sia Abrasives invests in the future in a significantly deteriorating environment

sia Abrasives, which generates 92 per cent of its sales outside Switzerland, has seen an increasing deterioration in orders in recent weeks. To ensure the company’s economic viability in the current market environment and thus retain jobs, it is being forced to implement measures that will take hold quickly to adjust capacities. sia Abrasives will therefore put much of the workforce at the Frauenfeld facility on short time from 1 January 2009, cutting working hours by 40% and with employees using up accumulated holiday and overtime credits.

As a result of the worsening market conditions, sia Abrasives will not meet its sales and profit targets for 2008. With the added impact of exchange rate movements, sia Abrasives anticipates a year-on-year sales decline of a few percentage points and lower operating profit for the current financial year 2008.

These developments will not affect the continuation or terms of the ongoing public tender offer from Scintilla AG, Solothurn, for all publicly held shares of sia Abrasives Holding AG. Therefore, the Board of sia Abrasives unconditionally reiterates its recommendation to shareholders, published in its report dated 19 November 2008, to accept the Bosch offer and tender their sia shares to Scintilla.

Announced expansion to go ahead to build Frauenfeld into Bosch’s global competence centre for abrasives On 25 August 2008, the Board of sia Abrasives Holding AG approved plans to invest a total of some CHF 45 million in building a new manufacturing unit at the Frauenfeld facility. With this move, the Board of Directors intends to ensure the company’s technological lead and set the stage for sustainable growth. This decision has also underscored the Board’s confidence in market performance worldwide. Bosch absolutely supports the project, signalling sustained expansion of the Frauenfeld production site for coated abrasives. This clear commitment by Bosch to the local production site means that the extensive capital spending project can go ahead after completion of the public tender offer from Bosch. sia Abrasives anticipates that the first sod can be turned in the third quarter of 2009. The unit is expected to be commissioned in mid-2011.