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Electronics Production | February 12, 2009

Salcomp's net sales weakened

In 2008, the Group’s net sales decreased by 1% and were EUR 283.3 million (EUR 286.2 million in 2007). The number of chargers delivered grew by 3% to 271.2 million (262.4 million) pieces. The market share in mobile phone chargers was some 22% (some 23%) in 2008.
The Group’s operating profit weakened by 53% to EUR 12.1 million (EUR 25.8 million). The operating profit includes EUR 0.1 million profit from the sale of the Kemijärvi real estate in June. In the first half of the year, the operating profit was weakened by lower gross margin due to changes in product mix, as well as material costs which decreased more slowly than targeted.

The operating profit was also burdened by higher fixed costs due to the increase in capacity at the India plant. In addition, the operating profit was weakened by some EUR 0.8 million costs related to the production adjustment measures, as well as by significant realized and unrealized exchange rate losses of some EUR 5.4 million, mainly during the second half. The Group’s operating profit percentage in 2008 was 4.3% (9.0%). The Group’s net financial expenses were EUR 6.5 million (EUR 3.2 million). Salcomp’s net result in 2008 totalled EUR 1.1 million (EUR 18.3 million).

Personnel and management
The number of Group personnel at the end of the year totaled 7,025 (9,722): 4,287 were employed in China, 1,308 in Brazil, 1,363 in India, 67 in Finland and the other countries. The decrease in the number of personnel was due to the adjustment measures taken in order to meet the weakened demand in the mobile phone charger market in the last quarter of the year. Production was adjusted at all Salcomp plants during the latter part of the year, amongst other things by reducing working shifts.

In Finland, the activities were enhanced during 2008 by e.g. transferring some functions from Finland to China, as well as centralizing the Finnish activities to Salo, Finland. The office in Kemijärvi will be closed by the end of April 2009. In addition, it was decided in January to lay off the Finnish personnel for four weeks’ period, as well as terminate five employments due to the change in the organization structure and a decrease in the amount of work.

Outlook for 2009
According to the estimates published by some of Salcomp's key customers and by the various market research companies, the mobile phone market is expected to decrease by approximately 10% during 2009, compared with 2008. Measured by the number of units, this would mean approximately 1.1 billion mobile phones, and therefore, mobile phone chargers, to be sold in 2009. According to the estimates, the decrease in the sales volumes of the mobile phones chargers will be stronger in the first half of the year than in the second half of the year.

Salcomp’s net sales in 2009 are expected to decrease compared with the 2008 level. Due to the current uncertain market conditions no guidance for the 2009 profitability is given.

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