2008-07-25 07:30:00 CEST
2008-07-25 07:31:41 CEST
REGULATED INFORMATION
Ahlstrom - Interim report (Q1 and Q3)
Interim report January-June 2008: Sales growth continued, full-year result expected to improve from last year
Ahlstrom Corporation STOCK EXCHANGE RELEASE 25.7.2008
Key highlights of April-June
* Net sales grew by 6.7% to EUR 465.9 million from the
second quarter in 2007. Excluding the currency impact, net sales
grew by 12.3%.
* Operating profit excluding non-recurring items amounted to
EUR 19.5 million, improving by 5.6% from the first quarter of this
year.
* Year-on-year, operating profit excluding non-recurring
items decreased by 7.3%. The main reasons for the year-on-year
decrease were the losses of the La Gère plant, low volumes of the
wipes business in Europe, as well as the escalating raw material
prices. Although La Gère improved its performance from the first
quarter, it was still burdening the Group result by EUR 2.7
million.
Outlook
* Due to the continuing overcapacity in release base papers
and wipes in Europe, as well as the uncertainty in the global
economy reflecting in the demand of some of Ahlstrom's products,
Ahlstrom revises its full-year outlook.
* As a result of the continuing volume growth and the
positive impact of the restructuring actions taken, Ahlstrom still
anticipates the net sales and operating profit to improve from last
year, but is now expecting a milder improvement than earlier
stated. Operating profit for the second half of this year is still
expected to be clearly better than in the second half of 2007.
+-------------------------------------------------------------------+
| Key figures, EUR | Q2/2008 | Q2/2007 | Q1-Q2/ | Q1-Q2/ | 2007 |
| million | | | 2008 | 2007 | |
|-------------------+---------+---------+--------+--------+---------|
| Net sales | 465.9 | 436.9 | 932.2 | 853.3 | 1,760.8 |
|-------------------+---------+---------+--------+--------+---------|
| Operating profit | | | | | |
| * excluding | | | | | |
| non-recurring | 19.4 | 21.0 | 38.7 | 44.4 | 25.8 |
| items | 19.5 | 21.0 | 37.9 | 40.6 | 67.8 |
|-------------------+---------+---------+--------+--------+---------|
| Profit before | | | | | |
| taxes | | | | | |
| * excluding | | | | | |
| non-recurring | 14.2 | 16.4 | 25.4 | 36.7 | 0.2 |
| items | 14.2 | 16.4 | 24.6 | 32.9 | 42.1 |
|-------------------+---------+---------+--------+--------+---------|
| Return on capital | | | | | |
| employed (ROCE),% | | | | | |
| * excluding | | | | | |
| non-recurring | 6.3 | 8.0 | 6.3 | 8.5 | 2.5 |
| items | 6.3 | 8.0 | 6.2 | 7.8 | 6.3 |
|-------------------+---------+---------+--------+--------+---------|
| Earnings per | | | | | |
| share, EUR | | | | | |
| *excluding | | | | | |
| non-recurring | 0.22 | 0.26 | 0.37 | 0.55 | 0.01 |
| items | 0.21 | 0.25 | 0.35 | 0.49 | 0.62 |
|-------------------+---------+---------+--------+--------+---------|
| Cash earnings per | | | | | |
| share, EUR | 0.12 | 0.20 | 0.99 | -0.06 | 0.94 |
|-------------------+---------+---------+--------+--------+---------|
| Gearing ratio, % | 76.0 | 50.9 | 76.0 | 50.9 | 65.3 |
+-------------------------------------------------------------------+
Risto Anttonen, CEO, comments on Ahlstrom's second quarter:
- During April-June, Ahlstrom's operating environment continued to be
challenging. The anticipated softness of demand caused by the
uncertainty in the global economy started to reflect in the volumes
of some of our products towards the end of the quarter. Cost
inflation remained strong, with average USD price for pulp rising by
approximately 20% compared with the corresponding period last year,
and USD price for energy by over 40%. We are constantly implementing
price increases to offset the cost effect, and their impact will be
gradually visible.
- Net sales came in at EUR 465.9 million, growing by 6.7% from the
previous year. We saw a nice progress also in comparable net sales
adjusted for currency effect, acquisitions and closures, which grew
by 8.1% on the second quarter, and by approximately 2.0% on the first
quarter of this year.
- Second quarter operating profit excluding non-recurring items
amounted to EUR 19.5 million, improving by 5.6% from the first
quarter. Year-on-year, the impact of La Gère, low volumes in wipes as
as well as the escalating raw material and energy prices decreased
the operating profit excluding non-recurring items by 7.3%.
- We have taken actions to tackle the challenges in the release base
papers and wipes in Europe, e.g. by organizing the wipes business
into a separate business area, and I am confident that their
performance will gradually improve. I am pleased to see that all the
other business areas were performing as anticipated.
OPERATING ENVIRONMENT
The anticipated signs of softness in demand began to materialize
towards the end of the second quarter of 2008 as a result of the
uncertainty in the global economy. This was especially visible in
Ahlstrom's products, which are linked with changes in consumer
spending patterns, such as wiping fabrics, filtration and nonwovens
for cars, housing filtration materials, as well as glass fiber
reinforcement applications for the marine industry.
Within the Fiber Composites segment, the overall demand for the
products of the Nonwovens business area continued to be on a good
level. However, a slowdown in wiping fabrics in Europe emerged, but
the demand was still stable in the USA. The demand for medical and
technical nonwovens remained stable in all geographical areas. In the
Filtration business area, the demand in the transportation filtration
market was solid in Europe, South America and Asia. In the USA, the
growth of transportation filtration products was flat, and the air
filtration market continued to suffer due to the weak construction
market. Demand in the Glass Nonwovens business area continued at a
very good level in the wind energy markets, but signs of softness of
demand emerged in marine applications.
