ARBONIA

Adjusting the number of staff at STI Hartchrom in Steinach to turnover performanc

Prolonged turnover decreases in Surface Technology accelerate restructuring – Consultation procedure with employees initiated – Flat turnover performance for AFG – Operating profit below expectations

Arbon, 30 October 2013 – AFG Arbonia-Forster-Holding AG is accelerating the restructuring of STI Hartchrom AG in Steinach; it cannot be ruled out that 40 to 50 jobs will be cut. The reason for such a cut is the rough market environment with a decrease in turnover. The expected job cuts should secure the long-term existence of STI and its jobs. A consultation procedure with the employees is being initiated in order to clarify the concrete consequences and possible alternatives. Various braking factors are also leading to a flattening of turnover performance and to revenues for AFG below our ambitious expectations.

The strategic realignment process of AFG Arbonia-Forster-Holding AG, which has proceeded positively overall, will be impacted by various negative developments in individual areas, which was unexpected. A decrease in turnover, particularly in the print segment, and a general trend of outsourcing to Asia, thus necessitates accelerated restructuring of the Surface Technology Division to be able to secure the future of the company for the long term and give it a new foundation.

This is expected to lead to 40 to 50 jobs being cut at the Steinach location. The consultation procedure with the employees was initiated on 30 October 2013 and will last until 19 November 2013. HR measures will also be examined for the Sternenfels/DE location. STI employs around 250 people at the Steinach location, and a total of around 520 around the world. This reorganization will enable STI to adapt its alignment to the market prospects for the coming years and further concentrate its spectrum of technology.

AFG Küchen AG is under prolonged heavy price and margin pressure due to its strong import activities. The conversion to the new generation of kitchens of the Forster Steel Kitchens brand name needs a bit more time than expected. As a result, the turnaround sought for 2013 cannot be completely achieved. In light of this development, AFG Küchen AG is being put to the test; all options for the future that present themselves will be examined in depth. The restraint in renovation activities and the weak construction and investment activities in some Eastern European markets present a challenge for the Heating Technology Business Unit and result in only moderate turnover performance and lower operating profit.

Growth in the other parts of AFG's core business is going well and profitability could improve even more. This shows that the strategic measures taken were the right ones. Significant year-on-year improvements were achieved in 2013.

In total, these unexpected negative developments, particularly in non-core business, resulted in flat performance of group turnover and operating profit coming in below our ambitious expectations. Nevertheless, an EBIT margin of over 4.0%, which would be an increase year-on-year, is expected for 2013. Group Management is sticking with its chosen realignment course with the targets for 2015. Starting in 2014, all units will once again be creating value as planned.

Contact
Daniel Frutig
CEO
daniel.frutig(at)afg.ch

Stefan Kern
Head Corporate Communications
stefan.kern(at)afg.ch