Ahlstrom Corporation STOCK EXCHANGE RELEASE 27.10.2009
July-September 2009 compared to July-September 2008
* Net sales were EUR 400.6 million (451.2).
* EBIT amounted to EUR 13.1 million (11.3) including
non-recurring items of EUR -4.4 million (-0.2).
* Profit before taxes was EUR 7.3 million (3.5) and earnings
per share were EUR 0.10 (0.04).
* Net cash from operating activities increased to EUR 67.3
million (24.7).
January-September 2009 compared to January-September 2008
* Net sales were EUR 1,175.6 million (1,383.4).
* EBIT amounted to EUR 12.1 million (50.0) including
non-recurring items of EUR -8.2 million (0.6).
* Loss before taxes was EUR 6.6 million (profit before taxes
28.9) and
earnings per share were EUR -0.11 (0.41).
* Net cash from operating activities increased to EUR 161.0
million (70.8).
Events in January-September 2009
* Restructuring programs and project to optimize working
capital proceeded according to plan. Since the turn of the year,
the number of employees decreased by 516 people and working capital
by EUR 81.1 million with turnover improving by 15 days.
* Gearing ratio decreased to 81.9% (December 31, 2008:
95.3%).
Strategy review process
* Conclusions of the strategy review process started in
April were completed.
Outlook for 2009
* No significant changes in the market situation are
expected during the rest of the year. Despite the improved
quarterly performance, both net sales and EBIT for 2009 are
expected to fall short of the level in 2008.
Jan Lång, President & CEO, comments:
- Despite the challenging market environment, we reached a
positive EBIT for July-September, particularly owing to streamlining
efforts, cost control and lower raw material prices. Employees have
committed themselves excellently to our target of shifting the focus
towards cash flow and working capital reduction. Our net debt
decreased by over EUR 87 million since the turn of the year. Still,
our profitability is not satisfactory, so the streamlining efforts
will continue. Due to risen raw material prices, we have also
announced price increases.
- We have today published our new strategic direction. In the
future, our business will be based on two very distinct business
models: the value-added business and the operational excellence
business. The focus is on profitable growth, with the return on
capital employed (ROCE) as the most important indicator. Its target
level of 13% remains unchanged.
KEY FIGURES
+--------------------------------------------------------------------------+
|EUR million | 7-9/| 7-9/|Change,| 1-9/| 1-9/|Change,|
| | 2009| 2008| %| 2009| 2008| %|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Net sales |400.6|451.2| -11.2|1,175.6|1,383.4| -15.0|
|------------------------------+-----+-----+-------+-------+-------+-------|
|EBIT (Operating profit/loss) | 13.1| 11.3| 15.5| 12.1| 50.0| -75.9|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Profit/loss before taxes | 7.3| 3.5| -| -6.6| 28.9| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Profit for the period | 4.9| 2.5| 92.3| -5.0| 20.9| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Earnings per share | 0.10| 0.04| -| -0.11| 0.41| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Return on capital employed | | | | | | |
|(ROCE), % | 4.8| 3.9| -| 1.5| 5.5| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Equity ratio, % | 39.3| 39.5| -| 39.3| 39.5| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Gearing ratio, % | 81.9| 84.8| -| 81.9| 84.8| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Interest-bearing net | | | | | | |
|liabilities |511.3|588.2| -13.1| 511.3| 588.2| -13.1|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Investments (excluding | | | | | | |
|acquisitions) | 12.4| 36.5| -66.0| 53.9| 90.5| -40.5|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Net cash from operating | | | | | | |
|activities | 67.3| 24.7| -| 161.0| 70.8| -|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Number of employees, average |5,899|6,544| -9.9| 6,034| 6,537| -7.7|
|------------------------------+-----+-----+-------+-------+-------+-------|
|Number of employees, | | | | | | |
|at the end of the period |5,849|6,452| -9.3| 5,849| 6,452| -9.3|
+--------------------------------------------------------------------------+
OPERATING ENVIRONMENT
The very challenging market conditions resulting from the recession
continued until the end of the first half of 2009, when the weakening
of demand for Ahlstrom's products stopped and the demand for some
products began to pick up. The positive trend continued during
July-September, but demand did not increase to the level of the
corresponding period last year.
In the Fiber Composites segment*, the recession has not impacted the
demand for Ahlstrom's food packaging and teabag materials or
nonwovens in medical applications. In January-September, their demand
remained close to the usual level. The demand for Ahlstrom's
construction materials increased slightly in July-September compared
to the first half of the year. Also the demand for wipes and
transportation filtration media improved after the weak January-June.
In addition, preparations for the possible spread of the A(H1N1)
virus that causes swine flu had a slightly increasing impact on the
demand for face masks and wipes. On the other hand, windmill and
marine markets continued to be weak.
In the Specialty Papers segment*, the market demand in release and
label papers, which picked up during the second quarter, continued to
increase and approached the level of the third quarter of 2008. The
demand for wall covers and posters as well as industrial papers also
increased. On the other hand, the automotive, furniture and textile
markets continued to be weak.
The increase in the market prices of Ahlstrom's main raw materials,
natural and synthetic fibers and chemicals, which began in June,
mainly continued.
