurrent EBITDA increased by 4% to Euro 1.1 billion and by 1% to Euro 144 million, respectively. The performance is driven primarily by the gradual improvement in market conditions in Central Europe and the continued strong operating performance in our remaining geographies. Total turnover in January-September 2006 amounted to Euro 1.2 billion and recurrent EBITDA to Euro 152 million, representing a margin of 12.6%. Our cost base remains under pressure, in particular resin costs as a result of a shortage in worldwide supply of methanol, caused by the temporary closure of some important production capacity. Wood costs are also increasing in some of our geographies, namely Central Europe, led primarily by increased competition for wood as a source of energy for power plants and for domestic purposes as a substitute for oil and gas. Integration of the Hornitex assets is well underway and key Hornitex managers have already joined the Central European executive management team. Immediate synergies have already been achieved in some areas, such as raw material purchasing and customer relationship management including allocation to the most suitable plants. The underlying principle behind the integration process is to embrace best policies and practices from both Sonae Indústria and Hornitex, thus maximizing the benefits derived from the skills and knowledge base of the two groups. We began production in the flooring joint-venture with Tarkett in October, with total flooring production capacity set to reach 25 million square meters. The new operation will lead to a strengthening of our market position in the growing laminate flooring market, with sales to Central Europe, Africa, Asia and Oceania. Sonae Indústria’s flooring production capacity in Central Europe has now been concentrated in the Joint-venture based at Eiweiler, which lead to the shut down of a flooring line at our Ussel plant in France (6 million square meters). Equally, the integration of Darbo is going smoothly, albeit at an earlier stage given that the acquisition was only finalized in September. Synergies will be achieved over the next couple of years as we improve the profitability of the plant to achieve levels closer to the average of the group. As already announced, we decided to invest in the reconstruction of the damaged PB line in Canada. The line will be up and running by third quarter 2007 and, in the meantime, we have maintained part of the supply to our key customers with imports primarily from our German and Iberian factories. Also in Canada, we started production on our new melamine line 4 in October and volumes will gradually be ramped up over the coming months.” Sonae Indústria is the most important Portuguese group of companies manufacturing wood based products. The products range includes: particleboard; MDF; hardboard; OSB.