SICO Announces its Best Annual Results Ever, With Net Earnings Up 40% Over 2003

Business Wire, March 3, 2005

LONGUEUIL, Quebec -- SICO INC. (TSX:SIC)

- The Company achieves net earnings of $15.5 million or $2.27 per
  share ($2.24 diluted) in 2004.
- Sales increase to $303.4 million, mostly as a result of PARA's
  full-year contribution and internal growth in the
  ARCHITECTURAL SECTOR.
- The INDUSTRIAL SECTOR's North American sales increase by 6.2%.
- The Board of Directors raises the quarterly dividend paid to
  common shareholders by 16.7%.

For the year ended December 31, 2004, SICO INC. (ticker symbol SIC/TSX) achieved record results in terms of sales, net earnings and operating cash flows. The Company recorded sales of $303.4 million, compared with $280.5 million the previous year. The 8.2% increase is attributable to the ARCHITECTURAL SECTOR's rise in revenues of 9.6% to $263.4 million, fuelled by PARA's contribution for the entire 12-month period as opposed to eight months in 2003, and by the organic sales growth of national brand paints and specialty products. The INDUSTRIAL SECTOR's sales were stable at $40.0 million. However, excluding revenues derivedfrom the 50% interest in the Sico-Becker joint venture divested by SICO in the fourth quarter of 2004, the INDUSTRIAL SECTOR's sales grew by 6.2% (12.3% in the fourth quarter), driven by a recovery in North American demand, particularly in the specialized equipment market, and the addition of new accounts. The decline in the U.S. dollar against the Canadian dollar had a negative impact of $1.1 million on this sector's sales that would have otherwise reflected a 2.6% increase in 2004 (9.4% for its North American sales).

Operating earnings before depreciation, amortization, financial expenses, loss on goodwill and on the disposal of the joint venture and income taxes ("EBITDA") grew by 36.5% to $32.3 million, compared with $23.6 million EBITDA in 2003, which included non-recurring restructuring costs related to the infrastructure optimization program. Excluding such costs, EBITDA rose 13.5%. Excluding restructuring costs, the ARCHITECTURAL SECTOR's EBITDA increased by 13.5% and profit margin improved from 18.6% to 19.3%. Several factors accounted for this strong performance, including PARA's additional contribution, the benefits of the operational infrastructure optimization program and the national brand product sales growth. Again excluding restructuring costs, the INDUSTRIAL SECTOR's EBITDA jumped 74.7% to $2.0 million, while its profit margin improved from 2.8% to 4.9%. Besides increased sales in North America, this improvement is attributable to the streamlining and optimization measures carried out during the previous year, including the concentration of all manufacturing operations in a single plant in order to improve productivity and lower costs.

It should be noted that, during the fourth quarter, SICO incurred additional expenses due to the fact that 2004 comprised 53 weeks compared to 52 in 2003. As the extra week corresponded to the December 24 to December 31 holiday period, the Company recorded little revenues, while assuming full salaries and other fixed costs. As expected, SICO also sustained significant price increases on some of its raw materials, such as metal containers and petroleum derivatives. These price increases were not fully offset by the efficiency of the Company's procurement and inventory management practices and the strong Canadian dollar.

In the fourth quarter, given the accumulated losses of the Sico-Becker joint venture, the difficult market conditions and the uncertainty concerning its future profitability, SICO sold its interest in this entity to its partner Becker Industrie S.A.S. This transaction translated into a $0.6 million loss on disposal, offset by a $0.5 million reduction in income taxes. In the third quarter, SICO had recorded a $1.0 million loss on Sico-Becker's goodwill.

Consequently, SICO closed 2004 with net earnings of $15.5 million, up 40.0% over $11.0 million in 2003 - the highest net profit ever achieved by the Company. Earnings per common share rose to $2.27 ($2.24 diluted), from $1.68 ($1.64 diluted) in 2003. For information purposes, excluding the non-recurring restructuring costs, net of related income taxes, and restating for 2004 results the loss on goodwill and on the disposal of Sico-Becker, net of the related tax recovery, SICO would have posted net earnings of $16.4 million or $2.42 per share ($2.39 diluted), up 16.3% over $14.1 million or $2.15 per share ($2.10 diluted) the previous year.

Operating activities (after net changes in non-cash working capital items) provided cash flows of $34.8 million in 2004, compared with $12.9 million the previous year. These funds were notably used to reduce the Company's total debt by $26.6 million. As at December 31, 2004, total net indebtedness amounted to $13.9 million for a total net debt to shareholders' equity ratio of 11:89. Hence, SICO is in an excellent financial position to pursue its expansion, namely through business acquisitions in the Canadian architectural paint market and the North American industrial coatings sector.