In the Specialty Papers segment, the demand in the Technical Papers
business area was flat in most of the product lines, especially in
abrasive and furniture papers. For the products of the Release &
Label Papers business area, the demand was two-folded: South American
label paper market grew strongly, but on the other hand, the current
overcapacity of release base paper resulted in lower demand for
Ahlstrom's products in Europe.
Raw material costs remained high during the review period. The
average USD market price for BHKP pulp (Bleached Hardwood Kraft pulp,
e.g. eucalyptus pulp), was on average approximately 23% higher than
in the second quarter of 2007. The market price for NBSK pulp
(Northern Bleached Softwood Kraft pulp) was on average approximately
16% higher than in the second quarter of 2007. Also the price for
rayon, one of Ahlstrom's most important synthetic raw materials,
increased significantly year-on-year, by approximately 28%. However,
the price for rayon has decreased since the first quarter of 2008.
Energy prices increased significantly in the second quarter due to
rising oil prices. Compared with the second quarter of 2007, the
price of oil has risen by approximately 79%. Ahlstrom's main energy
sources are natural gas and electricity.
FINANCIAL PERFORMANCE
Ahlstrom's business is reported in two segments: the Fiber Composites
segment and the Specialty Papers segment. The Fiber Composites
segment comprises the Nonwovens, the Glass Nonwovens and the
Filtration business areas, and the Specialty Papers segment comprises
the Release & Label Papers and the Technical Papers business areas.
Ahlstrom provides information on the breakdown of net sales per
segment, per business area and per geographical area. The breakdown
of operating profit is reported per segment.
Net sales in April-June 2008
During the April-June period, Group net sales grew by 6.7%, amounting
to EUR 465.9 million (EUR 436.9 million) compared with the same
period last year. Excluding the currency effect, net sales grew by
12.3%. Recent acquisitions increased the net sales by 12.0% in the
second quarter, whereas closing of unprofitable units decreased the
net sales by 7.9%. Comparable net sales adjusted for the currency
effect, acquisitions and closures grew by 8.1% from the same period
last year.
Sales volumes developed favorably, growing by 7.1% from the second
quarter of 2007. Most of the volume growth was attributable for the
acquisitions made in 2007. Comparable volume growth adjusted for
acquisitions and closures was 5.1%.
The Fiber Composites segment accounted for 55% and the Specialty
Papers segment 45% of the Group net sales.
The net sales of the Fiber Composites segment grew to EUR 257.0
million (EUR 235.5 million), up by 9.1% from the previous year.
Comparable net sales adjusted for the currency effect, acquisitions
and closures grew by 11.0% from the same period last year. Sales
volumes grew by 16.2% during the review period. Within the segment,
net sales grew especially strongly in the Glass Nonwovens business
area as a result of strong demand in windmill applications. In the
Nonwovens business area, net sales growth was mainly generated by the
acquisitions made in 2007. In the Filtration business area, net sales
decreased as a result of the negative currency effect.
The Specialty Papers segment reported net sales of EUR 209.7 million
(EUR 202.7 million), up by 3.5% from the second quarter of 2007 and
by 2.7% in volumes. Comparable net sales adjusted for the currency
effect, acquisitions and closures grew by 4.4% from the same period
last year. Within the segment, Technical Papers posted an increase of
net sales mainly driven by the West Carrollton acquisition completed
in the first quarter of 2008. In the Release & Label Papers business
area, net sales grew slightly, mainly generated by the acquired
labeling business in Brazil.
In terms of geographical areas, Europe still dominated Ahlstrom's net
sales split, accounting for 58% of the Group total. However, growth
was strongest in South America as a result of completed acquisitions
and good demand of certain Ahlstrom products, such as transportation
filtration materials and labels.
Net sales in January-June 2008
In January-June 2008, Group net sales amounted to EUR 932.2 million
(EUR 853.3 million, growing by 9.2% on the corresponding period in
2007. Most of the growth was generated by acquisitions, which
increased the net sales by 14.7%. The weak USD decreased the net
sales by 5.4% and closing of production units by 7.4%. Comparable net
sales adjusted for the currency effect, acquisitions and closures
grew by 7.3% from the same period last year.
Volumes grew by 8.8% and comparable volumes adjusted for acquisitions
and closures by 4.9%.
The Fiber Composites segment accounted for 55% and the Specialty
Papers segment 45% of the Group net sales.
The net sales of the Fiber Composites segment grew to EUR 509.0
million (EUR 441.9 million), up 15.2% from the previous year.
Comparable net sales adjusted for the currency effect, acquisitions
and closures grew by 10.5% from the same period last year. Sales
volumes grew by 24.0% during the review period mainly as a result of
the acquisitions.
The Specialty Papers segment reported net sales of EUR 426.7 million
(EUR 414.1 million), up by 3.1% on 2007. Comparable net sales
adjusted for the currency effect, acquisitions and closures grew by
4.1%. In terms of sales volumes, the growth amounted to 2.8%.
