07.04.2006 - 14:05 (GMT+3)
VLN , Company:
EKR: CONCERNING THE ACTIVITY OF EKRANAS AB
EKRANAS AB Stock Exchange Release 07/04/2006
CONCERNING THE ACTIVITY OF EKRANAS AB
The electronics market invigorated at the end of the last year - the increased
demand for vacuum devices as well as the prices allowed to forecast more
optimistic results of Ekranas AB operations for 2006. Over the Q1 of 2006,
in line with the planned sales objectives, Ekranas AB sold 1 235,5 thous.
of tubes, which is by 44 % more compared to the Q1 of 2005, which was
856 thous. tubes. Over the Q1 of 2006, the prices for tubes increased by 11%.
In order to use the favorable development of market tendencies, Ekranas AB
invoked all the possible measures to stabilize the business: good will of
employees, cost reduction policy, extensive marketing strategy, support of
financial institutions and the Government of the country.
Thanks to the efforts of more than 4000 staff, the Board of the company and
the Administration the following accomplishments have been made:
-production costs have been reduced by more than 4 % over the last half-year,
regardless of the steady increase of the prices of production materials and
-preparations have been finished for mass production of the highly marketable
Slim Type CPT;
-many alternative materials and components have been found in various new
sources and have already been introduced into production.
Actions of Shareholders
The intensive activities of Ekranas AB shareholders did not remain unnoticed
in the European Union:
-The Board representative of Ekranas in EDIA worked very hard during the past
two years to convince the EDIA Board to make action against unfair competition and
all ırregularities concerning CPTs imported from third countries.
-at the beginning of 2006, the European Commission commenced the anti-dumping
investigation of imports of color picture tubes originating in People’s Republic
of China, Republic of Korea, Malaysia and Thailand;
-the Vice-Chairman of the Board of the Company Aydin Giz has been elected to
the presidency of EDIA (European Display Industry Association) and as a member
of the Board of Directors at EECA (European Electronic Component Manufacturers
-many meetings took place with responsible officials of the European Commission
aiming at protecting the interests of Ekranas AB and of all other European
-significant lobbying actions have been taken in the European Commission in
order to stabilize the functioning of the company as well as the entire European
-a lot of actions were taken to keep alive the European CPT glass and related
Unfavorable Business Context
This unfavorable business context in the European Union and a long procedure
for measures were not sufficient to ensure profitable operations of Ekranas AB.
Today the company is not capable of competing with manufacturers of South East
Asian and Latin American countries which are actively supported by national
authorities in forming of advantageous tax policy, subsidising new products,
investments and research and development promotion in every possible way of
exports of production manufactured in the country and subsidizing of companies
and sales with dumped prices to eliminate all European CPT, glass and consumer
Currently only three tubes production companies operate in European Union:
Ekranas AB, Videocon – THOMSON (Poland) and Samsung (Hungary). A month ago, the
biggest worldwide CPT producers LG Philips Holding BV and recently Tesla – Ecimex
Company (Czech Republic) announced bankruptcy and termination of its operations.
During recent years, several factories of traditional tubes owned by multinational
companies were relocated from Europe into Latin American or South East Asian
countries. Over the last year and a half 15 companies engaged in color picture tubes
and glass and also the related industries closed their plants in Europe.
Although the conclusions of electronics experts show that in 2009 more than 60%
of TV sets sold all over the world will be vacuum devices, the unfair competition
of third countries, their unfair sales policy and the costs of tubes produced
in the European Union countries do not allow to ensure profitable business.
The Ekranas’ Board and management considered and evaluated formally and
informally the possibility to produce LCD and Plasma in Ekranas. However, the
reality shows that at this time no company gave a lisence to Ekranas for
production of these items and on the other side, a minimum 1.5 billion USD
investment for each line and product is needed. The reality is such, that in any
case it is not possible to collect this amount for investment to LCD and Plasma.
Actualy there is no production in European Union of LCD and Plasma due to very
huge investments amount needed and losses incurred also in this production.
Later on, Ekranas AB management decided to investigate the possibility to only
assemble the LCD parts in Ekranas. And again due to huge investment amount
requested only for unsophisticated assembly, the company was forced to dismiss
this project and to concentrate on the future of Slim Type CPT, to succeed in
the design etc.
Decision to Announce the Bankrupt
At present, three tubes assembly lines operate in Ekranas AB, however the
company is unable to make due payments for the material delivered, repay credits
and fulfill other material obligations. On the one hand, there is a market
demand, on the other side, there is a lack of materials and finances to produce
more, to decrease the costs and in turn increase profitability. Furthermore,
the unfortunate partial collapse of the panels’ glass melting furnace particularly
aggravated the situation.
Ekranas’ management tried all the economical, strategical, and marketing efforts
to survive and to continue the production and maintain the working places with
all possible devotion, imaginable hard work and persistence.
The Board of Ekranas AB and the management realize the social responsibility to
the employees and the community of the city, however, the economic situation on
the global market impels to undertake radical measures in order to avoid more
detriment being done against the people of the city. Phenomena of globalization
did not bypass Lithuania.
The Board after the evaluation of the inside and outside possibilities of
business and aforementioned reasons decided to agree with judgment to apply
to the court for necessary procedure for Ekranas AB on the 7 of April, 2006.
Today I, Eimutis Žvybas, submited an application to the Court of Panevezys
county under obligation of the Board.
Difficult, but Unavoidable Decision
This was the most difficult decision during our business life.
We are worried and anxious about all employees and their families as they
can incur moral and financial difficulties.
A lot of good employees, experienced and young managers work for Ekranas AB.
They had plenty of possibilities to learn and develop, to acquire
professional skills and creativity. We hope, all that intellectual capital
will be used in new spheres of activity.
The managers of subdivisions of the company will be obliged to inform all
employees about legal guarantees and rights as quickly as possible.
We express our gratitude for dedication and honest work for Ekranas AB.
We deeply regret about this difficult, but unavoidable decision was
determined by very complicated circumstances in the market.
Ekranas AB Chairman of the Board, Chief Executive Officer
Ekranas AB Vice Chaiman of the Board
Phone: +370 699 88330