2008-02-01 06:59:57 CET
2008-02-01 07:01:19 CET
REGULATED INFORMATION
Ahlstrom - Financial Statement Release
Ahlstrom's Financial Statements Bulletin 2007: Growth and restructuring in 2007. Dividend of EUR 1.00 per share proposed
Ahlstrom Corporation STOCK EXCHANGE RELEASE 1.2.2008
Net sales for the full year 2007 grew by 10.1% and amounted to EUR
1,760.8 million (2006: EUR 1,599.1 million). Operating profit
amounted to EUR 25.8 million (EUR 96.1 million) and included
non-recurring costs of EUR 42.0 million (gains of 8.7 million) mainly
related to the restructuring measures taken during the fourth
quarter. As part of the restructuring Ahlstrom decided to close four
plants which incurred an operating loss of EUR 4.3 million in
addition to the restructuring costs.
Profit before taxes was EUR 0.2 million (EUR 81.2 million). Return on
capital employed (ROCE) was 2.5% (10.4%). Earnings per share (EPS)
amounted to EUR 0.01 (EUR 1.31).
The Board of Directors proposes a dividend of EUR 1.00 (EUR 1.00) per
share to be paid for the financial year 2007.
As a result of the actions taken in 2007, Ahlstrom is well-positioned
to grow and improve clearly its operating financial performance in
2008.
October-December 2007 in brief
- Net sales amounted to EUR 462.5 million, growing by 23.3% (adjusted
for currency effect) from the fourth quarter of 2006 as a result of
good demand in the FiberComposites segment and Technical Papers
business area, as well as recent growth initiatives.
- Group operating profit excluding non-recurring items decreased to
EUR 11.0 million due to the weak profitability of the Release & Label
Papers business area. This was caused by the operating loss of the
closed plants as well as technical problems with the ramp-up of the
La Gère release base paper investment incurring additional costs of
EUR 7.6 million.
- In order to improve profitability, Ahlstrom announced restructuring
actions targeting to bring profit improvement of EUR 25 million on an
annual basis.
Key figures
+-------------------------------------------------------------------+
| EUR million | Q4/2007 | Q4/2006 | 2007 | 2006 |
|---------------------------+---------+---------+---------+---------|
| Net sales | 462.5 | 389.0 | 1,760.8 | 1,599.1 |
|---------------------------+---------+---------+---------+---------|
| Operating profit/loss | -34.7 | 12.3 | 25.8 | 96.1 |
|---------------------------+---------+---------+---------+---------|
| Operating profit excl. | 11.0 | 14.1 | 67.8 | 87.3 |
| non-recurring items | | | | |
|---------------------------+---------+---------+---------+---------|
| Profit/loss before taxes | -43.2 | 9.4 | 0.2 | 81.2 |
|---------------------------+---------+---------+---------+---------|
| Profit before taxes excl. | 2.5 | 11.3 | 42.1 | 72.5 |
| non-recurring items | | | | |
|---------------------------+---------+---------+---------+---------|
| Profit/loss for the | -29.0 | 8.8 | 1.3 | 57.6 |
| period | | | | |
|---------------------------+---------+---------+---------+---------|
| Net cash flow from | 9.8 | 25.0 | 43.9 | 119.2 |
| operating activities | | | | |
|---------------------------+---------+---------+---------+---------|
| Gearing ratio, % | 65.3 | 20.3 | 65.3 | 20.3 |
|---------------------------+---------+---------+---------+---------|
| Return on capital | -10.7 | 5.3 | 2.5 | 10.4 |
| employed (ROCE),% | | | | |
|---------------------------+---------+---------+---------+---------|
| Return on capital | | | | |
| employed (ROCE),% | | | | |
| excl. non-recurring items | 3.6 | 6.1 | 6.3 | 9.5 |
|---------------------------+---------+---------+---------+---------|
| Cash earnings per share, | 0.21 | 0.54 | 0.94 | 2.72 |
| EUR | | | | |
|---------------------------+---------+---------+---------+---------|
| Earnings per share, EUR | -0.64 | 0.18 | 0.01 | 1.31 |
|---------------------------+---------+---------+---------+---------|
| Average number of shares | | | | |
| during the period, 1000s | 46,671 | 45,602 | 46,476 | 43,802 |
+-------------------------------------------------------------------+
Jukka Moisio, President & CEO, comments Ahlstrom's year 2007:
In 2007, we used the proceeds raised in the 2006 IPO to expand our
geographic presence and offerings especially in the fast growing
markets in Brazil, Russia, India and China (BRIC). In total we
invested EUR 370 million. The investments are progressing according
to plan and their impact was partially seen in our net sales, which
grew by 10% to EUR 1,761 million. Net sales of the Fiber Composites
segment grew by 17 % and the Specialty Papers segment by 4%.
I am satisfied that the Fiber Composites segment and the Technical
Papers business area were able to improve their operating profit
despite the challenging business environment. However, the weak
performance of the Release & Label Papers business area decreased the
return on capital employed excluding non-recurring items in 2007 to
6.3%.
In order to improve profitability, Ahlstrom took actions to achieve
significant cost reductions. These actions result in the closure of
four plants and a reduction of personnel by approximately 10%
throughout the organization. The restructuring is targeted to
gradually improve Ahlstrom's annualized profits by EUR 25 million
with full effect from the second half of 2008 onwards.
Ahlstrom's business is on a solid basis. Our underlying operating
profit of the final quarter in 2007 was approximately EUR 20 million,
excluding the operating loss of the closed plants and the La Gère
problems. Ahlstrom is well-positioned to grow and improve clearly its
operating financial performance in 2008.
Ahlstrom Group: Financial statements 2007
Operating environment in October-December 2007
Despite the slowdown in the USA, demand for Ahlstrom's products
developed favorably in its main markets. The US market became,
however, increasingly short-term oriented. The export markets from
Europe for coated-one-side papers continued weak.
The prices for the main raw materials continued to escalate during
the quarter. The price increases were driven by the continuous tight
supply. The average USD market price for BHKP pulp (Bleached Hardwood
Kraft pulp, e.g. eucalyptus pulp), was on average approximately 13%
higher than in the fourth quarter of 2006 and 6% higher than in the
third quarter of 2007. The market price for NBSK pulp (Northern
Bleached Softwood Kraft pulp) was on average approximately 15% higher
than in the fourth quarter of 2006 and 5% higher than in the third
quarter of 2007.
The prices for rayon and polyester, Ahlstrom's most important
synthetic raw materials increased significantly as a consequence of
the continued shortage of supply. In particular the price for rayon
increased by more than 40% during 2007. Chemical prices remained
stable in the quarter despite the increasing oil prices.
Energy prices increased due to the adoption of winter energy prices
in Central Europe and rising oil prices. Ahlstrom's main energy
sources are natural gas and electricity.
Financial performance in October-December 2007
The Group's net sales increased by 18.9% to EUR 462.5 million (EUR
389.0 million). The acquisitions carried out earlier in the year
increased sales by EUR 72.3 million in the fourth quarter. On the
other hand, exchange rate fluctuations, mainly the weakening of the
USD, decreased the net sales approximately by EUR 17.3 million or by
4.5% from the fourth quarter of 2006. Comparable net sales adjusted
for acquisitions and the currency effect increased by 4.7% from the
same period last year.
Sales volumes grew by 24.3% and were mainly driven by acquisitions
and organic growth investments and continued good overall demand.
The Group's operating profit excluding non-recurring items decreased
by 22.1% and amounted to EUR 11.0 million (EUR 14.1 million). The
reason for the decrease was the weak performance of the Release &
Label Papers business area due to the the operating loss of the
closed plants and the technical problems with the La Gère, France
release base paper investment incurring additional costs of EUR 7.6
million. The integration costs of the acquisitions had approximately
a EUR 1.0 million impact on operating profit in the quarter.
In order to improve profitability, Ahlstrom took restructuring
actions in the fourth quarter. Ahlstrom decided to close the Ascoli
plant in Italy and the Chantraine plant in France, and to consolidate
the air filtration assets in the USA, including the closure of the
Darlington and Bellingham plants. Moreover, Ahlstrom completed the
integration of the acquisitions made during 2007 and streamlined
operations in various parts of the organization. Altogether four
sites, nine manufacturing lines and 650 positions (10% of personnel)
will be reduced as a result of the integration and the restructuring
actions.
