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Ladies and Gentlemen, For Armstrong DLW GmbH 2004 was a year of change, as we initiated various measures to position the Company to enjoy a profitable future. We were faced with the challenge of increasing sales revenues in a highly competitive market without any support on the part of macroeconomic developments. In 2004, we took an aggressive approach to tackling this challenge. Our clients, in other words architects, professional floor covering fitters and wholesalers demand stylish colors, a modern design and of course enhanced functional properties for the customized floor coverings they install. In 2004, the Executive Board resolved that going forward new product developments would be one of our central strategic goals. One focus of Executive Board activities was thus on the modernization of our entire product portfolio and the related investments. In September, we completely overhauled our main group of linoleum products, introducing modern product offerings. This included 66 new colors, extending the range as a whole, which now comprises 131 colors. Clients responded to these new attractive product lines with great enthusiasm, welcoming them at the advertising events we held throughout Europe. In April, we introduced a new vinyl coating to augment the functional properties of our vinyl floor coverings, and at the end of the year, our new range of vinyl floor covering products was ready to launch. Today we offer our products in fresh colors and a new appearance, backed up by an exciting and differentiated ad campaign. Throughout the year we pressed ahead with development projects for new product lines, such as designer tiles, carpet by the meter, and carpet tiles. All these products were introduced in the first months of 2005 thus perfecting the extensive overhaul of the entire Armstrong DLW product range. In 2004, the market situation could not exactly be described as favorable given the general decline in market volume in the commercial segment in West Europe and especially in Germany. Armstrong DLW GmbH sales increased by 4.6% on the year, while sales for the Armstrong DLW Group decreased by 3.9%. Despite the weak market volume we can discern the first signs of success from our concentrated sales and marketing activities. In 2004, we booked considerable overall sales growth rates particularly with vinyl flooring sold by the meter and vinyl tiles, carpet tiles and sport floorings. On the cost side, we achieved significant savings with regard to our production facilities. For example, in the Bietigheim plant where we manufacture resilient floorings, we introduced “Six Sigma”, a quality enhancement concept, and investments were made in raw material supply systems which have considerably boosted productivity and helped limit wastage. Furthermore, we have made savings since the end of 2003 by closing a weaving mill in Oss, Netherlands, and relocating manufacturing to Waasmunster in Belgium. In 2004, we again improved safety levels. The Company can thus claim an excellent safety record. Two production facilities operated all year long without a single accident, namely the textile factory in Bietigheim, Germany and the factory in Waasmunster, Belgium. We moved initiatives to raise manufacturing productivity forward in 2005. The increases in the prices of raw materials as a result of rising crude oil prices made it imperative that we ensure ongoing improvements here. In view of the slow economic recovery in West Europe we assume that our efforts and investments in developing new products and introducing these successfully on the market, coupled with augmented efficiency levels in production, will place Armstrong DLW in the right position to lock into future success. Last but not least, I would like to thank the staff of Armstrong DLW for all their hard work and their commitment in 2004.
They have made considerable headway in improving the market position and cost structure of our company!
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