DEVELOPMENT OF NET SALES
+----------------------------------------------------------------------+
|Net sales by segment | 7-9/| 7-9/|Change,| 1-9/| 1-9/|Change,|
|and business area | 2009| 2008| %| 2009| 2008| %|
|--------------------------+-----+-----+-------+-------+-------+-------|
|Fiber Composites |216.5|249.3| -13.1| 637.7| 758.3| -15.9|
|--------------------------+-----+-----+-------+-------+-------+-------|
| Advanced Nonwovens | 41.6| 48.1| -13.5| 131.3| 138.9| -5.5|
|--------------------------+-----+-----+-------+-------+-------+-------|
| Filtration | 70.5| 77.6| -9.1| 205.0| 240.3| -14.7|
|--------------------------+-----+-----+-------+-------+-------+-------|
| Glass & Industrial | | | | | | |
|Nonwovens | 46.8| 58.9| -20.5| 134.1| 187.0| -28.3|
|--------------------------+-----+-----+-------+-------+-------+-------|
| Home & Personal | | | | | | |
|Nonwovens | 59.5| 67.5| -11.9| 173.8| 201.1| -13.6|
|--------------------------+-----+-----+-------+-------+-------+-------|
|Specialty Papers |185.9|204.0| -8.9| 544.2| 630.7| -13.7|
|--------------------------+-----+-----+-------+-------+-------+-------|
| Release & Label Papers| 72.1| 80.7| -10.7| 205.8| 241.0| -14.6|
|--------------------------+-----+-----+-------+-------+-------+-------|
| Technical Papers |115.5|123.4| -6.4| 340.5| 389.7| -12.6|
|--------------------------+-----+-----+-------+-------+-------+-------|
|Other functions* and | | | | | | |
|eliminations | -1.8| -2.1| -| -6.3| -5.7| -|
|--------------------------+-----+-----+-------+-------+-------+-------|
|Total net sales |400.6|451.2| -11.2|1,175.6|1,383.4| -15.0|
+----------------------------------------------------------------------+
* Other functions include financing and taxation-related receivables,
liabilities and cost items, as well as earnings, costs, assets and
liabilities belonging to holding and sales companies.
Development of net sales in July-September 2009
Net sales decreased in all of Ahlstrom's business areas compared to
the third quarter of 2008. Compared to April-June 2009, net sales
remained unchanged. Net sales for July-September amounted to EUR
400.6 million (EUR 451.2 million), reducing by 11.2% compared to
July-September 2008.
Net sales of the Fiber Composites segment amounted to EUR 216.5
million (EUR 249.3 million), representing 54% of the Group's net
sales. The segment's net sales were decreased by 13.1% compared to
July-September 2008. Net sales were reduced in all business areas due
to lower volumes in most products. Net sales in the Advanced
Nonwovens business area (-13.5%) was impacted by an extended summer
shut-down. The steepest fall (-20.5%) was seen in the Glass &
Industrial Nonwovens business area. On the other hand, net sales of
Glass & Industrial Nonwovens increased by 9.6% compared to April-June
this year, particularly owing to the picking up of the demand for
construction materials.
Net sales of the Specialty Papers segment amounted to EUR 185.9
million (EUR 204.0 million), representing 46% of the Group's net
sales. Net sales were reduced by 8.9% compared to July-September
2008. Net sales were reduced in both business areas due to lower
volumes and sales prices in most products. In the Technical Papers
business area, the reduction was smaller (-6.4%), which is
particularly due to an increase in the sales of wall covers and
poster papers. Sales of Release & Label Papers decreased by 10.7%
from July-September 2008, but increased slightly compared to
April-June this year.
Development of net sales in January-September 2009
Group net sales were reduced in all business areas due to lower
volumes in most products. Net sales for January-September 2009
amounted to EUR 1,175.6 million, down by 15.0% on the corresponding
period the previous year (EUR 1,383.4 million). The comparison
figures show that during the corresponding period in 2008, the global
recession had only a slight negative impact on sales towards the end
of the period.
Net sales of the Fiber Composites segment amounted to EUR 637.7
million (EUR 758.3 million), representing 54% of the Group's net
sales. Net sales fell by 15.9% compared to January-September 2008.
Net sales of the Advanced Nonwovens business area were close to the
level of January-September 2008 (-5.5%), while Glass & Industrial
Nonwovens net sales fell by 28.3%.
Net sales of the Specialty Papers segment amounted to EUR 544.2
million (EUR 630.7 million), representing 46% of the Group's net
sales. Net sales decreased by 13.7% compared to January-September
2008. Net sales were reduced in both business areas, the Release &
Label Papers (-14.6%) and Technical Papers
(-12.6%).
RESULT AND PROFITABILITY
+-------------------------------------------------------------------+
| Financial result | 7-9/ | 7-9/ | Change, | 1-9/ | 1-9/ | Change, |
| by segment | 2009 | 2008 | % | 2009 | 2008 | % |
|-------------------------------------------------------------------|
| Fiber Composites |
|-------------------------------------------------------------------|
| EBIT | | | | | | |
| (Operating | | | | | | |
| profit/loss) | 8.8 | 7.7 | 14.1 | 11.6 | 40.0 | -70.9 |
|------------------+------+------+---------+-------+------+---------|
| EBIT | | | | | | |
| (Operating | | | | | | |
| profit/loss), | | | | | | |
| % | 4.1 | 3.1 | - | 1.8 | 5.3 | - |
|------------------+------+------+---------+-------+------+---------|
| Return on net | | | | | | |
| assets, | | | | | | |
| RONA, % | 4.7 | 3.8 | - | 2.0 | 6.7 | - |
|-------------------------------------------------------------------|
| Specialty Papers |
|-------------------------------------------------------------------|
| EBIT | | | | | | |
| (Operating | | | | | | |
| profit/loss) | 7.3 | 6.5 | 12.6 | 10.8 | 16.7 | -35.4 |
|------------------+------+------+---------+-------+------+---------|
| EBIT | | | | | | |
| (Operating | | | | | | |
| profit/loss), | | | | | | |
| % | 3.9 | 3.2 | - | 2.0 | 2.6 | - |
|------------------+------+------+---------+-------+------+---------|
| Return on net | | | | | | |
| assets, | | | | | | |
| RONA, % | 7.6 | 5.7 | - | 3.7 | 4.9 | - |
|------------------+------+------+---------+-------+------+---------|
| Other functions* | | | | | | |
| and eliminations | | | | | | |
|------------------+------+------+---------+-------+------+---------|
| Operating | | | | | | |
| profit/loss | -3.0 | -2.9 | - | -10.3 | -6.7 | - |
|------------------+------+------+---------+-------+------+---------|
| Ahlstrom Group | | | | | | |
| total | | | | | | |
|------------------+------+------+---------+-------+------+---------|
| EBIT | | | | | | |
| (Operating | | | | | | |
| profit/loss) | 13.1 | 11.3 | 15.5 | 12.1 | 50.0 | -75.9 |
|------------------+------+------+---------+-------+------+---------|
| EBIT | | | | | | |
| (Operating | | | | | | |
| profit/loss), | | | | | | |
| % | 3.3 | 2.5 | - | 1.0 | 3.6 | - |
|------------------+------+------+---------+-------+------+---------|
| ROCE, % | 4.8 | 3.9 | - | 1.5 | 5.5 | - |
+-------------------------------------------------------------------+
* Other functions include financing and taxation-related receivables,
liabilities and cost items, as well as earnings, costs, assets and
liabilities belonging to holding and sales companies.
