Half-year report
2000

Positive development of sales and operating profit
Dear shareholders

In the first half-year 2000, the company with the two divisions flooring and industry specialties
recorded sales of CHF 916.6 million, 6.4% more than in the previous year. There was a morethan proportional increase in both operating profit and group profit. The first six months of2000 were characterized by the implementation of the new company strategy strongly focusing
on the four strategic businesses, with the core products linoleum, vinyls, belting and adhesives.
The initiatives and measures taken have shown first effects.
Income development

Both flooring and industry specialties contributed to the continued improvement of the operative result. The considerable increase in raw material prices could be largely compensated bycontinued rationalization. As a result of the investments in large-scale plants in previous years,depreciation rose by CHF 2.4 million to CHF 55.0 million. Nevertheless, the operating profit
after depreciation (EBIT) was improved by 12.1% to CHF 64.0 million.
Compared with the previous year, consolidated profit rose by 14.2% to CHF 44.1 million, notleast because of a strong financial result. Special provisions of CHF 70.0 million after tax madein the previous year have not been touched yet.
1)1)Summary of incomestatementÜbersichtErfolgsrechnung

1)First six months
2000
m CHF

1999
m CHF

% change on
1999

Net sales

916.6

861.8

6.4

Operating profit before depreciation (EBDIT)

119.0

109.7

8.5

Operating profit (EBIT)

64.0

57.1

12.1

Consolidated profit

44.1

38.6

14.2

unaudited

Financial position

Compared with end of June 1999, net debt decreased by CHF 54.5 million. Investments
concentrated on the strategic core business and were slightly below last year’s level withCHF 33.5 million in the first half-year 2000. Operating current assets showed a less thanproportional increase compared with sales.

The all in all improved group liquidity allows the repayment of the bond with warrants ofCHF 75.0 million expiring on 8.8.2000 without incurring new debt. The shareholders’ equity
ratio as per end of June 2000 is 45.6%.
Summary of balance
sheet
Bilanzübersicht
AssetsLong-term assets

30.6.1999 1)
m CHF

31.12.1999
m CHF

1,722.6

1,663.5

1,727.4

821.9

827.0

866.9

Current assets

900.7

836.5

860.5

Inventories

321.5

323.3

306.2

Receivables and others

383.1

367.0

332.8

Marketable securities and cash

196.1

146.2

221.5

Shareholders’ equity and liabilities

1)

30.6.2000 1)
m CHF

1,722.6

1,663.5

1,727.4

Shareholders’ equity

785.4

818.1

794.8

Liabilities

937.2

845.4

932.6

Financial debts

430.3

434.9

426.5

Other

390.6

361.9

386.6

Provisions

116.3

48.6

119.5

unaudited

Sales development by product groups

With CHF 916.6 million and a 6.4% increase, group sales in the first half-year 2000 showeda favorable trend, with a positive contribution from exchange rate movements. The businessdevelopment was particularly dynamic in North America (+22.5%) and in Asia (+33.7%).
In the flooring business, net sales of the core product linoleum rose by 5.2%. The more than
average increase – especially in the USA, Asia, Germany, the Netherlands and Great Britain –was the result of well-targeted marketing campaigns. As opposed, sales in Switzerland andScandinavia have not yet met the expectations so far.
Market conditions in the vinyl floorcoverings – another core business – continued to be difficult. In a stagnating market, sales of CHF 177.7 million were marginally higher than in theprevious year. A positive development could be observed in the USA, Asia and Scandinavia, andalso the export business to Eastern Europe was picking up. Resulting from unfavorable exchange
rate movements, business of the production site Nairn, Great Britain, was not satisfactory.
Business development was as expected in the other flooring activities. Carpets showed strong
sales in France and Benelux, whereas business performance in Switzerland was not satisfactory.
The Scandinavian parquet flooring activities continued their strong sales growth (+33.3%).