+-------------------------------------------------------------------+
| Net sales by | | | Q1-Q2/ | | |
| segment | Q2/2008 | Q2/2007 | 2008 | Q1-Q2/ | 2007 |
| and business area | | | | 2007 | |
|---------------------+---------+---------+--------+--------+-------|
| Fiber Composites | 257.0 | 235.5 | 509.0 | 441.9 | 941.4 |
|---------------------+---------+---------+--------+--------+-------|
| Nonwovens | 138.7 | 119.2 | 275.7 | 216.5 | 491.6 |
|---------------------+---------+---------+--------+--------+-------|
| Glass Nonwovens | 36.1 | 30.5 | 71.7 | 58.4 | 122.0 |
|---------------------+---------+---------+--------+--------+-------|
| Filtration | 82.9 | 87.2 | 162.7 | 169.8 | 332.6 |
|---------------------+---------+---------+--------+--------+-------|
| Specialty Papers | 209.7 | 202.7 | 426.7 | 414.1 | 824.7 |
|---------------------+---------+---------+--------+--------+-------|
| Technical | | | 266.3 | | |
| Papers | 130.4 | 125.5 | | 251.9 | 485.6 |
|---------------------+---------+---------+--------+--------+-------|
| Release & Label | | | 160.4 | | |
| Papers | 79.3 | 77.5 | | 162.8 | 340.4 |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| Net sales by | Q2/2008 | Q2/2007 | Q1-Q2/ | Q1-Q2/ | 2007 |
| geographical area | | | 2008 | 2007 | |
|-------------------+---------+---------+--------+--------+---------|
| Europe | 270.6 | 276.4 | 555.3 | 544.3 | 1,086.5 |
|-------------------+---------+---------+--------+--------+---------|
| North America | 110.1 | 95.9 | 212.7 | 185.4 | 399.3 |
|-------------------+---------+---------+--------+--------+---------|
| South America | 45.1 | 18.6 | 87.6 | 34.2 | 104.0 |
|-------------------+---------+---------+--------+--------+---------|
| Asia-Pacific | 30.6 | 35.7 | 58.3 | 69.7 | 130.3 |
|-------------------+---------+---------+--------+--------+---------|
| Rest of the world | 9.6 | 10.3 | 18.2 | 19.7 | 40.6 |
+-------------------------------------------------------------------+
Financial result in April-June 2008
In April-June 2008, Group operating profit excluding non-recurring
items amounted to EUR 19.5 million (EUR 21.0 million), improving on
the first quarter by 5.6%, but down by 7.3% from the second quarter
of 2007. Operating profit amounted to EUR 19.4 million (EUR 21.0
million), decreasing by 7.6% from last year.
The main reasons for the year-on-year decrease were the losses of the
La Gère plant, low volumes of the wipes business in Europe, as well
as the escalating raw material prices. Although La Gère improved its
performance from the first quarter, it was still burdening the Group
result by EUR 2.7 million.
Ahlstrom has achieved price increases in many of its business areas.
The restructuring actions taken were reflected in fixed costs, which
decreased by approximately 1.5 percentage units in relation to the
net sales.
Total net financial expenses amounted to EUR 4.7 million (EUR 4.3
million). Ahlstrom's share of the losses of the associated companies
was EUR 0.6 million (EUR 0.3 million).
Profit before taxes decreased to EUR 14.2 million (EUR 16.4 million)
and excluding non-recurring items, to EUR 14.2 million (EUR 16.4
million).
Income tax expenses amounted to EUR 3.6 million (EUR 4.5 million).
Profit for the period decreased to EUR 10.6 million (EUR 11.9
million) and earnings per share (EPS) to EUR 0.22 (EUR 0.26).
Return on capital employed (ROCE) amounted to 6.3% (8.0%), and
excluding non-recurring items, to 6.3% (8.0%). Return on equity (ROE)
was 5.8% (6.4%).
Financial result in January-June 2008
In January-June, Group operating profit amounted to EUR 38.7 million
(EUR 44.4 million). Excluding non-recurring items, operating profit
amounted to EUR 37.9 million (EUR 40.6 million). Profit before taxes
was EUR 25.4 million (EUR 36.7 million), and EUR 24.6 million (EUR
32.9 million) excluding non-recurring items.
Income tax expenses amounted to EUR 7.0 million (EUR 11.4 million).
Profit for the period decreased to EUR 18.4 million (EUR 25.3
million) and earnings per share (EPS) to EUR 0.37 (EUR 0.55).
Return on capital employed (ROCE) amounted to 6.3% (8.5%), and
excluding non-recurring items, to 6.2% (7.8%). Return on equity (ROE)
was 5.0% (6.7%). Net asset turnover was 1.5 (1.6).
Financial result by segment
In April-June 2008, the Fiber Composites segment posted operating
profit of EUR 15.3 million (EUR 17.3 million) excluding non-recurring
items. In January-June, operating profit amounted to EUR 30.3 million
(EUR 30.7 million) excluding non-recurring items. The main reasons
for the decrease in operating profit were the low volumes of the
wipes business in Europe and the strong cost inflation coupled with
the weak US dollar against the euro.
In April-June, the operating profit of the Specialty Papers segment
improved to EUR 5.7 million (EUR 5.4 million) excluding non-recurring
items. The slight improvement came as a result of the improved
financial result of the Technical Papers business area. In
January-June, operating profit decreased to EUR 10.9 million (EUR
14.0 million), mainly due to the losses of the La Gère plant as part
of the continued overcapacity in release base papers in Europe.
