Componenta’s Interim Report 1 Jan - 30 Jun 2007

•Net sales in the review period totalled MEUR 328.6 (MEUR 308.5). Comparable growth in net sales was 11.4%.
•Consolidated profit after financial items, excluding one-time items, was MEUR 14.8 (MEUR 15.4).
•Consolidated profit for the period after one-time items, taxes and minority interest was MEUR 25.1 (MEUR 10.8).
•Basic earnings per share was EUR 2.42 (EUR 1.18) and earnings excluding one-time items was EUR 1.00 (EUR 1.18).
•Consolidated net sales in the second quarter totalled MEUR 160.7 (MEUR 156.2) and the profit after financial items, excluding one-time items, was MEUR 5.5 (MEUR 10.1).

Due to the purchase at the end of the previous financial year and during the first quarter of 2007 of 92.6% of Döktas, which is listed on the Istanbul Stock Exchange, the figures for comparison for the 2006 income statement contained in the text of this report are all pro forma figures. The tables at the end of the report give a comparison both with pro forma figures and with the official figures for 2006.

Major events during the review period

In February Componenta sold all of its 50% holding in the shares of associated company Ulefos NV AS to the other owner of the company, Cappelen Holding AS. The shares were sold for about EUR 14 million and Componenta recorded a profit on the sale of about EUR 6.4 million.

Componenta’s offer made on 19 February 2007, in accordance with Turkish law, to purchase the remaining 26.8% of the shares and voting rights of Döktas Dökümcülük Ticaret ve Sanayi A.S., which is quoted on the Istanbul Stock Exchange, ended on 5 March 2007. As a result of the offer to purchase, at the end of the review period Componenta owns 92.6% of the shares of Döktas.

On 6 March 2007 Componenta signed an agreement to sell in an MBO the business of its subsidiary Componenta Albin AB, part of the Machine shops division, to the company’s operative management. The transaction was confirmed on 15 March 2007 after the terms for completion had been fulfilled. The selling price was EUR 14.3 million. Componenta recorded a profit of EUR 13.0 million on the sale.

In June Componenta completed the negotiations with trade unions concerning the proposal to consolidate the operations of the Componenta Åmål machine shop with Componenta Främmestad in Sweden. The consolidation of operations will take place during 2007. A provision of EUR 4.7 million was recorded in one-time costs for the review period in preparation for the costs arising from the consolidation. EUR 1.7 million of this provision was used during the second quarter. The consolidation is expected to improve the combined result of the business units by some EUR 2 million as from 2008

On 28 June 2007 Componenta signed a new five year EUR 200 million syndicated credit facility. This replaces the Group’s existing credit facilities, including the short-term loans raised in 2006 for the acquisition of Turkish foundry company Döktas.

Net sales and order book

The Group’s net sales in January – June were EUR 328.6 (EUR 308.5) million. Comparable growth in net sales was 11.4%. The order book at the end of June stood at EUR 106.9 (92.0) million.

Foundries division sales increased 5.4% from the previous year to EUR 125.1 (118.7) million.

Sales of the Machine shops division rose 15.9% to EUR 81.7 (70.5) million.

Showing the order books for the Machine shops and Foundries divisions separately is not justified because of the nature of Componenta’s supply chain. At the end of the review period the divisions had a combined order book of EUR 53.6 (48.9) million.

Net sales of the Döktas division increased 11.9% to EUR 121.7 (108.8) million. Döktas’ order book at the end of the review period stood at EUR 39.3 (33.0) million.

Componenta’s net sales by customer sector were as follows: heavy truck industry 26% (27%), off-road 36% (37%), machine building 11% (11%), power and transmission 9% (8%), cars and light trucks 17% (17%) and others 1% (1%).

Result

The interim report has been prepared in accordance with international financial reporting standards (IFRS). Componenta has prepared the interim report applying the same accounting principles as in its 2006 Financial Statements. The figures in the interim report are unaudited.

The Group’s operating profit excluding one-time items was EUR 25.4 (24.7) million and the result after financial items was EUR 14.8 (15.4) million.

