Economic growth lifts Constantia Packaging

Global economic growth in 2007 buoyed financials for Constantia Packaging with both the Flexible Packaging and Corrugated Board segments recording robust sales gains.

The third-quarter-report contains information and forecasts based on the future development of Constantia Packaging Group. The forecasts present estimates based on all available information at the time the annual report was published.

Some highlights include; After receiving all necessary approvals from competition authorities, the share purchase agreements negotiated on July 6, 2007 with Klaus Hammerer GmbH and the AMAG Employee Foundation closed on September 28 and
October 23, respectively. Klaus Hammerer GmbH previously owned a 40% equity interest in AMAG, while the AMAG Employee Foundation owned 20%. AMAG’s new ownership structure now breaks down as follows: Constantia Packaging AG owns 73.45%, Constantia Packaging B.V. 16.55% and the AMAG Employee Foundation 10%.

AMAG’s first-time consolidation in the Constantia Packaging AG consolidated financial statements will take effect on October 1, 2007. In this third-quarter report through September 30, 2007, AMAG’s results are therefore still consolidated under the equity method. The initial full consolidation will be reflected in the fourth quarter, after AMAG’s financial reporting has been converted to IFRS and the purchase price allocation is completed.

The Constantia Packaging Group’s key commodities include aluminum, plastic, paper, paint, varnish and corrugated board base paper. In 2007 aluminum, paper and crude oil prices all recorded significant price swings.

On the London Metal Exchange (LME), the average 3-month price for aluminum eased slightly in the third quarter to finish September at USD 2,450 per metric ton. Meanwhile, prices for recycled corrugated board base paper rose by around 15% during the first nine months. Further price increases have been announced through the end of the year.

Both Constantia Hueck Folien, Germany, and Novis, Romania, which were consolidated in the first quarter of 2007, recorded better-than-expected results. Since their respective first-time consolidations on January 1 and March 1, 2007, the newly acquired companies contributed €143.6 million to sales and €13.2 million to EBITDA.

We continue to review options for Danapak Flexibles Group, Denmark. As part of our regular business portfolio review, we are working closely with our joint venture partner Arla Foods and Danapak’s management to weigh the various options and ensure the company’s future success.

Global economic growth in 2007 buoyed Constantia Packaging’s results. Both the Flexible Packaging and Corrugated Board segments recorded robust sales gains. Nine-month sales increased by 29.7%, or €234.9 million, from €790.7 million in 2006 to €1,025.6 million this year. The consolidation of Constantia Hueck Folien and Constantia Novis accounted for the bulk of these sales gains, but the company’s existing businesses also generated 11.5% organic growth, an increase of €91.3 million.

Constantia Flexibles Group’s markets again grew on pace with the overall economy in the third quarter. The integration of the recent acquisitions Constantia Hueck Folien and Constantia Novis is on track, as both companies are delivering the expected earnings contributions.

In the Beverages & Labels segment of the Flexible Packaging division, sales were held back by cool summer weather in the primary Western European markets (Benelux countries, Germany, France).

The increased transaction volume that characterized Constantia Packaging AG’s sales and procurement markets in the first half is not likely to continue through yearend, but we do expect these volumes to remain sustained at high levels. Thanks to consistent cost reduction efforts and the ongoing development of our services and product innovation, we project that full-year earnings will be up relative to last year.

The acquisition of a majority stake in AMAG represents a major leap for the Constantia Packaging Group. With the closing of the transaction on October 1, 2007, we will have a standalone Aluminum business segment. This transaction was therefore the first decisive step toward achieving our strategic goal of becoming an industrial holding company.

We have a long and very successful track record of integrating recent acquisitions, thanks in large measure to our partnership model. We expect to integrate and grow our new business segment in this manner, which will create new opportunities for all those involved. We intend to take advantage of these opportunities together with our employees, whom we would like to thank for their efforts, including those who have recently joined the company.

Constantia Packaging BV, with headquarters in Vaassen, the Netherlands, is the main shareholder of the Group. Constantia Packaging B.V. is the majority owner of Constantia Privatbank AG, Vienna, and holds 16.55% of AMAG Group. Turnauer Industriestiftung, located in Vaduz, Liechtenstein, holds a controlling interest in Constantia Packaging BV.

Detailed information on the third quarter report for 2007 are available on the Constantia Packaging website.

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