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American Standard Achieves Record Sales And Earnings in Q1

American Standard has announced record first-quarter sales up 7% to $2.34bn, partially offset by operational consolidation expenses of $20 million Net income rose to $124.9m, up 48 percent on a GAAP basis and up 22% excluding tax items and operational expenses.

'Volume and productivity drove our increased earnings from operations, overcoming continued pressure from commodity cost escalations, which we partially offset by price increases,' said Fred Poses, chairman and chief executive officer. 'We achieved these results despite short-term production issues that affected Bath and Kitchen sales and costs in Europe.

'We continue to invest in marketing and our new product pipeline, which we believe will produce results this year and even greater benefits going forward,' said Poses. 'In addition, we're encouraged by the order and pricing trends for air conditioning equipment. Although commodity cost escalations have outpaced price realization, we're increasingly closing the gap. With this expected improvement in the largest part of our business and strength in the rest of our company, we're confident of our ability to deliver strong growth in sales, earnings, margin and cash flow for the entire year.

'For the second quarter, we expect sales to be up about 6-8 percent and earnings in the range of 82-87 cents per diluted share, up 12-19 percent from second quarter last year," said Poses. "In addition, we're reaffirming our 2005 guidance of 6-7 percent sales growth and earnings of $2.60-2.75 per diluted share, which assumes that for the year tax items will offset operational consolidation expenses. We're also on track with our 2005 goal to generate $890 million in net cash provided by operating activities and more than $550 million in free cash flow, up from our record 2004 results.'

In the first quarter, segment income was $202.1 million, flat compared with the record first quarter last year. Segment income included operational consolidation expenses associated with previously announced plant reductions, severance, asset impairment and similar expenses. Excluding those operational consolidation expenses, segment income was up 10 percent to $222.5 million. Total operating margin for the quarter was 8.6 percent, down from 9.3 percent the prior year. Excluding operational consolidation expenses, total operating margin was 9.5 percent. Net cash used by operating activities was $50 million, $88.8 million below last year because of increased working capital, tax payments and capital expenditures. Free cash flow represented a use of $98.6 million. On March 25, the company paid its new quarterly dividend of 15 cents per share of common stock to shareholders of record on February 28. In addition, the company bought back $140 million in common stock during the quarter.

To facilitate understanding of first-quarter results, several tables follow this news release. The first-quarter results that exclude operational consolidation expenses, tax items and foreign exchange are non-GAAP measures. Free cash flow, another measure used, is also non-GAAP. Management believes that these measures, discussed in this text and in the tables, are helpful in assessing the overall performance of the company. Some of the items are used, in part, to determine incentive compensation for current employees. These measures should be considered in addition to, not as a substitute for, GAAP measures. BATH AND KITCHEN sales rose slightly to $604.1 million, helped by foreign exchange.

In addition, the Champion® toilet continued to generate strong sales. Segment income was $44.8 million, down 11 percent compared with last year and down 3 percent excluding operational consolidation expenses of $3.9 million. The segment income reduction resulted primarily from lost sales and higher costs caused by the short-term production issues affecting the European region and was partially offset by favorable price. Operating margin was 7.4 percent, down 1 percent from the prior year, and 8.1 percent excluding operational consolidation expenses.
'We expect to resolve the bulk of the Bath and Kitchen production issues by the end of the second quarter,' said Poses.

During the quarter, Bath and Kitchen launched extensive new product lines for its Ideal Standard and JADO brands at the ISH trade fair in Frankfurt, Germany, including five total bathroom suites; innovative shower, sauna, steam and whirlpool systems; gourmet kitchen fittings and electronic faucets as well as a variety of bathroom fittings such as those with STRASS® Swarovski® crystal handles. In China, Bath and Kitchen opened its flagship Bathaus in Beijing, now the company's largest showroom in the world, with trend-setting products and new technology. Key commercial wins in China during the quarter included the Academy of Arts and Design at Tsinghua University in Beijing, Dongguan Science and Technology Museum near Guangzhou City, Oriental Fontana Garden luxury villas in Shanghai and Traders Hotel in Beijing. In the U.S., the company launched new bath and kitchen television and print advertising. It also sponsored the "This Old House" 25th anniversary showhouse (the Carlisle project) and, with American Standard-branded heating, ventilation and air conditioning products, is sponsoring the popular "Ask This Old House" television program on the Public Broadcasting Service (PBS).

Jobs Boost in Wednesbury

Business is booming for Wednesbury-based Aqualux as ten new jobs have been created to keep up with the extra demand for its showering products.

The jobs boost at Aqualux coincides with a multi-thousand pound contract to supply Plumbworld, the UK’s leading online retailer of bathroom products, with a large cross-section of its product range, including luxury steam cabins.

The new members of staff will join the Customer Service and Engineering departments and have been carefully chosen to reinforce Aqualux’s commitment to excellent service and quality products.

Aqualux is the UK’s leading supplier of bath screens, holding a 40% share of the market and currently employs over 250 people at its headquarters in the heart of the West Midlands.

James Cadman, managing director, said: 'We have seen a substantial growth in business over the past six months and it is a natural progression to extend our team to make sure we can provide our customers with the excellent service they have come to expect. We are confident there will be even more job opportunities in the near future.'

