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Electronics Production | February 06, 2007

Perlos is looking to close operations in Finland

Perlos today announced their annual results for 2006. They also mentioned that they are looking to close their operations in Finland.
On 15 January 2007, Perlos announced a profitability improvement programme with the objective of significantly improving the operating result of Perlos' continuing operations, exclusive of non-recurring items, compared with 2006. Perlos intends to achieve this objective by boosting the efficiency of its operations and by reducing annual expenses by more than EUR 100 million by the end of 2007. The profitability improvement programme concerns all of the company's operations in Europe, Asia and North
and South America.

Crucial measures for changing Perlos' cost structure include boosting the efficiency of production processes, purchasing activities and subcontracting as well as cutting costs related to quality by improving the quality of all operations. The entire company's organisation will also be streamlined and production in Finland will be adjusted to match demand. As a result of these measures, it is estimated that, by the end of 2007, the Perlos Group will require 4,000 fewer employees than at present.

On 22 January 2007, as a part of its profitability improvement programme, Perlos started co-determination negotiations concerning all personnel in Finland for reasons connected with production, finances and the restructuring of operations. The negotiations concern approximately 1,400 people. The aim of the negotiations is to actively find different ways to improve profitability and one of the options to be discussed at the negotiations is the discontinuation of production operations in Finland altogether. According to a preliminary estimate, the company will need to cut approximately 1,200 full-time jobs.

If a decision to discontinue production operations in Finland were to be made, it is estimated that this would incur non-recurring expenses of EUR 35-40 million. The majority of the expenses would result from write-downs of property, plant and equipment, with no effects on cash flows.

Perlos adjusted its financial reporting as from the Interim Report released on 26 October 2006 due to the divestment of the Healthcare Customer Group.

October-December 2006:
- The Group's net sales totalled EUR 143.9 million (EUR 200.5 million in 10-12/2005).
- The operating result was EUR –4.3 million (EUR 8.3 million).
- The result for the review period was EUR –3.9 million (EUR 7.9 million).
- Earnings per share (diluted) were –0.07 EUR (EUR 0.15).
- Net cash flow from operations was EUR 43.2 million (EUR 26.2 million).
- Gross investments amounted to 9.5% (11.7%) of net sales.

Year 2006:
- The Group's net sales totalled EUR 673.6 million (EUR 614.0 million in 2005).
- The operating result exclusive of non-recurring items was EUR 10.7 million (EUR 21.2 million).
- The operating result was EUR –32.9 million (EUR 8.9 million).
- The result for the report year was EUR –43.6 million(EUR 6.4 million).
- Earnings per share (diluted) were EUR –0.82 (EUR 0.12).
- Net cash flow from operations was EUR 65.5 million (EUR 19.4 million).
- Gross investments amounted to 8.7% (16.2%) of net sales.

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