2016-08-03 07:30:51 CEST
2016-08-03 07:30:51 CEST
REGULATED INFORMATION
Ahlstrom - Half Year financial report
Ahlstrom half-year report January-June 2016: All-time high quarterly operating profitability and cash flow
Ahlstrom Corporation STOCK EXCHANGE RELEASE August 3, 2016 at 08:30
This is a summary of the half-year report January-June 2016. The complete report
with tables is attached to this release and available at www.ahlstrom.com
Ahlstrom half-year report January-June 2016
All-time high quarterly operating profitability and cash flow
April-June 2016 compared with April-June 2015
* Net sales EUR 279.4 million (EUR 281.1 million).At constant currency rates,
growth was 2.8%.
* Adjusted EBITDA EUR 37.1 million (EUR 31.5 million), representing 13.3%
(11.2%) of net sales
* Operating profit EUR 23.3 million (EUR 15.7 million)
* Adjusted operating profit EUR 24.5 million (EUR 16.8 million), representing
8.8% (6.0%) of net sales, and the 11th consecutive quarter of year-on-year
improvement
* Profit before taxes EUR 19.6 million (EUR 20.8 million. The comparison
figure includes a capital gain of EUR 11.1 million from share sales.)
* Earnings per share EUR 0.22 (EUR 0.29)
* Net cash flow from operating activities EUR 54.9 million (EUR 14.0 million)
January-June 2016 compared with January-June 2015
* Net sales EUR 546.6 million (EUR 552.9 million).At constant currency rates,
growth was 1.0%.
* Adjusted EBITDA EUR 65.1 million (EUR 57.7 million), representing 11.9%
(10.4%) of net sales
* Operating profit EUR 34.0 million (EUR 28.4 million)
* Adjusted operating profit EUR 39.5 million (EUR 28.8 million), representing
7.2% (5.2%) of net sales
* Profit before taxes EUR 26.4 million (EUR 34.6 million. The comparison
figure includes a capital gain of EUR 17.1 from share sales.)
* Earnings per share EUR 0.27 (EUR 0.46)
* Net cash flow from operating activities EUR 63.3 million (EUR 12.5 million)
Major events after the reporting period
* July 20: outlook on profitability for 2016 raised
* July 27: the agreement to divest Ahlstrom's Building & Wind business unit to
Owens Corning was terminated
Marco Levi, President & CEO
"April-June 2016 was a very strong quarter, where we delivered sales growth of
2.8% at constant currency rates and were able to raise our profitability to an
all-time high level in the current structure of the company. Albeit we continued
to benefit from lower variable costs, we now have a much improved operational
efficiency and a more competitive cost structure. In addition, our cash flow
generation was very good in the quarter, driven by higher profitability and
active management of working capital.
We are successfully executing on our strategic roadmap through better commercial
excellence and a new lean operating model, and will further pursue to improve
margins and lower costs. In addition, we are growing by increasing the capacity
utilization of our recent investments and finding new growth opportunities in
areas such as single-serve coffee materials and water filtration. This has been
reflected in our updated guidance for 2016, giving us confidence we can reach
our target of above 8% adjusted operating profit margin by 2018.
Sales growth at constant currency rates was also very encouraging in the quarter
and most of our business units increased their profits. In the Filtration &
Performance segment, the Filtration as well as Wallcover & Poster units
delivered either higher sales or margins despite challenging market conditions
with the Industrial Nonwovens unit continuing to make steady progress. In the
Specialties segment, all four business units - Food, Advanced Liquid
Technologies, Tape, and Medical - improved their profitability.
I'm also happy about the much improved performance of our Building & Wind
business unit, which we will continue to manage and develop as part of our
business portfolio."
Outlook for 2016
Ahlstrom reiterates the outlook published on July 27, 2016. The company expects
net sales from continuing operations in 2016 to be in the range of EUR
1,040-1,140 million. The adjusted operating profit from continuing operations is
expected to be 5.4%-6.4% of net sales.
The adjusted operating profit excludes restructuring costs, impairment charges
and capital gains or losses.