Tel: 0870 241 6131
Web: http://www.aqualux.co.uk

Maytag Announces First Quarter 2005 Results

Maytag Corporation reported on 22nd April first quarter consolidated sales of $1.168 billion, down 4.2 percent from sales of $1.219 billion in the same period last year.

Consolidated net income for the first quarter was $7.7 million or 10 cents per share, compared with net income of $38.7 million, or 49 cents per share, a year earlier.

Savings from restructuring activities implemented in 2004 only partially offset rising costs. Lower net sales and higher costs - primarily for steel and energy-related items, and higher distribution costs - reduced first-quarter, year-over-year profitability.

Maytag Chairman and CEO Ralph Hake stated that while the company achieved the gains that were anticipated through the 'One Company' restructuring, it is clear that not enough progress has been made. 'We must immediately take more aggressive steps to improve our cost position by reducing our manufacturing footprint,' he said. 'This will require a manufacturing restructuring that addresses our noncompetitive supply chain costs and burden absorption issues. A new financing plan will fund these business initiatives, which will include a new credit agreement and finalising plans to refinance 2006 debt maturities.'

In the Home Appliance segment, sales declined compared to the prior year primarily as a result of lower sales of OEM refrigeration products, lower sales at Best Buy as well as lower average selling prices for floor care products.

However, Hake noted that the company experienced sequential market share improvement in all major appliance categories, signaling that the actions Maytag has implemented to improve its sales performance are taking root. He said, 'We expect further growth from new products scheduled for launch in the first half 2005, among them are the Maytag® Neptune® 27-inch washer and dryer, the Jenn-Air® suite of glass-front appliances, and the new Hoover® FloorMate™ hard floor cleaner.'

Maytag Services and Maytag International continue to perform well, producing double-digit revenue growth this quarter versus prior year. Commercial Products remained down year over year given the ongoing weakness in the vending industry.

While sales were up slightly in Home Appliances compared with the fourth quarter, Hake noted that the Jenn-Air® premium appliance lines and the company's value brands posted strong gains in the quarter. The corporation saw an improvement in average selling prices this quarter based upon its recent pricing actions; however, these increases were largely offset by selected 2004 price repositioning and product mix.

As expected, floor care sales were down year over year due to pricing actions in 2004. However, floor care did see stabilisation in market share in key categories with positive momentum attributed to the full-size extractor category. 'We expect new floor care product launches to take hold with new premium products slated for the second half of the year,' Hake said. 'Going forward, our most innovative products this year focus on floor care and laundry, which we believe are significant opportunities.'

Cash flow from operations in the first quarter of 2005 was a use of $49.8 million, compared with a use of $83.9 million in the first quarter of 2004. The improvement in cash flow was due to a smaller growth in working capital and lower pension contributions, partially offset by higher cash payments for restructuring charges and payment of $12.3 million for the final resolution of a distributor lawsuit.

Maytag's overall debt levels are down $126 million from the prior year, and cash and cash equivalents were increased by $91 million to $99 million. In addition, inventories were down from the prior year. In 2004, Maytag had higher inventories for its refrigeration transition and new product introductions.

Hake noted that the lower-than-expected realisation from the company's pricing actions, as well as higher fuel and energy-related raw material costs have prompted the company to reduce guidance for 2005. Maytag now expects reported earnings per share for the full year 2005 in the range of 45 cents to 55 cents, including approximately 10 cents in restructuring charges. Earlier, the company noted that 2005 guidance for reported earnings per share were expected to be in the range of $1.10 to $1.30, including about 5 cents for restructuring charges.

Maytag Corporation is a leading producer of home and commercial appliances. Its products are sold to customers throughout North America and in international markets. The corporation's principal brands include Maytag®, Hoover®, Jenn-Air®, Amana®, Dixie-Narco® and Jade®.

Nobia: Continued Strong Growth in the Nordic Region but Falling Sales in the UK

Sales rose by 1 per cent to SEK 2,854 million (2,813). Adjusted for currency effects and comparable units, sales fell by 1 per cent. The decline in organic growth can be explained by falling demand in the UK and by factors such as fewer delivery days, stock reductions in distribution channels and measures for smoothing the pace of production in the UK unit, Magnet. Sales in the UK business fell by 9 per cent excluding currency effects. Demand in the Nordic business continued to be strong and organic growth was 10 per cent. Sales in the Continental European business for comparable units and adjusted for currency effects fell by 1 per cent. This was mainly due to falling demand and sales in the Netherlands.

The Group's operating profit for the period fell by 9 per cent to SEK 193 million (212) and the operating margin was reduced to 6.8 per cent (7.5). Earnings per share after dilution fell by 7 per cent to SEK 2.15 (2.32). The fall in profit is mainly due to lower sales volumes in the UK business. Magnet, the UK business unit, is implementing further actions to cut costs and streamline the organisation. Costs for the additional actions are estimated to be SEK 30 million and will have a negative impact on the operating profit during Q2. Savings as a result of the programme are estimated to be around SEK 30 million over the year and estimated to have an effect from June.

Integration of the latest acquisition, the Austrian kitchen manufacturer EWE-FM, is proceeding according to plan. Sales of kitchens in Austria are seasonal. In line with this, EWE-FM did not contribute to the operating profit in Q1.

