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Electronics Production | December 20, 2006

Efore increased sales by 10,8%<br>restructuring costs sanked the results

Efore, that recently published its financial report for the fiscal year ended October 31, reported sales of 90.5 million euro compared to 81.6 million euro for the same period last year.

Efores operating profit reached EUR -5.8 million (EUR -0.8 million) and the company's profit before taxes reached EUR -5.5 million (EUR -0.4 million). For the fourth quarter Efore's net sales reached EUR 18.9 million (EUR 26.0 million), a decrease of 27.5% on the same quarter in the previous fiscal year. The operating profit was EUR -2.9 million (EUR 1.3 million) and the profit before taxes reached EUR -2.3 million (EUR 1.3 million). Most of the growth resulted from increased deliveries of power supply solutions for mobile phone networks, fixed telecommunications systems and industrial electronics. Sales were divided by customer segment as follows: telecommunications 68.8% (70.4%), industrial electronics 24.8% (24.3%) and health care electronics 6.4% (5.3%). Geographically, sales were split up as follows: EMEA EUR 57.9 million (EUR 50.5 million), the Americas EUR 21.2 million (EUR 24.8 million) and APAC EUR 11.4 million (EUR 6.3 million). The operating profit for the fiscal year was EUR -5.8 million (EUR -0.8 million). In addition to lower-than-expected sales in the last quarter, the operating profit for the fiscal year was adversely affected by restructuring costs resulting from transferring the focus of production from Finland and the USA to plants in China and Estonia. Costs were caused by losses at the Saarijärvi plant, the closure of production operations there, and the closure of one of the two US plants. The operating profit was also affected by management redundancy costs, advisory expenses in connection with acquisition negotiations, and large write-offs made on obsolete materials. There were also non-recurring write-offs on previously capitalized product development projects. The operating profit was also negatively affected by the simultaneous production and production rundown of lead-containing products, non-recurring expenses resulting from the startup of lead-free versions of the same products in conformance with the RoHS directive and also the somewhat high prices of RoHS components. Productivity growth at the company's plants in China and Estonia fell short of expectations during the early months of the year, and there were changes in production management at both plants during the second half of the year.
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