Niklasdorf, July 2006

Papers for labels and flexible packaging have been under constant upward cost pressure in recent years. In the past, it has been possible to offset this to a large extent by improving systems and increasing efficiency. But we have now reached the point where this price level is no longer sustainable, and there is no more scope for offsetting this by productivity improvements.

Although price increases were introduced a few months ago, prices were not increased sufficiently to reach a sustainable level.

Despite all internal savings, this enormous upward pressure on costs, due principally to increases in the price of energy and raw materials, forces B&B to introduce further price increases of 8-10% (depending on grade) to our customers in the third quarter of 2006 for label papers and for flexible packaging papers.

We know that these price increases are not exactly "welcome" in an intensely competitive market. But we trust our customers will appreciate that this move is essential, and we assure customers of a continuing high level of quality and excellent service.