EXEL OYJ INTERIM REPORT 1 January ? 31 M

EXEL OYJ STOCK EXCHANGE RELEASE     29.4.2004 11:00 AM       1 (8)

EXEL OYJ INTERIM REPORT 1 January – 31 March 2004

Overview:

  - Very strong sales growth continues in both divisions; net sales
  for the first quarter grew by 67% to EUR 20.5 million (EUR 12.3
  million).
  - This growth was driven by the expansion of Nordic Walking in
  Central Europe, the acquisition of Bekaert’s pultrusion operations,
  and strong demand for specialty profiles.
  - Operating profit grew by 392% to EUR 2.1 million (EUR 0.4
  million).
  - The markets for Nordic Walking and specialty profiles continue to
  look strong in the near term.

Operating environment

Despite weak general economic growth in Exel’s main market areas in
Central Europe, demand for our specialty products, particularly carbon
fibre profiles and products under our Nordic Fitness SportsTM (NFS)
concept, has remained strong. We expect this trend to continue in the
near term.

The markets for our raw materials have been stable with the exception
of carbon fibre. Demand for carbon fibre is growing strongly mainly
due to large aircraft projects. Growing demand has caused prices to
escalate quickly, which may negatively affect the overall market for
carbon fibre-based products.

Industry division

The Industry division’s net sales grew by 82% to EUR 11.7 million
(EUR 6.4 million). The division’s net sales grew due to the addition
of a new production facility, acquired from Bekaert in Belgium
(roughly EUR 2.1 million) and strong growth in the specialty profiles
market, while the major industrial customers’ activity still remains
at a low level with respect to non-specialty products. Profitability
also remained good as operating profit grew to EUR 1.2 million (EUR
0.9 million) due to e.g. strong sales and improved operating
efficiency. Keen price competition continues in the marketplace,
however. Profitability was also affected negatively by a credit loss
recorded during the period under review in relation to the Belgian
operations in the amount of EUR 0.2 million.

The cautiousness of the major industrial customers notwithstanding,
the demand for specialty profiles is high. Product development
projects continue in our profiles product segment mainly in relation
to automotive applications, infrastructure construction and wind
power.

Antenna profile markets have remained strong throughout the winter due
to a pick-up in the construction of GSM and 3G networks. The strong
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network construction is expected to continue at least through the
summer.

Paper machine utilisation rates remain low but paper machine profile
sales have still grown slightly over the period under review.

The sales of lattice masts reached record levels during the period
under review. Demand is expected to grow further in anticipation of
the International Civil Aviation Organization’s (ICAO) frangibility
regulations that take effect in 2005 and require airport lighting
system support masts to be breakable upon impact.

The integration of the pultrusion operations acquired from Bekaert in
January, 2004 has commenced both in Belgium and Spain. Efficiency
enhancing measures are progressing on schedule, and the profitability
of the acquired operations is expected to improve by the end of the
year.

Sport division

The net sales of the Sport division totalled EUR 8.8 million (EUR 5.9
million) during the period under review, or 50% more than during the
same period last year. Profitability improved significantly; operating
profit totalled EUR 0.8 million (EUR -0.4 million). The NFSTM concept
is gaining customers and attracting strong interest in otherwise
slowly growing sporting goods markets.

NFSTM, and particularly Nordic Walking in German-speaking Central
Europe, continues its strong growth. Exel’s market share has remained
very solid. Nordic Walking is currently being introduced to new
countries. Pre-season sales of other pole products have been on
approximately the same level as last year.

Floorball pre-season sales in our main markets, i.e. Finland, Sweden
and Switzerland, have also remained at last year’s levels. These
markets will not grow materially this year.

Laminate sales have remained flat compared to the same period last
year, although the sales of Exel GmbH’s Plastics products have grown
slightly year over year. In water sports, the demand for Exel’s
surfing masts is holding steady but the overall market continues to
shrink worldwide.

Net sales and profits

Consolidated net sales grew by 67% year over year during the first
quarter. Net sales growth by division were as follows:

Net sales
(EUR million)     1-3/2004          1-3/2003          Change
Industry          11.7               6.4               82.1%
Sport              8.8               5.9               49.9%
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Total             20.5              12.3               66.7%

Consolidated operating profit totalled EUR 2.1 million
(EUR 0.4 million). Operating profit by division was as follows:

Operating profit
(EUR million)     1-3/2004          1-3/2003          Change
Industry          1.2                0.9              45.7%
Sport             0.8               -0.4              292.3%
Total             2.1                0.4              391.8%

The improvement in operating profit was mainly due to increased sales
volumes and improved operating efficiency in both divisions.

Net financial expenses

Net financial expenses totalled EUR 97,000 (EUR 129,000). Savings in
financial expenses stemmed from the repayment of long-term debt during
2003. Funding arrangements for the acquisition of Bekaert’s pultrusion
operations did not yet materially increase financial expenses during
the period under review.