Market developments in first quarter 2005 compared to first quarter 2004
Demand in the UK is estimated to have fallen by 3-4 per cent, mainly as a result of less activity in the housing market. Demand on the Nordic market is estimated to have increased by around 6 per cent in total. Demand on Nobia's main markets in Continental Europe (Germany, the Netherlands and Austria) is estimated to have fallen by around 3 per cent.

Net sales and results
Net sales rose by 1 per cent to SEK 2,854 million (2,813). The acquisition of EWE-FM contributed SEK 121 million. Adjusted for currency effects and for comparable units, sales fell by 1 per cent.

The operating profit fell to SEK 193 million (212) mainly as a result of the lower sales volumes in the UK business. The Nordic business increased its operating profit as a result of higher volumes and improved cost efficiency. The businesses in the UK and Continental Europe reported lower operating profit mainly as a result of lower sales. EWE-FM did not contribute to the operating profit in Q1.

Financial items amounted to SEK -20 million (-24). The improvement in financial items is mainly due to lower net debt compared to the same period last year. The profit after financial items fell by 8 per cent to SEK 173 million (188).

The tax cost for the period was SEK -48 million (-54), which represents a tax rate of 27.7 per cent (28.7).

The profit after tax was SEK 125 million (134), which represents earnings per share after dilution of SEK 2.15 (2.32).

The UK business
Net sales fell by 12 per cent to SEK 1,207 million (1,368). Excluding currency effects, sales fell by 9 per cent. Demand on the UK market is estimated to have fallen during the same period by around 3-4 per cent.

Sales of kitchen, wardrobe and bedroom interiors and joinery fell by a total of 8 per cent compared to first quarter previous year and adjusted for currency effects.

The reported drop in sales is attributable to fewer delivery days compared to the same period last year, stock reductions by customers holding stock and the closure of five loss-making stores. To prepare for order-based production at the Magnet business unit, measures have been taken to smooth the pace of production and increase delivery quality. This has meant fewer deliveries of consumer kitchens in the quarter. The order book for consumer kitchens at the end of the period was higher than at the same time last year. Within the framework of the ongoing store investment programme at Magnet, six refurbished stores were re-opened for the January Sales.

The operating profit was negatively affected by lower sales volumes and fell to SEK 80 million (122). The gross margins for both rigid and flat-pack kitchen interiors improved. Store overheads have increased as a result of improved service and staffing in the stores. The losses at the C.P. Hart bathroom business continued during the period.

The operating margin was 6.6 per cent (8.9).

Measures already being implemented to improve profitability in the UK business are proceeding according to plan. The upgrading of the store network is continuing with refurbishment of existing stores, relocation and closure of loss-making stores. During the first quarter manufacturing doors at Keighley was closed down. Magnet's factory in Darlington is continuing work to reorganise the factory for order-based production. In addition, Magnet initiated additional actions in the second quarter to cut costs and streamline the organisation. Organisational changes are being made at Magnet's kitchen and joinery business to get a sharper focus on professional customers and reduce costs. The bathroom business at C.P. Hart will be streamlined with the kitchen business being transferred to Poggenpohl. Savings will be made in connection with this move.

Costs for the new actions are estimated at SEK 30 million and will negatively impact profits in the second quarter. Savings are estimated to be around SEK 30 million on an annual basis and be effectual from June 2005.

Imperial Bathrooms Gets New Management Team

British bathroom manufacturer Imperial Bathrooms has recently appointed a new management team that includes Managing Director, Antonio Garrido and Sales Director, John Gill.

In addition to strengthening the Imperial brand by promoting the newly adopted brand-positioning platform ‘Imperial Bathrooms – A Modern Classic’, the new team will be responsible for further developing relationships with key retailers and kick-starting an intensive new product development programme.

Having held a series of director and senior positions within leading British manufacturing companies – including Pilkington’s Tiles, Hepworth Building Products, Denby Pottery, Dorma and Redland – Antonio’s arrival heralds the dawn of an exciting phase for the next development of the privately-owned company.

Antonio comments: 'In addition to an ambitious new product development strategy, we have a number of exciting retail and marketing initiatives that we intend to roll out over the next twelve months, all of which will serve to underline Imperial’s standing as ‘a modern classic’ both in the UK and overseas.

'We want to help the retailer sell the Imperial dream to the consumer and we want every Imperial bathroom to be a space of distinction, opulence and serenity. At Imperial, we manufacture products to be proud of.'

He added: 'Based on the success of our recent instore product promotions, we also intend to support our UK network of retailers with an ongoing programme of product and marketing activity that will include new and refreshing design brochures, ongoing product promotions and extended instore displays.'

In addition to strengthening relationships with Imperial’s network of retailers, newly-appointed Sales Director, John Gill, will assume responsibility for Imperial’s expanding specification and own-brand sales operations. He will also head up the company’s customer service and telemarketing function. With a degree in Engineering, John has also held a number of senior positions within the ceramics and construction industries. Joining Imperial from Pilkington’s Tiles where he was National Contract Sales Manager, John also operated in a similar capacity at H & R Johnson. He started his sales and marketing career with Tarmac Topbloc.

Commenting on John’s appointment, Antonio said: 'John’s career experience and personal enthusiasm will be an invaluable asset both to Imperial’s management team and to our network of the best bathroom retailers and merchants. He brings with him a diverse skills set that will help contribute to the overall strengthening of Imperial’s market standing.'

