CEO’S REVIEW

President and CEO Iikka Savisalo:

“The Group’s net sales remained at the same level as in the first quarter of 2011, although the sales of laser and automation solutions decreased by one quarter, compared to the January-March period in 2011. The decrease in the net sales was due to a weak demand at the end of the year 2011. At the beginning of 2012, the demand shows moderate signs of recovery. We managed to significantly increase the sales of our special components. Most of all, the sales were increased due to a new customer relationship with a major electronics company. Utilizing Cencorp’s decoration technology has created several new projects with the same customer.

The Group’s profitability improved year-on-year. However, the result includes a non-recurring sales profit of EUR 1.1 million following the sale of the plant building. Our operational profitability has not yet reached the targets set by the Board of Directors. Our main goal in the short and medium terms is to improve the company profitability.

Cencorp announced its new strategy on 19 April. The new strategy’s main focus in the Laser and Automation Applications segment is on the life cycle management of customers’ automation systems and equipment and in the medium term on Cleantech applications development. Company’s research and development related e.g. to LED and fuel cell applications has improved remarkably.

Cencorp believes that the decoration business located in Guangzhou requires investments and the company has stated in its strategy that the decoration business is no longer part of its core business. To be able to focus on its core business, the company has started negotiations to find a strategic partner in the decoration operations. Alternatively, Cencorp investigates different options to exit from the decoration business.

Cencorp has high future expectations of the Special Components segment and its flexible circuit production located in Beijing. The company has established an investment to produce new type of flexible circuits to meet the needs of customers operating in renewable energy business. With the investment, the company will be able to fast increase its production capacity of the application the company informed of in January 2012.

The new strategy requires considerable restructuring in the organisation. The company has announced that it starts statutory negotiations in all its offices in Finland. The restructuring will also concern Cencorp’s operations in China and the US.”