SURTECO SE: Cautious optimism for 2017

- Consolidated net profit up by 35 % in 2016 compared with the previous year

- Healthy balance street structure secures future growth

- Payout ratio at 52 %: dividend proposal unchanged at EUR 0.80 per share

- Outlook for 2017: increases in the prices of raw materials put a brake on earnings growth - EBIT target of EUR 42-46 million

Buttenwiesen-Pfaffenhofen, 28 April 2017 - SURTECO SE, one of the world's leading manufacturers of decorative surface materials and producer of technical extrusions (profiles), draws a positive conclusion for the business year 2016. The results show that earnings before the financial result and income tax (EBIT) improved by 31 % to EUR 40.9 million (2015: EUR 31.1 million) and therefore achieved the original target corridor of EUR 38 - 42 million. The profit after tax and the earnings per share even increased by 35 % to EUR 23.9 million (2015: EUR 17.7 million) and to EUR 1.54 respectively (2015: EUR 1.14). Improved profitability and significantly lower one-off expenses enabled both Strategic Business Units to grow their earnings. Although SURTECO generated a new record value for consolidated sales of EUR 639.8 million (2015: EUR 638.4 million), the slack demand in the second half of the year in the Strategic Business Unit Paper meant that we were unable to achieve the targets we had defined for ourselves. The consolidated increase in sales was primarily based on the first contributions to sales made by the British Nenplas Group on 1 December 2016.

"SURTECO is once again an attractive dividend stock in 2016 with a payout ratio of 52 % and a return of around 3.4 %. Although the current high cost of raw materials has put a brake on earnings, we are cautiously optimistic for 2017," commented Dr. Herbert Müller, the Chairman of the Board of Management of SURTECO SE, on the development.

After the dividend was recently significantly increased several times and the payout ratio had therefore risen significantly above the desired long-term level of 50 % of the consolidated net profit, SURTECO intends to return to this level for the business year 2016. Accordingly, the Board of Management and the Supervisory Board will submit a proposal to the Annual General Meeting on 29 June 2017 to pay out an unchanged dividend of EUR 0.80 per share. Based on the closing price of the share for 2016, this represents a dividend return of around 3.4 %.

Significant growth in earnings in the two segments

There were positives and negatives for the year 2016 in relation to the two Strategic Business Units of SURTECO SE. While sales in the Strategic Business Unit Plastics went up by around 4 % to
EUR 254.4 million (2015: EUR 243.7 million), development in the Strategic Business Unit Paper fell back by -2 % to EUR 385.4 million (2015: EUR 394.7 million) and therefore lagged behind expectations. The reasons for this were the follow-on effects relating to the relocation of the decorative printing activities. By contrast, the two segments demonstrated significant improvements for EBIT (EBIT paper segment: +47 % to EUR 25.3 million and plastics segment +19 % to EUR 22.1 million). At the end of the year, the number of employees climbed by 5 % to 2,833 on account of the acquisition of Nenplas.

Sustained high balance sheet quality continues after takeover of Nenplas

SURTECO posted a very high balance sheet quality after the Nenplas takeover. Hence, on 31 December 2016, the equity ratio once again increased slightly from 51.0 % in the previous year to 51.4 %. The level of debt (39 % after 38 % in the previous year) and the net financial debt (EUR 135.6 million after EUR 126.6 million in the previous year) rose only slightly in spite of the Nenplas acquisition. On account of the increased acquisition-related investments, the free cash flow in 2016 was EUR 4.1 million (2015: EUR 40.7 million). The Group therefore continues to have a sound platform for the future corporate growth the Group has as its objective.

Outlook for 2017: Prices of raw materials put a brake on potential for growth

On the basis of the first-time full consolidation of the Nenplas Group, the Board of Management is projecting a slight increase in consolidated sales for the business year 2017. Nenplas is part of the Strategic Business Unit Plastics and this segment is likely to experience modest organic growth and increase significantly overall. Stable development is anticipated overall for the paper segment. On the earnings side, massive price increases for the important raw materials ABS (acrylonitrile butadiene styrene) and titanium dioxide are exerting negative burdens. These increases can only be passed on with a time lag. SURTECO can counteract the increase in the prices of raw materials by the earnings contribution of the Nenplas Group and a further improvement in profitability. Overall, EBIT is projected to increase to a level between EUR 42 and 46 million in 2017.

You will find the Annual Report for the year 2016 and additional information about SURTECO SE on the Internet at www.ir.surteco.com.

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Profile of SURTECO
SURTECO SE, Buttenwiesen-Pfaffenhofen, is a leading international specialist for surface technologies. The product portfolio includes papers printed with decorative designs, impregnated products, release papers, decorative flat foils and edgebandings based on specialist papers for technical applications and plastics. The extensive product portfolio is completed by skirtings made of plastic, technical extrusions for industry and do-it-yourself ranges and shutter systems.
The Group currently has a workforce of appr. 2,800 and manufactures at 23 sites on four continents, currently generating approximately 27 % of sales in Germany, 44 % in European countries outside Germany and the remainder in America, Asia and Australia. Customers of SURTECO generally come from the wood based materials, flooring and furnishing industry and the interior industry.
The shares of SURTECO SE are listed on the official market (Prime Standard) of the Frankfurt and Munich Stock Exchanges under the ticker symbol SUR and ISIN DE0005176903. They are also traded on the stock markets in Berlin, Düsseldorf, Stuttgart Hamburg and Hannover.

Cautionary note regarding forward-looking statements

This press release contains statements of future forecasts or expectations and other forward-looking statements and involves known and unknown risks and uncertainties. There is therefore no guarantee for the statements and expectations expressed herein. The actual results and developments may differ substantially. The company does not intend to - and assumes no obligation - to update any forward looking statements contained herein or to adapt such information to future results or developments.

Important indicators of SURTECO SE (in EUR million)

¹ Difference to balance of segment earnings due to internal clearing
² Based on an number of shares amounting to 15,505,731
³ For the business year 2016: Dividend proposal to the Annual General Meeting
⁴ Net debt / Equity