Antonio went on to say that Imperial’s new design catalogue is currently being produced and to register for an early copy, interested customers should call the new Customer Services Hotline Number – 0870 60 61 62 3.

Caption: Pictured left; newly-appointed Sales Director, John Gill, alongside Imperial’s new Managing Director, Antonio Garrido.

Fagor Group Buys Out the French Household Domestic Appliances Leader ElcoBrandt

Fagor Electrodomesticos group has finalised an agreement with Elco Holdings Ltd. pertaining to a 90% purchase of ElcoBrandt. This €162.5 million transaction will allow the Spanish group to become the 5th largest European major domestic appliance manufacturer. The acquisition still requires formal validation from the European authorities.

The announcement of the acquisition was made at a Press Conference held in Bilbao, Spain, on Wednesday 13th April 2005. Pablos Mongelos, managing director of Fagor Electrodomesticos says:

‘Fagor is getting a new dimension. With 12 different brands and 16 production sites, Fagor is doubling its size’.

ElcoBrandt executive board chairman, Bruno Vendroux, expressed his satisfaction with the deal. He says:

‘This buyout is opening new perspectives for ElcoBrandt. The acquisition will create synergies between the two groups and widen our offer.’

ElcoBrandt
Market leader in France and 6th in the European rankings of major domestic appliance companies, ElcoBrandt owns a prestigious portfolio of well-known brands, of which Brandt and De Dietrich are present in the UK. It includes European brands such as Ocean, Samet, San Giorgio, Sauter, Thomson and Vedette. The group currently employs 4,600 staff, and more than 3.5 million appliances are designed and manufactured each year in its six European industrial sites (five in France and one in Italy). ElcoBrandt's 2004 turnover was €813 million, of which 40% were international sales.

Fagor Electrodomesticos
Spanish leader in the major domestic appliances sector, Fagor employs 6,230 staff on ten production sites and, in 2004, recorded a €940 million turnover. Fagor has a presence in 82 countries, with four brands: Fagor, Edesa, Aspes and Mastercook.

Chelsea Football Club Announces Samsung Electronics as Official Club Sponsor

Chelsea Football Club has announced Samsung Electronics Co. Ltd as its new Official Club Sponsor.

The agreement was signed on April 25th at Stamford Bridge, Chelsea's stadium, by In-Soo Kim, Samsung European President, and Peter Kenyon, Chelsea FC plc Chief Executive.

The five year deal, which starts on June 1st, 2005, is the biggest ever sponsorship deal signed by Chelsea and the second largest by Samsung after its sponsorship of the Olympic Games.

The logo of 'Samsung Mobile' will appear on the new Chelsea Centenary shirts for the first time on its pre-season tour this summer.

Chelsea Chief Executive Peter Kenyon said: 'We are absolutely delighted to have Samsung as our new official club sponsor. The company is one of the world's largest brand names, and we are excited about what it can offer Chelsea.

'Samsung has a key part to play in the future global development of Chelsea and we believe we can play a similar role for it in its strategic aims. There is a great synergy between the two brands in terms of recent dramatic growth and success, levels of performance and market targets.

'As a company it has already shown a strong commitment to sport through sponsorship of the Olympic Games and in football through its ownership of Suwon Bluewings, the champions of Asia. We look forward to a long and fruitful relationship.'

The agreement gives Samsung exclusivity with Chelsea in product categories such as mobile phones, AV, white goods and IT equipment.

'Samsung and Chelsea Football Club are organisations with a huge presence in their respective global markets,' said In-Soo Kim, President & CEO of Samsung Electronics Europe.

'Samsung is already a leading global brand in digital technology and is enjoying dramatic growth in Europe, success that is being replicated by Chelsea's impact in the UEFA Champions League and the English Premiership.

'Chelsea is making its mark on the world stage as one of the rising stars of football, and the association with the club will not only help drive and enhance Samsung's image on a global scale but also allow us to get even closer to our customers. Samsung is an equally ambitious company, and we are looking forward to sharing that drive and momentum to build on our success and boost brand awareness.'

In-Soo Kim added: 'Chelsea Football Club has a stylish heritage that is reflected in Samsung's passion for design and innovation. Samsung has highlighted its leadership in mobile and therefore has chosen this to appear on the Chelsea shirt. Samsung Mobile is already a leading brand globally. I am convinced that the association with Samsung Mobile will create a positive spill-over effect for other product categories. We will be undertaking a range of marketing activities to support this partnership and will look to strengthen the value of both brands as well as drive product sales on a global scale.'

Chelsea Football Club Manager and First Team Coach, Jose Mourinho, was also present at the announcement, and posed for photographs with In-Soo Kim and Peter Kenyon, as was Chelsea's Business Affairs Director Paul Smith, who made the opening press conference address.

Paul Smith said: 'Our relationship with Samsung is the next, and very important step, in the Chelsea business plan of working with global, blue-chip partners at every level.

'In the last two years Chelsea's UK fan base has increased by 300 percent to an impressive 2.9 million. Worldwide, the fan base is approaching 20 million. That represents amazing growth. The Chelsea brand is seen as dynamic, cosmopolitan and successful which represents an attractive platform for our partners.'

