Freudenberg Group completes portfolio restructuring

Business Press Releases Tuesday May 25, 2004 17:11
Weinheim, Germany, 25 May 2004 -- news aktuell

Weinheim (ots) - At the beginning of 2004, the FreudenbergGroup completed a far-reaching reorientation of its portfolio,according to the report presented by Dr. Peter Bettermann, Speaker ofthe Management Board of Freudenberg & Co., at this year's annualpress conference of the Group in Weinheim. Over the past five years,the Group has disposed of companies with annual sales totaling some400 million Euro. The Group is no longer active in shoe production ortrading or in leather production, the business activities thatdominated the first half of Freudenberg's 155-year history. Inaddition, the entire business of Freudenberg Technischer Handel hasbeen disposed of to the Brammer Group.

Dr. Betterman reported: "It is gratifying to note that internalgrowth within the Group has been almost sufficient to compensate forthe reduction in sales as a result of disinvestment. The acquisitionswhich we have now completed will lead to strong growth in sales." Theacquisitions, in the fields of seal technology, nonwovens, householdproducts and specialties, have reinforced the core business areas ofthe Group and represent strong sales of about 500 million Euro whichwill, for the most part, not affect the balance sheet until thecurrent financial year.

Balance sheet strength maintained / Moody's confirms A 3 rating

Following the acquisitions, the traditional strength of theFreudenberg balance sheet is still maintained and the equity ratioremains above 40 percent. This was confirmed by Moody's InvestorsService, which renewed its "A 3 stable" rating for Freudenberg at thebeginning of May 2004. Moody's assesses the leading position of theGroup on niche markets and its balanced global presence just aspositively as its conservative balance sheet structure, its strongcash flow and its continuous, steady, organic growth.

Three percent growth in adjusted sales

In the 2003 financial year, the sales of the Freudenberg Group fellslightly, by 1.3 percent, to 3.87 billion Euro in nominal terms. Thisdecline was mainly due to changes in the US dollar/Euro exchange rateand almost solely concerned North America. Adjusted for the effectsof currency fluctuations, acquisitions and disinvestments, sales grewby 109 million Euro or three percent. The fall in consolidated profitto 93 million Euro (2002: 137 million Euro) was chiefly due tocurrency effects, high restructuring expenses at the Weinheim siteand upfront costs and integration expenses in connection with majoracquisitions. Cash flow from operating activities amounted to 267million Euro. As in previous years, cash flow from operatingactivities was sufficient to cover investments, including theacquisitions. As of year-end 2003, the equity ratio was 43 percent.

Further improvements in health and safety

A significant success in 2003 was the further reduction in theaccident rate (notifiable accidents per 1,000 associates) from 14.1in 2002 to 10.7 in 2003. This 24-percent reduction was chiefly theresult of the "We all take care" initiative, intended to encouragehealth and safety projects at all sites of the Freudenberg Group, toheighten health and safety awareness in accordance with the Group'sGuiding Principle of "Responsibility" and to cut accident rates stillfurther. 274 projects were entered for the prizes available as partof the initiative. The main prize was awarded to Korea Vilene Companyfor its "Daily safety-man" project. In this project, one associate isappointed safety manager for the day every day. The task of thoseappointed is to identify unsafe machines, unsafe working conditionsand unsafe behavior on the part of associates and to ensure that suchproblems are remedied. In 2003, health and safety expenditure atFreudenberg doubled, reaching about 15 million Euro.

Two new business groups

In 2003, a number of major investments were completed, whilepreparations were made for others. Freudenberg reinforced itsNonwovens Business Area by acquiring the entire business of theformer Freudenberg Politex Joint Venture in Italy, the market leaderin polyester-based roofing materials. Freudenberg Household Productsbecame the market leader for mechanical household cleaning productsin the USA through the acquisition of O'Cedar and also acquired thelaundry care division of Hailo, substantially strengthening itsposition in the sector. OKS of Munich, another company acquired byFreudenberg, specializes in lubricants for maintenance and ideallycomplements the business of Kl?ber Lubrication. Together with USrelease agent specialist Chem-Trend, taken over at the beginning of2004, these two companies now form the new Freudenberg ChemicalSpecialities Business Group, with sales of 375 million Euro and about2,000 associates. Another new business group is Burgmann Industries,established following the acquisition of the mechanical seals,compensators and automotive divisions of Burgmann Dichtungswerke inWolfratshausen at the beginning of 2004. Outside Germany, BurgmannIndustries cooperates closely with Japanese mechanical seals producerEagle Industry. The new business group has a workforce of about 3,300and annual sales of almost 300 million Euro.

Significant increase in the workforce

Freudenberg is an internationally oriented family company with abroad range of products spanning seals and vibration controlcomponents, nonwovens, mechanical household cleaning products,specialty lubricants and release agents. The main customer groups arethe automobile and investment goods industries (seal and vibrationcontrol technology, acoustic and vibration control, car interiors andfilters) and the textile industry (interlinings, technical textiles).The Group also has a presence on the final user market with vileda(R)brand household products and nora(R) brand rubber floorcoverings. TheGroup consists of more than 300 companies in 54 countries. As of theend of 2003, 28,479 persons were employed by Freudenberg, 786 morethan the year before. Including the newly acquired companies (as ofApril 2004), Freudenberg has a total of about 32,000 associatesthroughout the world, including 12,491 (2003: 11,375) in Germany.

ots Original Text Service: Freudenberg & Co. KG
Internet: http://www.presseportal.de
For further information, please contact:
Wolfgang Orians
Freudenberg & Co.
Corporate Communications
Phone:     +49 (0) 6201-80 66 16
Fax:       +49 (0) 6201-88 34 30
E-Mail:   wolfgang.orians@freudenberg.de
Internet: www.freudenberg.com
--Distributed by AsiaNet (www.asianetnews.net)--

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