Premier Tech

Premier Tech

August 19, 2005 19:03 ET

After Difficult but Wise Choices for the Future, Premier Tech's 4th Quarter is Profitable

RIVIERE-DU-LOUP, QUEBEC--(CCNMatthews - Aug. 19, 2005) - Premier Tech Ltd. (TSX:PTL.SV.A) released today its consolidated results for the fourth quarter and the fiscal year ended May 28, 2005.

During the fourth quarter of fiscal year 2005, the Company achieved sales of $94.8 million, a similar performance to that of the previous fiscal year. All business units recorded sustained sales, with the exception of Erin Systems whose sales dropped following the reorganization of its distribution network in Europe.

Consolidated sales for the fiscal year ended May 28, 2005, reached $296.3 million, a drop of 1.1% from $299.7 million the previous year. The Company's sales indicate sustained growth in the business units Premier Horticulture, Premier Tech Environment and Premier Tech Biotechnologies, while Premier Tech Packaging and Erin Systems posted a decline following the reorganization of their European activities. The discontinuation of the activities of the German subsidiary Chronos Richardson GmbH and the review of the Erin Systems distribution network had a significant impact on the Company's European sales.

In the fourth quarter, earnings before income taxes were $4.1 million, compared with $3.5 million for the same period the previous year. Premier Tech Packaging's segmented earnings improved significantly with the elimination of certain losses incurred when financial support was no longer granted to Chronos Richardson GmbH in Germany and given a drop in operating costs. Premier Horticulture also posted a sizeable increase in its segmented earnings following a rise in the sales volume, tighter management of operating costs and the effect, in the spring of 2005, of price increases announced last January in the American market. Furthermore, the implementation of Erin Systems' reorganization plan, some of which was completed during the fourth quarter, .and the $3.3 million negative impact related to the appreciation of the Canadian dollar, compared with the same quarter the previous year, negatively impacted the segmented earnings.

In the final quarter of fiscal year 2005, net earnings were $0.5 million, compared with $2.2 million for the same quarter the previous year. The reduction of net income is mainly explained by the non recognition of future tax benefits on losses related to Erin Systems and Chronos Richardson.

During the fiscal year 2005, Premier Tech's net loss stood at $6.8 million, or $(0.42) per share, compared with net earnings of $1.7 million, or $0.10 per share, the previous year. Several factors, some under the Company's control and others not, contributed to lower earnings before other items. As concerns the factors under the Company's control, the business unit Erin Systems posted a segmented loss of $8.1 million during the current fiscal year. Fierce competition in the European markets and higher operating costs prompted Premier Tech to review its business unit's strategy. This review led to the reorganization of the European distribution network, the discontinuation of the partnership project with Hartl Anlagenbau GmbH, and the deferral of its modernization project at the Caraquet, New Brunswick, plant. Considering these adjustments, Erin Systems sold off much of its inventoried equipment at reduced prices on certain territories, which negatively influenced its segmented earnings.

As well, in December 2004, following cost overruns on some projects and an overly cumbersome operating cost structure, Premier Tech stopped investing in its German subsidiary, Chronos Richardson GmbH. Since its acquisition in December 2002, the German subsidiary had, on its own, accumulated an operating loss totaling $9.3 million. The decision to no longer invest in the German subsidiary forced the Company to review Chronos Richardson's European operations, which also resulted in temporary additional operating costs for Premier Tech Packaging. The main operating activities of Chronos Richardson GmbH have now been assumed by the Company's operations in Asia, Canada, Italy and the United Kingdom. Following this major reorganization, Premier Tech Packaging continues to maintain its extensive technology portfolio and remains a leader in the industrial flexible packaging industry.