Sponsorship activities between Chelsea and Samsung will run in the UK and across Europe, Asia as well as in North and South America. This will drive further sales and marketing activities, starting with Samsung's Mobile division.

Samsung will promote the company's expertise in telecommunications and digital convergence, and grow its position in Europe as leading design and development for consumer technology.

About Samsung Electronics
Samsung Electronics Co., Ltd. is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies with 2004 parent company sales of US$55.2 billion and net income of US$10.3 billion. Employing approximately 123,000 people in 93 offices in 48 countries, the company consists of five main business units: Digital Appliance Business, Digital Media Business, LCD Business, Semiconductor Business and Telecommunication Network Business. Samsung Electronics is the world's largest producer of colour monitors, colour TVs, memory chips and TFT-LCDs.

Web: http://www.samsung.com

Sanitec Results for the Financial Year 2004

Group sales for the year were EUR 898.9 million: a growth of EUR 3.7 million or 0.4% excluding the effect of the divested Vacuum Sewage Systems business segment.

Solid sales increases in other regions compensated for the weak market situation in Germany, Netherlands, and Italy.

One-time restructuring and integration consulting costs of EUR 44.7 million strongly affected our EBITDA.

Excluding these one-time effects and the disposal of the Vacuum Sewage Systems business segment, Sanitec's EBITDA improved to EUR 160.5 million, representing 18.2% of net sales in 2004 compared to 17.3% in 2003.

Total operating expenses including depreciation and amortisation were reduced by EUR 33.5 million or 3.7% driven primarily by the company's integration process and sales, general, and administration cost reduction initiatives.

Excluding the EUR 44.7 million in non-recurring items in 2004 and EUR 16.9 million in 2003 as well as the effects of the Vacuum Sewage Systems business segment disposal, total operating expenses were reduced by EUR 8.4 million or 1.0%.

Industrial capital expenditures were EUR 26.4 million or 2.9% of net sales compared to EUR 32.0 million or 3.4% of net sales in 2003.

Net indebtedness was substantially reduced by EUR 120.3 million or 18.4% to EUR 533.3 million largely through increased cash flow from the company's Vacuum Sewage Systems business segment divestment, the sale of Lecico shares, and improved working capital management.

Cash flow from operating activities decreased EUR 15.2 million from previous year driven by EUR 27.8 million net increase in one-time restructuring and integration consulting costs.

Comment by Lennart Sundén, President and CEO
'Despite demanding market conditions, Sanitec was able to increase its profitability in 2004, when excluding one-time effects and the divestment of the Evac business. This gives me confidence that Sanitec is a company with high growth potential and I am very much excited about the challenges ahead of us', says Lennart Sundén, President and CEO of Sanitec.

Operating and Financial Review for Sanitec Group

Net Sales

Consolidated
In 2004, the Group's sales performance was materially affected by the disposal of the Vacuum Sewage Systems business segment when comparing to the previous year. Outside this special effect, sales continued to be influenced by weakness in certain core markets. Net sales for 2004 were EUR 898.9 million compared to EUR 951.1 million in 2003 which is a decrease of 5.5% or EUR 52.2 million. Excluding the net EUR 55.9 million effect for the disposal of the Vacuum Sewage Systems business segment, sales in the core businesses grew by EUR 3.7 million or 0.4%. Negative sales developments in Germany, Italy, and the Netherlands were offset by growth, most notably in the Nordic countries, the United Kingdom, and other Eastern European countries, lead by the Czech Republic and Ukraine.

Bathroom Ceramics
Bathroom Ceramics net sales for 2004 were EUR 610.0 million compared to EUR 605.7 million in 2003, an increase of EUR 4.3 million or 0.7%. Currency exchange rate variances negatively impacted our net sales in 2004 in this segment by EUR 0.2 million. The Group was able to increase average selling prices in all but two regions. The remaining regions finished roughly on par with the previous year.

Bath and Shower Products
Bath and Shower Products net sales for 2004 were EUR 272.8 million against EUR 273.4 million for 2003, a decrease of EUR 0.6 million or 0.2%. Currency exchange rate variances negatively impacted our net sales in 2004 in this segment by EUR 1.0 million. Excluding the foreign currency exchange rate impact, this segment grew by EUR 0.4 million or 0.1% compared to the previous year.

Vacuum Sewage Systems
Net sales until April 14th, 2004, when the operations of our Vacuum Sewage Systems business segment were sold to the French Zodiac Group, finished at EUR 16.1 million (72.0 million for the full year 2003).

Operating Expenses
Starting in 2002 and continuing through into 2004, we successfully implemented numerous improvements in our cost structures.

Cost of products sold - materials and consumables decreased by 7.5% or EUR 22.5 million to EUR 276.6 million, compared to EUR 299.1 million in 2003. Disposal of the Vacuum Sewage Systems business segment accounted for a net EUR 28.7 million decrease in these expenses. The remaining increase of EUR 6.2 million or 2.4% can be traced to increased energy costs for production, a product mix shift to more complex and manufacturing cost intensive products, increased volumes produced, and increased prices for certain outsourced products. Gains made with the strategic purchasing program continued in 2004 but were offset by the cost increases driven by the above mentioned factors.