Net sales flooringÜbersicht Erfolgsrechnung 1)

First six months
2000
m CHF

1999
m CHF

% change on
1999

Total

514.3

494.0

4.1

Linoleum

205.1

194.9

5.2

Vinyls

177.7

172.8

2.8

Carpets

110.7

110.7

0.0

Parquet Flooring

20.8

15.6

33.3

Among industry specialties, the core products of conveyor and drive belts made from synthetic materials had buoyant demand on all continents. The strong demand from industries suchas food, logistics and producers of fitness equipment made a particular contribution to thepositive development.
Sales of the core product adhesives were up 4.7%, i.e. a rather subdued first half year. Demandis expected to pick up in the remaining months of the year.
The sales of coated textiles were encouraging thanks to newly developed fields of application.
The business development was not satisfactory in the field of extruded profiles and decorativefilms. The continued increase in sales of films to industrial customers could not compensate
for the – partly deliberate – decrease of wall coverings and self-adhesive decorative films.
ÜbersichtErfolgsrechnung 1)
Net sales industry
specialties

First six months
2000
m CHF

1999
m CHF

% change on1999

Total

402.3

367.8

9.4

Belting

188.2

157.5

19.5

Adhesives

107.3

102.5

4.7

Coated Textiles/Extruded Profiles/Decorative Films

106.8

107.8

– 0.9

Strategy Implementation

At the beginning of 2000, the management positions of the four strategic business units werefilled. By 1.1.2001 at the latest, the organizations within the business units will be aligned witha clear market focus as a priority. Intensive efforts are made to enhance Forbo’s presence in
the Internet.
In the linoleum business, the product development was intensified apart from selective marketing
initiatives. In the field of vinyls, new product development is also underway at full speed at
the new production plant in Coevorden, the Netherlands. The market launches of the first newproducts will take place in the first quarter of 2001.
The positive sales development of belting calls for the provision of additional capacities. Therefore the speedy conclusion of commissioning the new installation in Hanover for producing
4.5 meter wide belting material has high priority. The well-targeted coverage of attractive customer segments is starting to pay off especially in the USA. First steps to rationalize the European
finishing and dispatch centers, which will lead to personnel and financial savings, are being
taken.
Adhesives will in the future be split up in the marketing organizations floor/wall and industrial
applications. Preparations for opening up new markets are underway.
In the other business units, good progress with restructuring initiatives to higher profitability
has been made especially with carpets. The sales organizations for Germany, Switzerland,Austria, South and Eastern Europe have been integrated under a joint management. The coordination of production on the European level will result in improved plant utilization andelimination of redundancies. In this context the needlefelt production site in Wermelskirchen,
Germany, will be closed on October 31, 2000. Needlefelt floor coverings will, in the future,
be produced exclusively at Forbo-Sarlino in Reims, France. This move will have a positive impacton costs.
By the end of 2000, parts of the special provisions of CHF 70.0 million will be used in connection with the closure of the Wermelskirchen site and other measures.

Employees

On 30.6.2000 Forbo had 6872 employees, 43 more than at the end of 1999. The increase byregions is the USA (+12), Asia (+14) and Europe (+17). The jobs lost as a result of restructuringinitiatives were partly compensated by growth in other areas.
OutlookBased on the positive economic outlook in our major markets and the increasing impact of
the strategy implementation and restructuring programs, we are expecting a continuation of thepositive sales and profit development.
The higher operative cash-flow combined with the moderate investment activity is likely to resultin a clear improvement of the free cash-flow also for the entire year.

Forbo Holding AG

Karl Janjöri
Chairman of the Board of Directors

Werner Kummer
President andChief Executive Officer

Eglisau/Zurich, July 21, 2000

Stock exchange information
Issued and outstanding shares
Market prices

Stock market capitalization

30.6.2000

1,473,416

High

CHF 828

Low

CHF 620

30.6.2000

CHF 680

30.6.2000

m CHF 1,002Dates
Media conference: November 7, 2000
Financial analysts presentation: November 7, 2000
Media conference: March 28, 2001
Annual General Meeting: April 24, 2001

Interim statement according to the Listing Rules of the Swiss Exchange Appendix II, Rule No. 12