Financial results for 2006

Financial results for 2006
1 January 2006 – 31 December 2006

LM Glasfiber increases sales by 43%

By expanding capacity and improving capacity utilisation LM Glasfiber increased sales by 43% while improving profitability. In terms of MW, sales rose to an all time high of 4,100MW from 3,000MW in 2005.

• Sales in 2006 amounted to DKK 3,539 million up from DKK 2,469 million in 2005. Main drivers for the increase were strong global demand for wind power, geographical positioning in the key growth markets for wind power and a broadening of our customer base. 
• Earnings before interest, taxes, depreciation, amortisation and special items (EBITDA) amounted to DKK 796 million against DKK 416 million in 2005, and operating profit (EBIT) amounted to DKK 401 million against DKK 160 million in 2005.
• Operating profit as a percentage of sales improved from 6.5% in 2005 to 11.3% in 2006 exceeding our margin guidance of 10%. The improvement was mainly based on improved capacity utilisation, changes in product and market mix as well as price increases compensating for an increase in raw material prices in 2005.
• Investments, which in 2006 related primarily to capacity expansions in China and North America as well as the development of new blade designs and moulds were DKK 298 million. Total capacity added in 2006 was larger than reflected in investments as most of our investments in our Canadian plant were capitalised in 2005.
• Free cash flow increased to DKK 217 million compared with DKK 56 million in 2005 due mainly to the increase in operating profit.
• For 2007, LM Glasfiber forecasts sales growth of at least 25%, and operating profit is expected to represent at least 10% of revenue. Our outlook for 2007 is based on:
  • Strong global demand for wind power
  • Broadened strategic customer base and long-term contracts with key customers 
  • Continued capacity expansion of 1,000MW in China, India and Spain 
  • Expected run-in costs associated with bringing three new factories on-line in 2007 
  • Continued high capacity utilisation and expected positive cost effects from our comprehensive process improvement programme REACH.

Roland Sundén, CEO of LM Glasfiber, said: “We are at a unique moment in time when  we are starting to realise the urgency of reducing our dependence on coal,  oil and gas. And there is no doubt that wind power will become an increasingly important component of the overall energy mix in many countries.

This situation constitutes a significant value creation opportunity for LM Glasfiber.

In 2006 we have responded by expanding our global manufacturing capacity and welcoming more than 1,000 new colleagues.  We have opened a new wind tunnel to further reduce the cost of wind energy by driving innovation in rotor blade aerodynamics. During the first six months of wind tunnel testing in 2006, we have documented a potential for efficiency improvements of more than 5%.

We have launched REACH – our comprehensive process improvement programme aimed at systematically implementing and developing world class business processes and systems to continuously improve our performance in terms of quality, on-time delivery, and cost. Safeguarding our ability to consistently deliver high-quality blades on time to our customers while growing our business rapidly is an important challenge and a key focus area for management.

Finally, executing on our growth and innovation focus we expanded our strategic customer base and increased our global market share in a surging market.

All these improvements can be attributed to the dedication of our people. I would like to thank all LM Glasfiber people for your hard work and commitment in 2006.”

The financial statements were adopted at LM Glasfiber Holding A/S’s Annual General Meeting earlier today.

The Annual Report 2006 for LM Glasfiber Holding A/S is available for download at www.lmglasfiber.com/investor and supporting imagery can be downloaded from www.lmglasfiber.com/images.

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