STOCKHOLM, Sweden, March 22, 2004 (PRIMEZONE) -- In compliance with the Swedish Co-determination Act, Pergo has decided to begin negotiations with the unions regarding concentration of production of premium products for the European market to the plant in Trelleborg. Approximately 120 persons at Pergo's Swedish units will be made redundant as a consequence of this decision. Pergo intends to transfer production from Perstorp to Trelleborg, while certain new investments also will be made in Trelleborg.
A reduction of Pergo's product cost is necessary to meet the company's long-term financial goal of an operating margin of at least 8 percent. An overview of the production structure has been under way during the winter. The work related to the European structure has now been finalized and a decision taken to initiate negotiations with the unions regarding changes within the Swedish units.
The plan is to transfer major parts of the production equipment required to manufacture premium products for the European market from Perstorp to Trelleborg. In addition to this, the personnel demand in Perstorp will also be affected by the earlier taken decision to shift production to the US. A minor part of production requiring environmental permit will remain in Perstorp. In total, approximately 120 persons will be given notice, most of them in Perstorp. Some 20 persons will be offered work in Trelleborg. The redundancy notices will be implemented in two stages, in which 45 persons will be given notice immediately. The timetable for the total structural change is estimated at one and a half years.
Total restructuring costs are estimated to amount to approximately SEK 250 M, of which SEK 150 M pertains to the write-down of fixed assets. The costs will be charged against earnings in the first quarter of 2004. The annual effect on earnings of the decided changes is estimated at about SEK 80 M, whereof the major part will be achieved in 2006.
The company will invest about SEK 80 M at the plant in Trelleborg during the coming year to meet prevailing market demands and to facilitate the structural change. SEK 55 M of the total investment is related to new production equipment.
For further information, please contact: CEO -- Goran Bernhoff, phone number +46 410 36 31 00
About Pergo
Pergo is a laminate flooring company with leading market positions, particularly in Europe and the US. Net sales amounted to MSEK 2,799 (3,194) in full-year 2003 and the number of employees was 795 (784) as at December 31, 2003. Pergo developed laminate flooring at the end of the 1970s and launched the product in Europe during the 1980s. The company started sales in the US in 1994 and, to a smaller degree, in Asia in 1995 and Latin America in 1997. The company's products have been marketed under the Pergo(r) brand name since 1989. The company is listed on the Stockholm Stock Exchange. For further information about Pergo, please visit our homepage www.pergo.com.
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