The Group had one-time items totalling EUR 12.9 (0.0) million during the review period:
-Profit on sale of Ulefos AS shares EUR 6.4 million
-Profit on sale of business operations of Componenta Albin AB EUR 13.0 million
-One-time costs, provision for the financial impact of the proposal made in the negotiations to consolidate the operations of the Componenta Främmestad and Åmål units EUR 4.7 million
-Write-downs on production equipment to be scrapped and other similar items EUR 1.8 million

The Group’s net financial costs in the review period amounted to EUR -10.6 (-9.3) million. Net financial costs increased by EUR 1.5 million because of the equity hedging started in the second quarter and because of changes in exchange rates.

The Group’s operating profit was similar to that in the previous year. The operating profit of the Foundries division improved significantly from the previous year during the first half of the year. The operating losses recorded by the Karkkila foundry and the Heerlen furan foundry decreased considerably from the previous year. The operating profit of the Döktas division in the second quarter was poorer than in the previous year due to the rise in the prices of raw materials, unfavourable developments in exchange rates, and exceptionally low sales of aluminium wheels.

The result after financial items, excluding one-time items, in the second quarter was EUR 5.5 (10.1) million.

Income taxes in the review period totalled EUR -1.6 (-4.0) million.

The net result for the review period was EUR 26.1 (11.4) million.

The basic earnings per share was EUR 2.42 (1.18) and the corresponding earnings per share excluding one-time items was EUR 1.00 (1.18).

The return on investment incl. one-time items was 21.2% (12.9%) and return on equity 58.5% (20.5%).

Financing

In March the Group repaid EUR 3.2 million, or 10%, of the principal of the preferred capital notes issued in 2002 in accordance with the terms for the notes.

On 30 June 2007 Componenta Corporation had outstanding capital notes and convertible notes with a combined value of EUR 55.2 million, as defined in IFRS. During the review period 4,201 of Componenta’s convertible capital notes were converted into shares. As a result, the number of Componenta shares increased by 840,200 and the shareholders’ equity in the IFRS balance sheet rose by EUR 7.1 million.

At the end of the review period the Group had EUR 113.0 million in non-utilised long-term credit facilities. In addition the Group has a EUR 150.0 million commercial paper programme. The Group’s interest-bearing net debt, excluding the outstanding capital notes of EUR 55.2 million, stood at EUR 213.9 (102.3) million. The company’s net debt as a proportion of shareholders’ equity, including the capital notes in shareholders’ equity, was 140.3% (113.6%).

Componenta is making more effective use of capital with a programme to sell its sales receivables. Under this arrangement, some of the sales receivables are sold without any right of recourse. By the end of the period the company had sold sales receivables totalling EUR 33.5 (30.2) million.

On 28 June 2007 Componenta signed a new five year EUR 200 million syndicated credit facility to replace the Group’s existing credit facilities. The new facility strengthens Componenta’s financial position, improving the company’s capabilities to develop its core business. The banks participating in the credit facility are Swedbank AB (publ.), Nordea Bank Finland Plc, OKO Bank Plc, Bayerische Hypo- und Vereinsbank AG, ABN Amro Bank N.V., Danske Bank A/S and HSH-Nordbank AG.

Componenta’s net cash flow from operations during the review period was EUR 6.1 (11.8) million, and of this the change in net working capital was EUR -16.0 (-7.4) million. The net cash flow from investment was EUR -27.4 (-3.1) million.

At the end of the review period the Group’s equity ratio was 19.9% (20.5%). The Group’s shareholders’ equity, including the capital notes on 30 June 2007 in shareholders’ equity, as a proportion of the balance sheet total was 31.2% (33.4%). Changes in currency exchange rates increased the Group’s shareholders’ equity in the second quarter by EUR 4.3 million.

Performance of business divisions

The 2007 financial reports publish the figures for the Group’s three divisions, Foundries, Machine Shops and Döktas. In addition, the reports contain figures for Other Business, which includes the service companies, the Componenta Wirsbo forges, the Sherbrook sales company, Componenta Pistons, elimination of intra-group items, the business of Componenta Albin that has been divested, and the Group’s share of the figures for associated company Ulefos NV that has been divested.

Foundries

The Foundries division comprises the Group’s foundries in Karkkila, Pori, Pietarsaari and Iisalmi in Finland, and the foundries in Weert and Heerlen in the Netherlands.

