H a l f -ye a r r e port
2001

Consolidation with a positive outlook
Dear shareholders

In an increasingly difficult economic environment, the company with its floor coverings andindustry specialties businesses succeeded in recording sales of CHF 792.0 million in the firsthalf-year 2001. In currency adjusted terms and without the previous year’s divestments, this corresponds with a 1.2 % increase compared with a strong first half-year 2000. At CHF 56.4 million,
the operating result was 11.4 % lower than in the first half of 2000 on a comparable basis. Theeffective decline was CHF 7.6 million. In addition to the retracting global economic trend, currency exchange rates had a negative impact on the results, especially the clearly weaker EURO in
comparison with the first half-year 2000. We have vigorously continued with the implementationof our strategy aimed at a further profit improvement. Additional cost-saving measures havebeen taken as an answer to the cyclical downturn. They will have a positive impact in the second
half-year.

Income development

In the context of focusing the activities Extruded Profiles, Decorative Films and Coated Textiles
were sold last year. Overall, the sales in the continued core business were satisfactory in all business fields – under the prevailing economic conditions. Sales development with Linoleum andAdhesives is particularly encouraging.
The decrease of the operative result is due to currency exchange rate effects, which alone accountfor a decline by CHF 2.5 million, and the operative business where essentially three factors arerelevant. First, the Linoleum core business did not succeed in compensating higher production
costs by rationalization. This was the result of lacking sales’ volumes in the depressed Germanmarket for floor coverings. Second, Belting suffered a sales decline in the USA as a result of theeconomic downswing. In addition, the new production plant in Hanover for the manufacture of
4.5 meter wide beltings could not yet fully reach the planned efficiency and quality. And third,
the margins of the Adhesives business continued to be under pressure because of higher raw
material prices in the previous year. As opposed, Vinyls and Carpets could just about maintaintheir sales and improve their margins slightly.
Group profit is also influenced by a clearly weaker financial result as compared with the previousyear. Whereas capital gains were made with securities in the fist half of 2000, this year’s stock
market development resulted in non-realized valuation losses. In addition, the financial result
includes interest costs associated with the share buy-back program. Group profit declined byCHF 11.0 million or 24.9 % compared with the first six months of 2000. Some CHF 2 million
are due to unfavorable currency exchange rates.

1)
Summary of incomestatementÜbersichtErfolgsrechnung 1)

Net sales
thereof continued operations
Operating profit before depreciation and amortization ( EBITDA )thereof continued operations
Operating profit ( EBIT )thereof continued operations
Consolidated profit
1)

First six months% changes on 2000

2001
m CHF

2000
m CHF

effective

currency
adjusted

792.0

916.6

–13.6

–10.4

792.0

809.8

–2.2

1.2

102.8

119.0

–13.6

–10.2

102.8

114.4

–10.1

–6.6

56.4

64.0

–11.9

–7.9

56.4

66.5

–15.2

–11.4

33.1

44.1

–24.9

–20.4

unaudited

Financial position

The net financial debt rose by CHF 155.1 million compared with the year-end 2000, CHF 114.7
million of which are the result of the share buy-back program. The remaining increase resultsfrom seasonal variation in current assets which remained nearly unchanged from the end of June
2000 on a comparable basis.
In the fist half-year, CHF 27.1 million were invested in fixed assets (CHF 33.5 million in the firsthalf-year 2000). As a result investments are clearly below the depreciation of CHF 46.4 million inthe period under consideration. This highlights the efforts made for a better asset utilization.
The strategic provisions of CHF 17.9 million (after tax) were not used in the first half of 2001.
Of the remaining provisions CHF 3.2 million were utilized for purposes originally specified. The
company’s liquidity continues to be good, accompanied by a solid shareholders’ equity base.
The equity capital share in the balance sum total is still 46.1 % following the share buy-back todate (compared with 53.3 % at the end of the previous year).
Successful share buy-back program

With the shareholder-friendly buy-back of own shares, Forbo optimizes its capital structure andmaintains sufficient financial flexibility for further expanding business activities in accordancewith the Group strategy. The program intends the buy-back of own shares up to a total volumeof CHF 200 million maximum. To date the company has bought 103 374 of its own shares via traded put options and further 33 000 shares via a second trading line. As a result Forbo owns
meanwhile 136 374 shares with respect to the share buy-back program or 9.0 % of the share capital with a total value of CHF 133.8 million. The decision to eliminate these shares will be taken
at the 2002 Annual General Meeting. The reduction of the number of shares will have a positiveeffect on earnings per share.
Summary of balance
sheet
Bilanzübersicht
Assets31.12.2000
m CHF

30.6.2000 1) 2)
m CHF

1 526.8

1 526.6

1 722.6

Long-term assets

764.9

778.9

821.9

Current assets

761.9

747.7

900.7

Inventories

291.8

260.7

321.5

Receivables and others

341.2

303.9

383.1

Marketable securities and cash

128.9

183.1

196.1

1 526.8

1 526.61 722.6

Shareholders’ equity and liabilities
Shareholders’ equity

703.8

813.9

785.4

Liabilities

823.0

712.7

937.2

Financial debts

440.7

339.8

430.3

Other346.3

333.7

390.6

Provisions

36.0

39.2

116.3

unaudited2)
before divestments
1)

