Looser Holding manifests strength and defies currently difficult environment

In the first half-year 2009, Looser Holding AG, headquartered in Arbon (Switzerland), generated net revenues of 228.3 million Swiss francs (prior year: 253.5 million Swiss francs), which corresponds to a decline by 9.9 percent. After adjustments for currency effects mainly due to the weaker Euro in comparison to the previous year, the decrease amounted to 6.4 percent. The economic crisis in particular affected the Temperature Control Division. The Coatings division also failed to reach the prior year result but still reported an increase against the first quarter 2009. The Industrial Services and Doors divisions successfully stood their ground in their respective markets, increasing revenues against the prior year by 1.3 percent and 2.6 percent, respectively (after currency adjustments).

The operating result (EBITDA) amounted to 29.1 million Swiss francs, compared to 35.8 million Swiss francs in the previous year. The EBITDA margin of 12.7 percent was just slightly under the 13.0 percent margin for the entire year 2008. Due to lower prices of raw materials and strict cost management but also generally thanks to Looser Holding’s diversification strategy, profitability remained at a high level.

The cashflow from operations increased significantly to 12.8 million Swiss francs (prior year: 0.1 million Swiss francs) as a result of a more active management of working capital (in particular inventories). Thanks to this measure and the successful sale of the operating premises of Feycolor GmbH in Mäder (A) as well as of another investment property (total cash inflow of approx. 5.7 million Swiss francs), net debt decreased markedly from 175.9 million Swiss francs (as of 31 December 2008) to 166.1 million Swiss francs.

At 33.6 percent, the equity ratio was solid. Taking into account the capital increase successfully completed in July 2009, the equity ratio as of 30 June 2009 would have been 38.5 percent.

Consolidated net income amounted to 9.9 million Swiss francs and thus declined against the prior year figure of 14.6 million Swiss francs. The increased tax rate compared to the previous year was mainly due to positive non-recurrent effects in the prior year.

Coatings: Challenging environment In the first half-year, the Coatings division (FLH Group) reported a decline in revenues by 8.4 percent to 97.1 million Swiss francs. After currency adjustments, revenues decreased by 7.3 percent. In particular the Parquet Coatings business in China and South East Asia with end consumers in the USA as well as the Industrial Coatings business in Europe were adversely affected by the significant slump in sales. Due to the strong Swiss franc, the framework conditions for exports from the domestic Swiss market were difficult. In contrast, the development in the Non-Stick Coatings business was gratifying. In particular ILAG High Performance Coatings established in October 2006 in China reported substantial customer and revenue growth. In the first half-year, the enterprise experienced growth in the double-digit range.

The situation in the raw materials markets further eased in the first half-year. Therefore, the gross margin rose slightly against the prior year. Costsaving measures initiated by Looser Holding at an early stage resulted in a cost reduction by about 1.3 million Swiss francs compared to the prior year period. The concentration of the Feycolor Group’s production activities at the Regensburg plant in Germany was completed in the first half-year. In the wake of this restructuring, about 25 jobs were made redundant. In addition, the structures at individual companies were adjusted in a targeted manner in line with reduced demand. The full effects of these measures will only be felt at a later stage, i.e. in the second half-year 2009 as well as from 2010 onwards.

The operating result (EBITDA) amounted to 8.9 million Swiss francs and thus failed to reach the prior year figure of 10.8 million Swiss francs. The operating result was affected by non-recurrent start-up costs relating to the development of the Parquet and PDL Coatings business as well as by special expenses resulting from the shutdown of the Feyclolor production plant in Austria. The fact that the operating result of the prior year period was outperformed in the second quarter 2009 and that the EBITDA margin of 9.2 percent increased against that of the fiscal year 2008 (margin of 8.6 percent) triggers some optimism.

Industrial Services: Prior year record result outperformed The Industrial Services division (Condecta Group) continues on its successful course. Revenues after currency adjustments increased by 1.3 percent to 25.9 million Swiss francs. With an operating result (EBITDA) of 7.6 million Swiss francs or about 29.4 percent (prior year: 25.7 percent) of net revenue, the result generated for the period was again excellent. The continued strong utilization rate of rental equipment (Modular Space and Construction Cranes) and flourishing Modular Space trading activities contributed to this gratifying result.

As a result of the acquisition of Mobi-Toil AG, the second-largest provider of mobile sanitary units in Switzerland, this business division will be further expanded. In the Event Services business, services will be provided throughout Switzerland in the future.

Temperature Control: Slump in sales The Temperature Control division (Single Group) suffers most in the current economic situation. Weak demand in the Machinery and Plant Construction as well as Semi-Conductor sectors resulted in a decline in revenues by 44.1 percent to 12.9 million Swiss francs in local currencies. Thanks to measures initiated (in particular the introduction of short-time working and reduction in the number of contract staff, etc.), a positive operating result of 0.7 million (EBITDA margin of 5.3 percent) was again generated. Due to the consistent outsourcing of non-core processes, Single is in a position to respond rapidly to any decline in demand.

Doors: Remarkable performance The Doors division (Prüm-Garant Group) generated net revenues of 92.9 million Swiss francs in the first half-year 2009. This corresponds to a growth rate after currency adjustments of 2.6 percent. Thus the division again stood its ground in a market environment that, pursuant to market studies, is declining. While the environment is significantly harder for the Standard Doors business segment, the Project business of the Prüm-Garant Group experiences a gratifying development. This product mix resulted in a moderate increase in personnel expenses.

The EBITDA margin was 14.3 percent and thus approximated the figure for the fiscal 2008 (14.5 percent). EBITDA amounted to about 13.3 million Swiss francs.

Prospects for 2009 Prospects for the second half of 2009 remain difficult to assess. No significant recovery tendencies can be identified at present. Due to the Looser Group’s broadly based business portfolio as well as measures initiated at an early stage and good market positions in the individual niche markets, the Board of Directors and Group Executive Board continue to be convinced of Looser Holding’s long-term growth opportunities. In the current environment, the Company’s management expects EBITDA of about 55 million Swiss francs to be achieved in the fiscal year 2009. The equity ratio and liquidity of Looser Holding AG will be strengthened significantly as a result of the cash inflow of more than 28 million Swiss francs from the capital increase successfully completed in July 2009.