+-------------------------------------------------------------------+
| Financial result by | Q2/2008 | Q2/2007 | Q1-Q2/ | Q1-Q2/ | 2007 |
| segment | | | 2008 | 2007 | |
|----------------------+--------------------------------------------|
| Fiber Composites | |
|----------------------+--------------------------------------------|
| Operating profit* | 15.3 | 17.3 | 30.3 | 30.7 | 60.6 |
|----------------------+---------+---------+--------+--------+------|
| Operating | | | | 6.9 | |
| profit*, % | 6.0 | 7.3 | 6.0 | | 6.4 |
|----------------------+---------+---------+--------+--------+------|
| Return on net | | | | 8.7 | |
| assets*, % | 7.9 | 9.5 | 7.7 | | 8.7 |
|----------------------+--------------------------------------------|
| Specialty Papers | |
|----------------------+--------------------------------------------|
| Operating profit* | 5.7 | 5.4 | 10.9 | 14.0 | 13.9 |
|----------------------+---------+---------+--------+--------+------|
| Operating | | | | 3.4 | |
| profit*, % | 2.7 | 2.7 | 2.6 | | 1.7 |
|----------------------+---------+---------+--------+--------+------|
| Return on net | | | | 8.5 | |
| assets*, % | 4.9 | 6.4 | 4.7 | | 3.6 |
+-------------------------------------------------------------------+
*Excluding non-recurring items
FINANCING
In January-June 2008, net cash flow from operating activities
increased to EUR 46.1 million (EUR -3.0 million).
Interest-bearing net liabilities increased by EUR 56.6 million to EUR
547.7 million (December 31, 2007: EUR 491.1 million). Gearing ratio
was 76.0% (December 31, 2007: 65.3%) and the equity ratio 41.6%
(December 31, 2007: 44.0%).
CAPITAL EXPENDITURE
Ahlstrom's strategy is to grow both organically and by acquisitions.
Growth investments are targeted to expand Ahlstrom's business to fast
growing markets and to serve customers globally. The investments are
expected to generate net sales amounting to 1.5 times the investment
value in three to five years and reach a return of capital employed
of at least 13%.
In January-June 2008, Ahlstrom's capital expenditure excluding
acquisitions amounted to EUR 54.1 million (EUR 65.8 million).
In 2008, Ahlstrom's organic investments are expected to be
approximately EUR 100 million including the following, previously
announced major investments: food nonwovens production line to
Chirnside, the UK, wiping fabrics line in Paulinia, Brazil, and
partly the new medical nonwovens plant to be built in Gujarat, India.
Acquisitions and new investment decisions
Ahlstrom made no acquisitions during April-June 2008.
On February 1, 2008 Ahlstrom announced that it had signed an
agreement to acquire Friend Group Inc., which consists of West
Carrollton Parchment Company and West Carrollton Converting Company.
The deal was closed on February 13, 2008, and the acquisition price
was EUR 9.8 million.
Negotiations with Zhejiang KAN Specialty Material Co and its
management to form a joint venture for the production of specialty
paper in China were terminated on May 2, 2008. The deal was
originally expected to be closed during the fourth quarter of 2007.
Organic growth investment decisions
Ahlstrom made no new organic investment decisions during the second
quarter of 2008. Update on the status of previously announced major
organic investments is provided below.
Investment start-ups
The building of Ahlstrom's two new dust filtration production lines,
one in Wuxi, China and one in Bethune, South Carolina, the USA, have
proceeded as planned. The Wuxi line started operations during the
second quarter of this year and the Bethune line is expected to start
production during the third quarter of 2008.
The new glassfiber tissue production plant established in 2007 in
Tver, Russia, was inaugurated in June 2008, and will be ramping up
for production during 2008. The plant will primarily serve Russian
building and composites materials industries, and will strengthen
Ahlstrom's position as a leading developer and manufacturer of
specialty glassfiber tissues.
The building of Ahlstrom's new food nonwovens production line in
Chirnside, the UK, has proceeded on schedule, and production is
estimated to start during the fourth quarter of 2008. The new line
utilizing spunmelt technology will primarily serve the growing
infusion products market with next generation products used e.g. in
teabags.
In Paulinia, Brazil, Ahlstrom is building a nonwoven wiping fabrics
production line to start production during the fourth quarter of
2008. The investment consists of a building and machinery. The new
production line will utilize spunlace technology and its main
customers operate within the household and industrial wipes sectors
in Latin America.
Ahlstrom is establishing a new medical nonwovens plant in Gujarat,
India, with operations estimated to start in the first quarter of
2010. The new plant will manufacture a full range of spunmelt fabrics
with a main focus on the medical fabrics market and the site also
enables future expansions of Ahlstrom's business in India. The
facility will be located in the Mundra Special Economic Zone (SEZ).
CHANGES IN ORGANIZATION AND MANAGEMENT
Ahlstrom announced on June 24, 2008 that it will change its Business
Area organization as from July 1 to reflect the strong growth of its
Nonwovens business.
The new structure will be implemented in Ahlstrom's financial
reporting starting from the third quarter of this year. The former
Nonwovens Business Area will be divided into two parts, Home &
Personal Nonwovens Business Area, covering mainly the Wipes business,
and Advanced Nonwovens Business Area, incorporating the Food, Medical
and Industrial Nonwovens businesses.
Changes in the Corporate Executive Team have been made accordingly.
Jean-Marie Becker, born 1957, B.Sc. (Tech.), was appointed Senior
Vice President, Home & Personal Nonwovens and member of the Corporate
Executive Team. Senior Vice President Claudio Ermondi, who previously
led the Nonwovens Business Area, took the responsibility for the
Advanced Nonwovens Business Area and continues as member of the
Corporate Executive Team.
PERSONNEL
At the end of June 2008, Ahlstrom had 6,568 employees (6,325). The
average number of employees during January-June was 6,538 (5,794).
PRINCIPAL RISKS AND UNCERTAINTIES
The principal uncertainties that affect Ahlstrom's net sales and
financial performance in the short-term are related to:
- General economic conditions and changes in the demand for end-user
products
- Increases in raw material prices (e.g. pulp, chemicals and
synthetic fibers)
- Increases in energy prices
- Fluctuations in foreign currency rates
These factors are described in more detail in Ahlstrom's Annual
report 2007, on pages 20-23.