Key figures
EUR million Q2/2016 Q2/2015 Change, % Q1-Q2/2016 Q1-Q2/2015 Change, %
--------------------------------------------------------------------------------
Net sales 279.4 281.1 -0.6 546.6 552.9 -1.1
EBITDA 36.0 30.4 18.2 59.5 57.4 3.7
% of net sales 12.9 10.8 10.9 10.4
Adjustment items
included in EBITDA -1.1 -1.1 -5.5 -0.3
Adjusted EBITDA 37.1 31.5 17.8 65.1 57.7 12.7
% of net sales 13.3 11.2 11.9 10.4
Operating profit 23.3 15.7 48.6 34.0 28.4 19.8
% of net sales 8.4 5.6 6.2 5.1
Adjustment items
included in operating
profit -1.1 -1.1 -5.5 -0.4
Adjusted operating
profit 24.5 16.8 46.0 39.5 28.8 37.4
% of net sales 8.8 6.0 7.2 5.2
Profit before taxes 19.6 20.8 -5.5 26.4 34.6 -23.9
Profit for the period 12.0 15.8 -23.9 15.5 24.6 -37.0
Earnings per share 0.22 0.29 0.27 0.46
Return on capital
employed, % 18.1 10.0 13.2 9.3
Net cash flow from
operative activities 54.9 14.0 63.3 12.5
Capital expenditure 7.3 5.1 43.9 11.9 8.1 47.5
Interest-bearing net
liabilities 160.2 233.8 -31.5 160.2 233.8 -31.5
Gearing ratio, % 55.4 69.3 55.4 69.3
Equity ratio, % 34.9 35.9 34.9 35.9
Number of personnel,
at the end of the
period 3,328 3,413 -2.5 3,328 3,413 -2.5
--------------------------------------------------------------------------------
Ahlstrom has adopted the European Securities and Markets Authority (ESMA)
guidelines on Alternative Performance Measures, which became effective on July
3, 2016. The company uses alternative performance measures to reflect the
underlying business performance and to improve comparability. These alternative
performance measures should, however, not be considered as a substitute for
measures of performance in accordance with IFRS.
Ahlstrom has used revised terminology since the beginning of 2016. In
accordance, the previously used terms "Operating profit excluding non-recurring
items" has been replaced by "Adjusted operating profit" and "EBITDA excluding
non-recurring items" by "Adjusted EBITDA".
Adjusted items affecting comparability and alternative performance measures used
by Ahlstrom are defined below:
Adjustment items: restructuring costs, impairment charges, capital gains or
losses
EBITDA = Operating profit + depreciation and amortizations + impairments
Adjusted EBITDA = EBITDA - Adjustment items
Adjusted operating profit = operating profit - Adjustment items
Redefined strategy and long-term financial targets
Ahlstrom's redefined strategy and new long-term financial targets extending to
the year 2018 were announced in January 2016. Global trends faced by our
customers steer our product offering and provide us with a wealth of
opportunities. We are committed to growing and creating stakeholder value by
providing the best-performing sustainable fiber-based materials.
As part of the implementation, the company's business structure was simplified
and reorganized into two business areas: Filtration & Performance and
Specialties. The aim of this change is to increase market and customer focus.
Both business areas have business unit-specific strategies and operating models.
This enables us to provide customer-driven product development and tailored
customer service, cost efficiency, better allocation of resources, and specific
go-to-market approaches.
The roadmap for execution outlines the change in strategy and is focused on
commercial excellence, a new lean operating model, organic growth via higher
asset turnover and growth via new platforms.
Long-term financial targets over the economic cycle:
* Operating profit margin: adjusted operating profit margin to be above 8% by
2018
* Gearing: gearing to be maintained below 100%
* Dividend policy: we aim for a stable dividend, increasing over time, based
on the annual net income performance
The adjusted operating profit margin excludes restructuring costs, impairment
charges, capital gains or losses, and discontinued operations.
Major events after the reporting period
Agreement to divest Building & Wind business unit terminated
On July 27, 2016, Ahlstrom and Owens Corning announced the termination of the
agreement regarding the planned divestiture of Ahlstrom's Building & Wind
business unit to Owens Corning following challenges associated with obtaining
regulatory clearance in Germany for the transaction.
Ahlstrom will continue to operate and develop the Building & Wind business unit
as before and it will be reported as part of the Filtration & Performance
segment. The divestment was announced on January 21, 2016. The German
competition authority opened a second-phase investigation into the planned
transaction on April 8, 2016.
Outlook raised and revised
On July 20 2016, Ahlstrom raised its outlook for adjusted operating profit
margin in 2016 as the result of continued improvement in operational performance
and lower variable costs. The outlook for net sales was kept unchanged.
On July 27, 2016, Ahlstrom revised the outlook to include the Building & Wind
business unit. The outlook is stated in the section below.
