2007-10-24 07:30:13 CEST

2007-10-24 07:30:13 CEST


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Elcoteq - Company Announcement

ELCOTEQ CONTINUES THE ACTION PLAN INITIATED IN 2007 WITH NEW MEASURES AND WARNS OF ONE-TIME COSTS FOR THE END OF THE YEAR


Elcoteq SE	Stock Exchange Release	October 24, 2007 at 8.30 am (EET)

ELCOTEQ CONTINUES THE ACTION PLAN INITIATED IN 2007 WITH NEW MEASURES AND WARNS
OF ONE-TIME COSTS FOR THE END OF THE YEAR 

Elcoteq has decided to continue the action plan that was started at the
beginning of 2007 by launching further actions. The company warns that these
actions will result in one-time costs. 

With the new actions the company aims to ensure a competitive cost structure,
growth opportunities and the implementation of the IEMS strategy (IEMS =
Integrated Electronics Manufacturing Services) in an ever-tighter market as
well as achieve its financial targets in the 2008 financial year. The company
believes that the cost-savings and higher operational efficiency achieved from
the new action plan will enable it to reach operating income level of about two
percent in 2008. 

The company's profitability has been improved by balancing the customer base,
by expanding the service portfolio and by means of the action plan started up
at the beginning of 2007. The savings achieved have measured up to expectations
but are not sufficient for reaching long-term objectives. 

Elcoteq prepared itself for substantial growth in production volumes in 2007 on
the basis of forecasts from a single customer. The customer's forecasts had
been very accurate in the past. However, the received orders fell substantially
short of the forecasts and the profitability of this business has weakened
significantly. Pricing in 2007 was based on the higher delivery volumes
expected by this customer. The company has initiated negotiations with this
customer in order to clarify operating methods. For these reasons, the company
has not met its financial targets even though sales to other customers in 2007
were up 30% on the previous year. 

New action plan

The new action plan has three major focuses: 

- adoption of a customer-centric organization model 
- turning around loss-making operations into profit or downsizing them 
- additional operational savings 

The customer-centric organization model comprises three business areas, which
are: Personal Communications, Communications Networks and Home Communications.
The business areas are profit and loss units responsible for the management of
customer accounts, the supply chain and service development. Group functions
focus on improving company-level profitability, strengthening synergy benefits
and business development. 

Deputy CEO, COO Jukka Jäämaa is responsible for the implementation of the new
organization model. The following persons from Elcoteq's management have been
appointed to head up the business areas and take on profit responsibility: 

- Personal Communications, Anssi Korhonen
- Communications Networks, Tommi Pettersson
- Home Communications, Vesa Keränen

The new organization model will be launched on January 1, 2008. The current
organization will be responsible for achieving the set targets until the end of
2007. 

The company's unprofitable business operations will be downsized in 2008. These
measures may involve cuts, mergers or divestments of production capacity,
especially in Europe. 

Additional savings in operations will be gained particularly from improving
efficiency in materials management and the more flexible use of production
machinery. 

The new action plan will lead to one-time costs that the company will seek to
recognize in the last quarter of 2007. The company will release information on
the specifics of the program during the final quarter. 


ELCOTEQ SE

Tuula Hatakka
SVP, Treasury, Communications and Investor Relations

Further information: 
Jouni Hartikainen, President and CEO, tel. +358 10 413 11
Mikko Puolakka, CFO, tel. +358 10 413 1287, mobile +41 79 618 0302
Tuula Hatakka, SVP, Treasury, Communications and Investor Relations, tel. +358
10 413 1808 

About Elcoteq
Elcoteq SE is a leading electronics manufacturing services (EMS) company with
original design manufacturing (ODM) capabilities in the communications
technology field. Elcoteq provides global end-to-end solutions consisting of
product development, NPI, manufacturing, supply chain management, and
after-sales services for the whole lifecycle of its customers' products. These
products include terminal products such as mobile phones and set-top boxes as
well as communications network equipment such as base-stations, tower-top
amplifiers, and microwave systems. The company operates in 16 countries on four
continents and employs some 23,000 people. Elcoteq's consolidated net sales for
2006 totaled 4.3 billion euros. Elcoteq SE is listed on the Helsinki Stock
Exchange.  For more information visit the Elcoteq website at www.elcoteq.com.