Result and profitability in July-September 2009
Compared to July-September 2008, Ahlstrom's profitability was
improved by low raw material prices and the improved demand pattern,
but above all, by the implemented streamlining measures and internal
cost control. The performance was burdened by lower sales volumes
compared to July-September 2008 and increased price pressures due to
the global recession. The Group EBIT was EUR 13.1 million (EUR 11.3
million). The figure includes non-recurring items of EUR -4.4 million
(EUR -0.2 million).
EBIT of the Fiber Composites segment amounted to EUR 8.8 million (EUR
7.7 million). The figure includes non-recurring items of EUR -1.1
million (EUR 0.3 million).
EBIT of the Specialty Papers segment amounted to EUR 7.3 million (EUR
6.5 million). The figure includes non-recurring items of EUR -2.4
million (EUR 0.1 million).
Result and profitability in January-September 2009
The Group EBIT was EUR 12.1 million (EUR 50.0 million). The
difference is above all due to the reduction in sales volumes because
of the global recession, particularly during the first quarter, and
increased price pressure. Implemented streamlining measures, market
demand picking up at the end of the second quarter and lower raw
material prices, particularly during the first two quarters of the
year, improved the result.
Non-recurring items in January-September totaled EUR -8.2 million
(EUR 0.6 million), comprising mainly restructuring and reduction of
personnel. The most significant item in the second quarter was a
restructuring of EUR 1.4 million connected with the Bethune plant in
the United States in the Home & Personal Nonwovens business area.
Non-recurring items amounting to EUR 1.7 million were recognized in
the third quarter due to the restructuring of the Filtration and
Release & Label Papers business areas at the Turin plant in Italy.
EBIT of the Fiber Composites segment decreased to EUR 11.6 million
(EUR 40.0 million). Non-recurring items amounted to EUR -3.8 million
(EUR 2.2 million).
EBIT of the Specialty Papers segment was reduced to EUR 10.8 million
(EUR 16.7 million). The figure includes non-recurring items of EUR
-2.9 million (EUR -0.6 million).
Ahlstrom continued an active approach in adjusting its daily
production to weak demand. The market related downtime in production
was 20.3% in January-September 2009 compared to 6.0% during the
corresponding period in 2008. Ahlstrom pursued temporary layoffs and
other flexible working hour solutions in different countries
depending on the market conditions. Globally, approximately 2,400
employees were affected by the temporary layoffs and other flexible
working hour arrangements during January-September (550 in the
corresponding period in 2008) and 1,400 during July-September (350).
Fixed costs were 4.1% lower than in January-September 2008 as a
result of cost control and implemented streamlining measures.
Total net financial expenses were EUR 19.8 million (EUR 20.4 million
in January-September 2008). The net financial expenses include net
interest expenses of EUR 18.3 million (EUR 17.8 million), exchange
rate losses of EUR 0.2 million (EUR 0.4 million) and other financial
expenses of EUR 1.2 million (EUR 2.1 million).
Loss before taxes was EUR 6.6 million (profit before taxes of EUR
28.9 million).
Tax income amounted to EUR 1.6 million (income tax expenses of EUR
7.9 million).
Loss for the period was EUR 5.0 million (profit of EUR 20.9 million)
and earnings per share (EPS) were EUR -0.11 (EUR 0.41).
Return on capital employed (ROCE) amounted to 1.5% (5.5%), and return
on equity (ROE) to -1.1% (3.9%).
FINANCING
In January-September 2009, net cash flow from operating activities
amounted to EUR 161.0 million (EUR 70.8 million in January-September
2008). Cash flow was improved by significantly reduced working
capital, to which particular attention has been paid since the
beginning of the year. Operative working capital fell by EUR 81.1
million compared to the end of 2008.
Interest-bearing net liabilities fell by EUR 87.4 million from the
turn of the year to EUR 511.3 million (December 31, 2008: EUR 598.7
million). Ahlstrom's interest-bearing liabilities amounted to EUR
547.5 million on September 30, 2009. Of the loan portfolio,
approximately 33% was tied to a fixed interest rate using interest
rate derivatives or loan contracts. The duration of the loan
portfolio (average interest rate tying period) was 10 months and the
average interest rate was approximately 3.7%.
The gearing ratio was 81.9% (December 31, 2008: 95.3%) and the equity
ratio 39.3% (December 31, 2008: 36.8%).
Ahlstrom has actively been extending the maturity structure of its
loan portfolio during 2009. During the first half of the year, the
company made agreements on new medium-term bilateral loan facilities
amounting to EUR 55 million, and during the summer it signed a
three-year, EUR 200 million agreement on the refinancing of the
medium-term revolving credit facility of the same amount expiring in
November 2009. In addition, Ahlstrom signed an agreement on pension
loans amounting to EUR 56 million in the fall. The average maturity
of the raised pension loans is 3.5 years, and they improve the
repayment profile of the company's loan portfolio correspondingly.
PERSONNEL
The number of Ahlstrom employees during January-September was 6,034
on average (6,537 employees on the corresponding period in 2008) and
at the end of September, 5,849 (6,452). At the end of 2008, the
number of employees was 6,365.
During January-September 2009, the headcount decreased by 516 persons
due to the programs announced in January and April 2009 as well as
some restructuring actions taken in 2008, mainly the closure of the
Ascoli plant in Italy.
At the end of September, the highest numbers of employees were in the
United States (24%), France (21%), Italy (13%), Finland (11%) and
Germany (9%).
CAPITAL EXPENDITURE
Ahlstrom did not make any major investment decisions during the
review period. Ahlstrom's capital expenditure for January-September
totaled EUR 53.9 million (EUR 90.5 million excluding acquisitions in
January-September 2008).
