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Frigoglass: Net Sales Increased by 26.5%

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Frigoglass  said that the consolidated net sales increased by 26.5% in the first nine months of the year to €438.6 million, with sales in the third quarter increasing by 4.9%, cycling strong double digit growth in both comparable prior year periods. This performance was driven by Cool Operations, where sales increased by 27% in the first nine months, to €364.6 million. Glass Operations sales also increased year-on-year which reflects a solid performance in the continuing businesses and the positive contribution of the Frigoglass Jebel Ali acquisition. Sales at Glass Operations increased by 24.2% in the first nine months to €73.9 million, with Frigoglass Jebel Ali contributing €8.1 million for the four months consolidation.

Cool Operations accounted for 83% of consolidated sales in the first nine months of 2011, level to the comparable prior year period. Sales in Eastern Europe continued to demonstrate strong growth, increasing by almost 50% to €149.4 million, whilst sales in Western Europe grew 41.7% in the first nine months to €87.4 million. In Asia/Oceania, sales in the first nine months declined by 11% against the prior year comparisons, reaching €66.8 million, influenced by the significantly lower sales in India due to the in-market cooler upgrade program by a major customer group resulting in postponing new placement. Sales in Africa/Middle East increased by 14.2% in the first nine months to €51.5 million, with sales growth accelerating in the third quarter of the year. North America recorded growth of 76.6% for the first nine months to €9.5 million, following new product launches.

In terms of Sales by key customer groups, sales to Coca-Cola Hellenic increased by 106.6% in the first nine months of the year, representing 27.6% of Cool sales whilst sales to other Coca-Cola bottlers declined by 6.7% in the first nine months, accounting for 28.4% of Cool sales. Sales to the Brewery segment continued to grow following a 33% rise in 2010 and increased by 39.3% in the first nine months, representing 25.7% of Cool sales. Sales to all other customers also continued to grow following a 94% rise in 2010, increasing by 11.2% in the first nine months. The strong segment performance on top of last year’s substantial growth reflects Frigoglass’ continuing focus on diversifying its customer base.

Sales at Glass Operations increased by 24.2% for the first nine months to €73.9 million, accounting for 17% of nine month consolidated sales. Frigoglass Jebel Ali contributed €8.1 million sales during its four months of operation. Excluding the positive contribution of Frigoglass Jebel Ali, sales increased by 10.7% in the first nine months to €65.9 million with strong performance across customer segments and with Other Operations (Metal Crowns and Plastic Crates).

Consolidated Operating Profit (EBIT) increased by 9% for the first nine months to €44.2 million, with the respective margin decreasing by 160 basis points to 10.1%, compared to 11.7% in the comparable prior year period. The decline in margin reflects the dilutive effect of new operation (Frigoglass Jebel Ali) as well as the impact of higher commodity costs, the negative operating leverage in India as a result of the in-market cooler upgrade program and the higher production costs to satisfy stronger than anticipated demand in Europe. Excluding the effect on non-recurring items and input costs, the benefits of volume leverage would have increased EBIT margin for the first nine months of 2011, compared to the prior year period. Net Profit increased by 2.3% to €19.5 million in the nine months compared to €19 million in the prior year.

Cash flow generated from operating activities, before working capital movements, was €66.8 million in the first nine months compared to €60.7 million in the prior year. Working capital movements together with capital expenditure of €20.8 million and the acquisition of Frigoglass Jebel Ali for €4.2 million resulted in a cash outflow of €73.6 million after operational and investing activities in the first nine months. This compares to an outflow of €46.9 million in the prior year. The rise in sales led to increased working capital requirements in the nine month period. However, the net working capital to sales ratio improved to 0.51x compared to 0.56x in the comparable prior year period.

Petros Diamantides, Managing Director, Frigoglass, commented:

"Frigoglass is pleased to report continued progress for the first nine months of 2011. Cycling 37% growth in the prior year, we are deliveringa 27% increase so far this year and one of the strongest third quarters in our Cool business demonstrating both the value of our well-positioned geographic portfolio as well as the depth of the ability to execute across our customer segments. Glass has also recorded 24% growth inits strongest nine month period ever.

We continue to operate in a high input cost environment which together with a number of one-off factorshave masked the strength of our underlying performance in terms of positive operational leverage and cost control.

Looking ahead, we expect solid top-line growth in the fourth quarter, although we anticipate input cost inflation will continue to weigh on margins and the macro-economic landscape of key European markets will remain uncertain. We remain confident that our strong market execution, geographic diversity, sector leading position, authentic relationships with the worlds leading beverage companies and a continuing focus on operating cost reduction positions us to deliver further progress going forward and value for our stakeholders."
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