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High raw material prices to hit Uster's sales
14
Oct '08
Unexpected Deterioration in Economic Situation - 2008 revenue expected to be around CHF 150 million, Strong EBITA margins of 22% - 24%

Uster Technologies Ltd, the leading high technology instrument manufacturer of products for quality measurement & certification for the textile industry, announced an update on its 2008 outlook.

At the half year, declines in consumer spending, strong currencies (China and India), high raw material prices and over-supply of yarn were having an impact on Uster Technologies' client base, which were reflected in significantly reduced investments in production machinery.

Nevertheless,investments in testing systems were still at good levels. However, the recent deterioration of the world's finance and banking sector has had major impacts on economies worldwide, which was not foreseen at the half year.

This results in a negative impact on Uster's customers' investment plans and along with restricted ability to obtain credit, has led to a further decline in demand for machinery as well as testing systems. As a consequence, for the full year 2008, Uster Technologies expects revenues to be around CHF 150 million (compared to CHF 187 million in the previous year).

In spite of the demanding economic situation, the Company's flexible business model & low cost base allows Uster Technologies to keep its strong EBITA margin in the range of 22% – 24%. The net result is expected still to increase significantly compared to the previous year.

This improvement is mainly due to a lower cost level, lack of one-time items and a decrease in interest expense following the refinancing after last year's IPO.

Despite the current downturns in the world's textile markets, Uster Technologies is convinced that in the midterm, there will be an ongoing focus on improving quality of textile products as a key differentiator for producers.

As such, investments by the Uster Group in R&D are expected to continue to ensure a strong pipeline of future new roducts.The Asian markets, especially China, will continue to offer great opportunities and the expansion of Uster Technologies into the midsegment will continue, although at a slower pace in line with current market trends.

The Uster Group provides testing and monitoring instruments, systems and services that allow optimization and certification of quality through each individual stage of textile production; from the raw textile fiber, such as cotton, wool or synthetic filament yarns to the final finished fabric. The Uster Group provides benchmarks that are a basis for the trading of textile products at assured levels of quality across global markets.

Uster Technologies AG

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