Raw material prices continued to rise during the review period. The rising prices weakened the division’s result. The increase in prices is passed on to customer prices mainly in the following quarter. The division had net sales in the review period of EUR 125.1 (118.7) million and an operating profit of EUR 11.3 million, or 9.0% of net sales (EUR 7.2 million, 6.0%). The division’s operating profit improved from the previous year as a result of higher volumes and enhanced efficiency in operations. The operating result of the Karkkila foundry and the Heerlen Furan foundry improved significantly during the first half of the year.

The division had second quarter sales of EUR 62.0 (61.2) million and an operating profit of EUR 6.1 (4.2) million.

Machine shops

The Machine shops division comprises the Främmestad and Åmål machine shops in Sweden, the machine shops in Lempäälä and Pietarsaari in Finland, and the machine shop operations in the Netherlands. The division had net sales in January - June of EUR 81.7 (70.5) million and an operating profit of EUR 2.8 million, or 3.4% of net sales (EUR 3.4 million, 4.8%).

In June Componenta completed the negotiations with trade unions concerning the proposal to consolidate the operations of the Componenta Åmål machine shop with Componenta Främmestad in Sweden. The consolidation will take place during 2007. The goal is to transfer 80% of Åmål’s production to Främmestad during the July-September period and the remainder during the final quarter of the year. The objective of the proposed consolidation is to safeguard long-term competitiveness, which can be achieved with a larger unit and by raising efficiency in operations. The consolidation is expected to improve the combined result of the business units by some EUR 2 million as from 2008. All employees at the Componenta Åmål machine shop are being offered a job at Componenta Främmestad under their current employment terms. The Åmål machine shop employed 65 people when negotiations were started in March 2007. At the moment about half this number is still working there.

The division had second quarter sales of EUR 40.6 (35.1) million and operating profit of EUR 1.3 (1.5) million.

Döktas

The Döktas division comprises the iron foundry and machine shop in Orhangazi and the aluminium foundry and machine shop in Manisa. The division’s result in the second quarter suffered from the rise in raw material prices, unfavourable developments in exchange rates, and exceptionally weak sales of aluminium wheels. The division had net sales in the review period of EUR 121.7 (108.8) million and operating profit of EUR 10.7 million, 8.8% of net sales (EUR 12.0 million, 11.0%). The division’s order book stood at EUR 39.3 (33.0) million.

The Döktas division had net sales in the second quarter of EUR 60.2 (56.0) million and operating profit of EUR 5.1 (8.2) million. The operating profit in 2006 was exceptionally high due to favourable developments in exchange rates.

The Döktas foundry and machine shop in Orhangazi supply ready-to-install cast components mainly to the off-road industry and to car and light truck manufacturers. Döktas Orhangazi had net sales in the review period of EUR 82.4 (72.7) million and operating profit of EUR 8.1 million, 9.8% of net sales (EUR 8.2 million, 11.2%).

The Döktas aluminium foundry and machine shop in Manisa mainly manufacture aluminium pressure cast components and aluminium wheels. Döktas Manisa had net sales in the review period of EUR 39.3 (36.1) million and operating profit of EUR 2.6 million, 6.7% of net sales (EUR 3.7 million, 10.2%).

Other Business

Other Business comprises the service companies, the Componenta Wirsbo forges, the Sherbrook sales company, Componenta Pistons, elimination of intra-group items, the business of Componenta Albin that has been divested, and the Group’s share of the figures for associated company Ulefos NV that has been divested.

Other Business had an operating profit excluding one-time items in January - June of EUR 0.6 (2.2) million. The factors affecting the operating profit for Other Business were the divestments (Ulefos NV and Albin) and the one-time elimination of the intra-group margin between Döktas and Sherbrook.

Shares and share capital

The shares of Componenta Corporation are quoted on the Small Cap segment of the OMX Nordic Exchange in Helsinki. At the end of the review period the company's share capital stood at EUR 21.7 (19.3) million. On 30 June 2007 the quoted price of Componenta Corporation shares stood at EUR 13.36 (6.55). The average price during the review period was EUR 11.68, the lowest quoted price was EUR 8.49 and the highest EUR 14.37. At the end of the review period the share capital had a market capitalization of EUR 145.1 (63.8) million and the volume of shares traded during the review period was equivalent to 27.5% (30.2%) of the share stock.

