PKC's Electronics business: net sales decreased 2,1% in 3Q

Harri Suutari, President and CEO of PKC Group said "After continuing for a long period of time, growth in our customer sectors has stopped and demand has taken a downturn. Production volumes in the third quarter were lower than in the first half of the year but remained historically high. We are maintaining our full year forecast, despite the expectation that production volumes will decrease and adaptation measures will be implemented during the final quarter." "The weakened world economy is speeding up structural developments in our customer sectors, creating new opportunities for the long-term development of our business operations. The PKC Group's strategic position will strengthen considerably by the business acquisition and long-term delivery agreement with MAN Nutzfahrzeuge to be finalised at the turn of the year", the CEO continued. Net Sales & Financial Performance: July-September 2008 Consolidated net sales in July-September amounted to €73.4 million (66.9 million), up 9.6% on the same period a year earlier. Consolidated operating profit totalled €6.0 million (7.6 million), accounting for 8.2% of net sales (11.3%). Depreciation amounted to €2.1 million (1.9 million). Financial income and expenses were €0.5 million negative (0.8 million negative). Profit before taxes was €5.5 million (6.8 million). Profit for the report period totalled €3.0 million (4.4 million). Net sales generated in the report period by the Wiring Harnesses business amounted to €57.0 million (50.2 million), or 13.5% more than in the comparative period. The segment's share of consolidated net sales was 77.6% (74.9%). It generated an operating profit of €3.9 million (3.3 million), equivalent to 6.8% of the segment's net sales (6.6%). Net sales generated by the Electronics business decreased 2,1% to €16.4 million (16.8 million). The segment's share of consolidated net sales was 22.4% (25.1%). It generated an operating profit of €2.1 million (4.2 million), equivalent to 13.1% of the segment's net sales (25.3%). Net Sales & Financial Performance: January-September 2008 Consolidated net sales in January-September amounted to €247.0 million (210.6 million), up 17.3% on the same period a year earlier. Consolidated operating profit totalled €25.0 million (21.4 million), accounting for 10.1% of net sales (10.1%). Depreciation amounted to €6.1 million (5.6 million). Financial income and expenses were €2.3 million negative (1.4 million negative). Profit before taxes was €22.7 million (20.0 million). Profit for the report period totalled €15.0 million (14.2 million). Net sales generated in the report period by the Wiring Harnesses business amounted to €195.7 million (168.0 million), or 16.5% more than in the comparative period. The segment's share of consolidated net sales was 79.2% (79.8%). It generated an operating profit of €16.0 million (13.8 million), equivalent to 8.2% of the segment's net sales (8.2%). Net sales generated by the Electronics business grew 20,7% to €51.3 million (42.5 million). The segment's share of consolidated net sales was 20.8% (20.2%). It generated an operating profit of €9.0 million (7.5 million), equivalent to 17.6% of the segment's net sales (17.8%). The programme for rationalising and improving the efficiency of operations, which was started during the second quarter, was continued. The reorganisation of the North American businesses was completed during the third quarter. The operations launched in China in 2005 and the businesses acquired in North America in 2006 continued to be loss-making, despite the started corrective actions. Due to the weakening of the Chinese, Brazilian and Russian currencies since the start of the year, a total of €1.2 million of remeasurement losses were recorder in the third quarter as translation differences form non-monetary items, the cumulative translation difference being €0.6 million negative. Personnel During the report period, the Group had an average payroll of 5,636 employees (4,876). At the end of the report period, the Group's personnel numbered 5,573 employees (5,073), of whom 4,812 (3,435) worked abroad and 759 (728) in Finland. Outlook The deliveries to the utility vehicle industry are expected to decline during the final part of the year. Similarly, wiring harnesses deliveries to telecommunications and industrial customers are also expected to drop during the final quarter. Electronics contract design and manufacturing services are also forecast to remain at their present level, which is lower than early in the year, for the remainder of the year. Consolidated net sales during the current year are expected to grow on the previous year. Due to declining delivery volumes, falling prices and delivery mix, profitability in the final quarter will drop below the first half. We are maintaining our full-year forecast, according to which we expect operational profitability to remain at a good level.