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Higher Sales and Lower Profits

January 30, 2004

In the business year 2003, Forbo increased sales to CHF 1 599 million or 4 % compared with the previous year. In local currency the increase is 7 %. The annual profit reduced by restructuring costs will be only slightly higher than the amount recorded for the first half-year (CHF 14 million).

With sales of CHF 729.0 million, the flooring business declined by 1.7 % in local currency. Losses with linoleum caused by the general weakness in large building construction could partly be offset by a broader offer of vinyls for the contract market. All in all the market position was strengthened.

With adhesives Forbo reached sales of CHF 572.9 million. This corresponds with an increase by 22.2 % in local currency which is mainly due to the acquisitions made in 2002. Whereas the economic conditions continued to be difficult in Europe, a positive trend could be observed in the fourth quarter in North America where 40 % of sales are realized.

The belting business under the name of Siegling sold products worth CHF 297.0 million, 1.4 % more than in the previous year in local currency. Despite strong competition and difficult market conditions, slight increases could be realized in segments such as the food and printing industries.

All in all the sales development in West Europe remained unsatisfactory. Positive exceptions are France and Southern Europe for floor coverings and adhesives, and Germany for belting. Eastern Europe, North America, and notably Asia stayed on a growth course for all three businesses. This trend accelerated in the last two months of the year 2003. However, the Dollar weakness had an increasingly negative impact on the development of margins in both North America and Asia.

The profit decrease shown in the half-year report continued as a result of the economic environment combined with a further decline of margins and the increasing Dollar weakness. The program to cut some 220 jobs or 4 % of the total Group workforce announced in October 2003 has been largely completed. The restructuring costs associated with the program have an additional negative impact on annual profits. Consequently, the results for the total business year are expected to be only slightly above the results of the first half-year (CHF 14 million). The free cash flow development is likely to be more positive with a considerable surplus being expected also for 2003. The final results will be published on March 23, 2004 at the occasion of the financial media conference.

Changes in the Executive Board

Martin H. Richenhagen, Executive Board member, with responsibility for the flooring business, will take over the position of CEO in an international Company that was offered to him. Forbo regrets Richenhagen’s decision to leave the company in view of the fact that he could be won for the flooring business only last year. His designated successor is 48 years old Tom Kaiser. Kaiser´s latest position was that of a General Manager with the Wolf Group, a leading European company in the field of heating, air conditioning and ventilation technology. The function will be handed over in March 2004.

Forbo is a worldwide producer of floor coverings, adhesives and conveyor and drive belts. The company employs about 5 600 people and has an international network of 32 production companies in 12 countries and 60 marketing organizations in 30 countries.

Contact:

Ursula Leonhard
Head of Corporate Communications
Tel: + 41 1 868 25 69
Fax: + 41 1 868 35 69

Gerold Zenger
Chief Financial Officer
Tel: + 41 1 868 25 25
Fax: + 41 1 868 25 26