SHARES AND SHARE CAPITAL
During January-June 2008, a total of 3.8 million Ahlstrom shares were
traded for a total of EUR 64 million. The lowest trading price during
the review period was EUR 13.80 and the highest EUR 18.78. The
closing price on June 30, 2008 was EUR 14.35 and market
capitalization was EUR 670 million.
Equity per share of Ahlstrom Group was EUR 14.63 at the end of the
review period (December 31, 2007: EUR 15.35).
At the end of the review period, there were no outstanding options
entitling to subscription of Ahlstrom shares. The share capital at
the end of the review period amounted to EUR 70,005,912.00. The total
number of shares on June 30, 2008 was 46,670,608.
ANNUAL GENERAL MEETING 2008
Ahlstrom Corporation's Annual General Meeting of Shareholders (AGM)
was held on April 2, 2008. The key resolutions of the AGM are
summarized below.
The AGM resolved to distribute a dividend of EUR 1.00 per share for
the fiscal year that ended on December 31, 2007 in accordance with
the proposal of the Board of Directors. The AGM approved the
financial statements and consolidated financial statements and
discharged the members of the Board of Directors and the CEO from
liability for the financial period January 1-December 31, 2007.
PricewaterhouseCoopers Oy (PwC) was elected as Ahlstrom's auditor as
recommended by the Audit Committee. PricewaterhouseCoopers Oy (PwC)
has designated Authorized Public Accountant Eero Suomela as auditor
in charge.
The AGM confirmed the number of Board members unchanged at seven.
Thomas Ahlström, Sebastian Bondestam, Jan Inborr, Bertel Paulig,
Peter Seligson and Willem F. Zetteler were re-elected as members of
the Board of Directors and Martin Nüchtern was elected as a new
member as proposed by the Compensation and Nomination Committee of
the Board. 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 Ahlstrom
shares as proposed by the Board of Directors, taking into account the
limitations set forth in the Companies' Act. The maximum number of
shares to be repurchased is 4,500,000, corresponding to less than 10%
of all issued Company shares. The authorization is 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. The shares may be repurchased only through public trading
at the prevailing market price by using unrestricted shareholders'
equity.
The AGM authorized the Board of Directors to resolve to distribute a
maximum of 4,500,000 own shares held by the Company as proposed by
the Board of Directors. The Board of Directors is authorized to
decide to whom and in which order the shares will be distributed. The
Board of Directors may decide on the distribution of its own shares
otherwise than in proportion to the existing pre-emptive right of
shareholders to purchase the Company's own shares. 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 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 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.
After the AGM, the organization meeting of the Board of Directors
elected Peter Seligson as Chairman and Bertel Paulig as Vice Chairman
of the Board. The Board of Directors also appointed the members of
the permanent committees. The members of the Audit Committee are
Bertel Paulig (Chairman), Thomas Ahlström and Willem F. Zetteler. The
members of the Compensation and Nomination Committee are Peter
Seligson (Chairman), Jan Inborr and Sebastian Bondestam.
OUTLOOK
The uncertainty of the global economy has started to reflect in the
demand for some of Ahlstrom's products. Signs of softness of demand
are visible especially in products related with changes in consumer
spending patterns, such as wiping fabrics, filtration and nonwovens
for cars, housing filtration materials, as well as glass fiber
reinforcement applications for the marine industry.
Prices for Ahlstrom's main raw materials, especially pulp, are
expected to stay at high level during 2008. High oil prices are
expected to keep energy and synthetic fiber costs high. For
chemicals, there is a strong price pressure following the high oil
price. On the other hand, the slowdown of the Chinese textile
industry has started to decrease the price of rayon.
For the reasons stated above, as well as for the continuing
overcapacity of release base papers and wipes in Europe, Ahlstrom
revises its outlook for 2008 as follows.
Full-year net sales are estimated to grow from that of 2007 as a
result of the completed acquisitions and the ongoing investment
projects especially in BRIC countries (Brazil, Russia, India, China),
and despite the closing of four production units in Europe and North
America.
As a result of the continuing volume growth and the positive impact
of the restructuring actions taken, Ahlstrom still anticipates the
operating profit to improve from last year, but is now expecting a
milder improvement than earlier stated. Operating profit for the
second half of this year is still expected to be clearly better than
in the second half of 2007.
This interim report has been prepared in accordance with the
International Financial Reporting Standards (IFRS). The report is
unaudited.
Comparable figures refer to the same period last year unless
otherwise stated.
Helsinki, July 25, 2008
Ahlstrom Corporation
Board of Directors
ADDITIONAL INFORMATION ON JULY 25, 2008:
Risto Anttonen, CEO, tel. +358 (0)10 888 4166, at 14.00-15.00 Finnish
time
Jari Mäntylä, CFO, tel. +358 (0)10 888 4768
News conference at 10.00 Finnish time
A news conference for media and analysts will be held on Friday, July
25, 2008 at 10.00 Finnish time at Ahlstrom's Head Office, address
Salmisaarenaukio 1, 00101 Helsinki. The conference will be held in
Finnish. Welcome.
Conference call at 13.00 Finnish time
A conference call for analysts and investors will be held in English
at 13.00 Finnish time. To participate in the teleconference, please
dial +358 (0)9 2313 9202 a few minutes before the call. Use the title
of the conference call: Ahlstrom conference call. A replay number is
available until August 1, 2008. The number for the replay is +358
(0)9 231 446 81, access code: 803525.
