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Electronics Production | May 24, 2010

Salcomp: Operating profit back in the black

In the first quarter of the year, Salcomp's net sales increased by 26% to EUR 59.6 million (EUR 47.5 million in January-March 2009) due to the increase in the number of chargers delivered by 41% to 65.9 million (46.7 million) pieces.
According to estimates of market research companies and Salcomp, some 283 million mobile phones with registered trademarks were sold during the first quarter of the year. Salcomp's market share in mobile phone chargers was approximately 23% (approximately 18%).

Salcomp's operating profit improved to EUR 1.5 million (EUR -1.0 million). Operating profit was improved by an increase in the sales volumes, as well as realized and unrealized exchange rate gains of EUR 0.4 million, whereas higher fixed costs weakened the operating profit. The operating profit in the comparison period in January-March 2009 was burdened by a sharp decline in sales volumes, as well as realized and unrealized exchange rate losses of EUR 1.0 million. The operating margin in January-March 2010 was 2.5% (-2.1%).

The profit for the period in January-March amounted to EUR 1.6 million (EUR -2.0 million). Earnings per share were EUR 0.04 (EUR -0.05), and diluted earnings per share were EUR 0.04 (EUR -0.05).

Personnel and management
The number of Group personnel at the end of March totaled 9'295 (7'017): 5'760 were employed in China, 1'222 in Brazil, 2'256 in India, and 57 in Finland and other countries. The number of personnel increased mainly due to the increase in production volumes.

Outlook for 2010
According to the estimates published by some of Salcomp's key customers and by various market research companies, the mobile phone market is expected to grow during 2010, compared with 2009. Measured by the number of units, this would mean approximately 1.2 billion mobile phones and, therefore, mobile phone chargers, to be sold in 2010.

This lays a solid base for increasing the number of chargers delivered by Salcomp, as well as the net sales, in 2010. On the other hand, prices of materials and components used in chargers are expected to rise somewhat in 2010, creating challenges in improving the operating profit.

However, Salcomp's outlook for 2010 remains unchanged. Both Salcomp's net sales and operating profit in 2010 are expected to improve compared with the 2009 level.

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