The largest on-going investment project is the construction of a
medical nonwovens plant in Gujarat, India. Operations at the plant
are estimated to start in the first quarter of 2010. The project has
proceeded according to plans, and the buildings and installations of
equipment are nearly complete. The estimated total cost of the
project is EUR 38 million.
STREAMLINING PROGRAMS
Restructuring programs
Ahlstrom has launched two restructuring programs this year to improve
and adjust operational activities to the changed market demand. In
addition, a project to optimize working capital was initiated in
early 2009. All of the programs have proceeded according to plan.
January program
On January 7, 2009, Ahlstrom announced global restructuring plans to
improve profitability and adjust operations to the challenging market
situation. Of the permanent layoffs of 210 people as part of the
program, a total of 172 had been laid by the end of September. In
addition, there were temporary layoffs at production sites as well as
at the head office, and production was cut down in several countries
by market related downtime**.
The program involved the closing down of unprofitable operations at
the plants in Italy that belong to the Home & Personal Nonwovens
business area and produce nonwoven wipes. On July 6, 2009, the
company announced that it will close down the Gallarate plant as well
as one production line in Cressa. The reduction impact on personnel
related to the closures was approximately 50. Non-recurring expenses
were EUR 19 million, of which EUR 5.2 million have a cash flow
effect. The non-recurring expenses have been booked in Ahlstrom's
fourth quarter 2008 financial results.
April program
Ahlstrom announced on April 29, 2009 that it was to initiate another
restructuring program, aiming for annual savings of EUR 50 million.
The savings are estimated to have full effect in 2010.
In April, Ahlstrom estimated that the restructuring may have an
impact on 400 to 500 Ahlstrom employees globally. A total of 251
employees were laid off by the end of September.
The largest personnel cut implemented so far was related to the
company's June decision to permanently close down a production line
at the plant in Bethune, USA, and move its production to Green Bay,
USA. The production line belonged to the Home & Personal Nonwovens
business area, producing wipes. Personnel cuts made as a result of
the closing down total 65 employees, and most of them were laid off
during the third quarter.
Ahlstrom announced on September 14, 2009, that it will start new
cooperation negotiations at the plant in Karhula, Finland, to reduce
approximately 100 positions and temporarily lay off 80 employees. The
actions are targeted to adapt the production volumes of specialty
reinforcements and glass fiber tissue to match the demand. In
addition, the company announced on October 6, 2009, that it will
start negotiations to adjust production at its Altenkirchen plant in
Germany. The adjustments are estimated to result in a reduction of
approximately 65 positions (see Events after the review period).
When announcing the April program, its cost was estimated to be
approximately EUR 40 million in 2009, of which 50% cash-related.
Approximately 8 million of the costs were realized by the end of
September, and the total cost of the program is now estimated to be
about EUR 34 million by the end of 2009, of which 60% cash-related.
The costs are lower than estimated due to the implemented measures
differing slightly from the planned solutions. However, this will not
impact upon the target for annual savings of EUR 50 million.
Optimization of working capital
The project to optimize working capital initiated at the beginning of
2009 is proceeding according to plan. The project aims at reducing
the working capital by EUR 100 million over two years. So far, the
project has been initiated at 12 plants and, in the next few months,
it will be rolled out to most production sites and functions. During
January-September, the operative working capital fell by EUR 81.1
million with turnover improving by 15 days to 61 days at the end of
September.
AUTHORIZATIONS OF THE BOARD
Ahlstrom Corporation's Annual General Meeting of Shareholders (AGM)
held on March 25, 2009, authorized the Board of Directors to
repurchase Ahlstrom shares. The maximum number of shares to be
purchased is 4,500,000. The shares may be repurchased only through
public trading at the prevailing market price by using unrestricted
shareholders' equity.
The AGM also authorized the Board of Directors to distribute a
maximum of 4,500,000 own shares held by the company. The Board of
Directors is authorized to decide to whom and in which order the
shares will be distributed. The shares may be used as consideration
in acquisitions and in other arrangements as well as to implement the
company's share-based incentive plans in the manner and to the extent
decided by the Board of Directors. The Board of Directors also has
the right to decide on the distribution of the shares in public
trading for the purpose of financing possible acquisitions.
The authorizations are valid for 18 months from the close of the
Annual General Meeting but will, however, expire at the close of the
next Annual General Meeting, at the latest.
SHARES AND SHARE CAPITAL
Ahlstrom's share is listed on the NASDAQ OMX Helsinki. Ahlstrom has
one series of shares. The share is classified under NASDAQ OMX's
Materials sector and the trading code is AHL1V.
During January-September 2009, a total of 3.4 million Ahlstrom shares
were traded for a total of EUR 25.1 million. The lowest trading price
during the review period was EUR 6.15 and the highest EUR 10.00. The
closing price on September 30, 2009, was EUR 9.25, and market
capitalization was EUR 431.7 million on September 30, 2009.
Ahlstrom Group's equity per share was EUR 13.38 at the end of the
review period (December 31, 2008: EUR 13.46).
Ahlstrom has not used the AGM authorization to repurchase or
distribute company shares.
EVENTS AFTER THE REVIEW PERIOD
Key conclusions of the strategy review process
Ahlstrom has published a stock exchange release today, October 27,
2009, announcing that it has completed the conclusions of the
strategy review process initiated in April 2009. The aim of the
process was to verify the future direction and ambitions of the
company. The development of business operations will be based on
profitable growth, with increased focus in Asia. At the same time,
the company aims to manage its balance sheet and reduce its gearing
ratio.
In accordance with the revised strategy, Ahlstrom's operations will
be based on two distinct business models resulting from different
competitive situations, market growth potential and possibilities to
differentiate in various product lines. The first business model is
based on providing customers with added value products and the second
on operational excellence.
The value-added business will be the company's primary growth engine,
developing through organic growth and possibly by making small
acquisitions. Innovative new products that help Ahlstrom's customers
become more competitive will create the foundation of success. The
cluster will include the Fiber Composites segment's Advanced
Nonwovens and Glass & Industrial Nonwovens business areas as well as
transportation and liquid filtration media in the Filtration business
area. It will also include crepe papers and vegetable parchment from
the Technical Papers business area of the Specialty Papers segment.