The presentation material will be available on July 25, 2008 after
the interim report has been published, at www.ahlstrom.com >
Investors > IR presentations.
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. Ahlstrom's
materials are used in a large variety of everyday products, such as
filters, food packaging, wipes, flooring, furniture, labels and
tapes. 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 at www.ahlstrom.com.
APPENDIX
Financial statements
APPENDIX
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, 2008
The Group has adopted the following new interpretation as of January
1, 2008:
- IFRIC 11: IFRS 2 - Group and Treasury Share Transactions
- IFRIC 12 Service Concession Arrangements (not yet approved by EU)
- IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their interaction (not yet approved by EU)
The above mentioned interpretations do not have an effect on the
consolidated financial statements.
Financial Statements are unaudited.
INCOME STATEMENT Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
Eur million 2008 2007 2008 2007 2007
Net sales 465.9 436.9 932.2 853.3 1,760.8
Other operating income 4.3 1.7 7.3 13.1 20.4
Expenses -426.9 -396.5 -852.9 -781.4 -1,655.5
Depreciation, amortization and
impairment charges -23.9 -21.0 -47.9 -40.6 -99.8
Operating profit 19.4 21.0 38.7 44.4 25.8
Net financial expenses -4.7 -4.3 -13.3 -7.3 -25.6
Share of loss of associated
companies -0.6 -0.3 -0.0 -0.4 -0.1
Profit before taxes 14.2 16.4 25.4 36.7 0.2
Income taxes -3.6 -4.5 -7.0 -11.4 1.2
Profit for the period 10.6 11.9 18.4 25.3 1.3
Attributable to
Equity holders of the parent 9.9 11.9 17.1 25.2 0.5
Minority interest 0.7 0.0 1.3 0.1 0.8
Basic earnings per share, EUR 0.22 0.26 0.37 0.55 0.01
Diluted earnings per share, EUR 0.22 0.26 0.37 0.55 0,01
BALANCE SHEET Jun 30, Jun 30, Dec 31,
Eur million 2008 2007 2007
ASSETS
Non-current assets
Property, plant and equipment 738.6 678.4 747.7
Goodwill 179.4 143.0 179.7
Other intangible assets 56.7 39.1 58.2
Investments in associated companies 12.4 12.3 12.4
Other investments 0.2 0.2 0.2
Other receivables 16.7 12.9 16.9
Deferred tax assets 31.2 25.8 29.7
Total non-current assets 1,035.1 911.7 1,044.8
Current assets
Inventories 256.9 233.1 246.3
Trade and other receivables 415.3 419.8 389.3
Income tax receivables 4.1 3.4 3.9
Other investments 0.0 0.0 5.8
Cash and cash equivalents 20.1 21.5 21.3
Total current assets 696.4 677.9 666.5
Total assets 1,731.5 1,589.6 1,711.4
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent 683.0 751.2 716.4
Minority interest 37.8 0.7 36.0
Total equity 720.8 751.9 752.4
Non-current liabilities
Interest-bearing loans and borrowings 290.2 149.0 202.7
Employee benefit obligations 84.9 97.2 87.7
Provisions 4.1 5.4 4.6
Other liabilities 0.2 0.8 0.6
Deferred tax liabilities 27.2 27.6 27.6
Total non-current liabilities 406.7 279.8 323.2
Current liabilities
Interest-bearing loans and borrowings 277.6 255.2 315.5
Trade and other payables 296.8 284.0 273.1
Income tax liabilities 7.3 7.9 9.1
Provisions 22.3 10.7 38.1
Total current liabilities 604.0 557.9 635.8
Total liabilities 1,010.7 837.7 959.0
Total equity and liabilities 1,731.5 1,589.6 1,711.4
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 equity 7) 8)
holders of the parent
Eur million 1) 2) 3) 4) 5) 6)
Equity at
December 31, 2006 68.5 209.3 0.5 0.1 -3.1 490.4 0.8 766.6
Cash flow hedges, net of
tax:
Gains and losses taken
to equity - - - -0.1 - - - -0.1
Translation differences - - - - -3.9 - - -3.9
Gains and losses from
hedge of net
investments in foreign
operations,
net of tax - - - - 1.6 - - 1.6
Other changes - - - - - 0.0 -0.0 0.0
Profit for the period - - - - - 25.2 0.1 25.3
Total recognized income
and expense
for the period - - - -0.1 -2.3 25.3 0.0 22.9
Dividends paid - - - - - -46.6 -0.1 -46.7
Share options exercised 1.5 - 7.7 - - - - 9.2
1.5 - 7.7 - - -46.6 -0.1 -37.5
Equity at June 30, 2007 70.0 209.3 8.3 -0.0 -5.4 469.1 0.7 751.9
Equity at
December 31, 2007 70.0 209.3 8.3 0.0 -15.5 444.3 36.0 752.4
Cash flow hedges, net of
tax:
Gains and losses taken
to equity - - - 0.4 - - - 0.4
Translation differences - - - - -8.0 - 1.2 -6.8
Gains and losses from
hedge of net
investments in foreign
operations,
net of tax - - - - 4.6 - - 4.6
Purchases of minority
interest - - - - - -0.7 -0.7 -1.4
Other changes - - - - - -0.0 - -0.0
Profit for the period - - - - - 17.1 1.3 18.4
Total recognized income
and expense
for the period - - - 0.4 -3.5 16.4 1.8 15.2