As concerns external factors, over the past fiscal year, the Company was forced to deal with numerous changes that impacted on the activities of some of its business units. As such, adverse weather conditions during the peat harvesting season in Quebec, Manitoba and Saskatchewan had a significant negative impact on Premier Horticulture's operating costs. This business unit also had to deal with increases in its transportation costs following a major hike in gas prices, the consolidation of the Canadian transportation industry and the implementation of regulatory measures. Premier Horticulture's transportation costs are a major component of the Company's cost structure.

Increases in the price of petroleum products and the pressure exerted by countries such as China and India on the demand for raw materials, especially steel and plastic, also had a negative impact on the business units as a whole.

Finally, the appreciation of the Canadian dollar against its US counterpart once again negatively impacted Premier Tech's results since nearly 80% of the Company's production is shipped to foreign markets. Exchange rate fluctuations against the Canadian dollar had a negative impact of $11.6 million on sales and of $7.4 million on earnings before income taxes during the current fiscal year compared with the previous year.

Premier Tech also announces that as of August 19, 2005, it has completed arrangements regarding a new five-year operational financing. This agreement with the new partner provides for a $50-million operational line of credit, with loans determined on the basis of inventory and accounts receivable.


Premier Tech begins fiscal year 2006 with equanimity, confident that it has made the right decisions and wise choices in repositioning its activities. As well, the Company is taking a clear and realistic look at the efforts that it will have, along with its team members, to invest to deal with and control adverse external environment elements.

Fiscal year 2006 will bring its share of challenges, especially as concerns the pursuit of target measures such as price increases and continuous improvement programs, aimed at reducing operating costs and improving operational efficiency, and necessary changes due to the permanent appreciation of the Canadian dollar against its US counterpart. As well, the Company will strive to maintain a highly proactive approach to problems that will potentially be triggered by the tightening of Canada-US customs procedures. Furthermore, Premier Tech intends to pursue its vision of long-term development, as it clearly demonstrates with the implementation of the of its Research, Development and Innovation program.

In short, Premier Tech must continue to show rigor and discipline in its efforts to put itself back on the road to profitability as quickly as possible. This is the primary commitment of the Company's management team.

for the fiscal years
ended May 28, 2005,
and May 29, 2004 Fourth Fourth 12-month 12-month
(in thousands of Quarter Quarter Period Period
dollars, except for 2005 2004 2005 2004
amounts per share) $ $ $ $

Operating results

Sales 94,486 94,656 296,299 299,651
Earnings (loss)
before income taxes 4,051 3,502 (4,584) 5,215
Net earnings (loss) 466 2,247 (6,848) 1,669
Net earnings (loss)
per share 0.03 0.14 (0.42) 0.10

Financial position

Total assets 195,876 219,680
Working capital 40,665 49,816
Long-term debt 42,488 48,078
debt 69,694 67,869
Total liability 149,724 166,690
Shareholders' equity 46,152 52,990
Shareholders' equity
per share 2.83 3.28

Number of shares
outstanding 16,314,695 16,164,695

For more than 80 years, Premier Tech has been building its know-how and reputation on the various technology-oriented opportunities offered by sphagnum peat moss, an abundant natural resource in Canada. Its seven business units, gathered in three groups (Horticulture and Agriculture, Industrial Equipment and Environmental Technologies (have the mission to become technological and commercial leaders in their respective fields of expertise. Buoyed by a multidisciplinary team of over 1 300 people based in America, Europe and Asia, Premier Tech is building on the development of its personnel, on research, development and innovation, on the introduction of value-added products and on proactive management of its business units' manufacturing operations. Its strategic approach is supported by ongoing worldwide market development efforts. Premier Tech shares are listed on the Toronto Stock Exchange, in Canada, under the symbol PTL.SV.A.

Contact Information

  • Premier Tech
    Mr. Christian Dollo, Senior Vice-President
    Chief Financial Officer
    (418) 867-8883 Ext. 6383
    (418) 867-8297 (FAX)
    Premier Tech
    Mr. Martin Noel, Vice-President
    Corporate Development
    (418) 867-8883 Ext. 6438
    (418) 867-8297 (FAX)