Personnel costs were decreased substantially by 9.1% or EUR 25.7 million to EUR 258.0 million in 2004 from EUR 283.7 million in 2003. Disposal of the Vacuum Sewage Systems business segment accounted for a net EUR 12.7 million decrease in these expenses. The remaining reduction of EUR 13.0 million or 4.9% is a direct result of our ongoing strategy of restructuring our ceramics and bath and shower production networks including the related closure of production units, as well as the reorganisation and integration of the sales, marketing, and administration functions throughout the Group. In 2004, we finalised the closure of a ceramics manufacturing plant in Slovakia, and continued to reorganise our remaining manufacturing and administration base which allowed us to further reduce our employee workforce.

Cost of outside services also decreased significantly by EUR 7.2 million or 8.2% in 2004 to EUR 80.8 million from EUR 88.0 million in 2003. Disposal of the Vacuum Sewage Systems business segment accounted for a net EUR 2.2 million decrease in these expenses. The remaining reduction of EUR 5.0 million or 5.9% was generated by increased Group integration and sharing of outsourced products and services, renegotiation of supply contracts with current suppliers, as well as the establishment of contracts with new strategic sourcing partners.

Other operating income and expenses, net, increased by 20.2% or EUR 28.0 million to EUR 166.7 million from EUR 138.7 million in 2003. Disposal of the Vacuum Sewage Systems business segment accounted for a net EUR 6.5 million decrease in these expenses. A large increase in these expenses is related to EUR 44.7 million of one-time charges related to integration consulting and restructuring. The net increase in these expenses of EUR 6.7 million or 5.9% after elimination of one-time expenses of EUR 16.9 million in 2003 and the above mentioned amount in 2004, was driven primarily by increased costs associated with the establishment of the new Ceramics, Acrylics, and Enclosures (CA&E) and Wellness divisions. Savings achieved by measures to reduce sales, general, and administration costs such as integration and centralisation of common functions like information management; sharing of resources among our units, such as competence centres, and lower costs due to purchasing initiatives were offset by the increased activity related to the above mentioned divisional split.


Operating Profit

Consolidated
Our operating profit for 2004 decreased by 37.9% or EUR 18.7 million to EUR 30.7 million from EUR 49.4 million for 2003. Our operating profit margin decreased from 5.2% for the year 2003 to 3.4% for the year 2004. Disposal of the Vacuum Sewage Systems business segment accounted for a net EUR 3.0 million of the decrease. Operating profit in 2003 was negatively affected by EUR 16.9 million of one-off restructuring and integration consulting costs while these costs were EUR 44.7 million in 2004. After elimination of these expenses in both years and on a comparable basis, without the Vacuum Sewage Systems business segment, our operating profit increased by EUR 12.1 million or 19.1% to EUR 75.4 million in 2004. This represents an increase in profitability from 7.2% of net sales in 2003 to 8.5% of net sales in 2004.

Bathroom Ceramics
Bathroom Ceramics operating profit was EUR 17.0 million, a decrease of EUR 14.6 million or 46.2% compared to the prior year. The improved performance in this segment related to our ceramics production network restructuring, including closures of certain manufacturing facilities and continued outsourcing of production to our strategic partners, was offset by non-recurring items related to integration consulting and restructuring as well as higher energy prices which also pressured raw material costs. Excluding one-off items in both years, the segment's profitability increased to 9.3% of net sales in 2004 from 7.4% in 2003.

Bath and Shower Products
Bath and Shower Products operating profit was lower than in the prior year at EUR 13.7 million compared to EUR 14.8 million in 2003. Production cost reduction efforts and efficiency programs were offset by non-recurring items related to restructuring and integration consulting as well as higher energy costs and increased costs related to the establishment of the new Wellness division. After elimination of one-off items in both years, this segment's operating profit margin was increased from 6.5% in 2003 to 6.9% in 2004.

Vacuum Sewage Systems
Vacuum Sewage Systems operating profit until April 14th, 2004 was EUR 0.0 million (3.0 million for the full year 2003). Effective April 14th, 2004, the operations of our Vacuum Sewage Systems segment (Evac) were sold to the French Zodiac Group.


EBITDA

Consolidated
Our 2004 EBITDA was EUR 116.8 million compared to EUR 141.6 million in 2003. One-off restructuring and integration consulting costs reduced our EBITDA for 2004 by EUR 44.7 million. Disposal of our Vacuum Sewage Systems business segment accounted for EUR 5.8 million of the decrease against the previous year. Excluding the non-recurring adjustments and compared on a like to like basis without the Vacuum Sewage Systems business segment, EBITDA profitability increased from 17.3% of net sales in 2003 to 18.2% in 2004. The key elements of this increase in profitability are rooted in our restructuring and integration efforts. Rationalisation of production capacity through factory closures and outsourcing, streamlining of sales, general, and administration functions, and integration of purchasing and logistics functions all contributed to the profitability increase in 2004.

Bathroom Ceramics
Bathroom Ceramics EBITDA for 2004 was EUR 78.3 million, down from EUR 96.1 million in 2003. This represents a decrease of EUR 17.8 million or 18.5%. EBITDA in this segment was negatively influenced by non-recurring integration consulting and restructuring expenses in both 2003 and 2004. The underlying profitability of this segment increased against the previous year. Excluding the non-recurring items in both 2003 and 2004, the EBITDA margin of this segment increased from 18.1% of net sales in 2003 to 19.3% in 2004. More efficient production achieved through factory closures and outsourcing, synergies from purchasing initiatives, and the streamlining of sales, general, and administration functions contributed to the increase and helped offset the negative effects of higher energy costs and pressure on raw material prices.