The operational excellence business will be key to support the growth
of the company. The main focus will be to develop cost effective
products serving customer needs, through, for instance, alternative
raw materials or new technological solutions. The cluster covers the
Release & Label Papers business area and the majority of the
Technical Papers business area in the Specialty Papers segment. In
the Fiber Composites segment, it will include the Home & Personal
Nonwovens business area and air filtration media in the Filtration
business area.
The long-term target of the strategy is to strengthen Ahlstrom's
competitive position and generate returns that are in line with the
company's financial targets. One of the most important indicators is
return on capital employed (ROCE), which should reach its target
level of 13%. In January-September ROCE was 1.5% and in
July-September 4.8%. Measures to reach these targets will be
continued with regard to the product lines and units falling below
the target level.
Negotiations on production adjustments at the Altenkirchen plant in
Germany
As part of the April restructuring program, Ahlstrom announced on
October 6, 2009, that it will start negotiations to adjust production
at its Altenkirchen plant in Germany. The adjustments are estimated
to result in a reduction of approximately 65 positions.
The specialty materials produced at the plant are used in the
automotive, construction and other industries, and the target is to
adjust their production to the current demand. The plant is part of
the Technical Papers business area.
OUTLOOK
At the beginning of the year, Ahlstrom estimated that the market
environment would continue to be challenging and difficult to
forecast during 2009. As a result, Ahlstrom announced that it would
change its disclosure policy so that during a period of major
uncertainty, the outlook would only include forecasts of the business
and market environment. The company reported that forecasts of net
sales development would be included only when the predictability of
the operating environment had returned to the previous level. As
predictability has returned to a better level than during the first
half of the year, Ahlstrom has decided to start again the estimation
of the future outlook on a calendar year basis in terms of the
development of both net sales and EBIT.
The slight increase in the market demand for Ahlstrom's products
towards the end of the second quarter continued during the third
quarter. Despite the improved quarterly performance, demand
nevertheless remains low. Net sales for January-September 2009 were
15% down on January-September 2008, and the market related downtime
in the production was approximately 20%. No significant changes in
the market situation are expected during the rest of the year.
Ahlstrom's net sales for 2009 are estimated to fall short of the
level of 2008.
The Group EBIT is also expected to fall short of the previous year,
mainly due to lower sales volumes, price pressure and non-recurring
items. Successfully implemented streamlining measures and adaptation
of operations to market situation combined with lower raw material
prices were not sufficient to compensate for the impact of low sales
volumes.
In addition to the restructuring programs announced in January and
April, the company will continue adjusting its operations to the
market situation as necessary.
Investments in 2009 are estimated to be approximately EUR 70 million
(EUR 167.0 million in 2008, or EUR 128.0 million excluding
acquisitions).
SHORT-TERM RISKS
Despite some positive signs, the global recession still continues and
causes several factors of uncertainty that might impact Ahlstrom's
business. Production may need to be cut more than planned, and the
risk of a decrease in sales prices will increase if the low demand
continues. So far, bad debts have remained low, but Ahlstrom's
customer credit risks have increased due to the weakening economic
situation and are more difficult to cover with credit insurances.
In addition, raw material prices which decreased during the first
months of the year, the price of pulp in particular, have been
increasing since last summer and the increase is estimated to
continue also during the fourth quarter.
If the challenging market conditions persist, they may prolong the
payback period of the EUR 500 million investment program carried out
by Ahlstrom in 2007 and 2008.
The general risks in Ahlstrom's business operations are described in
more detail in the company's annual report 2008 on pages 24 to 29,
and on the Internet at www.ahlstrom.com.
* * *
This interim report has been prepared in accordance with the
International Financial Reporting Standards (IFRS). Comparable
figures refer to the same period last year unless otherwise stated.
The report is unaudited.
This report contains certain forward-looking statements that reflect
the present views of the company's management. The statements contain
uncertainties and risks and are thus subject to changes in the
general economic situation and in the company's business.
Helsinki, October 27, 2009
Ahlstrom Corporation
Board of Directors
ADDITIONAL INFORMATION
Jan Lång, President & CEO, tel. +358 10 888 4700
Seppo Parvi, CFO, tel. +358 10 888 4768
Ahlstrom's President & CEO Jan Lång will present the third quarter
results in Finnish at a press conference in Helsinki on October 27,
2009, at 2:00 p.m. Finnish time. The conference will take place at
Event Arena Bank, address Unioninkatu 20, 2nd floor. The name of the
meeting room will be displayed on the display board in the lobby. You
are welcome to attend.
In addition, an international conference call for analysts and
investors will be held on October 27, 2009, at 4:00 p.m. Finnish
time. The discussion will be led by President & CEO Jan Lång. To
participate in the teleconference, please dial +358 9 2313 9201 in
Helsinki or +44 20 7162 0077 in London a few minutes before the
conference begins. When connecting to the conference call, please use
the conference id 848199. A replay number is available until November
3, 2009. The numbers for the replay are +358 9 2314 4681
(instructions in Finnish) and +44 20 7031 4064 (instructions in
English). The access code is the same as the conference call id
(848199).
The presentation material will be available at www.ahlstrom.com >
Investors > IR presentations on October 27, 2009, after the interim
report has been published.
AHLSTROM'S FINANCIAL INFORMATION IN 2010
Ahlstrom will publish its financial information in 2010 as follows:
Report Date of publication Silent period
Financial statements bulletin Wednesday, February January 1-February
2009 3 3
Interim report January-March Thursday, April 29 April 1-April 29
Interim report January-June Wednesday, August July 1-August 11
11
Interim report Tuesday, October 26 October 1-October
January-September 26
During the silent period, Ahlstrom will refrain from contact with the
representatives of the capital market.
The annual report 2009 will be published during the week starting
March 15.
The Annual General Meeting of Shareholders (AGM) will be held on
Wednesday, March 31, 2010, at 1:00 p.m. in Finlandia Hall, address
Mannerheimintie 13 e, Helsinki, Finland.
Distribution:
NASDAQ OMX Helsinki
www.ahlstrom.com
Principal media
Ahlstrom in brief
Ahlstrom is a global leader in the development, manufacture and
marketing of high performance nonwovens and specialty papers.
Ahlstrom's products are used in a large variety of everyday
applications, such as filters, wipes, flooring, labels, and tapes.