Dividends paid and other - - - - - -46.7 - -46.7
Equity at June 30, 2008 70.0 209.3 8.3 0.4 -19.0 414.1 37.8 720.8
STATEMENT OF CASH FLOWS Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
Eur million 2008 2007 2008 2007 2007
Cash flow from operating
activities
Profit for the period 10.6 11.9 18.4 25.3 1.3
Adjustments, total 30.8 30.2 65.3 49.9 102.4
Changes in net working capital -10.4 -21.2 -10.6 -48.4 *) -35.6 *)
Change in provisions and pension
liability -11.3 -3.4 -19.8 -17.4 *) 10.4 *)
Financial items -7.0 -3.2 5.5 -4.2 -15.1
Taxes paid -7.3 -5.3 -12.7 -8.3 -19.7
Net cash from operating
activities 5.4 9.0 46.1 -3.0 43.9
Cash flow from investing
activities
Acquisition of Group companies - -127.8 -11.0 -127.8 -217.2
Purchases of property, plant &
equipment -32.9 -30.0 -57.2 -62.8 -153.9
Other investing activities 4.2 -0.1 13.4 14.4 13.1
Net cash from investing
activities -28.6 -157.9 -54.8 -176.2 -358.1
Cash flow from financing
activities
Share issue - 0.5 - 9.2 9.2
Dividends paid -46.7 -46.8 -46.7 -46.8 -46.8
Other financing activities 60.2 192.7 54.3 218.0 353.1
Net cash from financing
activities 13.5 146.4 7.6 180.5 315.6
Net change in cash and cash
equivalents -9.7 -2.5 -1.0 1.4 1.4
Cash and cash equivalents at
beginning of period 29.3 23.9 21.3 20.1 20.1
Foreign exchange adjustment 0.5 0.1 -0.2 0.1 -0.2
Cash and cash equivalents at end
of period 20.1 21.5 20.1 21.5 21.3
*) 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 Q2 Q2 Q1-Q2 Q1-Q2 Q1-Q4
2008 2007 2008 2007 2007
Operating profit, % 4.2 4.8 4.2 5.2 1.5
Operating profit (excluding
non-recurring items), % 4.2 4.8 4.1 4.8 3.8
Return on capital employed
(ROCE), % 6.3 8.0 6.3 8.5 2.5
ROCE (excluding non-recurring
items), % 6.3 8.0 6.2 7.8 6.3
Return on equity (ROE), % 5.8 6.4 5.0 6.7 0.2
Interest-bearing net
liabilities, EUR million 547.7 382.6 547.7 382.6 491.1
Equity ratio, % 41.6 47.3 41.6 47.3 44.0
Gearing ratio, % 76.0 50.9 76.0 50.9 65.3
Earnings per share, EUR 0.22 0.26 0.37 0.55 0.01
Earnings per share, diluted,
EUR 0.22 0.26 0.37 0.55 0.01
Equity per share, EUR 14.63 16.11 14.63 16.11 15.35
Cash earnings per share, EUR 0.12 0.20 0.99 -0.06 0.94
Average number of shares
during the period, 1000's 46,671 46,636 46,671 46,279 46,476
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 33.1 36.6 54.1 65.8 154.7
Capital employed, at the end
of the period, EUR million 1,288.6 1,156.1 1,288.6 1,156.1 1,270.6
Number of employees, average 6,538 5,888 6,538 5,794 6,108
CHANGES OF PROPERTY, PLANT AND
EQUIPMENT Q1-Q2 Q1-Q2 Q1-Q4
Eur million 2008 2007 2007
Book value at Jan 1 747.7 601.7 601.7
Acquisitions through business combinations 3.4 56.5 116.8
Additions 53.9 64.9 150.3
Disposals -3.0 -0.6 -1.2
Depreciations and impairment charges -45.1 -38.4 -93.3
Translation adjustment and other changes -18.3 -5.6 -26.5
Book value at end of the period 738.6 678.4 747.7
TRANSACTIONS WITH RELATED PARTIES Q1-Q2 Q1-Q2 Q1-Q4
Eur million 2008 2007 2007
Transactions with associated companies
Sales and interest income 0.4 0.3 1.3
Purchases of goods and services -1.8 -3.0 -5.0
Trade and other receivables 0.1 0.2 0.1
Trade and other payables 0.4 0.5 0.5
Interest-bearing loans and borrowings - 3.9 0.1
Market prices have been used in transactions with associated
companies.
OPERATING LEASES Jun 30, Jun 30, Dec 31,
Eur million 2008 2007 2007
Current portion 5.2 5.7 5.3
Non-current portion 13.0 11.4 14.9
Total 18.2 17.0 20.3
CONTINGENT LIABILITIES Jun 30, Jun 30, Dec 31,
Eur million 2008 2007 2007
For own liabilities
Other loans
Amount of loans 0.8 1.2 0.9
Book value of pledges 0.9 1.3 1.0
For other own commitments
Guarantees 18.7 19.5 23.8
For commitments of associated companies
Guarantees 5.2 7.3 6.3
Capital expenditure commitments 26.2 49.3 32.4
Other contingent liabilities 4.2 5.1 4.7
Acquisitions in 2008
In February, Ahlstrom acquired the Friend Group Inc., which consists
of West Carrollton Parchment Company and West Carrollton Converting
Company. The Friend Group has two sites in West Carrollton serving
mainly the food packaging market in the USA. West Carrollton is a
producer of vegetable parchment and has parchmentizing and
converting operations located in West Carrollton, Ohio, the USA.
Ahlstrom West Carrollton has been incorporated in Ahlstrom's accounts
as part of Specialty Papers segment since February 1, 2008.
Management estimates that if the acquisition had occurred on January
1, 2008, Ahlstrom Group's net sales and profit for the period would
not have changed materially.