On 8 May 2007 Componenta received notification from Simo-Pekka Inkinen that the share of the voting rights and share capital carried by the shares in Componenta Corporation under his control had fallen below the 5% limit in a share transaction on 8 May 2007. On 30 June 2007 the share of the voting rights and share capital carried by the shares in Componenta Corporation under the control of Simo-Pekka Inkinen was 3.49%.

During the review period 577,000 new Componenta Corporation shares were subscribed with 2,885 capital notes from the convertible capital notes issued by Componenta Corporation in 2006. As a result of the conversion, the share capital of Componenta Corporation rose by altogether EUR 1,154,000 and the invested non-restricted equity fund by EUR 4,039,000.

A total of 263,200 new Componenta Corporation shares were subscribed with 1,316 capital notes from the convertible capital notes issued by Componenta Corporation in 2005. As a result of the conversion the share capital of Componenta Corporation rose by altogether EUR 526,400 and the share premium account by EUR 2,105,600.

The increases in share capital were registered in the Trade Register on 16 March 2007, 14 May 2007, 4 June 2007 and 28 June 2007. After these increases the registered share capital of Componenta Corporation is EUR 21,724,996 and the company has 10,862,498 shares.

The new shares are traded on the OMX Nordic Exchange in Helsinki, Small Cap list in Componenta Corporation’s share series (CTH1V). The new shares entitle holders to a dividend as from the date of registry in the Trade Register.

Share-based incentive scheme

The Board of Directors of Componenta Corporation has decided on 3 April 2007 under the authorization given by the Annual General Meeting to establish a share-based incentive scheme for the period 2007 - 2009. The scheme comprises three one-year earnings periods which are the calendar years 2007, 2008 and 2009. The bonuses will be paid in 2008, 2009 and 2010 partly in company shares and partly in cash. The part to be paid in cash will cover the tax and similar charges arising from the bonus. There is a ban on selling the shares for two years after the end of the earnings period.

Any yield from the scheme is based on the Group’s profit after financial items and the Group’s return on investment. In the 2007 earnings period the target group contains 39 persons. If the targets set for the scheme are met in full, the scheme will pay a bonus of a maximum of 180,000 Componenta Corporation shares. On 30 June 2007 the scheme covered a maximum of 60,000 Componenta Corporation shares. The President and CEO accounted for a maximum of 12,000 out of the total figure, and other key personnel altogether for a total maximum of 31,500 shares. The scheme had an impact before taxes on the result in the review period of EUR 0.05 million.

Purchasing and disposing of company shares

Under the authorization of the AGM held on 26 February 2007 the Board of Directors may decide to purchase a maximum of 1,000,000 of the Company’s own shares using the Company’s unrestricted shareholders’ equity.

The shares shall be purchased in public trading, for which reason they will be purchased other than in proportion to the holdings of shareholders. The purchase price shall be based on the market price for Componenta shares in public trading. The shares shall be purchased on the OMX Nordic Exchange in Helsinki and in accordance with its rules and regulations.

The Board of Directors may not implement the authorization to purchase the Company’s own shares if after the purchase the Company or its subsidiary would possess or hold in pledge altogether more than 10 per cent of all the Company’s shares. The authorization does not exclude the right of the Board of Directors to decide on a direct purchase of shares.

The AGM authorized the Board to decide to issue shares and grant, option rights and other special rights with an entitlement to shares under the following terms and conditions:

1.Under the authorization the Board may decide to issue shares and grant option rights and special rights as defined in chapter 10, section 1 of the Finnish Companies Act such that a maximum total of 2,000,000 shares are issued under the authorization. The authorization does not exclude the right of the Board of Directors to decide on a direct issue of shares.

2.The authorization is valid for a period of five years from the date of the decision of the AGM.

The Board has to date not exercised either of these authorizations.

Investments

Componenta’s investments in production facilities during the review period totalled EUR 10.4 (4.3) million, and finance lease investments accounted for EUR 0.1 million of this. The net cash flow from investments was EUR -27.4 (-3.1) million. This includes EUR 37.7 million used during the first quarter to purchase Döktas shares on the Istanbul Stock Exchange and in the offer to purchase shares that was compulsory under Turkish law, and the cash flows obtained from the sale in the same quarter of Componenta Albin and associated company Ulefos NV.