The restructuring is targeted to bring profit improvement of EUR 25
million on an annual basis. Net non-recurring costs related to the
restructuring actions totaled EUR 45.7 million (EUR 1.9 million), of
which EUR 9.0 million were asset write-downs and the rest was mainly
related to the personnel reduction.
The operating loss of the quarter amounted to EUR 34.7 million
(profit of EUR 12.3 million).
Total net financial expenses amounted to EUR 8.6 million (EUR 2.6
million). Net interest expenses increased to EUR 7.0 million (EUR 1.7
million) due to the increase in net debt and interest rates. Net
foreign exchange losses on financial items were EUR 0.5 million (loss
of EUR 0.5 million).
Ahlstrom's share of the profits of associated companies amounted to
EUR 0.1 million (losses of EUR 0.2 million).
Profit before taxes excluding non-recurring items decreased to EUR
2.5 million (EUR 11.3 million). Loss before taxes amounted to EUR
43.2 million (profit of EUR 9.4 million). Tax income was EUR 14.2
million (tax expense of EUR 0.7 million). Loss for the period
amounted to EUR 29.0 million (profit of EUR 8.8 million) and earnings
per share (EPS) to EUR -0.64 (EUR 0.18).
Return on capital employed (ROCE) excluding net non-recurring items
was 3.6% (6.1%) in the fourth quarter. ROCE amounted to -10.7%
(5.3%). Return on equity (ROE) was -15.1% (4.6%).
Financial performance in 2007
The Group's full year 2007 net sales grew by 10.1% amounting to EUR
1,760.8 million (EUR 1,599.1 million). Currency fluctuations, mainly
the weakened USD, decreased net sales by EUR 48.3 million or by 3.0%.
Sales volumes increased by 11.8%. Comparable net sales, adjusted for
acquisitions, currency effect and investment standstills grew by
4.3%.
Operating profit excluding non-recurring items amounted to EUR 67.8
million (EUR 87.3 million). The decrease in operating profit was
attributable to the weak performance of the Release & Label Papers
business area. The main reason for the decrease was the weakening
demand and oversupply of the coated-one-side papers in Europe and the
decision was made to close the Chantraine and Ascoli plants.
Furthermore, the operating loss of the closed plants and the
technical problems with the ramp-up of the La Gère, France investment
burdened profitability. The high raw material and energy costs and
the integration costs of the completed acquisitions of approximately
EUR 3.0 million impacted full year operating profit as well.
Net non-recurring costs in 2007 totaled EUR 42.0 million (gains of
EUR 8.7 million) and were mainly related to the restructuring in the
fourth quarter. The non-recurring gains were mainly related to the
sale of three power plants during the first quarter in Italy. In
addition to the non-recurring restructuring costs the closed plants
incurred an operating loss of EUR 4.3 million.
Ahlstrom announced price increases in all business areas during the
year to improve profitability. Throughout the year, Ahlstrom's
continuous improvement program aPlus brought productivity gains in
operations.
Operating profit for 2007 amounted to EUR 25.8 million (EUR 96.1
million).
Total net financial expenses were EUR 25.6 million (EUR 14.9
million). Net interest expenses increased to EUR 20.9 million (EUR
8.4 million) due to the increase in net debt and increased interest
rates. Net foreign exchange losses were EUR 1.2 million (EUR 4.5
million).
Ahlstrom's share of the losses of associated companies amounted to
EUR 0.06 million (profit of EUR 0.03 million).
Profit before taxes excluding non-recurring items decreased to EUR
42.1 million (EUR 72.5 million). Profit before taxes amounted to EUR
0.2 million (EUR 81.2 million). Tax income amounted to EUR 1.2
million (tax expense of EUR 23.6 million). Profit for the period
amounted to EUR 1.3 million (EUR 57.6 million) and earnings per share
(EPS) to EUR 0.01 (EUR 1.31).
Return on capital employed (ROCE) excluding non-recurring items was
6.3% (9.5%). ROCE was 2.5% (10.4%). Return on equity (ROE) was 0.2%
(8.5%).
Financing and financial position in 2007
Net cash flow from operating activities in 2007 decreased to EUR 43.9
million (EUR 119.2 million) due to the increase of working capital as
a result of growing net sales. In addition, the defined benefit
pension plan in the United Kingdom was closed and the historical
deficit was funded by EUR 20.8 million, impacting Ahlstrom's cash
flow.
Interest-bearing net liabilities increased by EUR 335.9 million to
EUR 491.1 million due to Ahlstrom's extensive investment program in
2007 including four acquisitions. (December 31, 2006: EUR 155.2
million).
Gearing ratio increased to 65.3% (December 31, 2006: 20.3%) and the
equity ratio was 44.0% (December 31, 2006: 56.5%).
Growth strategy
Ahlstrom's strategy is to grow both organically and by acquisitions.
Ahlstrom's growth investments are targeted to expand business in fast
growing markets and serve customers globally.
Ahlstrom's growth investments are expected to generate net sales
amounting to 1.5 times the investment value in 3-5 years and reach a
return of capital employed of at least 13%.
In 2007, Ahlstrom continued its global growth strategy by
implementing four acquisitions and a number of organic growth
investments on four continents, totaling EUR 371.9 million.
Capital expenditure in 2007 and estimate for 2008
Capital expenditure excluding acquisitions amounted to EUR 154.7
million (EUR 120.1 million). In 2007, the value of acquisitions was
EUR 217.2 million (EUR 7.8 million).
In 2008, the organic investments are expected to be approximately EUR
120 million including the previously announced food nonwovens line to
Chirnside, UK serving the infusion markets, the wiping fabrics line
in Brazil and partly the new medical nonwovens plant to be built in
Gujarat, India.
Acquisitions and investment decisions in 2007
On February 2, Ahlstrom decided to invest EUR 5 million in a new
drylaid nonwoven line at its Groesbeck, TX, USA plant to serve the
North American air filtration market. Later in 2007 Ahlstrom decided
to postpone the investment until further notice.
On April 30, Ahlstrom closed the acquisition of the spunlace
nonwovens business of the Italian Orlandi Group. The acquisition
price was approximately EUR 60 million and the acquired business
includes two plants in Italy. The acquired business generates annual
net sales of approximately EUR 65 million.
On May 7, Ahlstrom signed a memorandum of understanding with Mundra
Special Economic Zone (SEZ) in Gujarat, India to purchase a land area
of 5 hectares in the Textile and Apparel Park. The parties agreed not
to disclose the purchase price of the property.
On May 11, 2007 Ahlstrom announced an investment of EUR 8 million in
a new needlepunch line for its North American filtration business,
targeting the growing dust filtration market.
The new line will be located at the Bethune, SC, USA facility. The
targeted completion date is June 2008.
On May 25, 2007 Ahlstrom closed the acquisition of the consumer wipes
business of Fiberweb plc. The acquisition price was approximately EUR
65 million. The acquired business includes four plants in Europe and
in the USA. Annual net sales of the acquired business amounts to EUR
110 million.
On May 31, 2007 Ahlstrom closed the acquisition of Italian Fabriano
Filter Media SpA. Fabriano is a manufacturer of microglass filter
media, serving mainly the high efficiency air filtration market. The
acquisition price was approximately EUR 7 million. The transaction
includes one manufacturing plant with net sales of approximately EUR
7 million.
On September 3, 2007 Ahlstrom closed the transaction to form a joint
venture with Brazilian Votorantim Celulose e Papel (VCP). Ahlstrom
holds 60% and VCP 40% of the shares in the joint venture
Ahlstrom-VCP. The price for Ahlstrom's shareholding was approximately
EUR 80 million. The annual net sales of the joint venture is
approximately EUR 100 million.
On September 21, 2007 Ahlstrom signed agreements with Zhejiang Kan
Specialty Material Co (KAN Paper) and its management to acquire a
majority shareholding in a specialty papers joint venture in China.
Ahlstrom will hold 70% of the shares in the joint venture and the
debt-free value of the acquisition is expected to be approximately
EUR 10 million. The annual production capacity of the joint venture
is approximately 12,000 tons and it employs 130 people. The
transaction is expected to be closed during the first quarter 2008.
On December 13, Ahlstrom announced that it plans to double its
production capacity for specialty glassfiber reinforcements in the
USA to meet the fast growing demand especially within the wind energy
markets. The capacity increase will be implemented in two phases by
the end of 2011, and the total investment value is estimated to be
approximately EUR 7 million.
