Continued problems in Exel Sports Brands

EXEL OYJ STOCK EXCHANGE RELEASE 23.10.2007 at 18.30 1 (1)

Continued problems in Exel Sports Brands

Measures have been taken at Exel Sports Brands business with the aim of improving profitability. Surface treatment, assembly and packaging of pole and floorball products have been transferred to China. In addition, the warehousing and delivery operations have been outsourced to a service provider.

Exel has experienced delays in deliveries from its Chinese pole suppliers and in addition had quality problems linked to the production transfer. Furthermore, a weak sporting goods market has continued to impact sales negatively.

This, in combination with high costs to overcome late deliveries from suppliers as well as domestic forwarders, has led to a continued negative result. The lower than expected sales has also led to an overstock situation which will require write-offs of inventory in the third quarter as well as impairment of intangible and tangible assets. In addition, related manufacturing equipment will be written down.

A negative impact of EUR 4.2 million will be recorded in the third quarter results of which EUR 3.5 million relates to the Sports Brands business. The weak development in Sports Brands together with the necessary write-offs means that the Exel Group will show a loss before taxes of EUR 2.9 million in the third quarter.

In the interim report for second quarter released on 25 July 2007 Exel expected the full year profit before taxes to improve compared with the 2006 profit before taxes and non-recurring items. Due to the write-offs and impairment losses of 4.2 million, Exel now expects the profit before taxes for 2007 to be lower than the 2006 profit before taxes and non-recurring items (EUR 6.0 million). Still, the profit before taxes and non-recurring items is expected to be better than in 2006.

As previously communicated, Exel Sports Brands is no longer a core activity within the Exel Group. Exel has reviewed different structural alternatives and continue to seek a strategic partner with a long-term interest in developing the Exel Sports Brands business.

The third quarter results will be published at 11.00 Finnish time on October 30th.

Vantaa, 22 October 2007


Exel plc Göran Jönsson
Board of Directors President & CEO


Further information:
Mr. Göran Jönsson, President & CEO, tel. +46 708 430 110, or email goran.jonsson@exel.fi
Mr. Ilkka Silvanto, CFO, tel. +358 50 598 9553, or email ilkka.silvanto@exel.fi

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Exel is technology company which designs, manufactures and markets composite profiles and tubes for industrial applications and sports equipment. Exel’s operations consist of two divisions: Exel Composites, the Industry Division of Exel, and Exel Sports.

The personnel's expertise and high level of technology play a major role in Exel's operations. The core of the operations is based on own, internally developed composite technology, product range based on it and the domination of selected market segments with a strong quality and brand image. The company's growth is based on permanent search of new applications and development in co-operation with customers. Exel concentrates on niche segments and on profitable growth. Exel’s share is listed in the Mid Cap segment of the Helsinki Stock Exchange’s Nordic list.