The 2008 financial year is over, and – as expected – the Koehler
Group’s sales and turnover were lower than last year’s results. Our sales figures were proof of the global dimensions of the crisis; even previously fast-growing markets such as Eastern Europe and Russia are now suffering shortages of liquidity which have slowed growth
considerably, and on top of that there are currency problems. Take the Russian rouble, for instance, which lost con siderable ground against
the euro and dollar in 2008 and continues to be weak, and similarly for the British pound against the euro, whilest in Southern Europe, structural conditions have caused increasing difficulties in the economy. The situation in Turkey, one of our important sales markets outside the EU, is similar. The USA and Asia have also experienced a sharp downturn in their economies, and recovery is not yet in sight. The economy of the Federal Republic of Germany is currently in the deepest recession of its 60-year history. It is within this context that the German
and European paper industry will have to further consolidate itself. We are all expecting the paper industry to emerge from this crisis profoundly different from the way it is today. The miserable ecnomic situation in many countries and among a lot of our customers has exposed a heightened risk of payment defaults. Credit insurers have responded accordingly. Cover has been withdrawn entirely for some countries, or, as with many of our customers, reduced significantly. We continue to be stretched between employment and
sales on the one hand, and financial risk on the other. We are working closely with our customers all over the world to find solutions which will enable relationships that are often decades old to be continued meaningfully. Constructive cooperation with the works council has enabled us to conclude an internal wage and salary agreement aimed at safe guarding jobs. A shortening of working hours in conjunction with
changing working practices has enabled us to adjust production and administration effectively in order to meet the reduced demand. We
urgently need the additional savings and in - creased flexibility, because we are expecting a 10 % drop in sales this year compared with last
year’s figure. The executive board would like to thank all of our employees for their acceptance and support of the difficult but necessary steps we have taken. Our provisional result for 2008 has been with our auditors since the middle of March. We know that the efforts which our employees have made have paid off, and that we have been one of the few companies in the German paper industry to
achieve a positive and satisfactory result. We paid our employees the agreed profit share of  700 Euro for the 2008 financial year together
with the wages paid in March. We are working to adapt our medium and long-term strategies to the enormous changes that are taking place in
the global market. We are also pursuing shortterm opportunities vigorously as they present themselves in order for us to remain a financially strong company with an equity ratio of more than 40 % in the Koehler Group and more than 53 % at Koehler AG.
Together with our committed and motivated employees, and as a forward-looking partner to our friends in business, we are determined to
emerge stronger than before from the current
economic crisis – and the executive board is convinced that we will succeed in this.