Based upon its unique fiber expertise and innovative approach, the
company has a strong market position in several business areas in
which it operates. Ahlstrom's 6,000 employees serve customers via
sales offices and production facilities in more than 20 countries on
six continents. In 2008, Ahlstrom's net sales amounted to EUR 1.8
billion. Ahlstrom's share is quoted on the NASDAQ OMX Helsinki. The
company website is at www.ahlstrom.com.
APPENDIX
Consolidated financial statements
APPENDIX
CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements are unaudited.
INCOME STATEMENT Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2009 2008 2008
Net sales 400.6 451.2 1,175.6 1,383.4 1,802.4
Other operating income 2.0 5.8 8.1 13.1 18.7
Expenses -364.4 -421.5 -1,095.3 -1,274.4 -1,694.2
Depreciation, amortization
and impairment charges -25.0 -24.1 -76.3 -72.1 -112.3
Operating profit / loss 13.1 11.3 12.1 50.0 14.6
Net financial expenses -6.8 -7.1 -19.8 -20.4 -34.2
Share of profit / loss of
associated
companies 1.0 -0.7 1.1 -0.8 -1.1
Profit / loss before taxes 7.3 3.5 -6.6 28.9 -20.6
Income taxes -2.4 -1.0 1.6 -7.9 4.5
Profit / loss for the period 4.9 2.5 -5.0 20.9 -16.1
Attributable to
Owners of the parent 4.9 2.0 -5.0 19.1 -17.9
Minority interest - 0.5 - 1.8 1.8
Basic and diluted
earnings per share, EUR 0.10 0.04 -0.11 0.41 -0.38
STATEMENT OF
COMPREHENSIVE INCOME Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2009 2008 2008
Profit / loss for the period 4.9 2.5 -5.0 20.9 -16.1
Other comprehensive income,
net of tax:
Translation differences 1.1 -0.2 22.3 -7.0 -37.1
Hedges of net investments in
foreign operations -0.5 -1.4 -0.1 3.1 6.4
Cash flow hedges -0.1 -0.3 -0.0 0.1 -1.2
Other comprehensive income,
net of tax 0.4 -1.9 22.2 -3.8 -32.0
Total comprehensive income
for the period 5.2 0.6 17.2 17.1 -48.1
Attributable to
Owners of the parent 5.2 -1.6 17.2 12.4 -52.8
Minority interest - 2.2 - 4.7 4.7
BALANCE SHEET Sep 30, Sep 30, Dec 31,
EUR million 2009 2008 2008
ASSETS
Non-current assets
Property, plant and equipment 733.7 762.1 745.7
Goodwill 173.5 182.3 169.1
Other intangible assets 52.2 55.6 51.6
Investments in associated companies 12.5 11.7 11.4
Other investments 0.2 0.2 0.2
Other receivables 19.7 17.3 15.6
Deferred tax assets 45.3 33.7 40.4
Total non-current assets 1,037.1 1,062.9 1,033.9
Current assets
Inventories 182.0 269.1 252.5
Trade and other receivables 330.7 392.6 356.2
Income tax receivables 2.7 4.8 6.3
Other investments - 0.0 0.0
Cash and cash equivalents 36.2 24.3 58.2
Total current assets 551.6 690.8 673.2
Total assets 1,588.7 1,753.7 1,707.0
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 624.3 693.5 628.1
Minority interest - 0.0 0.0
Total equity 624.3 693.5 628.1
Non-current liabilities
Interest-bearing loans and borrowings 362.3 360.3 188.7
Employee benefit obligations 84.5 86.1 84.6
Provisions 4.4 4.0 4.4
Other liabilities 0.3 0.2 0.2
Deferred tax liabilities 20.9 25.5 16.5
Total non-current liabilities 472.3 476.1 294.4
Current liabilities
Interest-bearing loans and borrowings 185.3 252.2 468.1
Trade and other payables 292.3 306.7 293.3
Income tax liabilities 3.0 6.8 3.5
Provisions 11.5 18.5 19.7
Total current liabilities 492.1 584.2 784.5
Total liabilities 964.4 1,060.2 1,078.9
Total equity and liabilities 1,588.7 1,753.7 1,707.0
STATEMENT OF CHANGES IN EQUITY
1) Issued capital
2) Share premium
3) Non-restricted equity reserve
4) Hedging reserve
5) Translation reserve
6) Retained earnings
7) Minority interest
8) Total equity
Attributable to
owners of the parent
EUR million 1) 2) 3) 4) 5) 6) 7) 8)
Equity at January
1, 2008 70.0 209.3 8.3 0.0 -15.5 444.3 36.0 752.4
Dividends paid and
other - - - - - -46.7 - -46.7
Purchases of
minority interest - - - - - 11.4 -40.7 -29.3
Total comprehensive
income
for the period - - - 0.1 -6.8 19.1 4.7 17.1
Equity at September
30, 2008 70.0 209.3 8.3 0.1 -22.3 428.1 0.0 693.5
Equity at January
1, 2009 70.0 209.3 8.3 -1.2 -49.1 390.9 0.0 628.1
Dividends paid and
other - - - - - -21.0 - -21.0
Purchases of
minority interest - - - - - - -0.0 -0.0
Total comprehensive
income
for the period - - - -0.0 22.2 -5.0 - 17.2
Equity at September
30, 2009 70.0 209.3 8.3 -1.3 -26.9 364.9 - 624.3
STATEMENT OF CASH FLOWS Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2009 2008 2008
Cash flow from operating
activities
Profit / loss for the period 4.9 2.5 -5.0 20.9 -16.1
Adjustments, total 33.1 32.9 93.0 98.2 131.5
Changes in net working capital 38.7 19.7 95.1 9.1 47.2
Change in provisions -2.0 -5.3 -7.1 -25.0 -20.0
Financial items -6.8 -19.9 -15.8 -14.4 -16.8
Taxes paid -0.5 -5.3 0.9 -18.0 -23.4
Net cash from operating activities 67.3 24.7 161.0 70.8 102.4
Cash flow from investing activities
Acquisition of Group companies - -27.9 -0.0 -38.9 -39.0
Purchases of intangible and tangible
assets -13.3 -34.3 -58.0 -91.5 -131.2
Other investing activities 2.1 2.9 3.2 16.4 16.9
Net cash from investing activities -11.2 -59.3 -54.8 -114.1 -153.4
Cash flow from financing activities
