TREDEGAR REPORTS FOURTH-QUARTER, YEAR-END RESULTS

RICHMOND, Va., Jan. 26, 2005– Tredegar Corporation (NYSE:TG) reported fourth-quarter income from continuing operations of $3.4 million (9 cents per share) compared to $6.4 million (17 cents per share) in 2003. Earnings from manufacturing operations were $6.5 million (17 cents per share) versus $6.1 million (16 cents per share) last year. Fourth-quarter sales were up to $226.7 million from $181.9 million in 2003. A summary of fourth-quarter and year-end results from continuing operations is shown below:

Norman A. Scher, Tredegar’s president and chief executive officer, said: “Tredegar made solid progress during 2004, and we believe we will see improved results in 2005. Full-year sales from manufacturing operations increased 17% over 2003 while earnings rose 11%. In the fourth quarter, sales and profits improved in both films and aluminum. In films, sales of new apertured, elastic and specialty products continued to grow during the quarter. Unfortunately, profits were once again hurt by higher resin prices, which increased 27% during the second half of 2004. If this trend continues, significant near-term profit growth could be difficult to attain. In response, we have raised selling prices and implemented additional cost-sharing and pass-through agreements with customers. These actions, combined with growing momentum from new products, make us optimistic about the prospects for higher profits from our films business in 2005. In aluminum, the improved quarterly and full-year results reflect more favorable market conditions and cost reductions. Hopefully, as we move through the seasonally weak winter months and into spring, results will continue to improve.”

MANUFACTURING OPERATIONS

Film Products

Fourth-quarter net sales in Film Products were $111.3 million, up 22% from $91.5 million in 2003 due to growth in sales of new value-added products, higher raw material-driven selling prices and foreign currency effects. Operating profit from ongoing operations was $11.4 million, up 6% from $10.8 million last year. On a pro forma basis (excluding the divested films business in Argentina), volume for the quarter was 68.3 million pounds, up 6% from 64.3 million pounds in 2003.

Net sales, operating profit from ongoing operations and volume in the third quarter of 2004 were $104.6 million, $11.0 million and 70.1 million pounds, respectively. Volume on a pro forma basis (excluding the divested films business in Argentina) was 67.7 million pounds in the third quarter of 2004.

Full-year net sales were $413.3 million versus $365.5 million in 2003. Operating profit from ongoing operations was $43.3 million compared to $45.7 million in 2003. Volume on a pro forma basis (excluding the divested films business in Argentina) was 269.3 million pounds in 2004 and 263.4 million pounds in 2003. Prior-year results include sales of certain domestic backsheet products that were discontinued at the end of the first quarter of 2003.


Profits in Film Products continue to be hurt by higher resin prices, which have been increasing steadily since early 2002 and climbed at an accelerated pace during the second half of 2004. Average quarterly prices of low-density polyethylene resin in the U.S. increased about 5 cents per pound or 9% in the third quarter and 10 cents per pound or 16% in the fourth quarter. Resin prices in Europe and Asia exhibited similar trends. The company estimates that resin price increases in the fourth quarter resulted in a negative operating profit impact of about $2 million compared with the third quarter of 2004. This negative impact was partially offset by a customer reimbursement of $1 million for certain start-up costs that were incurred during the first half of 2004.

To address fluctuating resin prices, Film Products has pass-through or cost-sharing agreements covering the majority of its sales. However, under certain agreements, the higher resin costs are not passed through for an average period of 90 days. The company has implemented and continues to implement price increases for many customers that are currently not subject to pass-through arrangements, but these selling price increases typically lag resin price changes. Most new customer contracts contain resin pass-through arrangements. If resin prices continue to rise at a faster rate than selling prices, the delayed pass-through of costs will exert downward pressure on near-term profits.

Film Products remains optimistic about its growth prospects. Sales and profits of new apertured, elastic and specialty films are growing and the company is investing in new global growth opportunities. Capital expenditures during 2005 are expected to total approximately $50 million, with about $10 million earmarked for a production line that will manufacture a new material that enhances the fit of personal care products. The new line is already contracted to SCA, a $12 billion global personal care market leader headquartered in Sweden.

Capital expenditures were $45 million in 2004 versus $57 million in 2003.

Aluminum Extrusions

Fourth-quarter net sales in Aluminum Extrusions were $108.9 million, up 27% from $85.5 million in 2003. Volume was 59.6 million pounds for the quarter, up 10% from 54.1 million pounds in 2003, mainly due to higher shipments in commercial building and construction, machinery and equipment and distribution markets. Operating profit from ongoing operations increased 32% to $3.3 million from $2.5 million in 2003. The improved results were primarily due to higher selling prices, volume growth and productivity improvements, which were partially offset by the negative impact of the stronger Canadian dollar.

Full-year net sales were $425.1 million, up 20% from $354.6 million in 2003. Operating profit from ongoing operations was $22.6 million, up 50% from $15.1 million in 2003. Annual volume increased 7% to 243.4 million pounds from 228.2 million pounds in 2003.

The improved fourth-quarter and full-year results reflect the benefits of higher selling prices and the operating leverage inherent in this business. At current operating levels, the company expects every 1% increase in annual volume to yield a corresponding operating profit increase of approximately 3% to 4%.

Capital expenditures were $10 million in 2004 and are expected to be approximately $13 million in 2005.

THERICS

The fourth-quarter operating loss from ongoing operations at Therics was $2.5 million compared to a loss of $2.4 million in 2003. Net sales were $114,000 for the quarter and $380,000 for the year. The operating loss for 2004 was $9.8 million compared to $11.7 million in 2003.