On December 13, Ahlstrom announced an investment of approximately EUR
10 million in new nonwovens capacity at its Turin plant in Italy. The
investment consists of a rebuild of the paper machine 4, currently
producing release base papers, to manufacture nonwovens for
industrial applications. The line will be operational by the end of
the first quarter of 2009 and is targeted to serve customers within
the construction and building industries.
On December 13, 2007 Ahlstrom announced an investment of EUR 38
million in a new medical nonwovens plant utilizing spunmelt
technology in India. The site also enables future expansions of
Ahlstrom businesses in India. The new facility will be located in the
Mundra Special Economic Zone (SEZ) in the western state of Gujarat
and is expected to start production by the end of 2009.
Organic growth investment start-ups in 2007
During the first quarter of 2007 Ahlstrom repaired a glass furnace
and increased the production capacity of the chopped strand mat
machine at its Karhula plant in Finland.
Ahlstrom's new wiping fabrics line located at the Green Bay, WI, USA
plant ramped up during 2007.
Ahlstrom's new specialty glassfiber reinforcement plant in
Bishopville, SC, USA serving the wind energy, marine and
transportation markets was ramping up its production in January-
September 2007.
In June 2007, a major release base paper capacity expansion was
started up at the La Gère, France plant. The investment standstill
lasted five weeks. The investment ramp-up had technical problems and
ramped up during the second half of 2007.
The new industrial nonwovens production line in the Brignoud, France
plant started production in December 2007.
The new glassfiber tissue production plant in Tver, Russia was
expected to start production in December 2007 but it was delayed
until late January 2008.
Divestments in 2007
In March, Ahlstrom agreed to sell three hydropower plants close to
its Turin, Italy plant to a local energy company for approximately
EUR 7 million. The sale was consistent with the company's strategy to
focus on high performance fiber-based materials and to divest
non-core assets and reduce related costs.
Research and development (R&D) in 2007
Innovation is a key element in Ahlstrom's growth strategy. In 2007,
the R&D expenses totaled EUR 27.0 million (EUR 25.0 million),
representing 1.5% (1.6%) of Ahlstrom's net sales.
In 2007, 39% (39%) of Ahlstrom's net sales was generated by new or
improved products due to a large number of organic investments
started up during the year. The company's target range for net sales
generated by new or improved products is 25-35%
Ahlstrom continued to introduce new products and technologies in
order to further strengthen its position as a leading supplier of
fiber-based materials. Ahlstrom was rewarded by ADME (French
environment & energy control agency) for its innovative
photocatalytic filter media utilized in the first anti-odor building.
Other new products that were introduced included the expanded
offering of pulp-containing and dispersible wipes and a new specialty
glassfibre package for infusion processes used in windpower and
marine applications.
The company continued to develop technologies utilizing nanofibers
and the filter media acquisition made in 2007 broadened Ahlstrom's
technology portfolio by adding microglass technology to the Group. In
addition, Ahlstrom worked to continuously improve its existing
products and to increase the use of cost-efficient raw materials e.g.
eucalyptus pulp and reduce manufacturing costs.
Changes in corporate structure in 2007
Ahlstrom has changed the operative organization within the Specialty
Papers segment with effect from October 1, 2007 in order to improve
its performance. The Stenay and the Rottersac plants in France,
previously part of the Label & Packaging Papers business area, were
transferred to the Technical Papers business area. The plants employ
410 people. Following the reorganization, the Label & Packaging
Papers business area was renamed Release & Label Papers. Ahlstrom's
reporting reflects the new structure as of October 1, 2007.
In line with its strategy to improve profitability, Ahlstrom decided
in the fourth quarter 2007 to close its Ascoli, Italy plant and its
Chantraine, France plant. The Ascoli plant was closed in January 2008
and the Chantraine plant is expected to be closed by the second
quarter in 2008.
Furthermore, Ahlstrom decided to consolidate its air filtration sites
in Bellingham, Massachusetts and Darlington, South Carolina to its
Bethune plant in South Carolina in order to reduce fixed costs. The
Darlington plant was closed by the end of the year 2007 and the
Bellingham plant will be closed by the third quarter of 2008.
Moreover, Ahlstrom completed the integration of acquisitions made in
2007.
Changes in the Corporate Executive Team in 2007
Daniele Borlatto, previously Vice President, Filtration business in
Europe and South America was appointed Senior Vice President of the
Release & Label Papers business area and member of the Corporate
Executive Team as of October 11, 2007. Daniele Borlatto joined
Ahlstrom in 1990, and he has held several managerial positions in
sales and controlling prior to his current role.
Diego Borello, previously Senior Vice President of Ahlstrom's Label &
Packaging Papers business area (renamed Release & Label Papers with
effect from 1 October 2007), was appointed Senior Vice President,
Innovation and Technology as of October 11, 2007. He continues as a
member of the Corporate Executive Team.
Personnel
+-------------------------------------------------------------------+
| | 2007 | 2006 | 2005 |
|-------------------------------------------+-------+-------+-------|
| Number of employees, year-end | 6,481 | 5,677 | 5,525 |
|-------------------------------------------+-------+-------+-------|
| Number of employees, average | 6,108 | 5,687 | 5,605 |
|-------------------------------------------+-------+-------+-------|
| Wages and salaries, incl. bonus payments, | | | |
| EUR million | 256.9 | 234.1 | 225.1 |
+-------------------------------------------------------------------+
Geographically, 68% of Ahlstrom's employees were located in Europe,
23% in North America, and 10% in the rest of the world. With 23% of
the total workforce, USA has the largest percentage of employees,
followed by France with 21%, Italy with 16%, Finland with 12% and
Germany with 9%.
In 2007, 55% of Ahlstrom's employees worked within the
FiberComposites segment, 39% in the Specialty Papers segment and 6.0%
in other operations.
Annual General Meeting
Ahlstrom Corporation's Annual General Meeting of Shareholders (AGM)
was held on March 30, 2007.
The AGM confirmed the number of Board members unchanged at seven.
Sebastian Bondestam, Jan Inborr, Urban Jansson, Bertel Paulig, Peter
Seligson and Willem F. Zetteler were re-elected as members of the
Board of Directors and Thomas Ahlström was elected as a new member as
proposed by the Nomination Committee. The term of the Board of
Directors will expire at the close of the next Annual General
Meeting.
The AGM authorized the Board of Directors to repurchase a maximum of
4,500,000 Ahlstrom shares, corresponding to less than 10% of all
issued company shares. The Board of Directors is also authorized to
resolve to distribute the shares held by the company. The shares may
be used as compensation in acquisitions and in other arrangements as
well as to implement the company's share-based incentive plans. The
Board of Directors has also the right to decide on the distribution
of the shares in public trading for the purpose of financing possible
acquisitions. The authorization is valid until the next Annual
General Meeting on April 2, 2008. The Board did not utilize the
authorization to repurchase or distribute the shares during 2007.
Risk management
The objective of Ahlstrom's risk management is to create a consistent
consideration of risk and reward in day-to-day planning and execution
to support achievement of agreed targets while avoiding undesired
operational and financial events.
The Group's risk management policy states that threats to the
achievement of the organization's goals will be identified, analyzed,
evaluated and responded to, in order to protect the company against
loss, uncertainty and lost opportunity. The policy also defines key
activities and responsibilities related to managing risks.
Ahlstrom's risk management approach and framework was further
developed during 2007. Structured risk assessment work continued in
2007, covering integration of the risk assessment aspect into the
strategic business planning process as well as arranging detailed
risk assessment workshops within the business areas.
Ahlstrom has classified risks affecting its operations in three
categories, which are strategic business risks, operational risks and
financial risks.
Strategic business risks
Strategic business risks are often related to customer relationships,
product development, efforts to maintain competitive advantage in
quality, service and capacity utilization, as well as capital
investments and acquisitions. Some of the strategic business risks
that Ahlstrom is exposed to relate to global fiber-based materials
market, production capacity utilization, sourcing of raw materials as
well as integration of realized growth opportunities. In accordance
with the operative organization of the company, strategic business
opportunities and risks are primarily addressed by the business area
and product line management.
