Reno De Medici swings to H1 earnings of €900,000 compared with loss of €700,000; demand for coated cartonboard based on recycled material up more than 8% at European level, except for France

Sandy Yang

MILAN, Italy , August 4, 2010 (press release) – CONSOLIDATED FINANCIAL RESULTS AS AT 30 JUNE 2010 (VS. 30 JUNE 2009)

-- NET REVENUES: EURO 241.6 MILLION (EURO 214.1 MILLION AS AT 30 JUNE 2009)

-- GROSS OPERATING PROFIT (EBITDA): EURO 18.1 MILLION (EURO 18.0 MILLION AS AT 30 JUNE 2009)

-- NET OPERATING PROFIT (EBIT): EURO 4.6 MILLION (EURO 4.7 MILLION AS AT 30 JUNE 2009)

-- NET EARNINGS FOR THE PERIOD: POSITIVE BY EURO 0.9 MILLION (COMPARED WITH A LOSS OF EURO 0.7 MILLION AS AT 30 JUNE 2009)

-- NET FINANCIAL INDEBTEDNESS: EURO 117.5 MILLION (EURO 130.8 MILLION AS AT 31 DECEMBER 2009)

The Board of Directors of Reno De Medici S.p.A. (“RDM” or the “Company”), holding company of a main world-wide producer of cartonboard based on recycled material, met today under the chairmanship of Mr. Christian Dubé and approved the Consolidated First Half 2010 Financial Report of the Reno De Medici Group (“RDM Group” or the “Group”), that reports a Profit for the period of Euro 0.9 million.

INTRODUCTION

As at 30 June 2010, RDM Group registered satisfactory results, also in relation to the overall macroeconomic situation, benefiting from an increase in manufacturing efficiency, reached thanks to a good level of orders enabling an improvement in operating rate to be achieved, and also to the specific steps taken at certain facilities to optimize of the use of raw materials, energy and to obtain a general reduction in costs.

More specifically, the demand for the Group’s products saw a rise, driven by an increase in European industrial demand that was geared towards rebuilding stocks and by the economic recovery seen in the main Far Eastern countries that also led to favorable effects arising in Europe and the Middle East, in particular favoring exports. In terms of tonnes sold, in the first half of 2010 the demand for coated cartonboard produced from recycled raw materials rose by more than 8% at a European level over the first half of 2009, with the sole exception of France.

Trends in sales prices were also positive thanks to the introduction of the increases that the Group had announced in October 2009. These increases substantially offset, though late, the unfavourable effects caused by the rise in the price of raw material mixture in Europe and North America. The contribution from sales made on the overseas markets benefited from both the reduced commercial aggression of Chinese competitors and the strengthening of the dollar.

In terms of costs, the continuing significant rise in raw material mixture prices, a key feature of the first part of the year, slowed down in June, due amongst other things to the reduced request for waste by Chinese manufacturers. Also energy prices showed a generally upwards trend during the first half 2010, in line with the quotation in dollars of crude oil, the main reference product, which reached a peak for the previous 18 months.

The Group’s production reached 469 thousand tonnes during the first half of 2010, compared with 429 thousand tonnes in the corresponding period in 2009. In terms of volumes sold, quantities shipped amounted to 474 thousand tonnes in the first half 2010, compared with 419 thousand tonnes in the first half of 2009.

MAIN CONSOLIDATED RESULTS

The RDM Group in the first half of 2010 achieved Net Revenues of Euro 241.6 million, compared to Euro 214.1 million in the first half of the year 2009.

Consolidated Gross Operating Profit (EBITDA) as at June 30, 2010 of the RDM Group reached Euro 18.1 million compared to Euro 18.0 million in the corresponding period in 2009.

Consolidated Net Operating Profit (EBIT) of the RDM Group in the first half of 2010 amounted to Euro 4.6 million, versus Euro 4.7 million for the corresponding period of 2009.

Pre-tax current profit of the Group RDM is positive to Euro 1.9 million in the first half 2010, compared to Euro 0.4 million for the corresponding period of 2009.

The Group, during the six months ended June 30, 2010, made capital expenditure of Euro 5.7 million, compared to Euro 7.4 million on 30 June 2009.

The first half of 2010 saw the Reno de Medici Group return to profit with Net Earnings for the period reaching Euro 892 thousand, compared with a loss of Euro 726 thousand incurred in the corresponding period of the previous year.

The Consolidated Net Financial Indebtedness of the RDM Group as at June 30, 2010 amounted to Euro 117.5 million, compared to 130.8 million at December 31, 2009. This result is due to the Group’s overall good performance in terms of economics and working capital management.

OUTLOOK FOR OPERATIONS

In a macro-economic situation in Europe, where clear strong signals of a recovery in terms of end consumption have yet to be seen, the outlook for the remaining part of 2010 appears to be in line with the Group’s performance during the first six months of 2010, excluding any seasonal phenomena and, in particular, production stoppages, which, as usual, are planned for the summer period and at year end at the southern European factories.

Trends in the market and orders confirm the positive tendency of first half 2010: a slight pick up in the economy and end consumption should offset the effects linked to the replenishment of stocks disappear. Regarding movements in the price on raw material mixture, RDM Group evaluates that both the prices of cellulose and waste are considered to have reached their highest levels, further increases are still possible.

Also energy costs for the remaining part of the year ought not to move far from their current levels unless there are significant fluctuations in the quotation of the dollar. In this respect a further strengthening of the dollar would most likely benefit the Group’s results, due above all to the favourable effect on the overseas component of revenues.

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