Bong optimises production structure in Finland

Kristianstad, 9 May 2006

Bong has today announced a decision to adjust the production structure in the company’s Finnish operations. In line with this, envelope manufacturing in Tampere will be successively transferred to Bong’s factory in Kaavi, in Eastern Finland, over a period of two years. At the same time, the Group’s Finnish printing operations will be concentrated to the Tampere area. The new production structure is expected to yield cost savings of EUR 2.2 million annually, and to reach full effect from mid-year 2008. As a result of these changes, staffing in Bong’s Finnish subsidiary will be reduced by around 60 full-time positions. ”This is a concrete example of the Group’s systematic efforts to improve operating productivity through increased co-ordination between units and by moving production to areas and countries with lower costs”, says Bong’s Managing Director and CEO, Anders Davidsson. ”Since the acquisition of Kirjekuori Oy in 2004, we have had envelope manufacturing and printing in two locations in Finland. Today’s decision will change that and enable us to achieve valuable cost synergies”, adds Anders Davidsson. ”We have relatively low costs in Kaavi for overheads such as rents, which is decisive for our long-term profitability and competitiveness in Finland. In Tampere we intend to eventually move into smaller and more suitable premises for printing operations, which will lead to lower rents. Locating the printing facility in Tampere is only logical in view of its proximity to the Helsinki area and the experienced printers we have at our Tampere facility.” The restructuring costs are estimated at approximately EUR 0.8 million, of which the entire amount will be reserved as a provision and thereby charged to profit in the second quarter of 2006. Furthermore, the Kaavi factory will be expanded in two stages, partly to accommodate additional envelope machines and partly to provide new warehouse facilities. These investments are expected to reach approximately EUR 0.6 million in 2006 and around EUR 1.2 million in 2007. The first step of the restructuring and downsizing process will begin immediately.