Operational risks
Operational risks often arise as a consequence of inadequate or
failed internal processes, people's actions, systems or external
events. If the risks materialize, they can lead to injuries, damage
to property, interruption of operations, environmental impacts, or
liabilities to third parties. In order to identify and mitigate
operational risks, Ahlstrom has developed its operational loss
prevention processes. To minimize the potential financial impact of
materialized risks, Ahlstrom has an established group-wide insurance
program.
Financial risks
Financial risks are managed by Group Treasury, under the company's
Treasury Policy. The Treasury Policy covers funding, interest rate,
foreign currency and counterparty risks as well as risk related to
emission rights. There have been no major changes in the area of the
financial risks during 2007.
Ahlstrom will provide more detailed information on its risk
management in the Annual Report 2007.
Health, safety and environment
In its approach to management of its health, safety, environmental
obligations and asset protection (HSEA), Ahlstrom applies a
continuous improvement model. This model is applied to all phases of
the life cycle of Ahlstrom's products: from product development,
through raw material sourcing, production operations, product
delivery and ultimate disposal or recycle.
Ahlstrom's operative structure changed significantly in 2007. Ten
sites were either acquired in 2007 or commenced operation during the
year. Four sites were either closed or scheduled for closing.
Environmental due diligence investigations were conducted of all new
acquisitions. All sites scheduled for closing follow prescribed
phase down procedures to ensure regulatory compliance and risk
mitigation.
In 2007, Ahlstrom's environmental performance continued to improve as
gauged by its key environmental performance indicators. Energy
conservation was a key focus for the year. A significant number of
energy saving investments were made utilizing a dedicated capital
fund. The benefits of these investments were apparent in the third
and fourth quarters of the year. Coincident with improved energy
utilization, CO2 emissions also dropped globally. Ahlstrom expects to
be a net creditor for Phase 2 (2008 - 2012) of the European Emissions
Trading Scheme (ETS). Water utilization also improved and waste to
landfill continued to decrease as sites improved material utilization
and pursued more environmentally friendly disposal techniques. There
were no significant environmental incidents in 2007.
Ahlstrom believes that there are no material issues regarding
compliance with applicable environmental laws or regulations at any
of its sites. The company continuously monitors regulatory
developments worldwide. At this time, Ahlstrom does not foresee any
prospective environmental, health or safety regulatory change that
would have a material impact on Ahlstrom's operations or product
offerings.
Consistent with its standard practice, Ahlstrom will provide more
detailed information on its environmental, health and safety
performance in its Annual Report 2007.
Shares and share capital
Ahlstrom's share is listed on the OMX Nordic Exchange Helsinki.
Ahlstrom has one series of shares. The share is classified under the
Materials sector and the trading code is AHL1V.
During 2007, a total of 14.5 million Ahlstrom shares were traded for
a total of EUR 290.1 million. The lowest trading price during the
review period was EUR 16.03 and the highest EUR 24.50. The closing
price on December 31, 2007 was EUR 16.37 and market capitalization
was EUR 764.0 million.
Equity per share of Ahlstrom Group was EUR 15.35 at the end of the
review period (December 31, 2006: EUR 16.79).
At the end of the review period, there were no outstanding options
entitling to subscription of Ahlstrom shares.
In 2007, a total of 1,008,871 new shares of Ahlstrom Corporation were
subscribed with option rights under the company's stock option
programs I (2001) and II (2001). After the corresponding increases in
Ahlstrom's share capital, the share capital at the end of the review
period amounted to EUR 70,005,912.00. The total number of shares on
December 31 was 46,670,608.
Other events
In December 2007 the Board of Directors of Ahlstrom Corporation
decided to expand the responsibilities of the Compensation Committee
to cover the tasks of the Nomination Committee with immediate effect.
Consequently, the committee was renamed as Compensation and
Nomination Committee. The members of the committee are Peter Seligson
(Chairman), Jan Inborr and Urban Jansson. The main tasks of the
Compensation and Nomination Committee are to decide on the
compensation and benefits of the persons reporting to the President &
CEO as well as to identify and propose candidates for election to the
Board and propose compensation of the Board.
In December 2007 Ahlstrom Corporation's head office moved to more
cost effective office premises in Salmisaari, in western Helsinki
from Eteläesplanadi, Helsinki where Ahlstrom has had its head office
since 1937.
Outlook for the first half of 2008
Demand in Ahlstrom's main markets is expected to continue at a good
level. The slowdown in the USA increases uncertainty and reduces
short-term visibility, however, currently Ahlstrom sees no signs of
decreasing deliveries in its main businesses in the USA. The recent
acquisitions and the ongoing investment projects in Brazil, Russia
and China are expected to increase Ahlstrom's net sales by 10%.
Prices for Ahlstrom's main raw materials, especially pulp, are
expected to increase or stay at the current high level during the
outlook period. Oil prices continued to rise in the fourth quarter of
2007 and are expected to keep energy and synthetic fiber costs high.
For chemicals the price development is anticipated to be mixed.
In order to improve profitability, Ahlstrom has implemented price
increases, which are currently taking effect in all business areas.
As a result of the restructuring actions decided on during the fourth
quarter, Ahlstrom will have a more competitive cost structure in
2008. The restructuring is targeted to gradually improve operating
profit annually by EUR 25 million, with full effect seen from the
second half of 2008 onwards.
Due to the implemented growth actions and recent restructuring
measures, Ahlstrom is well positioned to grow and improve clearly its
operating financial performance in 2008.
More detailed information on the outlook for the business areas is
available in the appendix in the business area reviews.
Proposal for the distribution of profits
The Board of Directors proposes to the Annual General Meeting that a
dividend of EUR 1.00 per share be paid for the fiscal year that ended
December 31, 2007. According to the proposal of the Board of
Directors, the dividend record date will be April 7, 2008 and the pay
date April 14, 2008.
In addition, the Board of Directors proposes that EUR 70,000 be
reserved to be used for the public good at the discretion of the
Board of Directors.
Financial information in 2008
Ahlstrom Corporation will publish its financial information in 2008
as follows:
+-----------------------------------------------------------+
| Annual report 2007 | Week 12 |
|------------------------------------+----------------------|
| Interim report January - March | Friday, April 25 |
|------------------------------------+----------------------|
| Interim report January - June | Friday, July 25 |
|------------------------------------+----------------------|
| Interim report January - September | Tuesday, October 28 |
+-----------------------------------------------------------+
Ahlstrom's Annual General Meeting will be held on Wednesday, April 2,
2008 at 13.00 at the Finlandia Hall, Mannerheimintie 13 e, Helsinki.
This financial statement bulletin has been prepared in accordance
with the International Financial Reporting Standards (IFRS).
Comparable figures refer to the same period last year unless
otherwise stated.
Helsinki, February 1, 2008
Ahlstrom Corporation
Board of Directors
For additional information, please contact:
Jukka Moisio, President and CEO, tel. +358 (0)10 888 4700
Jari Mäntylä, CFO, tel. +358 (0)10 888 4768
Anna Ahlberg, Investor Relations Manager, tel. + 358 (0)10 888 4718
A news conference for media and analysts will be held on Friday,
February 1, 2008 at 9.30 Finnish time at the Helsinki Bourse Club,
address Fabianinkatu 14 A. The conference will be held in Finnish.
A conference call for analysts and investors will be held in English
at 13.00 Finnish time. To participate in the teleconference, please
dial +44 (0) 20 7162 0025 a few minutes before the call. Use the
password: Ahlstrom. A replay number is available until February 8,
2008. The number for the replay is + 44 (0) 20 7031 4064, access
code: 782251.
The presentation material will be available at www.ahlstrom.com >
Investors > IR presentations on February 1, 2008 after the financial
statements bulletin has been published.
This report contains certain forward-looking statements that reflect
the present views of the company's management. Due to the nature of
these statements, they contain uncertainties and risks and are
subject to changes in the general economic situation and in the
company's business.
Distribution:
OMX Nordic Exchange Helsinki
www.ahlstrom.com
Main media
Ahlstrom in brief
Ahlstrom is a global leader in the development, manufacture and
marketing of high performance fiber-based materials. Nonwovens and
specialty papers, made by Ahlstrom, are used in a large variety of
everyday products, 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 6,500 employees serve customers via
sales offices and production facilities in more than 20 countries on
six continents. In 2007, Ahlstrom's net sales amounted to EUR 1.8
billion. Ahlstrom's share is listed on the OMX Nordic Exchange
Helsinki. The company website is www.ahlstrom.com.