Bath and Shower Products
Bath and Shower Products EBITDA for 2004 was EUR 37.5 million, down from EUR 38.7 million in 2003, a decrease of EUR 1.2 million or 3.1%. The segment's EBITDA profitability was also negatively influenced by non-recurring items related to integration consulting and restructuring. However, the underlying profitability of this segment grew to 15.6% of net sales in 2004 compared to 15.3% in 2003 despite additional costs related to the establishment of the new Wellness division. Production reallocation to a more efficient structure and purchasing savings initiatives for raw material helped ease the effects of higher production costs driven by higher energy costs.

Vacuum Sewage Systems
Vacuum Sewage Systems EBITDA until April 14th, 2004 was EUR 1.0 million (6.8 million for the full year 2003). Effective April 14th, 2004, the operations of our Vacuum Sewage Systems business segment (Evac) were sold to the French Zodiac Group.


Subsequent Events
On February 4th, 2005, Sanitec International S.A. signed an agreement with the private equity fund EQT IV, to sell all the shares in Sanitec Oy, formerly Pool Acquisition Helsinki Oy. EQT is a leading private equity group in Northern Europe. After receiving approval from relevant competition authorities, the transaction was closed on April 11th, 2005. Through this transaction, all the operations of Sanitec Group were sold to EQT IV.

Following the closing of the sale of Sanitec, Dr Rainer S. Simon left his position as President and CEO of Sanitec on April 11th, 2005. He was succeeded by Mr Lennart Sundén as the new President and CEO as of the same date.

On February 17th, 2005, Sanitec International S.A. launched an offer to repurchase its EUR 260 million 9% High Yield Senior Notes issued on May 7th, 2002. By March 4th, 2005, the offer received tenders and consents representing over 95.2% of the Notes. In relation to the Indenture governing the Notes, this was sufficient to amend or eliminate substantially all the restrictive covenants, certain events of default and related provisions, as well as terminate the relevant pledge agreement. The High Yield Senior Notes were prepaid in connection with the closing of the sale of Sanitec Oy, formerly Pool Acquisition Helsinki Oy, on April 11th, 2005.

Following the prepayment of High Yield Senior Notes, Sanitec International S.A. has filed for deregistration from the Securities and Exchange Commission (SEC) in the United States. Sanitec International S.A. will no longer file the Annual Report as of December 31st, 2004 in Form 20-F with SEC.

Changes in Sanitec's Governance
An Extraordinary Shareholders Meeting on 22nd April 2005 elected a new Board of Directors for Sanitec. Mr Mikael Lilius was elected as Chairman. Other members are: Sven Stork, vice-chairman, Rolf Eckrodt, Andreas Tallberg and Juha Lindfors. Jussi Nyrölä was elected as deputy member.

Showerlux Shows Off its New Focus

Showerlux, the shower and bathroom expert with over thirty years experience in the market, has revealed a new business approach which provides a clearer distinction between its two key offerings.

The decision sees the Coventry based bathroom manufacturer focusing on its core business areas of bathing and showering through the development of two distinct ranges – Pure Showering and Bathing Experience. Bathing Experience will heighten awareness of Showerlux’s comprehensive bath ranges and hydrotherapy options, while integral to Pure Showering is the launch of Showerlux’s SLX shower valve range, which now enables the company to offer the complete showering solution

Bob Bowler, Managing Director of Showerlux, comments, ‘Showerlux has always been synonymous with showers but some people may have been less familiar with our extensive bathing ranges. The changes we have made will undoubtedly strengthen our business proposition. By creating a clear distinction between our two offerings we are confident of cementing our profile in the industry, attracting new consumers to the brand and increasing sales.‘

The company has devised contemporary looking brochures and separate price guides for the Pure Showering and Bathing Experience ranges. These feature stylish new lifestyle and product photography combined with detailed product descriptions.

Showerlux says that it has always been an innovator in shower related products and the Pure Showering range now reinforces the brand’s position as a complete showering provider. The range, which includes a number of new products for 2005, features everything from valves to over bath screens, as well as Showerlux’s selection of shower enclosures. Showerlux is also responding to consumer demand by enhancing its Bespoke offering to involve a comprehensive site, survey and installation service.

The dedicated Bathing Experience range was conceived by Showerlux in order to give prominence to its second core business area and in particular to create greater awareness of its hydrotherapy offering. ‘We firmly believe Bathing Experience is exactly the right proposition to communicate our credentials as a wellness brand to the consumer,’ comments Bowler.

As part of its new approach, all key qualifiying bathing and showering dealers will be entitled to attractive business packages as well as special brochures and exclusive products. They will also benefit from a simplified ordering system which will be in place from mid-April.

‘We start the year with some exciting new product development in valves, enclosures and hydrotherapy. Across both divisions, we are offering innovatively designed, quality products which we’re confident will be very popular with consumers. As a company, we’re looking forward to a busy and profitable 2005’ concludes Bowler.