The acquisition price includes professional fees amounting to EUR 0.1
million. The goodwill that arose from the acquisition of the shares
of the Friend Group Inc. reflects the synergy benefits resulting from
the expanded product offering to the Technical Papers' vegetable
parchment business and provides synergies to our existing business as
well as growth opportunities. The business combination and purchase
price allocations were accounted for as preliminary.
The acquisition had the following effect on the Group's assets and
liabilities:
ACQUISITIONS OF BUSINESSES Book values Fair values
before the entered in
Eur million consolidation consolidation
Property, plant and equipment 3.3 3.6
Intangible assets 0.0 1.3
Inventories 3.8 3.6
Trade and other receivables 2.7 2.7
Cash and cash equivalents 0.0 0.0
Assets, total 9.7 11.1
Deferred tax liabilities 0.4 0.6
Employee benefit obligations 0.4 0.6
Trade and other payables 3.1 3.1
Liabilities, total 3.9 4.3
Net assets 5.9 6.8
Goodwill arising in acquisition - 3.0
Acquisition price paid (in cash) - 9.8
Exchange rate differences - -0.2
Net cash outflow - 9.6
In addition, Ahlstrom has acquired the shares from the minority
shareholders of two sales companies amounting to EUR 1.4 million.
QUARTERLY DATA Q2 Q1 Q4 Q3 Q2 Q1
Eur million 2008 2008 2007 2007 2007 2007
Net sales 465.9 466.2 462.5 444.9 436.9 416.5
Other operating income * 2.4 2.3 2.0 3.1 1.7 2.6
Expenses * -425.0 -425.9 -429.0 -407.7 -396.5 -379.9
Depreciation, amortization,
impairment charges * -23.9 -24.1 -24.5 -24.1 -21.0 -19.6
Non-recurring items -0.1 0.8 -45.7 -0.1 - 3.8
Operating profit / loss 19.4 19.3 -34.7 16.1 21.0 23.3
Net financial expenses -4.7 -8.6 -8.6 -9.7 -4.3 -3.0
Share of profit / loss of
associated companies -0.6 0.5 0.1 0.2 -0.3 -0.1
Profit / loss before taxes 14.2 11.2 -43.2 6.7 16.4 20.3
Income taxes -3.6 -3.4 14.2 -1.6 -4.5 -6.9
Profit / loss for the
period 10.6 7.8 -29.0 5.0 11.9 13.4
Attributable to
Equity holders of the
parent 9.9 7.2 -29.6 4.9 11.9 13.3
Minority interest 0.7 0.6 0.6 0.1 0.0 0.0
Operating profit * 19.5 18.4 11.0 16.2 21.0 19.6
Operating profit, % * 4.2 4.0 2.4 3.6 4.8 4.7
* Excluding non-recurring items
QUARTERLY DATA BY SEGMENT Q2 Q1 Q4 Q3 Q2 Q1
Eur million 2008 2008 2007 2007 2007 2007
Net sales
Fiber Composites 257.0 252.0 249.7 249.8 235.5 206.4
Specialty Papers 209.7 217.0 214.4 196.3 202.7 211.4
Other operations and eliminations -0.7 -2.8 -1.5 -1.2 -1.3 -1.3
Group total 465.9 466.2 462.5 444.9 436.9 416.5
Operating profit / loss
Fiber Composites 16.8 15.5 2.7 13.5 17.3 15.2
Specialty Papers 4.7 5.5 -33.6 2.7 5.4 13.0
Other operations and eliminations -2.0 -1.7 -3.7 -0.1 -1.7 -4.9
Group total 19.4 19.3 -34.7 16.1 21.0 23.3
Operating profit / loss excluding
non-recurring items
Fiber Composites 15.3 15.0 15.7 14.1 17.3 13.4
Specialty Papers 5.7 5.2 -2.8 2.7 5.4 8.6
Other operations and eliminations -1.6 -1.7 -1.9 -0.7 -1.7 -2.5
Total 19.5 18.4 11.0 16.2 21.0 19.6
Non-recurring items -0.1 0.8 -45.7 -0.1 - 3.8
Group total 19.4 19.3 -34.7 16.1 21.0 23.3
KEY FIGURES QUARTERLY Q2 Q1 Q4 Q3 Q2 Q1
Eur million 2008 2008 2007 2007 2007 2007
Net sales 465.9 466.2 462.5 444.9 436.9 416.5
Operating profit / loss 19.4 19.3 -34.7 16.1 21.0 23.3
Operating profit (excluding
non-recurring items) 19.5 18.4 11.0 16.2 21.0 19.6
Profit / loss before taxes 14.2 11.2 -43.2 6.7 16.4 20.3
Profit before taxes
(excluding non-recurring
items) 14.2 10.4 2.5 6.7 16.4 16.5
Profit / loss for the
period 10.6 7.8 -29.0 5.0 11.9 13.4
Gearing ratio, % 76.0 64.4 65.3 60.1 50.9 24.3
Return on capital employed
(ROCE), % 6.3 6.4 -10.7 5.5 8.0 10.0
ROCE (excluding
non-recurring items), % 6.3 6.2 3.6 5.5 8.0 8.4
Earnings per share, EUR 0.22 0.15 -0.64 0.10 0.26 0.29
Earnings per share
(excluding non-recurring
items), EUR 0.21 0.14 0.02 0.11 0.25 0.24
Cash earnings per share,
EUR 0.12 0.87 0.21 0.79 0.20 -0.26
Average number of shares
during the period, 1000's 46,671 46,671 46,671 46,671 46,636 45,918
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
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