Appendices
1. Segment reviews
2. Financial statements 2007
Appendix 1
Segment reviews
Ahlstrom's business is reported in two business segments: the
FiberComposites segment and the Specialty Papers segment.
FiberComposites segment
Key figures
+-----------------------------------------------------------------------+
|EUR million | 2007| 2006|Change, %|Q4/2007|Q4/2006|Change, %|
|-----------------------+-----+-----+---------+-------+-------+---------|
|Net sales |941.4|808.2| 16.5| 249.7| 195.4| 27.8|
|-----------------------+-----+-----+---------+-------+-------+---------|
|Operating profit | | | | | | |
|excl. non-recurring | | | | | | |
|items | 60.6| 54.1| 12.0| 15.7| 11.0| 43.2|
|-----------------------+-----+-----+---------+-------+-------+---------|
|Operating profit, % | | | | | | |
|excl. non-recurring | | | | | | |
|items | 6.4| 6.7| | 6.3| 5.6| |
|-----------------------+-----+-----+---------+-------+-------+---------|
|Return on net assets | | | | | | |
|(RONA), % | | | | | | |
|excl. non-recurring | | | | | | |
|items | 8.7| 8.9| | 8.0| 7.2| |
+-----------------------------------------------------------------------+
The FiberComposites segment comprises three business areas: the
Nonwowens, Filtration and Glass Nonwowens business areas.
Fourth quarter
In the fourth quarter, the segment's net sales grew significantly by
27.8% and amounted to EUR 249.7 million (EUR 195.4 million),
representing 54% of the Group's net sales. The growth was mainly a
result of recent acquisitions, growth investments and continued good
demand. Sales volumes increased by 39.8%. The three acquisitions made
in 2007, Orlandi's nonwovens business, Fiberweb's consumer wipes
business and Fabriano S.p.A, increased net sales by EUR 48.2 million
in the fourth quarter. Comparable net sales adjusted for acquisitions
and currency effect grew considerably by 10.2%.
Operating profit excluding non-recurring items in the fourth quarter
improved significantly to EUR 15.7 million (EUR 11.0 million) despite
the increased raw materials prices and a shortage of certain raw
materials, especially abaca pulp, rayon and methanol.
Full year 2007
For the full financial year 2007, the segment's net sales amounted to
EUR 941.4 million (EUR 808.2 million), reflecting 16.5% growth and
representing 53% of Group net sales. Volumes sold grew by 23.3% from
the 2006 level. Net sales growth was achieved by good demand in all
business areas and by the acquisitions and the organic investments
implemented during 2007. Net sales adjusted for currency effect and
acquisitions grew by 6.6%.
The operating profit excluding non-recurring items increased clearly
to EUR 60.6 million (EUR 54.1 million). The improvement in the
segment's profitability was mainly achieved by increased net sales in
all business areas. However, the segment's profitability was
negatively impacted by the continued escalation of raw material and
energy costs and the ramp-up of several large lines during 2007. In
addition, the integration costs of the acquisitions had a EUR 3.0
million impact on operating profit in 2007.
In order to streamline its organization and improve its
competitiveness, Ahlstrom decided to consolidate its air filtration
sites in Bellingham, Massachusetts and Darlington, South Carolina to
its Bethune plant in South Carolina in the fourth quarter of 2007.
Furthermore, Ahlstrom successfully finalized the integration of the
acquisitions made in 2007. As a result of the integration of the
acquisitions and the restructuring of the FiberComposites segment
altogether six manufacturing lines were closed and 200 positions
reduced. The restructuring in the FiberComposites segment will
further support profitability improvement in 2008.
Nonwovens business area (28% of the Group's net sales)
The Nonwovens business area serves customers in the food packaging,
medical, wiping, building and technical goods sectors.
The good market situation for all the product areas continued
throughout the year 2007 despite the general concerns of the US
economy. The business area sales volumes grew significantly by 54.4%
in 2007 and net sales by 33.5% and amounted to EUR 491.6 million. The
growth was mainly driven by strong demand in wipes and wall coverings
and organic investments and acquisitions within the wiping fabrics
business.
As a result of the growth actions in 2007, Ahlstrom became the
largest wiping fabrics producer in the world. Comparable net sales
adjusted for acquisitions and currency effect grew by 7.7%. As
approximately 50% of the business area's net sales is denominated in
USD, the weakened USD had an adverse effect on the business area's
net sales during 2007.
In the fourth quarter, the business area's sales volumes increased by
90.0% compared with the corresponding period of 2006. The net sales
amounted to EUR 141.1 million and grew by 58.7% from the
corresponding quarter in 2006 driven by continuous strong demand in
most of the product areas and the positive impact of the implemented
growth investments and acquisitions. The weakened USD had a negative
impact on net sales during the fourth quarter.
Costs for energy and raw materials continued to increase in the
fourth quarter of 2007. Year- on-year, the price for rayon, one of
the most important raw materials for the nonwovens business area
increased by more than 40%. The business area was, however, able to
partially offset the increased input costs by improving productivity
at most of the manufacturing sites and by significantly increasing
sales prices.
In the fourth quarter, Ahlstrom announced that it will invest EUR 38
million in a new medical nonwovens plant in India with a possibility
for further expansions of Ahlstrom's businesses in the future. In
addition, Ahlstrom decided to invest approximately EUR 10 million to
convert a specialty paper machine to manufacture nonwovens for
industrial applications at its Turin plant in Italy.
The demand for the main nonwoven products is currently good in the
main markets.
Filtration business area (19% of the Group's net sales)
Filtration media produced by Ahlstrom are used in the transportation
industry and in liquid and air filtration applications.
In general, the demand for filtration materials continued to develop
favorably in 2007. Demand for transportation filtration media was
good in Europe and particularly strong in South America and Asia due
to strong local economic growth and certain customers relocating to
the area. In North America, the development was mixed. While the
market for transport filtration remained good the market for air
filtration media continued to suffer due to the slow down of the
housing market. The demand for liquid filtration, however, remained
steady throughout the year.
Full year sales volumes grew by 3.1%. Net sales amounted to EUR 332.6
and remained at the same level as in 2006. Net sales for the full
year 2007 adjusted for the currency effect and acquisitions increased
by 4.0%.
In the fourth quarter sales volumes increased by 3.2% mainly due to
continued strong growth in all geographical areas for transportation
filtration media, especially in Latin America and Asia. Net sales
decreased by 2.8% and was EUR 78.7 million despite increasing sales
volumes due to the negative impact of the weakened USD.
Costs for energy and raw materials, especially pulp and methanol
related products, increased significantly. Price increases have been
implemented in all geographic regions in order to improve
profitability.
The EUR 8 million investment in a new needlepunch line at the
Darlington facility announced on May 11, 2007 will be redirected to
the Bethune plant and start production in June 2008. On October 8,
Ahlstrom made the decision to invest in new filtration capacity in
its Windsor Locks, USA plant by converting a machine previously
producing nonwovens materials.
The market situation for transportation filtration is expected to
remain positive in Europe, Asia and Latin America. In North America
the filtration markets are uncertain and will depend on the general
economic development. Air filtration markets will remain weak.
Glass Nonwovens business area (7% of the Group's net sales)
Ahlstrom's glass nonwovens products are used in the building
materials, marine, transportation, windmill, and sporting goods
sectors.
The market demand for Ahlstrom's glass nonwovens applications
developed favorably throughout the year in all main geographies.
Especially the windmill market grew strongly in 2007. In 2007
Ahlstrom's sales volumes grew by 9.8% and net sales by 11.1% and
amounted to EUR 122.0 million. The new specialty reinforcement plant
in Bishopville, USA serving the windmill, transportation and marine
industries and the capacity expansion made in Karhula, Finland in the
beginning of the year were the main drivers of sales growth.
Furthermore price increases and improved product mix had a positive
impact on growth.
In the fourth quarter, sales volumes grew by 26.2% while net sales
grew by 16.0 % and amounted to EUR 30.8 million. The solid demand
continued in the fourth quarter and Ahlstrom's capacity was in full
utilization.
Raw material and energy prices continued to rise throughout the year
2007. The business area will continue to raise its sales prices and
improve productivity.
The new glassfiber tissue production plant in Tver, Russia, serving
the building and composite materials industries, was expected to
start production in December 2007 but was delayed until late January
2008.
