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Fibertex Reorganization Plan Completed

November 25, 2008

New lines, better pricing cornerstone of efforts.

Fibertex’s Aalborg-based Technical Division has successfully completed a year-long targeted reorganization and modernization of its business. The plan included a DKK130 million invesmtnet in new starte-of-the-art equipment, lessened raw material consumption, price increases and staff reductions.

“After the reorganizations, we have a highly efficient, state-of-the-art production system, a price level that matches our costs and not least a pipeline of new products in addition to an immediate improvement of earnings,” said Jorgen Bech Madsen, general manager of Fibertex’s technical division. “A number of less profitable customers were also divested. In other words, we are now trimmed to act in a competitive market.”

 The rationalization scheme was launched in the autumn of 2007 as the division’s earnings had been under increasing pressure for several years. The elements included the start-up of two production lines, one in Aalborg and one in the Czech Republic—which use fewer raw materials; price increases; the shutdown of older production lines including an entire older factor yin the Czech Republic; streamlined production process; innovation and product development

Mr. Madsen sees the efficiency measures as a big advantage to customers because, as a result of the initiative, Fibertex will be able to continue delivering high-quality products, offering an extremely high level of service while at the same time strengthening innovation and product development.

 “Even with the existing recession, we expect to be able to strengthen earnings. We have boosted our competitiveness considerably and are thus very well equipped to take advantage of the opportunities that may present themselves in terms of consolidation,” he said adding that he expects to see the full effect of the conversion in 2009.

Fibertex has just announced staff reduction in Denmark by approx. 25 employees,

“We are sorry to have to dismiss employees but unfortunately this is a necessary part of the process to ensure continued profitable earnings in the division and create a basis for future growth. Of course, we focus on getting the affected employees back to work again as soon as possible,” said Mr. Madsen.

Not all dismissals may be attributed to the efficiency measures. A current drop in sales as a result of the economic world crisis also had an effect. The drop has been pronounced in the furniture and automotive industries, in particular, which are some of the Technical Division’s largest customer areas but lately also the building industry has been hit. If the economic crisis escalates further, Fibertex may, like other companies, be forced to implement further efficiency measures.

Fibertex also has the Personal Care Division which is a subsupplier for manufacturers of baby diapers and femcare products. The nonwovens market is global and highly competitive. What’s more, raw material prices have been going up drastically in recent years at some 70% just as energy and transport costs have gone up.