Showerlux’s new positioning is being communicated by a comprehensive Direct Marketing and PR campaign, with advertising support planned later in the year.

Tel: 02476 88 25 15
Web: http://www.showerlux.com

Siemens Free Guarantee Offer Extended to Summer

Kitchen appliance manufacturer, Siemens has just confirmed that the company is extending its successful free five and ten-year guarantee offer on selected freestanding models from the end of April until 31st August 2005.

The move follows the success of the original free extended guarantee scheme, run throughout this year, which has made a significant contribution to Siemens' soaring sales figures and has proved extremely popular with the company's dealers nationwide.

The prestigious 'Serie IQ' range of washing machines (models WIQ1434GB, WIQ1634GB & new top-of-the-range 1800rpm model WIQ1834) continues to merit a free ten-year guarantee. Following the expiry of the two year standard manufacturer's guarantee, the policy can be extended for a further eight years until 31st August 2005, giving a total of ten years free cover for all parts and labour costs incurred during that time.

In addition, free guarantees on selected freestanding fridges, freezers, dishwashers and laundry appliances are now extended for a further three years to bring the total cover to five years, if purchased during the 4-month promotional period.

All applications must be made on special double-sided A4 claim forms produced for participating Siemens stockists. The forms incorporate the company's new grey corporate styling with the new strap line: 'Siemens. The future moving in'. This strap line and styling will also be on other new point of sale material - including posters and swing tickets - now available to promote the scheme.

Comments Siemens Brand Manager, Jane Massey:
‘The free extended warranty has had such a tangible effect on Siemens sales figures to date, that we have decided to extend the promotion until the summer to maintain the momentum’.

Web: http://www.siemensappliances.co.uk

The Energy Performance + Architecture Award

As the new professional event for smart building technologies, interclima+elec home&building aims to be a catalyst for the dissemination of innovations and solutions that improve the energy performance of buildings.

This ambition builds on the work of the 2004 show, which focused on this theme.
This year, Reed Expositions, the show's organiser, is working to increase awareness amongst specifiers of the challenges of energy performance. In order to achieve this, it has launched a special award, the Energy Performance + Architecture Award, to be presented to an internationally renowned architect who has paid special attention to energy efficiency in his or her recent work.

The Award will be made by an expert international jury made up of editors-in-chief and representatives of architecture magazines from five countries (France, Germany, Italy, Spain and the United Kingdom) and by Dominique Gauzin-Muller, architect and expert in environmentally friendly architecture.

The selection of the architects invited to take part and the winner will be made on the basis of the following criteria:

* the choice of high performance and low energy consumption systems (heating, air-conditioning, lighting, ventilation, controls and facilities management,...) ;
* the use of renewable energies
* the distribution of natural light;
* the application of bioclimatic principles (setting and orientation of the building, enhanced insulation of the envelope, exploitation of free, natural solar energy,...).

The award will be presented at the show in Paris in front of an invited audience of architects and students from schools of architecture, and the winner's designs will be displayed and explained.

£5 Million Pound Advertising Investment as Electrolux Group Launches across National Press on Key Kitchen Brands

Zanussi-Electrolux ‘Makes Life a little Easier' is aConsumer Press campaign for Laundry and Dishcare models to reinforce the message that the brand is all about Innovation, Design and Style developed by Advertising Agency Lowe. At the forefront of the campaign is the Jet System – a technological development which makes the range ‘the only range to power shower clothes and dishes clean’…. Utilising dynamic ‘jets’ or ‘shower’ technology saving time, water and energy … 'more like a powershower and less like a soak in the bath'

Adverts in premium National Press magazines such as Observer, Daily Mail and Guardian Weekend will hit the news stands from 28th May… with coverage across M&S Magazines and a whole range of Women and Home Titles thereafter. From June the ‘July and August issues’ of style and innovation focussed magazines such as Ideal Home, BBC Good Homes, Cosmopolitan and Marie Claire will feature the campaign.

The campaign will run in parallel to the AEG-Electrolux ‘Perfekt in Form und Funktion’ consumer advertising which covers up to to July issues of all the premium national press supplements, the major ‘food’ magazines and a spectrum of ‘homes’ titles.

The AEG-Electrolux adverts build on the success of the AEG Brand and its market share growth in the premium market in 2004. Three different advertisements highlight the LL1620 ‘Weight Sensitive’ Washing Machine, the S86378KG Fridge Freezer with ‘Longfresh Chill Zones’ and the D88004 ‘Touch Control’ Double Oven.

These AEG –Electrolux creatives are part of a broader European campaign of full colour, full page advertisements developed by the Agency BBH. Media Planning and Buying has been undertaken by Zenith Optimedia.

'The heavyweight AEG-Electrolux campaign continues to target upmarket females who are passionate about food and passionate about their homes. The choice of titles and frequency of communication will ensure that AEG is the preferred brand on the shopping list of the premium appliance purchaser,' explains Andrew Mackay, UK Electrolux Brand and Marketing Director . 'The Zanussi-Electrolux campaign focuses on innovation and style across a broader base of ABC1C2 aspirational females ensuring the brand is top of mind for those who demand quality and design-led innovaton'.

Electrolux Major Appliances Trade Sales Line:
Freestanding: Tel: 08705 650 650
Built-In: Tel: 08705 822 886