Balance sheet, financing and liabilities

The balance sheet total stood at EUR 43.1 million on 31 March 2004
(EUR 32.1 million). The acquisition of Bekaert’s pultrusion operations

contributed by approximately EUR 6.6 million to this total. Interest-
bearing net liabilities grew to EUR 9.8 million (EUR 9.2 million) due
to the acquisition. Total liabilities remained roughly unchanged.

Investments

The Group’s investments in fixed assets totalled EUR 3.1 million (EUR
0.4 million). The acquisition of Bekaert’s pultrusion operations
represented EUR 2.3 million of this in fixed assets (total acquisition
some EUR 6.5 million). Capacity expansion projects are underway in the
Sport division (Nordic Walking products). A new production line was
completed during the period under review at Exel’s Kiihtelysvaara
facility for the production of larger profiles.

Personnel

Group personnel stood at 428 (357) on 31 March 2004. This increase
related to the integration of the pultrusion operations acquired from
Bekaert into the Exel group (some 40 persons) and additional labour
needs at Exel’s Finnish manufacturing facilities (some 30 persons)
brought on by increased demand for production volumes.

Shares and ownership

Exel’s share capital totals EUR 1,884,120 and consists of 5,383,200
shares, each of which is nominally valued at EUR 0.35. The members of

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the Board of Directors and the President hold 98,100 shares, i.e.
1.8%.

The number of shares traded on the Helsinki Exchanges during the
period under review amounted to 11.97% of all shares. During the
period the highest share price quoted was EUR 14.79, and the lowest
EUR 11.75. The closing price for the review period was EUR 14.10.
Market capitalization was EUR 75.9 million on 31 March 2004.

Decisions by Exel’s Annual General Meeting

The Annual General Meeting held on 14 April 2004 re-elected Kari
Haavisto, Peter Hofvenstam, Vesa Kainu, Ove Mattsson and Mika Sulin to
the company’s Board of Directors. Ove Mattsson was re-elected Chairman
of the Board.

Increase in share capital

The AGM authorised the Board to increase the Company’s share capital
under the following terms: the Board was authorized to decide to
increase the Company’s share capital by one or more rights issues in
such a way that the Company’s share capital may be increased at the
most by EUR 352,500. The authorization is valid until 14 April, 2005.

In virtue of the authorization the Board may decide on who is entitled
to exercise subscription rights in connection with the rights issue,
the subscription price of the shares and the criteria used to
determine the subscription price and other terms of the rights issue.
The pre-emptive right of shareholders to acquire shares may be
deviated provided that from the Company’s perspective important
financial grounds exist, such as the financing, implementation or
enabling of a business acquisition or another cooperative arrangement,
the strengthening or development of the Company’s financial or capital
structure or the implementation of other measures relative to the
development of the Company’s business. No decision may be taken for
the benefit of the Company’s insiders.

In virtue of the authorization the Board is entitled to decide on a
rights issue in such a way that a share subscription may be made in
kind or otherwise under certain terms.

Acquisition of the Company’s own shares

The AGM authorised the Board to acquire the Company’s own shares using
funds available for distribution of profits so that the total
accounting par value of the own shares held by the Company or its
subsidiary organizations, or the number of votes they carry after the
acquisition, corresponds to no more than five (5) per cent of the
Company’s total share capital or the total voting rights of the
company. The Company may acquire a maximum of 269,160 shares.

The shares can be acquired either

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(a) through a tender offer made to all the shareholders on equal terms
and for an equal price determined by the Board, or

(b) through public trading in which case the shares will be acquired
in another proportion than that of holdings of the current
shareholders, and the purchase price is based on the market price of
the Company shares in public trading.

The shares may be acquired in order to finance, implement or carry out
business acquisitions or other cooperative arrangements, to strengthen
or develop the Company’s financial or capital structure, to implement
other measures relating to the development of the Company’s business,
to grant incentives to selected members of the personnel, or in order
to be transferred in other ways or to be cancelled.

Since the maximum number of the shares subject to the acquisition
equals a maximum of five (5) per cent of the total amount of the
shares and voting rights of the Company, the acquisition of the shares
will have no material impact on the distribution of the share
ownership and the voting power in the Company.

The authorization is valid until 14 April 2005.

Right to convey the Company’s own shares

The AGM authorised the Board to resolve to convey the Company’s own
shares so that the authorization would cover all such own shares of
the Company that are acquired on the basis of the acquisition
authorization granted to the Board of Directors.

The authorization entitles the Board of Directors to decide to whom
and in which order the own shares are conveyed. The Board may resolve
to convey the shares in another proportion than that of the
shareholders’ pre-emptive rights to the Company’s shares, provided
that from the Company’s perspective important financial grounds exist,
such as financing, implementing or carrying out business acquisitions
or other cooperative arrangements, implementation of other measures
relating to the development of the Company’s business or granting
incentives to selected members of the personnel. The shares may also
be conveyed at the public trading on the Helsinki Exchanges.

No decision may be taken in favour of anyone belonging to the
Company’s insiders.


The authorization comprises the right to decide on the price of the
conveyance and the grounds for price determination and the right to
convey the shares against other compensation than cash or to use the
right of set-off.

