Mar 29, 2004. /Lesprom Network/. French Groupe Gascogne’s Supervisory Board, chaired by Philippe Blanc, met on March 12 to examine the company’s financial statements for the 2003 financial year, finalised by the Executive Board. For Groupe Gascogne and many other manufacturing companies, particularly in the wood, paper and packaging industry, 2003 was one of the toughest years in recent memory. The company’s profitable growth was temporarily slowed by a combination of adverse factors. Group Gascogne reported consolidated sales at EUR 616 million ($760 million) in 2003, up 2,7% compared with the prior period in 2002. Export sales increased 12,2% to EUR 230,9 million accounting for 37,5% of the total sales volume, Lesprom.ru learned from the corporate press-release. Profits declined 26,9% to EUR 36,1 million after all the tax and amortization payments (EBITDA) were paid, while net profits increased 96,3% to EUR 0,4 million. The low financial results are due to the overall economic situation and the consolidation of EUR against USD. Gascogne group does not expect economic situation improvement within the next months and continues seeking additional possibilities to reduce expenses. The company announced its plans to sale an inefficient timber-processing line (the line’s sales dropped 7,2% to EUR 108,6 million in 2003 and operational losses were EUR 1,1 million). The company will concentrate on the main business producing and distributing paper and package. - A tough economic background in Groupe Gascogne’s key markets – particularly France and Germany – where growth was near-zero. - Adverse currency effects, due to the rise in the euro against the dollar, which dragged sales down by Ђ7m in the dollar zone alone. - The defeat of the unsolicited takeover bid by EEM, which took up a large amount of management time, cost Ђ2m, and led to a delay in Groupe Gascogne strategic timetable. Despite this background, however, Groupe Gascogne retained its potential to achieve renewed profitable growth, due to rigorous management of its activities and the wisdom of its strategy. - Aggressive cost-cutting paid off. Groupe Gascogne took steps to cut costs as soon as the first signs of recession appeared, resulting in savings of over Ђ7m in 2003, more than the initial target. - The Flexible Packaging division performed well. The Bags business generated earnings very close to 2002 levels, and confirmed its strong growth impetus and fundamentals. The positive contribution of acquisitions in this division vindicated Groupe Gascogne’s decision to focus on core businesses. - There was a recovery in the Distribution division. Despite the weak operating environment, the Distribution division hit its targets. This fully justifies efforts made in recent years to turn this division into a genuine growth driver for the group. - The restructuring plan in the Wood division should enable it to return to profit in 2005. Groupe Gascogne is planning to withdraw from its wood activities. Management’s cost-cutting efforts, together with the progress made by all subsidiaries in the last few years, enabled Groupe Gascogne to remain in the black in terms of consolidated underlying profit and net profit. In its March 12 2004 meeting, the Supervisory Board appointed Franзois Vittoz, director of strategy and development, to the Executive Board. Mr Vittoz, 50 years old, is a graduate of France’s elite HEC business school. He has spent most of his career working in the wood, paper and specialty products divisions of Saint-Gobain and, since 1994, Smurfit. The plan is that Mr Vittoz will eventually succeed Paul Dйsarmeaux as the Chairman of the Executive Board.