2008-04-25 07:30:00 CEST
2008-04-25 07:31:46 CEST
REGULATED INFORMATION
Ahlstrom - Quarterly report
Interim report January-March 2008: Solid net sales growth during the first quarter
Ahlstrom Corporation STOCK EXCHANGE RELEASE 25.4.2008
Key highlights in January-March:
* Sales grew by 11.9%, amounting to EUR 466.2 million (EUR
416.5 million) as a result of recent growth investments. Excluding
the currency impact, net sales grew by 17.1%.
* Operating profit excluding non-recurring items decreased
to EUR 18.4 million (EUR 19.6 million). This was due to a further
delay in the ramp-up of the La Gère release base paper investment
burdening operating profit by EUR 3.6 million, as well as the
continued rise of raw material prices.
* Cash flow from operating activities grew significantly to
EUR 40.7 million (EUR -12.0 million) primarily as a result of
increased cash flow from working capital.
Outlook:
* As a result of implemented growth investments and
restructuring actions, Ahlstrom is well positioned to grow and
clearly improve its operating financial performance in 2008.
+-------------------------------------------------------------------+
| Key figures, EUR million | Q1/2008 | Q1/2007 | 2007 |
|-------------------------------------+---------+---------+---------|
| Net sales | 466.2 | 416.5 | 1,760.8 |
|-------------------------------------+---------+---------+---------|
| Operating profit | 19.3 | 23.3 | 25.8 |
| * excluding non-recurring items | 18.4 | 19.6 | 67.8 |
|-------------------------------------+---------+---------+---------|
| Profit before taxes | 11.2 | 20.3 | 0.2 |
| * excluding non-recurring items | 10.4 | 16.5 | 42.1 |
|-------------------------------------+---------+---------+---------|
| Return on capital employed (ROCE),% | 6.4 | 10.0 | 2.5 |
| * excluding non-recurring items | 6.2 | 8.4 | 6.3 |
|-------------------------------------+---------+---------+---------|
| Earnings per share, EUR | 0.15 | 0.29 | 0.01 |
| *excluding non-recurring items | 0.14 | 0.24 | 0.62 |
|-------------------------------------+---------+---------+---------|
| Cash earnings per share, EUR | 0.87 | -0.26 | 0.94 |
|-------------------------------------+---------+---------+---------|
| Gearing ratio, % | 64.4 | 24.3 | 65.3 |
+-------------------------------------------------------------------+
Risto Anttonen, CEO, comments on Ahlstrom's first quarter:
- Volumes and overall demand for most of Ahlstrom's products
continued to be good during the first quarter, with net sales growth
on track. Net sales grew especially strongly in the Fiber Composites
segment and in South America as a result of recent growth
investments. During the quarter, we made another new investment for
future growth by acquiring a vegetable parchment company in the USA,
and one of the highlights of the quarter was also the start-up of our
new glass nonwovens plant in Tver, Russia.
- Operating environment continued to be challenging during the first
quarter of 2008, with main raw materials and energy prices rising
further. At the same time, the predictability of the market became
increasingly short-term oriented.
- Regarding profitability, we were able to improve operating profit
excluding non-recurring items from the fourth quarter of 2007 as a
result of the restructuring actions taken, but were still below the
level of the first quarter of 2007. This was primarily caused by the
further delay in the ramp-up of the release base paper investment in
our La Gère plant in France.
- As stated earlier, Ahlstrom is well positioned to clearly improve
its financial performance in 2008, as the full effect of the
restructuring actions start to show more clearly during the second
half of this year. All in all, we expect 2008 to be more stable than
2007 for several reasons. We will focus on leveraging on the growth
and restructuring actions taken last year. Also, the Release & Label
Papers business area is already improving its performance month by
month, and finally, we do not expect the raw material prices to
escalate at the same pace as in 2007.
OPERATING ENVIRONMENT
The demand for most of Ahlstrom's products continued to be good in
the main markets. Towards the end of the review period, however, the
predictability of the market became increasingly short-term oriented.
In the Fiber Composites segment, the overall demand for the products
of the Nonwovens business area continued to be on a good level, with
a slight slowdown of demand in wiping fabrics towards the end of the
quarter. The growth of wallcover materials continued strong. In the
Filtration business area, 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 good level
in all geographical regions and all products, especially the windmill
market in the USA.
In the Specialty Papers segment, the demand in the Technical Papers
business area grew from previous year. The demand was particularly
strong in vegetable parchment and industrial papers. For the products
of the Release & Label Papers business area, demand was two-folded:
South American market grew strongly, but on the other hand, the
current overcapacity of release base paper resulted in lower demand
for Ahlstrom's products.