Dividends paid - - -21.0 -46.7 -46.7
Changes in loans and other financing
activities -52.8 39.0 -108.7 93.3 136.3
Net cash from financing activities -52.8 39.0 -129.7 46.6 89.7
Net change in cash and cash
equivalents 3.3 4.3 -23.5 3.3 38.7
Cash and cash equivalents at
beginning of period 32.6 20.1 58.2 21.3 21.3
Foreign exchange adjustment 0.3 -0.1 1.5 -0.3 -1.7
Cash and cash equivalents at
end of period 36.2 24.3 36.2 24.3 58.2
KEY FIGURES Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
2009 2008 2009 2008 2008
Operating profit, % 3.3 2.5 1.0 3.6 0.8
Return on capital employed
(ROCE), % 4.8 3.9 1.5 5.5 1.4
Return on equity (ROE), % 3.1 1.4 -1.1 3.9 -2.3
Interest-bearing net
liabilities,
EUR million 511.3 588.2 511.3 588.2 598.7
Equity ratio, % 39.3 39.5 39.3 39.5 36.8
Gearing ratio, % 81.9 84.8 81.9 84.8 95.3
Earnings per share, EUR 0.10 0.04 -0.11 0.41 -0.38
Equity per share, EUR 13.38 14.86 13.38 14.86 13.46
Cash earnings per share, EUR 1.44 0.53 3.45 1.52 2.19
Average number of shares
during
the period, 1000's 46,671 46,671 46,671 46,671 46,671
Number of shares at the end
of
the period, 1000's 46,671 46,671 46,671 46,671 46,671
Capital expenditure, EUR
million 12.4 36.5 53.9 90.5 128.0
Capital employed, at the end
of
the period, EUR million 1,171.8 1,305.9 1,171.8 1,305.9 1,285.0
Number of employees, average 5,899 6,544 6,034 6,537 6,510
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with IAS 34,
Interim Financial reporting, as adopted by EU and the accounting
policies set out in the Group's Financial Statements for 2008 except
for the changes below.
Changes in accounting principles
The Group has adopted the following new or amended standards and
interpretations as of January 1, 2009:
- IFRS 8 Operating segments
The Group has two reportable segments: the Fiber Composites segment
and the Specialty Papers segment.
The adoption of IFRS 8 does not have an impact on reportable
segments.
- Revised IAS 23 Borrowing costs
The Group has already earlier applied this accounting policy and the
adoption of the revised standard has no impact on the consolidated
financial statements.
- Amendment to IAS 1 A Revised presentation
The amendment has changed the presentation of financial statements.
The income statement is presented in two statements: income statement
and statement of comprehensive income. The statement of changes in
equity includes only transactions with owners and all non-owner
changes are presented in equity as a single line.
The below mentioned new and amended standards and interpretations do
not have an impact on the consolidated financial statements.
- Amendment to IFRS 2 Share-based payment: Vesting Conditions and
Cancellations
- Amendments to IAS 32 and IAS 1 Puttable Financial Instruments and
Obligations Arising on Liquidation
- IFRIC 13 Customer Loyalty Programmes
SEGMENT INFORMATION Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2009 2008 2008
Fiber Composites 216.5 249.3 637.7 758.3 987.4
Specialty Papers 185.9 204.0 544.2 630.7 822.4
Other operations 4.1 5.3 11.3 14.7 20.2
Internal sales -5.9 -7.4 -17.6 -20.4 -27.6
Total net sales 400.6 451.2 1,175.6 1,383.4 1,802.4
Fiber Composites 1.3 1.6 4.3 3.3 5.6
Specialty Papers 0.6 2.7 2.6 7.2 9.0
Other operations 4.0 3.1 10.7 9.8 12.9
Total internal sales 5.9 7.4 17.6 20.4 27.6
Fiber Composites 8.8 7.7 11.6 40.0 15.3
Specialty Papers 7.3 6.5 10.8 16.7 10.2
Other operations -3.0 -2.8 -10.4 -6.5 -10.7
Eliminations 0.0 -0.1 0.1 -0.1 -0.2
Operating profit / loss 13.1 11.3 12.1 50.0 14.6
Fiber Composites 892.5 989.5 892.5 989.5 947.1
Specialty Papers 573.8 661.2 573.8 661.2 609.2
Other operations 24.8 29.7 24.8 29.7 30.4
Eliminations -4.6 -12.6 -4.6 -12.6 -15.9
Investments in associated
companies 12.5 11.7 12.5 11.7 11.4
Unallocated assets 89.8 74.2 89.8 74.2 124.9
Total assets 1,588.7 1,753.7 1,588.7 1,753.7 1,707.0
Segment information is presented according to the IFRS standards.
NET SALES BY REGION Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2009 2008 2008
Europe 212.9 241.0 624.4 796.3 1015.9
North America 99.5 114.9 308.0 327.6 442.5
South America 46.9 53.3 126.1 140.8 189.2
Asia-Pacific 32.0 33.7 94.5 92.0 119.4
Rest of the world 9.3 8.4 22.7 26.6 35.5
Total net sales 400.6 451.2 1,175.6 1,383.4 1,802.4
CHANGES OF PROPERTY, PLANT AND
EQUIPMENT Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2008
Book value at Jan 1 745.7 747.7 747.7
Acquisitions through business combinations - 3.8 3.9
Additions 52.9 89.3 118.7
Disposals -0.7 -3.1 -3.7
Depreciations and impairment charges -71.8 -67.8 -97.3
Translation adjustment and other changes 7.7 -7.8 -23.5
Book value at end of the period 733.7 762.1 745.7
TRANSACTIONS WITH RELATED PARTIES Q1-Q3 Q1-Q3 Q1-Q4
EUR million 2009 2008 2008
Transactions with associated companies
Sales and interest income 0.4 0.7 1.0
Purchases of goods and services -1.7 -2.7 -3.6
Trade and other receivables 0.0 0.3 2.6
Trade and other payables 0.2 0.3 0.3
Market prices have been used in transactions with associated
companies.