At the end of year 2007 Ahlstrom decided to double its production
capacity for specialty glassfiber reinforcements in the USA to meet
the fast growing demand especially within the wind energy markets. In
the first phase, Ahlstrom will invest approximately EUR 3 million in
2008 and install new machinery at the facility. In the second phase,
the investment value is estimated to be approximately EUR 4 million.
The investments made in 2007 further strengthen Ahlstrom's global
position as a leading supplier of glass nonwovens materials and
supports further growth in the business area.
Demand for Ahlstrom's glass nonwovens is expected to remain solid in
all geographic areas in the coming months.
Specialty Papers segment
Key figures
+-----------------------------------------------------------------------+
|EUR million | 2007| 2006|Change, %|Q4/2007|Q4/2006|Change, %|
|-----------------------+-----+-----+---------+-------+-------+---------|
|Net sales |824.7|794.0| 3.9| 214.4| 193.9| 10.5|
|-----------------------+-----+-----+---------+-------+-------+---------|
|Operating profit/loss | | | | | | |
|excl. non-recurring | | | | | | |
|items | 13.9| 36.4| -61.7| -2.8| 4.4| -163.7|
|-----------------------+-----+-----+---------+-------+-------+---------|
|Operating profit/loss, | | | | | | |
|% excl. non-recurring | | | | | | |
|items | 1.7| 4.6| | -1.3| 2.3| |
|-----------------------+-----+-----+---------+-------+-------+---------|
|Return on net asses | | | | | | |
|(RONA), % excl. | | | | | | |
|non-recurring items | 3.6| 11.8| | -2.4| 5.6| |
+-----------------------------------------------------------------------+
The Specialty Papers segment comprises two business areas: Release &
Label Papers and the Technical Papers business areas.
Fourth quarter
In the fourth quarter, net sales of the Specialty Papers segment
amounted to EUR 214.4 million (EUR 193.9 million), representing 46%
of Group net sales. Net sales increased by 10.5% compared with the
corresponding period last year. Volumes sold grew by 18.3%.
Comparable net sales adjusted for acquisitions and currency effect
remained at the same level as in the fourth quarter of 2006.
Operating loss excluding non-recurring items amounted to EUR 2.8
million (profit of EUR 4.4 million) and was attributable to the weak
performance of the Release & Label Papers business area due to the
operating loss of the closed plants. Technical problems with the
ramp-up of the La Gère investment incurred additional costs of EUR
7.6 million in the fourth quarter of 2007.
Full year 2007
For the full financial year 2007, the segment's net sales increased
by 3.9% and amounted to EUR 824.7 million (EUR 794.0 million). The
segment net sales represented 47% of Group net sales. Comparable net
sales adjusted for acquisitions and currency effect grew slightly by
1.1%.
Operating profit excluding non-recurring items decreased clearly to
EUR 13.9 million (EUR 36.4 million).The main reason for the decline
in profitability was the decrease in the sales prices in the Release& Label Papers business area. This was due to the weakening demand of
coated-one-side papers in Europe and the temporary excess supply of
release base papers. The operating loss of the closed plants and
technical problems with the ramp-up of the La Gère, France investment
impacted operating profit negatively. In addition, the increase in
the main raw material costs had a negative impact on operating
profit.
In order to improve its profitability, Ahlstrom decided in the fourth
quarter of 2007 to restructure its European operations of the
Specialty Paper segment including the closure of its Ascoli, Italy
plant and the Chantraine, France plant and the closure of the Turin
PM4 release base paper line. The Ascoli and the Turin PM4 have
already been closed and Chantraine is expected to close during the
first half of 2008. The actions will affect 450 positions and reduce
capacity by 120 thousand tons and their positive effect will be seen
during 2008.
Technical Papers business area (27% of the Group's net sales)
The main products of the Technical Papers business area are abrasive
base papers, crepe papers (such as masking tape base, wipes, medical
applications), pre-impregnated decor papers, sealing & shielding
materials (for gaskets, heat shields, calender bowls), coated papers
(e.g. wallpaper base and poster papers), flexible packaging papers as
well as vegetable parchment papers. The business area's main markets
include the furniture and home decoration, healthcare, food and
automotive industries.
The demand for technical papers varied by product and geographic
area. The market
environment continued to be favorable for vegetable parchment,
poster, and crepe paper papers while market conditions for flexible
packaging papers were challenging. The export markets were impacted
by the weak USD against the euro.
For the full year 2007 the business area's sales volumes grew by 4.9%
and net sales by 4.3% and amounted to EUR 485.6 million.
In the fourth quarter sales volumes increased by 7.4% and net sales
by 5.4% compared to the fourth quarter of 2006 and amounted to EUR
117.6 million. Strongest growth was seen in abrasive base, poster and
vegetable parchment papers.
The price for pulp, the main raw material of the business area
continued to rise throughout the year. In addition electricity prices
increased when winter tariffs were adopted in Central Europe.
Ahlstrom was able to increase sales prices in most product areas
during the year. Productivity improvements and fixed cost reductions
were implemented at all plants in order to improve profitability.
Ahlstrom was expected to close the joint venture with Zhejiang Kan
Specialty Material Co (KAN Paper) in the fourth quarter of 2007. The
closing was postponed due to Chinese authority approvals and
currently Ahlstrom expects to close the transaction during the first
quarter of 2008.
The business area expects reasonable demand to continue in the first
half of 2008.
Release & Label Papers business area (19% of the Group's net sales)
The Release & Label Papers business area manufactures a number of
different specialty papers for use in the self-adhesive industry, as
well as in the labeling and graphic industries.
The market situation for the business area remained challenging. The
temporary excess supply of release base papers prevailed and the
European export markets suffered due to the weak dollar. In Latin
America, the good demand of label and release base papers continued.
Sales volumes for the full year grew by 10.1%. Net sales was EUR
340.4 million and increased by 3.2%. Net sales adjusted for
acquisitions and currency effect decreased by 5.4% due to the
decrease in sales prices.
Sales volumes of the business area grew by 30.3% in the fourth
quarter and net sales by 17.5% and amounted to EUR 97.1 million. The
growth was mainly driven by the consolidation of the Ahlstrom-VCP
joint venture in Brazil.
The business area's main raw material, pulp, continued to escalate in
the fourth quarter. Furthermore, the energy costs increased when the
European plants adopted the winter energy prices. The operating loss
of the closed plants and the technical problems with the ramp-up of
the release base paper investment at the La Gère plant impacted the
performance of the business area negatively.
The market situation for release base, label and packaging papers is
expected to improve in Europe in the next six months due to recent
capacity reductions made in the market. In Latin America demand is
anticipated to remain good. The business area is well-positioned to
improve its financial performance in 2008.
APPENDIX 2
CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
This report has been prepared in accordance with the International
Financial Reporting Standards (IFRS) and the accounting policies set
out in IAS 34 (Interim Financial reporting) as adopted by EU and in
the Group's Financial Statements for 2007.
Application of amended or new IFRS-standards as of January 1, 2007
The Group has adopted the following new or amended standards and
interpretations as of January 1, 2007:
- IFRS 7 Financial Instruments: Disclosures
- Amendment to IAS 1 Presentation of Financial Statements - Capital
disclosures
- IFRIC 9 Reassessment of Embedded Derivatives
- IFRIC 10 Interim Financial Reporting and Impairment
The above mentioned standards and interpretations do not have a
material effect on the consolidated financial statements.
They will impact the format and extent of year-end 2007 notes to the
financial statements.
Financial Statements are audited.