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 18.2% higher than
in the first quarter of 2007 and 5.4% higher than in the last quarter
of 2007. The market price for NBSK pulp (Northern Bleached Softwood
Kraft pulp) was on average approximately 17.0% higher than in the
first quarter of 2007 and 4.1% higher than in the last quarter of
2007. Also the USD prices for rayon and polyester, Ahlstrom's most
important synthetic raw materials increased significantly. The price
of rayon rose by 28% and the price for polyester by 8% from the first
quarter of 2007.
Energy prices increased in the quarter due to rising oil prices.
Ahlstrom's main energy sources are natural gas and electricity.
FINANCIAL PERFORMANCE IN JANUARY-MARCH 2008
Ahlstrom's business is reported in two segments: the Fiber Composites
segment and the Specialty Papers segment. The Fiber Composites
segment comprises the Nonwovens, Filtration and Glass Nonwovens
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
The Group's net sales grew by 11.9% amounting to EUR 466.2 million
(EUR 416.5 million) compared with the same period last year. Recent
acquisitions increased the net sales by 17.6% in the first quarter.
On the other hand, the impact of the closed units decreased the net
sales by 7.0%. Exchange rate fluctuations, mainly the weakening of
the USD, decreased the net sales approximately by 5.2% from the first
quarter of 2007. Excluding the currency effect, the net sales grew by
17.1%. Comparable net sales adjusted for the currency effect,
acquisitions and closures grew by 6.5% from the same period last
year.
The most important factors contributing to the organic growth were
the overall good demand of the Glass Nonwovens business area as well
as the additional sales from the new wiping fabrics production line
in Green Bay, USA.
Sales volumes developed favourably, growing organically by 4.8% from
the first quarter of 2007, reflecting the overall good demand in most
of Ahlstrom's product lines.
Net sales by segment and geographical area
Of the Group net sales, the Fiber Composites segment accounted for
54% and the Specialty Papers segment 46%.
The net sales of the Fiber Composites segment grew to EUR 252.0
million (EUR 206.4 million), up 22.1% from the previous year.
Excluding the currency effect, net sales grew by 30.7%. Sales volumes
grew by 33.5% during the review period. In the Nonwovens business
area, net sales growth was mainly attributable to the acquisitions
and organic investments completed in 2007. Net sales of the
Filtration business area decreased slightly due to the weakening of
the USD against the euro. In the Glass Nonwovens business area, net
sales grew as a result of recent investments in the USA.
The Specialty Papers segment reported net sales of EUR 217.0 million
for the first quarter (EUR 211.4 million), up 2.7% from the first
quarter of 2007. In terms of sales volumes, the growth amounted to
3.0%. The Technical Papers business area increased its net sales by
7.5%, whereas the Release & Label Papers business area posted lower
net sales due to decreased demand caused by the current overcapacity
of release base papers.
In terms of geographical areas, net sales grew strongly, especially
in South America as a result of the Ahlstrom-VCP joint venture. In
the Asia-Pacific region, net sales decreased due to reduced exports
from Ahlstrom's European plants to Asia. However, volumes from
Ahlstrom's Asian mills increased by 15%.
+-------------------------------------------------------------------+
| Net sales by segment | | | | |
| and business area | Q1/2008 | Q1/2007 | Change, % | 2007 |
|---------------------------+---------+---------+-----------+-------|
| Fiber Composites | 252.0 | 206.4 | 22.1 | 941.4 |
|---------------------------+---------+---------+-----------+-------|
| Nonwovens | 137.0 | 97.4 | 40.8 | 491.6 |
|---------------------------+---------+---------+-----------+-------|
| Filtration | 79.9 | 82.6 | -3.3 | 332.6 |
|---------------------------+---------+---------+-----------+-------|
| Glass Nonwovens | 35.6 | 27.9 | 27.9 | 122.0 |
|---------------------------+---------+---------+-----------+-------|
| Specialty Papers | 217.0 | 211.4 | 2.7 | 824.7 |
|---------------------------+---------+---------+-----------+-------|
| Technical Papers | 135.9 | 126.4 | 7.5 | 485.6 |
|---------------------------+---------+---------+-----------+-------|
| Release & Label | | | | |
| Papers | 81.1 | 85.3 | -4.9 | 340.4 |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| Net sales by | | | | |
| geographical area | Q1/2008 | Q1/2007 | Change, % | 2007 |
|-------------------------+---------+---------+-----------+---------|
| Europe | 284.7 | 267.9 | 6.3 | 1,086.5 |
|-------------------------+---------+---------+-----------+---------|
| North America | 102.6 | 89.5 | 14.7 | 399.3 |
|-------------------------+---------+---------+-----------+---------|
| South America | 42.5 | 15.5 | 173.6 | 104.0 |
|-------------------------+---------+---------+-----------+---------|
| Asia-Pacific | 27.8 | 34.1 | -18.5 | 130.3 |
|-------------------------+---------+---------+-----------+---------|
| Rest of the world | 8.7 | 9.4 | -7.9 | 40.6 |
+-------------------------------------------------------------------+
Financial result
The Group's operating profit amounted to EUR 19.3 million (EUR 23.3
million) for the first quarter of 2008. Excluding non-recurring items
of EUR 0.8 million related to sale of assets, the operating profit
was EUR 18.4 million (EUR 19.6 million).
