MARTELA CORPORATION INTERIM REPORT, 1 January - 30

MARTELA CORPORATION        INTERIM REPORT         25 October 2013, 8.30 a.m. MARTELA CORPORATION INTERIM REPORT, 1 January - 30 September 2013 Group’s third quarter revenue at previous year’s level, and revenue and operating result for January-September down from previous year Key figures:

The Martela Group expects its revenue for 2013 to be down year on year and its operating result to be at or slightly below the 2012 level. * Operating result for July-September/2013 includes a gain of EUR 0.9 million from the sale of property. Market The demand for office furniture in Finland continued to be weak in the third quarter. At present, demand in Finland is focused largely on various office alteration and enhancement projects instead of new offices. Also in Sweden the market has gradually weakened during the year. By contrast, the Polish market has been at a normal level. Statistics on office construction are available for the first half year of 2013, and they indicate that 42 per cent fewer office buildings were completed in Finland in terms of square metres in the first six months than in the same period a year earlier. In the same period, however, there were approximately 74 per cent fewer office building permits granted and new office building starts than the previous year. In all, the amount of office construction activity was at a low level in the first half year, but the trend in the second quarter was slightly positive compared with the very weak first quarter figures. Consolidated revenue and result Third quarter revenue was EUR 34.3 million (34.8), a decrease of 1.4 per cent on the previous year. Consolidated revenue for January-September was EUR 95.4 million (101.9), a decline of 6.3 per cent. Revenue in Finland declined cumulatively, but in the third quarter it reached the level of the previous year. By contrast, revenue in Poland and Sweden in the review period was up from the previous year’s figures, although the growth rate slowed a little in the third quarter. In other markets the transfer of the Danish business at the end of 2012 from the Martela subsidiary to a dealer slightly reduced (2.0%) consolidated revenue for the review period. In Russia, revenue growth continued, but revenue still remains low in terms of Group view. The operating result for the third quarter was EUR 1.5 million (0.6). The operating result for January-September was EUR -2.5 million (-1.2). The consolidated third quarter operating result was boosted by EUR 0.9 million from the sale of a residential property in Nummela. Despite a clear reduction in the Group’s costs, the January-September operating result was down from the previous year due to lower revenue and a reduced sales margin on the Group’s products. The lower sales margin was the result of a different product breakdown compared with the comparison period. The Group’s third quarter profit performance returned to a positive track. Third quarter revenue reached the previous year’s level and, despite the slight weakening of the sales margin, the operating result, excluding the property sales gain, was of the same magnitude as a year earlier, due to the cost savings achieved. The Group’s fixed costs have gradually fallen during the year as a result of the measures already taken. In the third quarter, the Group also began to plan further measures to reduce its costs, targeting an annual cost saving of approximately EUR 6 million. The plan will be actualized by the end of 2014 and the savings will be realized by the full effect during the year 2015. The Group’s cost structure is being adjusted to correspond to the company’s changed operating environment. As part of the savings programme, the company began codetermination negotiations in August, and these were completed at the start of October. The outcome of the negotiations was that the Group’s cost level will be reduced by costs equivalent to 35 employees by the end of 2014. Preparation of further measures to achieve the targeted savings is continuing. The principal measures under consideration are transfers of production between business locations and reorganising and improving the productivity of poorly performing businesses. As previously stated, the Group will nevertheless be investing resources at the same time in improving its ability to offer even better comprehensive solutions and services, especially to meet the growing customer need for Activity Based Office solutions. The Group’s result before taxes for January-September was EUR -3.3 million (-1.9), and the result after taxes was EUR -3.1 million (-2.0). Martela’s full interim report for January-September  2013 is included in PDF format as an attachment to this release. The interim report is also available on the company’s website at www.martela.com. Martela Corporation Board of Directors Heikki Martela Managing Director ATTACHMENT: Martela’s interim report January-September 2013 Additional information Heikki Martela, Managing Director, tel. +358 50 502 4711 Markku Pirskanen, CFO, tel. +358 40 517 4606 Distribution NASDAQ OMX Helsinki Main News media www.martela.com