Recticel S.A. Business Report FY2010

Business Highlights

Financial Overview

(in million euros)

	FY2010	FY2009	Rate of change (%)	Factors
Overall
Sales	1,348.4	1,276.7	5.6	-
EBITDA	83.5	102.3	(18.4)	-
Automotive
Sales	324.9	289.4	12.3	1)
EBITDA	26.9	(6.9)	-	2)

Factors
Automotive Division
1）
-Sales in Automotive increased by 12.2% to EUR 324.9 million.This improvement is mainly attributable to higher sales volumes in ‘Interiors’ (EUR 170.2 million; +22.3%). This division mainly supplies the premium segment, which was the hardest hit by the global economic crisis in 2009. In 2010, sales in all countries (Western & Eastern Europe, USA and China) recovered significantly. The premium car market segment remained strong (both in Europe and the USA), and was further pulled by the demand in emerging economies such as China.

-Sales in ‘Seating’ (Proseat - the 51/49 joint venture between Recticel and the Canadian group Woodbridge) which focuses more on the low-to-mid segment of the car market, increased by 4.5% to EUR 136.6 million. The lower growth in this segment is explained by the progressive reduction of various governmental incentive programs for car renewals which had boosted demand in the previous year.

-Sales in ‘Exteriors’ (EUR 18.1 million, -7.4%) were slightly down. Since the divestment of the compounding activities to BASF in 2008, sales are limited to compounds produced for the account of BASF under a toll agreement.

2）
-EBITDA of the Automotive business line increased from EUR –6.9 million to EUR 26.9 million, including net non-recurring elements of EUR –6.1 million (2009: EUR –20.7 million). These non-recurring elements include mainly restructuring costs in Germany (‘Interiors’ - Unterriexingen) and in Belgium (Proseat Hulshout).

-The profitability of ‘Interiors’ improved significantly due to the impact of (i) considerably higher volumes, (ii) the effect of different restructuring measures that have been taken and implemented over the last years, and (iii) the fact that in April 2010 two US subsidiaries emerged from Chapter 11. Despite higher sales, the result for ‘Seating’ (Proseat) came out lower on the back of higher raw material prices and the effect of the restructuring costs in Belgium (EUR 4.8 million).

Exit from Chapter 11

-The Company announced that the US Bankruptcy Court has approved a restructuring plan of its US subsidiaries - Recticel Interiors North America (RINA) and Recticel Urepp North America (RUNA) - clearing the way for them to exit from Chapter 11 after roughly six months. (From a press release on April 14, 2010)

Plant Closure

-Proseat GmbH + Co. KG of Germany, a joint venture of Recticel S.A. and Woodbridge Foam Corporation, announced its intention to close the plant in Hulshout, Belgian for the poor financial results for 2010. The plant manufactures foam cushions, supplying them to the two auto manufacturers in the region, namely GM in Antwerp and Ford in Genk. However, the former closed its doors and the latter has put its entire production of car seats, including the production of foam cushions, into the hands of Lear Corporation. (From a press release on January 14, 2011)