INCOME STATEMENT Q4 Q4 Q1-Q4 Q1-Q4
Eur million 2007 2006 2007 2006
Net sales 462.5 389.0 1,760.8 1,599.1
Other operating income 2.3 5.6 20.4 36.7
Expenses -464.5 -360.8 -1,655.5 -1,458.2
Depreciation, amortization and
impairment -35.0 -21.5 -99.8 -81.6
charges
Operating profit / loss -34.7 12.3 25.8 96.1
Net financial expenses -8.6 -2.6 -25.6 -14.9
Share of profit / loss of associated 0.1 -0.2 -0.1 0.0
companies
Profit / loss before taxes -43.2 9.4 0.2 81.2
Income taxes 14.2 -0.7 1.2 -23.6
Profit / loss for the period -29.0 8.8 1.3 57.6
Attributable to
Equity holders of the parent -29.6 8.8 0.5 57.5
Minority interest 0.6 -0.0 0.8 0.1
Basic earnings per share, EUR -0.64 0.18 0.01 1.31
Diluted earnings per share, EUR -0.64 0.18 0.01 1.29
BALANCE SHEET Dec 31, Dec 31,
Eur million 2007 2006
ASSETS
Non-current assets
Property, plant and equipment 747.7 601.7
Goodwill 179.7 101.0
Other intangible assets 58.2 32.6
Investments in associated companies 12.4 12.9
Other investments 0.2 0.2
Other receivables 16.9 6.1
Deferred tax assets 29.7 25.9
Total non-current assets 1,044.8 780.4
Current assets
Inventories 246.3 214.4
Trade and other receivables 389.3 328.0
Income tax receivables 3.9 8.7
Other investments 5.8 5.0
Cash and cash equivalents 21.3 20.1
Total current assets 666.5 576.1
Total assets 1,711.4 1,356.6
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent 716.4 765.8
Minority interest 36.0 0.8
Total equity 752.4 766.6
Non-current liabilities
Interest-bearing loans and borrowings 202.7 44.0
Employee benefit obligations 87.7 112.4
Provisions 4.6 3.7
Other liabilities 0.6 0.6
Deferred tax liabilities 27.6 26.8
Total non-current liabilities 323.2 187.4
Current liabilities
Interest-bearing loans and borrowings 315.5 136.4
Trade and other payables 273.1 241.0
Income tax liabilities 9.1 12.4
Provisions 38.1 12.8
Total current liabilities 635.8 402.6
Total liabilities 959.0 590.0
Total equity and liabilities 1,711.4 1,356.6
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
Attributable to equity holders
of the parent
Total
Eur million 1) 2) 3) 4) 5) 6) 7) equity
Equity at
December 54.6 26.7 - 1.0 3.7 503.7 0.8 590.5
31, 2005
Cash flow
hedges,
net of tax:
Gains and
losses - - - -0.9 - - - -0.9
taken to
equity
Translation - - - - -15.6 - - -15.6
differences
Gains and
losses
from hedge of
net
Investments
in
foreign
operations,
net of tax - - - - 8.9 - - 8.9
Other - - - - - -0.9 -0.0 -0.9
changes
Profit for the - - - - - 57.5 0.1 57.6
period
Total
recognized
income and
expense
for the - - - -0.9 -6.8 56.6 0.1 49.1
period
Dividends - - - - - -65.2 -0.1 -65.3
paid
Share issue 13.7 182.4 - - - - - 196.1
Share options 0.1 0.2 0.5 - - - - 0.9
exercised
Redemption
of - - - - - -4.7 - -4.7
share
options
13.9 182.6 0.5 - - -69.9 -0.1 127.0
Equity at
December 68.5 209.3 0.5 0.1 -3.1 490.4 0.8 766.6
31, 2006
Equity at
December 68.5 209.3 0.5 0.1 -3.1 490.4 0.8 766.6
31, 2006
Cash flow
hedges, net of
tax:
Gains and
losses taken - - - -0.1 - - - -0.1
to
equity
Translation - - - - -19.9 - - -19.9
differences
Gains and
losses from
hedge of net
Investments
in foreign
operations,
net of tax - - - - 7.5 - - 7.5
Minority
increase - - - - - - 34.6 34.6
Ahlstrom-VCP
Other - - - - - -0.0 -0.0 -0.1
changes
Profit for the - - - - - 0.5 0.8 1.3
period
Total
recognized
income and
expense
for the - - - -0.1 -12.4 0.5 35.3 23.3
period
Dividends - - - - - -46.6 -0.1 -46.7
paid
Share options 1.5 - 7.7 - - - - 9.2
exercised
1.5 - 7.7 - - -46.6 -0.1 -37.5
Equity at
December 70.0 209.3 8.3 0.0 -15.5 444.3 36.0 752.4
31, 2007
STATEMENT OF CASH FLOWS Q4 Q4 Q1-Q4 Q1-Q4
Eur million 2007 2006 2007 2006
Cash flow from operating activities
Profit / loss for the period -29.0 8.8 1.3 57.6
Adjustments, total 25.9 24.4 102.4 109.8
Changes in net working capital 0.8 -10.6 -35.6*) -14.4
Change in provisions and pension 27.5 0.1 10.4*) -0.5
liability
Financial items -6.9 6.6 -15.1 -3.7
Taxes paid -8.6 -4.3 -19.7 -29.6
Net cash from operating activities 9.8 25.0 43.9 119.2
Cash flow from investing activities
Acquisition of Group companies -1.4 0.3 -217.2 -7.8
Purchases of property, plant & -45.4 -33.0 -153.9 -116.5
equipment
Other investing activities 4.2 38.5 13.1 45.3
Net cash from investing activities -42.6 5.8 -358.1 -79.0
Cash flow from financing activities
Share issue - 0.6 9.2 195.1
Dividends paid - - -46.8 -65.3
Other financing activities 37.4 -33.9 353.1 -165.8
Net cash from financing activities 37.4 -33.3 315.6 -36.0
Net change in cash and cash 4.5 -2.5 1.4 4.3
equivalents
Cash and cash equivalents at beginning 17.1 22.6 20.1 16.0
of period
Foreign exchange adjustment -0.3 -0.0 -0.2 -0.1
Cash and cash equivalents at end of 21.3 20.1 21.3 20.1
period
*) Includes EUR -20.8 million payment to the pension fund to cover
approximately half of the
historical deficit of the defined benefit pension plan in the United
Kingdom in Q1 2007.
KEY FIGURES Q4 Q4 Q1-Q4 Q1-Q4
2007 2006 2007 2006
Operating profit, % -7.5 3.2 1.5 6.0
Operating profit (excluding 2.4 3.6 3.8 5.5
non-recurring items), %
Return on capital employed (ROCE), % -10.7 5.3 2.5 10.4
ROCE (excluding non-recurring items), % 3.6 6.1 6.3 9.5
Return on equity (ROE), % -15.1 4.6 0.2 8.5
Interest-bearing net liabilities, EUR 491.1 155.2 491.1 155.2
million
Equity ratio, % 44.0 56.5 44.0 56.5
Gearing ratio, % 65.3 20.3 65.3 20.3
Earnings per share, EUR -0.64 0.18 0.01 1.31
Earnings per share, diluted, EUR -0.64 0.18 0.01 1.29
Equity per share, EUR 15.35 16.79 15.35 16.79
Cash earnings per share, EUR 0.21 0.54 0.94 2.72
Average number of shares during the 46,671 45,602 46,476 43,802
period, 1000's
Number of shares at the end of the 46,671 45,662 46,671 45,662
period, 1000's
Capital expenditure, EUR million 39.5 39.5 154.7 120.1
Capital employed, at the end of the 1,270.6 946.9 1,270.6 946.9
period, EUR million
Number of employees, average 6,512 5,677 6,108 5,687
CHANGES OF PROPERTY, PLANT AND
EQUIPMENT Q1-Q4 Q1-Q4
Eur million 2007 2006
Book value at Jan 1 601.7 577.4
Acquisitions through business combinations 116.8 4.6
Additions 150.3 117.0
Disposals -1.2 -1.0
Depreciations and impairment charges -93.3 -75.7
Translation adjustment and other changes -26.5 -20.6
Book value at end of the period 747.7 601.7
TRANSACTIONS WITH RELATED PARTIES Q1-Q4 Q1-Q4
Eur million 2007 2006
Transactions with associated companies
Sales and interest income 1.3 1.3
Purchases of goods and services -5.0 -10.9
Trade and other receivables 0.1 0.5
Trade and other payables 0.5 0.8
Interest-bearing loans and borrowings 0.1 6.6
Market prices have been used in transactions with associated
companies.
OPERATING LEASES Dec 31, Dec 31,
Eur million 2007 2006
Current portion 5.3 6.1
Non-current portion 14.9 18.2
Total 20.3 24.3
CONTINGENT LIABILITIES Dec 31, Dec 31,
Eur million 2007 2006
For own liabilities
Other loans
Amount of loans 0.9 1.5
Book value of pledges 1.0 1.6
For other own commitments
Guarantees 23.8 29.1
For commitments of associated companies
Guarantees 6.3 8.3
Capital expenditure commitments 32.4 50.6
Other contingent liabilities 4.7 5.3
Acquisitions in 2007
In 2007 Ahlstrom made several acquisitions in line with its strategy.
