Elcoteq Lowers Growth Forecast

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Helsinki, Finland — Elcoteq Network Corp. has lowered its full year 2003 net sales growth forecast from the previously announced level of 60 percent to 40 percent.

The main reasons for the change are slower economic development in China due to the SARS epidemic and the weakening of the U.S. dollar. Based on the current outlook the company estimates that its full-year net sales will reach approximately EUR 2.5 billion. Elcoteq further estimates that its full-year result in 2003 will be an improvement compared to the previous year.

Elcoteq estimates that its second-quarter (April through June) net sales will total approximately MEUR 500, having been MEUR 425 a year before.

Roughly 30 percent of Elcoteq's manufacturing capacity is situated in China and therefore the impact of the SARS epidemic on the general level of demand in China is clearly visible in Elcoteq's operations. Although the number of SARS cases is now on the decline, the unwillingness of the population to travel and spend has had a permanent effect on demand in 2003. This effect will be particularly evident in demand during the second quarter ending June 30. The SARS epidemic has had no direct impact on Elcoteq's manufacturing plants as no SARS cases have been noted in the company.

The weakening of the dollar against the euro will reduce the company's euro-denominated net sales. The dollar's exchange rate will be felt most keenly in net sales of Elcoteq's operations in China, where invoicing is dollar-linked. Elcoteq's net sales in Europe are not immune to the impact of the dollar either since a substantial quantity of dollar-priced components are used in Europe. However, Elcoteq's product pricing model takes account of exchange rates, and changes in the value of the dollar will have no significant effect on Elcoteq's result as long as net currency hedging is appropriate.

Elcoteq Network Corp. is the largest European electronics manufacturing services (EMS) company and one of the global leaders in its field. For more information, visit www.elcoteq.com.



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