The company said sales and marketing efforts at Therics are evolving more slowly than expected. Therics recently took steps to reduce its burn rate by approximately $500,000 per quarter and is exploring potential collaborations with other companies aimed at accelerating market penetration across a broader array of market segments.

OTHER ITEMS

The effective tax rate for manufacturing operations was 40.2% for the fourth quarter of 2004 and 36.1% for all of 2004. The higher rate recognized in the fourth quarter was due primarily to tax benefits of about $600,000 (2 cents per share) that were not recognized on 2004 operating losses of certain foreign subsidiaries that may not be recoverable in the carryforward period.

Fourth-quarter results include a net after-tax charge of $2.2 million (6 cents per share) for plant shutdowns, asset impairments and restructurings related primarily to charges associated with the relocation of Film Products’ R&D and technical operations, the shutdown of the films plant in New Bern, N.C., and severance at Therics. Last year’s fourth-quarter results included a net after-tax charge of $951,000 (2 cents per share) related to plant shutdowns, asset impairments and restructurings.

Fourth-quarter results also include net after-tax gains from the sale of assets and other items of $649,000 (2 cents per share). Last year’s fourth-quarter results included an after-tax gain on the sale of real estate of $2.8 million (7 cents per share).

Full-year results for 2004 include net after-tax charges for plant shutdowns, asset impairments and restructurings of $15.2 million (39 cents per share) compared to $7.3 million (19 cents per share) in 2003. After-tax gains from sale of assets and other items were $13.7 million (35 cents per share) in 2004 compared with $4.2 million (11 cents per share) in 2003.

Results for 2004 include an after-tax net gain from discontinued operations of $2.9 million (8 cents per share) versus an after-tax net loss of $45.7 million ($1.19 per share) in 2003 related primarily to the company’s venture capital activities.

Additional details regarding these items are provided in the financial tables included with this press release.

CAPITAL STRUCTURE

Net debt (debt net of cash) was $80.5 million, or about one times the last twelve months adjusted EBITDA.

See notes to financial tables for reconciliations to comparable GAAP measures.

QUARTERLY CONFERENCE CALL

Tredegar management will host a conference call on January 27 at 11:00 a.m. EST to discuss its earnings results. Individuals can access the call by dialing 877-692-2592. Individuals calling from outside the United States should dial 973-582-2700. A replay of the call will be available through February 3 by dialing 877-519-4471 (domestic) or 973-341-3080 (international), conference ID 5578216.

Alternatively, individuals may listen to the live audio webcast of the presentation by visiting the Tredegar Web site at www.tredegar.com. The webcast of the call may be accessed by selecting the “Webcast of fourth-quarter results” link on the home page. An archived version of the call will be available for replay on the Web site.

The words “believe,” “hope,” “expect,” “are likely,” and similar expressions identify “forward-looking” statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation the following:

Film Products is highly dependent on sales to one customer, which comprised approximately 27% of Tredegar’s net sales in 2004. Film Products' success in this regard depends on its ability to develop products that meet this customer’s requirements as well as market acceptance of this customer’s products and its marketing and production scheduling. Our ability to grow Film Products and attract new customers depends on developing and delivering new products, especially in the personal care market. Personal care products are now being made with a variety of new materials, replacing traditional backsheet and other components. While we have substantial technical resources, there can be no assurance that our new products can be brought to market successfully, or at the same level of profitability and market share of replaced films. A shift in customer preferences away from our technologies, our inability to develop and deliver new profitable products, or delayed acceptance of our new products in domestic and foreign markets, could have a material adverse effect on our business.


There is no assurance that Film Products will be able to successfully complete the proposed divestiture of the LaGrange plant (announced in January 2005) within a reasonable timeframe or at all or that it will be able to obtain acceptable terms and conditions for such sale from a purchaser.

Aluminum Extrusions is a cyclical business that is highly dependent on the economic conditions of its end-use markets in the U.S. and Canada, particularly in the construction, distribution and transportation industries. This business is also subject to seasonal slowdowns during the winter months. Aluminum Extrusions is under increasing domestic and foreign competitive pressures, including a growing presence of Chinese and other imports in a number of its markets.

Therics’ prospects and value depend on its ability to develop, manufacture, market, sell and profit from its orthopaedic product line and to achieve specified milestones, all of which will depend on its preclinical, clinical, regulatory, procurement, manufacturing, and sales and marketing capabilities or, where appropriate, its ability to enter into satisfactory arrangements with third parties to provide those functions.

Future performance is also influenced by the costs incurred by Tredegar’s businesses. There is no assurance that cost control efforts will offset cost increases or any additional declines in revenues. Likewise, there is no assurance of our ability to pass through to our customers cost increases in raw materials.

Tredegar does not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in conditions, assumptions or circumstances on which such statements are based.

To the extent that this release contains non-GAAP financial measures, it also presents both the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the difference between any such non-GAAP measures and such comparable GAAP financial measures. Accompanying the reconciliation is management’ s statement concerning the reasons why management believes that presentation of non-GAAP measures provides useful information to investors concerning Tredegar’ s financial condition and results of operations.

Based in Richmond, Va., Tredegar Corporation is a global manufacturer of plastic films and aluminum extrusions. Tredegar is also developing and marketing bone graft substitutes through its Therics subsidiary.

Click here for financial detail. (Adobe Acrobat Reader required. If you do not have Adobe Reader, please download it for free).