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PCB | May 04, 2007

Aspocomp posts another loss

Finland based PCB producer Aspocomp's Net sales for the first quarter 2007 was EUR 27.5 million (EUR 37.0 million in 1-3/2006).
According to -spocomp the reference quarter figure includes the Chinese lower technology plant that was divested in April. Eliminating the effect of the divesture, comparable net sales declined by 13.1 percent (EUR 31.7 million in 1-3/2006). This was mainly due to weaker sales at the Salo plant. Sales fell also at the Chinese plant due to general overstocking in the local market. Net sales strengthened at the Oulu plant.

- Operating profit: EUR -6.6 million (-3.5). The decline was mostly due to the weak sales at the Salo plant and the low capacity utilization at the Thai plant. However, operating profit improved by 36 percent on the last quarter of 2006. The plant in Oulu continued to turn a profit. Operating profit of the Asian plants declined but remained good in China, where the sale of the lower technology plant did not reduce profits.

Investments: EUR 47.6 million (5.7). Investments consisted mostly of the minority share purchase in the Chinese subsidiary.
- Per-share cash flow after investments: EUR -2.33 (-0.20).

The report and reference period figures do not include the Modules division divested in August 2006. Unless otherwise stated, the reference period figures include the Chinese lower technology plant. All share-related reference figures have been calculated with the share amount prior to the share offering in mind.

Aspocomp's main priority in 2007 is to focus the company's resources on developing its market position and competitiveness, serving the main global customers, increasing cost-effectiveness as well as securing the liquidity and financing of the Aspocomp Group.

The full-year net sales of the Aspocomp Group from continuing operations and excluding the sold plant in China are forecast to increase compared to the previous year. Profitability is anticipated to improve on 2006; however, it is expected that the full-year result will be clearly unprofitable and liquidity will remain weak.

Maija-Liisa Friman, President and CEO said "The first quarter result declined considerably from the reference quarter mostly due to the Salo plant. Although the plant's performance improved markedly compared to the previous quarter, its capacity utilization rate remained low and the expected profitability was not attained. The Salo plant's conversion was started in 2005 but the required results have not been achieved yet. A deadline has thus been set for the project: the end of the first half of 2007. We must consider all options, including the possible closing of the plant, to rectify the current unsatisfactory situation.

The operational performance of the Thai plant improved but the plant's competitiveness remained weak due to its lower technology production.

The acquisition of the minority holding in the Suzhou, China plant was finalized in April. This allows us to benefit from the plant's profitability and cash flow and enables us to serve our global customers more efficiently. Following the overstocking of PCBs in the sales channels during the first quarter, the plant's HDI PCB capacity has since been in full use starting the second quarter. In addition, the lower technology premises will be vacated by the end of this year and equipped for higher technology HDI PCB production. It is scheduled to go on stream during 2008. We have appointed key personnel, began building up research and development and started up new viafill HDI technology production at the plant. The acquisition was financed by Standard Chartered Bank (Hong Kong) Limited, one of the most esteemed banks in Asia. This signals their strong trust in Aspocomp's business and strategy.
During the quarter, the layout of the plant in India was finalized, planning, process definitions and bidding contests for the building and machinery were concluded, the final authority approvals were obtained and the plant's foundations were laid. Aspocomp is currently negotiating for long-term loans to partly finance the project.

As the worldwide handheld sales channels were full of products, estimates for the actual manufacturing and sales volumes for the quarter vary by different sources. The component manufacturing volume seemed to contract somewhat on the previous quarter. Consequently, PCB suppliers witnessed weaker than expected sales, and the capacity utilization rates declined. Material costs did not develop favorably.

According to market estimates, global HDI PCB production in the January-March period declined by almost 3 percent compared to the previous quarter. In Asia it contracted by about 2 percent according to industry evaluations. In China, however, it continued increasing slightly.

Aspocomp's customers in the handheld devices segment reported strong performance despite seasonal variation and overbuilt global inventory. In the telecom infrastructure market, the Group's customers experienced flat or slightly falling sales. The automotive electronics market appeared stable during the review period, seeing small but steady growth.

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