The operating profit was mainly burdened by the weak performance of
the Release & Label Papers business area, which was due to the
further delay in the ramp-up of the release base paper investment in
La Gère plant in France, as well as the current excess capacity in
the release base paper market. The La Gère loss amounted to EUR 3.6
million during the first quarter. In addition, Group operating profit
was burdened by escalating raw material and energy costs, which
Ahlstrom was not fully able to offset by its on-going price increases
in all business areas.
Ahlstrom's share of the profits of the associated companies was EUR
0.5 million (losses of EUR 0.1 million).
Profit before taxes decreased to EUR 11.2 million (EUR 20.3 million)
and excluding non-recurring items, to EUR 10.4 million (EUR 16.5
million) due to the higher financing costs related with recent growth
investments.
Income tax expenses amounted to EUR 3.4 million (EUR 6.9 million).
Profit for the period decreased to EUR 7.8 million (EUR 13.4 million)
and earnings per share (EPS) to EUR 0.15 (EUR 0.29).
Return on capital employed (ROCE) amounted to 6.4% (10.0%), and
excluding non-recurring items, to 6.2% (8.4%). Return on equity (ROE)
was 4.2% (7.1%). Net asset turnover was 1.5 (1.8).
Financial result by segment
For the first quarter of 2008, the Fiber Composites segment increased
its operating profit to EUR 15.0 million (EUR 13.4 million) excluding
non-recurring items. The improvement in operating profit was partly
slowed down by pricing pressures in the Nonwovens business area.
The Specialty Papers segment's operating profit decreased to EUR 5.2
million (EUR 8.6 million) excluding non-recurring items. The main
reasons for the decrease were the above stated delay of the La Gère
ramp-up and the overcapacity of the release base papers, which
reflected as lower profitability for Ahlstrom's release base paper
products.
+-------------------------------------------------------------------+
| Financial result by | | | | |
| segment | Q1/2008 | Q1/2007 | Change, % | 2007 |
|----------------------------+--------------------------------------|
| Fiber Composites segment | |
|----------------------------+--------------------------------------|
| Operating profit* | 15.0 | 13.4 | 12.2 | 60.6 |
|----------------------------+---------+---------+-----------+------|
| Operating profit*, % | 6.0 | 6.5 | n/a | 6.4 |
|----------------------------+---------+---------+-----------+------|
| Return on net assets* | | | | |
| (RONA), % | 7.8 | 8.5 | n/a | 8.7 |
|----------------------------+--------------------------------------|
| Specialty Papers segment | |
|----------------------------+--------------------------------------|
| Operating profit* | 5.2 | 8.6 | -40.3 | 13.9 |
|----------------------------+---------+---------+-----------+------|
| Operating profit*, % | 2.4 | 4.1 | n/a | 1.7 |
|----------------------------+---------+---------+-----------+------|
| Return on net assets* | | | | |
| (RONA), % | 4.5 | 10.7 | n/a | 3.6 |
+-------------------------------------------------------------------+
*Excluding non-recurring items
FINANCING IN JANUARY-MARCH 2008
Net cash flow from operating activities increased to EUR 40.7 million
(EUR -12.0 million), primarily as a result of increased cash flow
from working capital.
Interest-bearing net liabilities decreased by EUR 13.2 million to EUR
477.9 million (December 31, 2007: EUR 491.1 million). Gearing ratio
was 64.4% (December 31, 2007: 65.3%) and the equity ratio 43.8%
(December 31, 2007: 44.0%).
During the quarter, Ahlstrom finalized negotiations of two bilateral
medium-term and one long-term loan agreement for a total amount of
EUR 100 million.
CAPITAL EXPENDITURE IN JANUARY-MARCH 2008
Ahlstrom's strategy is to grow both organically and by acquisitions.
