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Electronics Production | January 17, 2006

Scanfil plans to close Belgian plant

Finnish EMS-provider Scanfil Oy. Said today that discontinuing production at its factory in Belgium was an option in plans to restructure Belgian subsidiary Scanfil N.V. 144 people works at the factory.
As the company reported earlier, the prices and delivery volumes of broadband products decreased significantly in 2005. In 2006, the demand in this product group is predicted not to exceed the current level. Hence, the Group's sales in the first half of 2006 are estimated to be about 15% lower compared with the corresponding period last year. However, the sales are expected to pick up again during the second half of the year. The growth of the telecommunications network market and the timing of China's 3G decision are among the important factors that will affect the Group's sales in the second half of the year.

Today at 11.00 am Finnish time, the Board of Directors of Scanfil Plc's Belgian subsidiary, Scanfil N.V., informed the representatives of the company's personnel groups about an intention to restructure the company's operation, possibly resulting in personnel reductions. The option of discontinuing production at the plant will also be discussed in the negotiations. The estimated maximum impact on personnel is 144 workers and 27 office employees. Scanfil N.V. has also announced that it will start a communication and negotiation process with the representatives of the personnel groups, in accordance with Belgian legislation. Depending on the outcome of the negotiations, plans may include transferring the Belgian subsidiary's production to Scanfil Group's lower cost units, which will constitute the focus of the Group's future growth in accordance with the selected strategy. The expenses resulting from the possible restructuring operations, production transfers and adjustments are estimated at about EUR 6 million. The objective of the planned measures is to achieve significant savings in the next few years. The Group's profitability in 2006 is predicted to be on a satisfactory level.

Scanfil Group's sales grew in 2005 as predicted, totalling about EUR 321 million. Profitability was on a very satisfactory level, with the operating profit representing about 8.5% of net turnover. Scanfil Plc will release the financial statements for 2005 on 16 February 2006.

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