NIBE Industrier implements programme to reduce stocks and cut costs and revises its full-year forecast

NIBE Industrier implements programme to reduce stocks and cut costs and revises
its full-year forecast 
“The background to this is that prior to the 2007 financial year we made
preparations to meet an increase in volumes in line with the substantial growth
experienced over the past few years. It was our opinion that the market would
continue to develop positively for all three of our business areas,” says
Gerteric Lindquist, CEO of NIBE Industrier. 
 
During the first six months of the year sales trends for NIBE Element and NIBE
Heating did indeed develop positively. Sales for NIBE Stoves, on the other
hand, did not shown the same strong growth as in recent years, chiefly as a
result of the fact that the markets as a whole in both Germany and Denmark
contracted significantly. 
 
“Until now we have been of the opinion that the second half of the year would
continue to see NIBE Element and NIBE Heating develop well at the same time as
NIBE Stoves showed a strong recovery. 

However, with just over three months of 2007 to go, we now believe that this
year's increase in sales for the NIBE Group will be less than previously
estimated. This is a consequence of a notable weakening in demand in the
overall heat pump market in Sweden and slower than anticipated growth in the
heat pump market in Germany. Despite a marked rise in demand for the products
of NIBE Stoves over recent months, it is now our opinion that sales for the
year as a whole will remain more or less on a par with those for 2006. 
 
“This means that both our current rate of production and the levels of stocks
in our warehouses are too high, both for heat pumps and wood-burning stoves.
Consequently we must reduce our production rate over the remainder of the year.
The fixed cost base must also be reduced to correspond better to the lower rate
of growth.” 

In terms of manpower this means a reduction of approximately 100 employees in
Markaryd. Negotiations in accordance with the terms of Sweden's law on
co-determination in the workplace will begin immediately. 
 
An intensive project to save materials has already been in place for some time
in the NIBE Group: material costs have been rising more quickly than we have
been able to compensate ourselves for through increased prices. 

The cost-cutting programme aims to reduce the fixed cost base at the Markaryd
unit by SEK 50 million in 2008 compared to today's levels. 
 
“For 2007 as a whole we believe that the increase in sales for the NIBE Group
will amount to around 10%, while the pre-tax profit is expected to be
approximately 10% less than in 2006,” says Gerteric Lindquist. 

“The weakening trend that we have now noted has, however, not changed our view
of the NIBE Group's future opportunities for growth. NIBE's long-term
objectives remain unchanged. This means, for example, that by 2011 at the
latest we will have increased annual sales to SEK 10 billion while still
maintaining good profitability.” 

Yours sincerely,
NIBE Industrier AB

Benny Torstensson
Information Manager

For further information, please call +46 (0)433 - 73 000 or +46 (0)70 - 530 20
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