Eastern European Markets
March 21, 2005

Sanitec to produce bathroom ceramics in Russia through joint venture

On 17 March 2005, Sanitec Corporation signed a Letter of Intent with the Russian SAVVA Group, to establish a joint venture between Sanitec and SAVVA’s subsidiary, Santek, in the production and sales of bathroom ceramics in Russia.

The Letter of Intent calls for the parties’ joint development of two ceramics factories in Russia. The existing Santek factory is situated in Cheboksary and has an annual production capacity of about half a million ceramic pieces. A new factory under construction in Novochebksarsk will have a capacity in excess of one million pieces. The new plant is planned to be on stream in summer 2005. Both factories will be capable of supplying products according to both Sanitec’s and Santek’s needs and specifications.

“This investment is an important part of our Russian strategy and aims to establish a leading position for Sanitec in the Russian market,” says Pertti Lehti, Executive Vice President. In 2004, Sanitec produced approximately 13 million ceramics pieces in 17 ceramic production plants, mainly located in Europe.

The SAVVA Group is currently active in the design, production, marketing, sales and distribution in Russia of bathroom ceramics products under the Santek brand, as well as in ceramic tiles throughout Russia.

Russia is a growing market and important focus for Sanitec

Currently Sanitec markets its ceramics products in Russia under the Ido, Ifö and Kolo brands, and holds approximately 6% share of the Russian ceramics sanitaryware market.

“Russia is an interesting market for us; it is closely connected to the European market and there is significant potential for growth over the next years. Given our strong market position in Europe, it is logical now to focus on a market like Russia,” says Johan Nilsson, Senior Vice President, North East Europe.

“In 2004 we strengthened our sales and marketing organisation in Russia and in 2005 we will participate in the first industrial investment together with Santek. During 2005 we will also implement new logistic solutions to further improve the level of service to our customers,” says Pertti Lehti with regard to Sanitec’s future plans in Russia.

For additional information, please contact:
Sanitec Corporation
Mr Pertti Lehti
Executive Vice President, Supply & NPD
mobile +358 50 2857

Mr Johan Nilsson
Senior Vice President, North East Europe
tel. +46 456 480 01
mobile +46 705 532 829

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