Board of Directors and Management

Componenta’s Annual General Meeting of Shareholders on 26 February 2007 elected the following to the Board of Directors: Heikki Bergholm, Heikki Lehtonen, Juhani Mäkinen, Marjo Raitavuo and Matti Tikkakoski. The Board held its organization meeting after the AGM and elected Heikki Bergholm as its Chairman and Juhani Mäkinen as Vice Chairman.

At the end of the review period the corporate executive team of Componenta Group comprised the following: President and CEO Heikki Lehtonen; Yaylalý Günáy, Managing Director, Componenta Döktas; Hakan Göral, Sales Director, Componenta Döktas; Olli Karhunen, Director, Foundries; CFO Matti Kivekäs; Jari Leino, Director, Sales and Product Development, Heavy Trucks; Anu Mankki, Director, Human Resources; Marc Omes, Director, Group Sales and Product Development; Marko Sipola, Director, Business Development; Michael Sjöberg, Director, Machine Shops, and Communications Manager Pirjo Aarniovuori.

Personnel
During the review period the Group had on average 4,214 (4,046) employees. The number of Group personnel at the end of the year including contract labour was 5,037 (5,127). At the end of June 50% (49%) of the Group’s personnel were in Turkey, 23% (23%) in Finland, 17% (17%) in the Netherlands, and 10% (11%) in Sweden.

Risks and uncertainties in the near future

Price fluctuations for Componenta Group’s main raw material, recycled metal, affect the sales margins on the Group’s products. When the price of recycled metal rises, the increase in the price of the raw materials can be passed on to the products supplied to customers after a certain delay, so price increases in recycled metal reduce the sales margin temporarily. When prices of recycled metal go down the Group’s margins improve for a while.

The electricity consumption of the Group’s foundries and machine shops creates a spot price risk for the purchased electricity. The Group purchases electricity price forwards to hedge against the impact of electricity prices on the financial performance. The target hedging level for the forecast electricity consumption by the Group’s production plants is 90% for the next 12 months, 60% for the following year and 40% for the third year. Trading in electricity price forwards has been outsourced. The Group aims to pass on the increase in the price of electricity to customers with a separate electricity surcharge.

Appropriate insurance has been taken against risks associated with assets and interruption of operations and to minimize indemnity.

The financial risks relating to Componenta Group’s business operations are managed in accordance with the financial policy approved by the Board of Directors. This aims to protect the Group against adverse changes in the financial markets and safeguard the performance of the Group and its financial position. Management of financial risks takes place in the corporate treasury function.

Following the acquisition of Döktas, Componenta now has a significant currency position in Turkish lira. The company hedges the translation and transaction risks in accordance with its treasury policy. Despite the hedging, however, any changes in the value of the Turkish lira in relation to other currencies, especially the euro, US dollar and GB pound, may have an impact on Componenta’s financial performance in the short term.
The Group has no significant concentration of risk for receivables. The Group recognized no major credit losses in 2006.

The company is not party to any significant contracts that will come into force, that can be amended or that can cease to be valid if control of the company changes in consequence of a public purchase offer.

Prospects

Componenta’s prospects in 2007 are based on general external financial indicators, order forecasts given by customers, and on Componenta’s order intake and order book.

Demand for heavy truck components remained strong in the second quarter of 2007.

Demand for components in the off-road, power and transmission, and machine building industries continued to grow in the second quarter compared to the corresponding period in the previous year.

Demand from car and light truck manufacturers in the second quarter fell short of that in the previous year due to exceptionally poor sales of aluminium wheels.

The demand outlook in the Group’s customer sectors looks good for 2007. Rising interest rates and unfavourable developments in exchange rates may weaken prospects in the second half of the year.

Combining the operations of Componenta and Döktas is expected to achieve synergy benefits of EUR 10 million by the end of 2008. Some of the synergies are expected to improve the company’s result in the final half of the year. The efforts to enhance the performance of the Karkkila and Heerlen units are continuing during 2007. It is estimated that the operating result at the units will improve significantly during the current year.

At the end of the review period the order book at Componenta was at a higher level than at the same time in the previous year.

Componenta Group’s 2007 net sales are expected to increase and the result after financial items, excluding one-time items, to improve on the corresponding pro forma figures for 2006.


Helsinki, 17 July 2007

COMPONENTA CORPORATION

Heikki Lehtonen
President and CEO


Further information:

Heikki Lehtonen
President and CEO
tel. +358 10 403 00

Matti Kivekäs
CFO
tel +358 10 403 00