Outlook in 2016
Ahlstrom reiterates the outlook published on July 27, 2016. The company expects
net sales from continuing operations in 2016 to be in the range of EUR
1,040-1,140 million. The adjusted operating profit from continuing operations is
expected to be 5.4%-6.4% of net sales.
The adjusted operating profit excludes restructuring costs, impairment charges
and capital gains or losses.
Short-term risks
The global economic outlook remains uncertain. The European markets continue to
suffer from slower growth, and Britain's decision to leave the European Union
has increased uncertainty. In addition, the recent slowdown in China has raised
concerns, although the expected shift in the country's economic structure
towards more consumer consumption and less investment can also provide
opportunities.
Slower-than-anticipated economic growth poses risks for Ahlstrom's financial
performance. It may lead to lower sales volumes and force the company to
initiate market-related shutdowns at plants, which could affect profitability.
Tougher competition through competitors' increased production capacity,
aggressive pricing as well as adoption of new technologies may also affect
profitability. Shifts in the pattern of demand for the company's products may
strain the flexibility of its asset base and leave some assets underutilized,
while others may become over-loaded.
Further swings in currency exchange rates may lead to fluctuations in net sales
and profitability. Ahlstrom's main raw materials are wood pulp, synthetic
fibers, and chemicals. The prices of these key raw materials are volatile, and
any increases may affect the company's profitability depending on its ability to
mitigate the risk.
In some of the Group companies income tax returns are under examination in tax
audits or have been already disputed by the tax authorities. The main items
under discussion or already disputed relate to transfer pricing and
restructuring issues. Based on an evaluation of the current state of these
processes, no significant tax provisions have been booked, because it is not
possible to make a reliable estimate of the outcome of the processes.
The general risks facing Ahlstrom's business operations are described in greater
detail on the company website at www.ahlstrom.com and in the report by the Board
of Directors in the company's Annual Report for 2015. The risk management
process is also described in the Corporate Governance Statement, also available
on the company's website.
This report contains certain forward-looking statements that reflect the present
views of the company's management. The statements contain uncertainties and
risks and are thus subject to changes in the general economic situation and in
the company's business.
Disclosure procedure
Ahlstrom publishes its half-year report January-June 2016 enclosed to this stock
exchange release. The report is attached to this release in pdf format and is
also available on the company's web site at www.ahlstrom.com.
Additional information
Marco Levi, President & CEO, tel. +358 (0)10 888 4700
Sakari Ahdekivi, CFO, tel. +358 (0)10 888 4768
Juho Erkheikki, Financial Communications & Investor Relations Manager, tel.
+358 (0)10 888 4731
Ahlstrom's President & CEO Marco Levi and CFO Sakari Ahdekivi will present the
report at an analyst and press conference in Helsinki on Wednesday, August 3 at
11:00 a.m. Finnish time. The event will take place at Ahlstrom's head office,
Alvar Aallon katu 3 C, second floor, meeting room Antti.
The combined webcast and teleconference will be held in English and can be
viewed at the following address:
http://qsb.webcast.fi/a/ahlstrom/ahlstrom_2016_0803_q2
Conference call details:
In Finland +358 (0)9 2310 1618
In Sweden +46 (0)8 5065 3935
In the U.K. +44 (0)20 3427 1922
To participate via telephone, please dial in a few minutes before the conference
begins. A list of phone numbers for other countries is available at
www.ahlstrom.com/Investors. The confirmation code is 6434508.
An on-demand webcast of the conference will be available on Ahlstrom's website
for twelve months after the call.
The presentation material will be available at
www.ahlstrom.com/en/Investors/Reports-and-presentations/2016/ after the report
has been published
Financial information in 2016
+---------------------------------+-------------------+------------------------+
|Report |Date of publication|Silent period |
+---------------------------------+-------------------+------------------------+
|Interim report January-September | | |
|2016 |Friday, October 28 |September 29- October 27|
+---------------------------------+-------------------+------------------------+
During the silent period, Ahlstrom will not communicate with capital market
representatives.
Ahlstrom in brief
Ahlstrom provides innovative fiber-based materials with a function in everyday
life. We are committed to growing and creating stakeholder value by proving the
best performing sustainable fiber-based materials. Our products are used in
everyday applications such as filters, medical fabrics, life science and
diagnostics, wallcoverings, tapes, and food and beverage packaging. In 2015,
Ahlstrom's net sales amounted to EUR 1.1 billion. Our 3,300 employees serve
customers in 22 countries. Ahlstrom's share is quoted on the Nasdaq Helsinki.
More information is available at www.ahlstrom.com.
[HUG#2032769]
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