In April, Ahlstrom acquired the spunlace nonwovens business of the
Italian Orlandi Group. The transaction expands Ahlstrom's technology
portfolio with airlace technology which is used to manufacture
pulp-containing wiping fabrics. In May, Ahlstrom acquired the
consumer wipes business of Fiberweb plc, serving mainly the personal
care, baby care and household wipes applications. With these two
acquisitions, Ahlstrom became the leading wiping fabrics producer in
the world. In May, Ahlstrom acquired Italian Fabriano Filter Media
SpA, a manufacturer of microglass filter media, serving mainly the
high efficiency air filtration market.
In September, Ahlstrom acquired 60% of a Brazilian specialty paper
production plant and formed a joint venture with the seller,
Votorantim Celulose e Papel (VCP). The joint venture will serve
mainly labelling and flexible packaging applications but produces
also coated and uncoated papers for other end users.
Management estimates that the consolidated net sales for year 2007
would have been EUR 1900 million, if the acquisition had been
accomplished on January 1, 2007.
The table below summarizes the acquisitions in 2007.
The goodwill that arose mainly from the acquisition of Orlandi Group
and the Ahlstrom-VCP joint venture reflects the synergy benefits
resulting from the expanded product offering to wipes and filtration
business, entry to the new geographical markets as well as growth
opportunities.
ACQUISITIONS OF Orlandi, Fiberweb, Ahlstrom-VCP
BUSINESSES Fabriano
Book values Fair values Book values Fair values
before the entered in before the entered in
Eur million consolidation consolidation consolidation consolidation
Property, plant 54.4 60.8 44.2 56.8
and equipment
Intangible 5.3 8.6 0.3 23.9
assets
Inventories 22.0 20.6 12.0 12.0
Trade and other 34.7 34.6 16.5 16.5
receivables
Cash and cash 2.9 2.9 0.2 0.2
equivalents
Assets, total 119.4 127.4 73.2 109.4
Deferred tax 0.8 6.0 - 12.3
liabilities
Employee benefit 1.4 1.4 - -
obligations
Interest-bearing
loans and 10.5 10.5 - -
borrowings
Trade and other 25.1 25.3 11.0 11.0
payables
Liabilities, 37.8 43.1 11.0 23.3
total
Net assets 81.5 84.3 62.2 86.1
Minority - - - -34.4
interest
Goodwill arising - 48.1 - 38.7
in acquisition
Acquisition
price paid (in - 132.4 - 90.3
cash)
Exchange rate - -0.4 - -2.0
differences
Cash (acquired) - -2.9 - -0.2
Net cash outflow - 129.1 - 88.1
QUARTERLY DATA
Eur million
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2007 2007 2007 2007 2006 2006 2006 2006
Net sales
462.5 444.9 436.9 416.5 389.0 385.9 409.6 414.6
Other operating income *
2.0 3.1 1.7 2.6 4.3 4.4 5.6 7.0
Expenses *
-429.0 -407.7 -396.5 -379.9 -359.3 -349.6 -368.7 -375.5
Depreciation, amortization, impairment
charges *
-24.5 -24.1 -21.0 -19.6 -19.9 -19.8 -20.5 -19.8
Non-recurring items
-45.7 -0.1 - 3.8 -1.9 4.4 2.9 3.3
Operating profit / loss
-34.7 16.1 21.0 23.3 12.3 25.3 28.9 29.6
Net financial expenses
-8.6 -9.7 -4.3 -3.0 -2.6 -3.7 -4.1 -4.5
Share of profit (loss) of
associated companies
0.1 0.2 -0.3 -0.1 -0.2 -0.2 0.4 -0.0
Profit / loss before taxes
-43.2 6.7 16.4 20.3 9.4 21.4 25.2 25.1
Income taxes
14.2 -1.6 -4.5 -6.9 -0.7 -5.0 -8.6 -9.3
Profit / loss for the period
-29.0 5.0 11.9 13.4 8.8 16.4 16.6 15.8
Attributable to
Equity holders of the
parent
-29.6 4.9 11.9 13.3 8.8 16.4 16.5 15.8
Minority interest
0.6 0.1 0.0 0.0 -0.0 0.0 0.1 0.0
Operating profit *
11.0 16.2 21.0 19.6 14.1 20.8 26.0 26.3
Operating profit, % *
2.4 3.6 4.8 4.7 3.6 5.4 6.4 6.3
* Excluding non-recurring items
QUARTERLY DATA BY SEGMENT
Eur million
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2007 2007 2007 2007 2006 2006 2006 2006
Net sales
FiberComposites
249.7 249.8 235.5 206.4 195.4 195.3 204.9 212.7
Specialty Papers
214.4 196.3 202.7 211.4 193.9 191.5 205.2 203.3
Other operations and eliminations
-1.5 -1.2 -1.3 -1.3 -0.3 -0.9 -0.5 -1.5
Group total
462.5 444.9 436.9 416.5 389.0 385.9 409.6 414.6
Operating profit / loss
FiberComposites
2.7 13.5 17.3 15.2 9.2 13.3 13.9 15.9
Specialty Papers
-33.6 2.7 5.4 13.0 3.0 6.0 10.3 13.0
Other operations and eliminations
-3.7 -0.1 -1.7 -4.9 0.1 6.0 4.8 0.7
Group total
-34.7 16.1 21.0 23.3 12.3 25.3 28.9 29.6
Operating profit / loss excluding non-recurring items
FiberComposites
15.7 14.1 17.3 13.4 11.0 13.3 13.9 15.9
Specialty Papers
-2.8 2.7 5.4 8.6 4.4 8.7 10.3 13.0
Other operations and eliminations
-1.9 -0.7 -1.7 -2.5 -1.2 -1.2 1.9 -2.6
Total
11.0 16.2 21.0 19.6 14.1 20.8 26.0 26.3
Non-recurring items
-45.7 -0.1 - 3.8 -1.9 4.4 2.9 3.3
Group total
-34.7 16.1 21.0 23.3 12.3 25.3 28.9 29.6
KEY FIGURES QUARTERLY
Eur million
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2007 2007 2007 2007 2006 2006 2006 2006
Net sales
462.5 444.9 436.9 416.5 389.0 385.9 409.6 414.6
Operating profit / loss
-34.7 16.1 21.0 23.3 12.3 25.3 28.9 29.6
Operating profit (excluding non-recurring items)
11.0 16.2 21.0 19.6 14.1 20.8 26.0 26.3
Profit / loss before taxes
-43.2 6.7 16.4 20.3 9.4 21.4 25.2 25.1
Profit before taxes (excluding non-recurring items)
2.5 6.7 16.4 16.5 11.3 17.0 22.3 21.8
Profit / loss for the period
-29.0 5.0 11.9 13.4 8.8 16.4 16.6 15.8
Gearing ratio, %
65.3 60.1 50.9 24.3 20.3 25.0 30.0 30.0
Return on capital employed (ROCE), %
-10.7 5.5 8.0 10.0 5.3 10.3 11.7 12.3
ROCE (excluding non-recurring items), %
3.6 5.5 8.0 8.4 6.1 8.5 10.6 11.0
Earnings per share, EUR
-0.64 0.10 0.26 0.29 0.18 0.36 0.36 0.41
Cash earnings per share, EUR
0.21 0.79 0.20 -0.26 0.54 1.29 0.21 0.68
Average number of shares during the period, 1000's
46,671 46,671 46,636 45,918 45,602 45,592 45,587 38,326
CALCULATION OF KEY FIGURES
Interest-bearing net Interest-bearing loans and borrowings - Cash
liabilities and cash equivalents -
Other investments (current)
Equity ratio, Total equity x 100
% Total assets - Advances
received
Gearing ratio, Interest-bearing net x 100
liabilities
% Total equity
Return on equity Profit (loss) for the period x 100
(ROE), % Total equity (annual
average)
Return on capital Profit (loss) before taxes + x
employed Financing expenses 100
Total assets (annual average) -
(ROCE), % Non-interest bearing liabilities (annual
average)
Profit (loss) for the period
Earnings per share, attributable to equity holders of the
parent
EUR Average adjusted number of shares
during the period
Cash earnings per Net cash from operating
share, activities
EUR Average adjusted number of shares
during the period
Equity per share, Equity attributable to equity holders
of the parent
EUR Adjusted number of shares at the end
of the period
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