Gamma Holding's third quarter performance

In the third quarter, Gamma Holding's turnover was 3% up on the comparable period in 2004, rising to EUR 212 million (2004: 206 million). Despite pressure on prices and higher raw material prices, the net group result (excluding restructuring costs) remained more or less stable at a profit of EUR 6.1 million (2004: EUR 6.4 million).

In the third quarter, the turnover of the Gamma Technologies sector rose as a result of an upward trend in Belting and Coating & Composite Technology. The turnover of the Belting Technology business unit showed an increase right across the board. This business unit was also able to benefit from the increase in the supply of conveyor belts to major airports, with the first deliveries being made to Beijing Airport in the third quarter. The Coating & Composite Technology business unit posted increased turnover in almost all of the product groups in which it is active. The turnover of the Filtration and Sailcloth Technology business units remained more or less stable. Overall, this sector's turnover rose by 8% to EUR 120 million (2004: EUR 112 million).

In the third quarter, the turnover of the Gamma Comfort & Style sector fell by 2% to EUR 92 million (2004: EUR 94 million). Although turnover was up in Car Fabrics, there was a slight decline in Sleep Care Fabrics. Exotic Fabrics is still facing difficult circumstances, in particular in Côte d'Ivoire and Ghana. Because sales of the local brands Uniwax (Côte d'Ivoire) and GTP (Ghana) are lagging behind, measures are being prepared to adjust the volume of production. In the Netherlands, it is intended that further efficiency measures be taken at Vlisco Helmond.   

Over the first nine months, turnover amounted to EUR 643 million, the same as for the corresponding period of 2004. The net group result (excluding restructuring costs) rose by 3% to a profit of EUR 21.4 million (2004: EUR 20.7 million). Mainly as a result of the closure of Juapong Textiles Ltd. in Ghana (Exotic Fabrics) with effect from 1 July this year and further restructuring measures, the net group result came to a profit of EUR 12.7 million (2004: EUR 20.5 million).

Progress in ‘Planning for growth'

Good progress was made in the third quarter with the 'Planning for growth' project that was commenced in 2004. This project forms the basis for more rapid growth and improved results within the Gamma Technologies sector over the coming years.  

At Belting Technology the centralisation of the manufacturing activities in the Czech Republic is proceeding according to plan. Furthermore, a start has been made, in connection with the further implementation of efficiency measures, on the redistribution of production activities among locations in Spain and the Netherlands. In July the sales network was strengthened with a new joint venture in Hungary.

Filtration Technology has made the necessary preparations to commence sales and manufacturing activities in Eastern Europe, India and China. The focus of these activities is to promote further growth and to improve the cost structure. 

The Coating & Composite Technology business unit is expanding according to plan in Southern Europe and attractive emerging markets. 

Measures at Sleep Care Fabrics

For some time now Sleep Care Fabrics has been faced with a decline in sales of jacquard mattress ticking, whilst in Europe, in particular, the margins have been under pressure. Partly in view of the increasingly tough competition from local manufacturers in the export markets in which Sleep Care Fabrics sells its products, the business unit is speeding up its strategy to bring costs into alignment with the geographic spread of its activities. 

This means that the production capacity in Mexico, amongst other places, will be increased. For exports from Belgium to countries within Europe, the intention is to transfer much of the production capacity to low(er)-wage countries (Czech Republic and Turkey). Implementation of this plan would mean that two of the three factories in Belgium will have to be closed before the end of 2007. There will be consultation with the social partners about this plan.  

Prospects for 2005

In accordance with previous statements, Gamma Holding expects the net group result (excluding restructuring costs) for 2005 as a whole to be in the same order of magnitude as in 2004. Because of the intended restructurings, particularly in Sleep Care and Exotic Fabrics, the restructuring costs are expected to be substantial. Furthermore, possible divestments could also have a negative impact on the net group result. As a consequence of these far-reaching measures, the net group result for 2005 is expected to be negative.

Gamma Holding will publish its final annual figures for 2005 on Friday, 24 February, 2006.

This press release replaces the trading update that had been scheduled for 11 November.

Executive Board of Gamma Holding N.V.

Helmond, The Netherlands, 2 November 2005

Profile

Gamma Holding develops, manufactures and sells innovative, high-quality textile-based products throughout the world. In 36 countries, around 8,000 employees are active. Its headquarters are located in Helmond (The Netherlands) and its shares are listed on Euronext Amsterdam.

Gamma Holding comprises two sectors, Gamma Technologies and Gamma Comfort & Style, with activities in the field of process and conveyor belts, filters, coatings and composites, sailcloth, mattress ticking, car fabrics and exotic fabrics. With these products the company is a leading global player in its selected niche markets.