Pfleiderer improves performance but faces legal challenge over restructuring

Panel products manufacturer Pfleiderer recorded an after-tax profit of €1.6m in the third quarter despite the closure of three of its German plants and the costs of restructuring.

But the better financial performance is tempered by a legal challenge mounted by several creditors and shareholders to the company’s restructuring plan.

The company’s sales totalled €297.5m, up 5% on a year ago, with Eastern Europe (sales up 20% in the region) and surface-finished panels the drivers for growth. Significant price increases were achieved to compensate for sharply rising raw material costs.

Pleiderer has implemented double-digit price rises during the first nine months, during which it recorded earnings before interest, tax, depreciation and amortisation of €88.7m and sales of €892.8m. But its loss after tax was €80.4m (2010: €21.5m loss).

Pleiderer has had to draw up a wide-ranging restructuring plan in the face of a mounting debt burden and challenging economic environment.

But despite its business performance improving, it says it has been unable to introduce capital measures set out in the restructuring plan because of lawsuits filed by individual shareholders and creditors who are against elements of the plan.

“Pfleiderer has petitioned the court, seeking to gain its approval so the company can promptly put these resolutions into action despite the pending litigation,” it said.

The company said the initial ruling by Frankfurt District Court, in favour of the creditors, had given rise to concerns about the restructuring plans chances of success.

“Pfleiderer holds this ruling to be erroneous and has contested it at the appellate court, the Higher Regional Court of Frankfurt,” it added.

Pfleiderer said it was confident the court would side with the company and that the restructuring plan would not be jeopardised. A ruling is expected in January.

Looking forward, the group expects to record a loss for the whole year 2011, with a further improvement in operating results in 2012.