PDF, 1.2 MB - Pfleiderer AG

28 being focused: being better
Prices
Low consumer spending in Germany is reflected in the depressed level of demand for furniture
and interior outfittings. The feedback effect this has had on supplier industries has put manufacturers
under greater pressure to fill production capacities. This pressure has been exacerbated
by increased production costs, mainly due to a three-percent increase in wages. The
resulting over-capacities and price adjustments have been further aggravated by the insolvency
of a major market participant in Germany.
Overall, prices obtained for standard raw particleboard products have fallen in Germany
by up to 21 percent, compared to 2000. Outside Germany, developments have not had the
same effect. Here, Pfleiderer has experienced a fall in prices of around 6 percent for raw particleboard
and around 0.5 percent for direct-coated board.
The direct effect of lower price levels made itself clearly felt on results in 2002. However,
a further fall in results was stopped by strict cost management policies adopted in previous
years.
Sales/Results
2002 2001
million euros million euros
Sales 697.5 723.5
EBITDA 70.6 106.3
EBIT 31.9 64.3
The Wood-Based Panels Business Center reported sales of 697.5 million euros in fiscal 2002.
This is a decline of around –3.6 percent on the previous year (723.5 million euros). Despite
the drop in demand and lower price levels, Pfleiderer was able to compensate largely for the
downturn in sales in this Business Center through greater export activities. Strict cost management
also helped ward off negative effects. Around 52.5 percent of sales came from outside
Germany.
However, earnings before interest, taxes, depreciation and amortization (EBITDA) were
down by –33.6 percent to 70.6 million euros (2001: 106.3 million euros). These lower earnings
reflect the market conditions in Germany – continued lower demand in the furniture industry, a
major competitor producing under insolvency conditions and overcapacities in the market have
resulted in prices continuing to spiral downwards in 2002. Earnings before interest and taxes
(EBIT) were down by –50.4 percent to 31.9 million euros (2001: 64.3 million euros).
Despite all this, in a market under pressure Pfleiderer Wood-Based Panels is one of the
most profitable suppliers, with a ROCE of 7.9 percent.