DGAP-News: SURTECO SE

Press Release

SURTECO SE: Uneven business development

- Group sales at EUR 334.0 million slightly below previous year

- EBIT for half year at EUR 19.3 million (2016: EUR 21.6 million)

- Free cash flow more than doubled at EUR 20.0 million

- EBIT for 2017 between EUR 42 to EUR 46 million

Buttenwiesen-Pfaffenhofen, 14 August 2017 - Business performance of SURTECO SE, one of the world's leading manufacturers of decorative surface materials and producer of technical extrusions (profiles), was defined by very varied developments in the company's two business segments during the first half year of 2017. The plastics line underwent gratifying development during which sales increased by 13 % as a result of the takeover of the British Nenplas Group and thanks to organic growth. By contrast, discontinuations of activities with weak margins in the paper segment and advance orders in the previous year were manifested by a drop in sales of 10 % during the comparative period. After six months, this resulted in sales of EUR 334.0 million at Group level following EUR 337.7 million in the previous year. Massive price increases for raw materials in the plastics line exerted a negative impact on raising productivity in the paper sector. Furthermore, personnel expenses rose on account of the Nenplas acquisition, wage and salary increases under collective bargaining agreements in the second quarter and due to a slightly bigger workforce, resulting from good capacity utilization in the plastics line. In combination with high depreciation and amortization, this led to a fall in earnings before the financial result and taxes (EBIT) to EUR 19.3 million (1st half year 2016: EUR 21.6 million). Net profit fell back to EUR 10.0 million (1st half year 2016: EUR 12.0 million).

"While the plastics line fulfilled expectations in the first half year, we are not satisfied with development in the paper segment. Thanks to the improvements in efficiency already achieved and the Probos takeover, we are affirming our forecast of an EBIT target of between EUR 42 and EUR 46 million for 2017," according to Dr. Herbert Müller, Chairman of the Board of Management of SURTECO SE.

Free cash flow at EUR 20.0 million - level of debt significantly reduced

Thanks to the improvement in cash flow from current business operations and after deduction of higher investments, SURTECO succeeded in more than doubling free cash flow for the half year from EUR 7.8 million to EUR 20.0 million. This meant that the increase in net financial debt as a result of the Nenplas takeover could be very significantly reduced from EUR 135.6 million at the year-end to EUR 114.4 million. The level of debt decreased correspondingly from 39 % to 34 %. The equity ratio continued to remain stable and unchanged at 49.2 % on 30 June 2017. Since the Probos takeover in July was financed through borrowings, there will be changes for balance sheet indicators in the third quarter.

Outlook for 2017: EBIT target between EUR 42 and EUR 46 million

The forecasts for the business year 2017 are primarily shaped by substantial price increases in raw materials and by the acquisition of the Portuguese Probos Group. Although sales revenues for the Strategic Business Unit Paper will ease significantly compared to the year-earlier value, EBIT for the segment is likely to increase slightly on account of rises in productivity. Sales and EBIT in the plastics segment, including consolidation of the Probos Group from July, are likely to be substantial above the year-earlier values. At Group level, sales revenues will therefore also increase substantially compared with 2016. As a result of the expenses incurred for the acquisition of the Portuguese Probos Group and the resulting purchase price allocation effects, the Group continues to assume EBIT amounting to between EUR 42 and EUR 46 million for the year as a whole in 2017, including consolidation of the Probos Group for the second half of the year.

You can find the report for the first half of 2017 and other information on SURTECO SE on the Internet by going to www.ir.surteco.com.

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Profile of SURTECO
SURTECO SE, Buttenwiesen-Pfaffenhofen, is a leading international specialist for surface technologies. The product portfolio includes papers printed with decorative designs, impregnated products, release papers, decorative flat foils and edgebandings based on specialist papers for technical applications and plastics. The extensive product portfolio is completed by skirtings made of plastic, technical extrusions for industry and do-it-yourself ranges and shutter systems.
The Group currently has a workforce of appr. 3,300 and manufactures at 25 sites on four continents, currently generating approximately 27 % of sales in Germany, 45 % in European countries outside Germany and the remainder in America, Asia and Australia. Customers of SURTECO generally come from the wood based materials, flooring and furnishing industry and the interior industry.
The shares of SURTECO SE are listed on the official market (Prime Standard) of the Frankfurt and Munich Stock Exchanges under the ticker symbol SUR and ISIN DE0005176903. They are also traded on the stock markets in Berlin, Düsseldorf, Stuttgart Hamburg and Hannover.

Cautionary note regarding forward-looking statements

This press release contains statements of future forecasts or expectations and other forward-looking statements and involves known and unknown risks and uncertainties. There is therefore no guarantee for the statements and expectations expressed herein. The actual results and developments may differ substantially. The company does not intend to - and assumes no obligation - to update any forward looking statements contained herein or to adapt such information to future results or developments.

Important indicators of SURTECO SE
(in EUR million)

¹ Difference to balance of segment earnings due to internal clearing
² Based on a number of shares amounting to 15,505,731
³ Net debt / Equity