The authorization is valid until 14 April 2005.

Prospects for the rest of 2004

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The Nordic Walking markets are expected to remain very active
throughout the year. The demand for specialty profiles is expected to
continue strong through the summer. The integration of the Belgium
operations into the Exel Group is progressing according to plan and
will require significant resources. Raw materials prices are assumed
to stay at current levels with the exception of carbon fibre prices,
which are expected to increase. Net sales are expected to grow
significantly, compared to last year, during the remainder of the
year, both through the acquisition of Bekaert’s pultrusion operations
and organic growth. During the remainder of this year, however, the
net sales growth is not expected to continue in the same pace as
during the first quarter of this year. Operating profit is expected to
grow in line with net sales.

Mäntyharju, 29 April 2004


Exel Oyj                   Ari Jokelainen
Board of Directors         President


EXEL GROUP

CONSOLIDATED INCOME STATEMENT

EUR 1,000                           1-3/04   1-3/03   change % 1-12/03

NET SALES                           20,514   12,303   67       57,281
Increase (+)/decrease (-) of
Finished goods and work in
progress                            1,016    420      142      834
Production for own use              78       54       44       323
Other operating income              21       94       -78      342

Materials and services              -8,498   -4,747   79       -21,716

Personnel expenses                  -4,570   -3,491   31       -14,329

Depreciation                        -815     -815     0        -3,184

Other operating expenses            -5,679   -3,397   67       -14,205

OPERATING PROFIT                    2,067    420      392      5,345
Financial income and expenses (net) -97      -129     -25      -436


PROFIT BEFORE EXTRAORDINARY ITEMS   1,970    291      576      4,910
Extraordinary items

PROFIT BEFORE INCOME TAXES          1,970    291      576      4,910
Income taxes                        -658     -98      574      -1,537

PROFIT FOR THE PERIOD               1,312    194      577      3,373
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The taxes taken into account are based on the profit for the period.

CONSOLIDATED BALANCE SHEET

EUR 1,000                           31.3.04  31.3.03  change% 31.12.03

ASSETS
Non-current assets
  Intangible assets                 2,969    3,349    -11      3,126
  Consolidation goodwill            312      384      -19      330
  Tangible assets                   12,973   10,403   25       10,470
  Investment                        95       127      -25      95
Current assets
  Inventories                       10,409   8,435    23       8,747
  Receivables                       12,894   8,342    55       8,626
  Marketable securities             652
  Cash in hand and at bank          2,770    1,030    232      2,753
Total                               43,076   32,069   34       34,147

LIABILITIES AND SHAREHOLDERS’ EQUITY
Equity
  Share capital                     1,884    1,855    2        1,870
  Other equity                      16,963   13,280   28       15,666
Liabilities
  Deferred tax liability            14       106      -87      14
  Non-current                       8,494    5,517    54       4,077
  Current                           15,720   11,311   39       12,521
Total                               43,076   32,069   34       34,147


FUNDS STATEMENT

EUR 1,000                           1-3/04   1-3/03   change % 1-12/03

Cash flow from business operations  2,552    -511     599      6,409
Acquired business operations        -6,440
Investment in tangible and
intangible assets                   -804     -393     105      -2 599
Income from surrender of tangible
and intangible assets                                          79
Rights issue                                                   282
Withdrawal of non-current loans     5,052                      53
Repayments of non-current loans     -724     -705     3        -2,192
Withdrawals of/repayments of
current loans                       1,029    112      819      -747
Dividend paid                                                  -1,060
Other                               5        2        150      4
Change in liquid funds              670      -1,495   145      229




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                                    31.3.04  31.3.03  change% 31.12.03

Indicators (EUR 1,000)
Gross investment                    3,144    395      696      2,519
% of net sales                      15%      3%                4%
R&D expenses                        612      431      42       1,707
% of net sales                      3%       4%                3%
Average personnel                   421      356      18       355
Personnel at end of period          428      357      20       355
Order book                          16,255   7,571    115      11,449
Solvency ratio, %                   44%      47%               52%
Return on investment, %             29%      6%                21%
Net gearing, %                      52%      61%               29%
Earnings per share, EUR             0.24     0.04     577      0.64
Equity per share, EUR               3.50     2.81     25       3.26


Derivatives

Derivatives are used for hedging purposes only.

Interest rate risk

The company’s long-term debt is subject to interest rate risk, which
is why it has fixed the rate of interest on some of its borrowings
through swap agreements that extend to the years 2007-2009.

Currency risk

The company’s US dollar-denominated raw materials purchases are
partially hedged against currency risk through 11-month forward
contracts.

Interest rate derivatives Face value Fair market value (NPV)
  Interest swaps           3,441    -43

Currency derivatives
  Forward contracts        923      26


Consolidated contingent liabilities on 31 March 2004

Corporate mortgages                 12,500   12,500   12,500
Mortgages on land and buildings     2,954    2,954    2,954
Other contingent liabilities        2,174    2,569    2,390

The columns 1-3/04 and 1-3/03 are unaudited.