30.6.20011)
m CHF

Business development by product groups *The share of the extra-European business in Group sales could be increased to 21.4 %.
Linoleum recorded a sales increase of 3.1 % in the period under consideration, supported by
the successful launch of the Marmoleum® Global 1 collection. This product group could further
strengthen its market position in Switzerland, the Benelux countries, and France. As opposed,
sales in Germany decreased by 6.4 %. In spite of the economic downturn in America, Linoleum
managed to further raise sales by 15.4 %.
In the Vinyls business sales are nearly unchanged from the previous year (+0.7 %), with slightly
higher margins. Sales development was positive in France. Sales losses recorded in Great Britain,
the Benelux countries and Scandinavia could be compensated by the expansion of businessactivity in the export markets of Eastern Europe, Russia, and America.
Carpets continued their favorable development in France and in the Benelux countries, whereas
decreasing sales were recorded in Germany and Switzerland. The Scandinavian Parquet Flooring
activities continued their sales growth.
Net sales FlooringÜbersicht Erfolgsrechnung 1)

First six months% changes on 2000

2001
m CHF

2000
m CHF

effective

currency
adjusted

Total

501.6

514.3

–2.5

1.7

Linoleum

202.5

205.1

–1.3

3.1

Vinyls

171.9

177.7

–3.3

0.7

Carpets

107.4

110.7

–3.0

–0.1

Parquet Flooring

19.8

20.8

–4.8

5.8

The global Belting business is suffering from the basic economic conditions. The important
US business recorded a sales decrease by 2.9 % and considerably increasing cost pressure. In Asia,
there are also signs of a slow-down in business activity.
In the Adhesives business sales both in the floor/wall and the industrial applications had anequally positive development. Forbo could strengthen its position especially in the Benelux countries and in Switzerland. Raw material prices are still reason for concern, only with gradual signsof price easing.
Net sales Industry SpecialtiesÜbersicht Erfolgsrechnung 1)First six months% changes on 2000

2001
m CHF

2000
m CHF

effective

Total (continued operations)

290.4

295.5

–1.7

0.9

Belting

181.7

188.2

–3.5

–1.1

Adhesives

108.7

107.3

1.3

4.4

–106.8–100.0–100.0

Divested activities

Employees

As per June 30, 2001 Forbo employed 5 833 people compared with 5 832 at the end of 2000. There
was a slight increase in Europe and Asia compared with a reduction in the USA.
Measures initiatedIn the context of the Group’s strategy implementation, numerous projects are underway for
intensified market coverage, product innovation, and the more efficient use of resources. In spiteof pressure on profitability these projects will be continued as planned, while additional measures
have been initiated in response to the current adverse business climate.
In the Floor Coverings Division efforts are underway for improving logistics, streamlining theEuropean organization for Vinyls, and rationalizing the administration. Additional commercial
product collections will be introduced in the core businesses Linoleum and Vinyls still before
the end of the year.

* All percentages are currency adjusted.

currencyadjusted

The Belting business will have to make additional adjustments to the number of personnel in theUSA and in Asia. Furthermore, some more branches will be closed in order to optimize the infrastructure. In the context of site specialization the shift of production between Hanover and Wallbach (Switzerland) has been realized. Substantial quality improvements and higher operating
efficiency of the new production plant in Hanover are expected for the second half of 2001. All inall, Forbo is making considerable efforts for further cost reductions, notably overheads. The steps
initiated in this area will result in the reduction of up to 80 jobs, mainly in the USA and in Asia.
Growth through acquisitions

The announced takeover of the Spanish adhesives manufacturer Carzuh is planned to become
effective on September 1, 2001. Carzuh has sales of CHF 25.0 million. With Carzuh Forbo intends
to open up the Spanish market for industrial adhesives in segments where Forbo already has astrong position in other countries.
On July 1, 2001 Forbo acquired the shoe adhesives business from Sika Tivoli. The additionalsales of about CHF 2 million resulting from this acquisition will strengthen Forbo’s leadership in
this market niche.
Forbo is looking for further growth through acquisition in line with the Group strategy.
OutlookAs a manufacturer of floor coverings and industry specialties, Forbo operates in to a short-termoriented business that cannot rely on large orders on hand. This does make prognoses difficult,but changes of the market sentiment will have immediate positive effects on business performance. Targeted market focus and intensive marketing activities in addition to the initiated shortterm measures make us expect a stronger second half-year.

Forbo Holding AG

Karl Janjöri
Chairman of the Board of Directors

Werner Kummer
Chief Executive Officer

Eglisau/Zurich, July 26, 2001

Stock exchange information

Issued and outstanding shares
Market prices

Stock market capitalization

30.6.2001

1 352 526

HighCHF 839

Low

CHF 70330.6.2001

CHF 763

30.6.2001

m CHF 1 032

Dates

Media conference: November 6, 2001
Financial analysts presentation: November 6, 2001
Annual results media conference: March 26, 2002
Financial analysts presentation: March 26, 2002
Annual general meeting: April 23, 2002

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