OPERATING LEASES Sep 30, Sep 30, Dec 31,
EUR million 2009 2008 2008
Current portion 6.7 6.9 6.9
Non-current portion 15.2 18.1 17.1
Total 21.9 25.0 24.0
CONTINGENT LIABILITIES Sep 30, Sep 30, Dec 31,
EUR million 2009 2008 2008
For own liabilities
Other loans
Amount of loans 0.2 0.5 0.5
Book value of pledges 0.3 0.6 0.5
For other own commitments
Guarantees 41.5 16.1 38.7
For commitments of associated companies
Guarantees 2.1 4.2 4.2
Capital expenditure commitments 13.2 41.9 36.2
Other contingent liabilities 4.1 4.4 4.7
QUARTERLY DATA Q3 Q2 Q1 Q4 Q3 Q2 Q1
EUR million 2009 2009 2009 2008 2008 2008 2008
Net sales 400.6 398.9 376.1 419.0 451.2 465.9 466.2
Other operating
income 2.0 3.5 2.7 5.6 5.8 4.3 3.1
Expenses -364.4 -366.7 -364.2 -419.8 -421.5 -426.9 -425.9
Depreciation,
amortization,
impairment charges -25.0 -25.9 -25.3 -40.2 -24.1 -23.9 -24.1
Operating profit /
loss 13.1 9.7 -10.7 -35.4 11.3 19.4 19.3
Net financial
expenses -6.8 -4.8 -8.2 -13.8 -7.1 -4.7 -8.6
Share of profit /
loss of
associated companies 1.0 -0.3 0.4 -0.3 -0.7 -0.6 0.5
Profit / loss before
taxes 7.3 4.7 -18.6 -49.5 3.5 14.2 11.2
Income taxes -2.4 -2.2 6.2 12.4 -1.0 -3.6 -3.4
Profit / loss for
the period 4.9 2.5 -12.4 -37.0 2.5 10.6 7.8
Attributable to
Owners of the parent 4.9 2.5 -12.4 -37.0 2.0 9.9 7.2
Minority interest - - - - 0.5 0.7 0.6
QUARTERLY DATA
BY SEGMENT Q3 Q2 Q1 Q4 Q3 Q2 Q1
EUR million 2009 2009 2009 2008 2008 2008 2008
Net sales
Fiber Composites 216.5 212.4 208.8 229.1 249.3 257.0 252.0
Specialty Papers 185.9 188.2 170.1 191.6 204.0 209.7 217.0
Other operations and
eliminations -1.8 -1.7 -2.8 -1.7 -2.1 -0.7 -2.8
Group total 400.6 398.9 376.1 419.0 451.2 465.9 466.2
Operating profit / loss
Fiber Composites 8.8 5.3 -2.5 -24.7 7.7 16.8 15.5
Specialty Papers 7.3 6.8 -3.4 -6.5 6.5 4.7 5.5
Other operations and
eliminations -3.0 -2.4 -4.9 -4.2 -2.9 -2.0 -1.7
Group total 13.1 9.7 -10.7 -35.4 11.3 19.4 19.3
KEY FIGURES
QUARTERLY Q3 Q2 Q1 Q4 Q3 Q2 Q1
EUR million 2009 2009 2009 2008 2008 2008 2008
Net sales 400.6 398.9 376.1 419.0 451.2 465.9 466.2
Operating profit /
loss 13.1 9.7 -10.7 -35.4 11.3 19.4 19.3
Profit / loss before
taxes 7.3 4.7 -18.6 -49.5 3.5 14.2 11.2
Profit / loss for
the period 4.9 2.5 -12.4 -37.0 2.5 10.6 7.8
Gearing ratio, % 81.9 92.0 99.8 95.3 84.8 76.0 64.4
Return on capital
employed
(ROCE), % 4.8 3.2 -3.3 -10.8 3.9 6.3 6.4
Earnings per share,
EUR 0.10 0.05 -0.26 -0.79 0.04 0.22 0.15
Cash earnings per
share, EUR 1.44 1.56 0.45 0.67 0.53 0.12 0.87
Average number of
shares
during the period,
1000's 46,671 46,671 46,671 46,671 46,671 46,671 46,671
CALCULATION OF KEY FIGURES
Interest-bearing net liabilities
Interest-bearing loans and borrowings - Cash and cash equivalents -
Other investments (current)
Equity ratio, %
Total
equity/ x
100
Total assets - Advances received
Gearing ratio, %
Interest-bearing net liabilities/ x
100
Total equity
Return on equity (ROE), %
Profit (loss) for the period/ x
100
Total equity (annual average)
Return on capital employed (ROCE), %
Profit (loss) before taxes + Financing expenses/
x 100
Total assets (annual average) - Non-interest bearing liabilities
(annual average)
Earnings per share, EUR
Profit (loss) for the period attributable to equity holders of
the parent/
Average number of shares during the period
Cash earnings per share, EUR
Net cash from operating activities/
Average number of shares during the period
Equity per share, EUR
Equity attributable to equity holders of the parent/
Number of shares at the end of the period
*Ahlstrom's business is reported in two segments: the Fiber
Composites segment and the Specialty Papers segment. The Fiber
Composites segment comprises the Advanced Nonwovens, Filtration,
Glass & Industrial Nonwovens and Home & Personal Nonwovens business
areas. The Specialty Papers segment covers the Release & Label Papers
and Technical Papers business areas.
*Ahlstrom's business is reported in two segments: the Fiber
Composites segment and the Specialty Papers segment. The Fiber
Composites segment comprises the Advanced Nonwovens, Filtration,
Glass & Industrial Nonwovens and Home & Personal Nonwovens business
areas. The Specialty Papers segment covers the Release & Label Papers
and Technical Papers business areas.
** Market related downtime = downtime taken due to market reasons,
lack of orders or too high product stock. Otherwise plants could have
run normally without any other downtime.
Market related downtime % = market related downtime / manned time.
Manned time = available time - unmanned time. Time the machines were
running according to their shift system.
Ahlstrom interim report January-September 2009: Streamlining measures continued with success
| Source: Ahlstrom
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