Ahlstrom's growth investments are targeted to expand business to fast
growing markets and 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-March 2008, Ahlstrom's capital expenditure amounted to EUR
31.9 million (EUR 29.1 million), including acquisitions of EUR 11.0
million (no acquisitions in January-March 2007).
In 2008, the organic investments are expected to be below EUR 100
million including the following, previously announced major
investments: food nonwovens 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
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.
Friend Group employs 162 people and has two sites in West Carrollton
serving mainly the food packaging market in the USA. West Carrollton
Group is a producer of vegetable parchment and has parchmentizing and
converting operations located in West Carrollton, Ohio, the USA. This
acquisition enables Ahlstrom to build a global platform for its
vegetable parchment business, develop new applications for the
product as well as improve its customer service worldwide.
Organic growth investment decisions
Ahlstrom made no new organic investment decisions during the first
quarter of 2008. Update on the status of previously announced major
organic investments is provided below.
Investment start-ups
The new glassfiber tissue production plant established in 2007 in
Tver, Russia, started production in March 2008, and will be ramping
up 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 spunmelt products used
e.g. in teabags.
In Paulinia, Brazil, Ahlstrom is building a nonwoven wiping fabrics
production line to start production during the second quarter of
2009. 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.
The establishment of the new medical nonwovens plant in Gujarat,
India is proceeding well, 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 businesses in
India. The facility will be located in the Mundra Special Economic
Zone (SEZ).
CHANGES IN MANAGEMENT
Change of CEO
Ahlstrom Corporation's President and CEO Jukka Moisio announced on
February 28, 2008 that after serving the company for 17 years, he
will resign from Ahlstrom's service in order to take on new
challenges outside the company. Ahlstrom agreed with Jukka Moisio
that he would be free to start at his new position as from April 1,
2008.
Ahlstrom's Board of Directors appointed B.Sc. (Econ.) Risto Anttonen
(born 1949), Senior Vice President, Commercial Operations, to act as
interim CEO as from February 28, 2008. Risto Anttonen joined Ahlstrom
in 1991 and has held several senior executive positions in the
company.
The Board of Directors has initiated the search for a new CEO.
Changes in Corporate Executive Team
As a result of the change of CEO, the responsibilities of its
Corporate Executive Team (CET) were reorganized as follows, effective
as from March 19, 2008.
Diego Borello took over the responsibility for Corporate Purchasing
in addition to his other duties as Senior Vice President, Innovation
and Technology.
The responsibility for Ahlstrom's sales network in Asia-Pacific was
assigned to Senior Vice President Laura Raitio, who thus has the
responsibility of Ahlstrom's sales network in its entirety. Laura
Raitio also took over the responsibility of Human Resources, and
continues as Senior Vice President, Marketing.
Gustav Adlercreutz, Senior Vice President, Administration, General
Counsel, took over Business Development on top of his other duties.
Tommi Björnman, Senior Vice President of the Glass Nonwovens Business
Area, took the responsibility of Ahlstrom's Performance Excellence
process in addition to his other tasks.
The other responsibilities of the CET members remain unchanged.
PERSONNEL
At the end of March 2008, Ahlstrom had 6,552 employees (5,653). The
average number of employees during January-March was 6,541 (5,665).
PRINCIPAL RISKS AND UNCERTAINTIES
The principal uncertainties that could 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-March 2008, a total of 2.7 million Ahlstrom shares
were traded for a total of EUR 46.7 million. The lowest trading price
during the review period was EUR 15.96 and the highest EUR 18.78. The
closing price on March 31, 2008 was EUR 18.40 and market
capitalization was EUR 858.7 million.
Equity per share of Ahlstrom Group was EUR 15.17 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 March 31, 2008 was 46,670,608.
SHARE-BASED INCENTIVE PLAN
Ahlstrom's Board of Directors has on February 1, 2008 approved a
share-based long-term incentive plan for the Corporate Executive Team
(CET) as part of the remuneration and commitment program for the CET.
The plan will last for five years, comprising three earning periods
of three calendar years (2008, 2009 and 2010). The plan offers a
possibility to receive Ahlstrom shares and cash (equaling the amount
of taxes of the total reward) as a reward, if the earnings per share
(EPS) targets set by the Board for each earning period are achieved.
If the targets of the plan are attained in full for all three earning
periods, the reward to be paid on the basis of the plan will in its
entirety correspond to a gross value of 500,000 shares as a maximum.
The Board recommends that the President & CEO owns shares in the
Company, corresponding in value to his annual net salary and that the
other CET members own shares in the Company, corresponding in value
to half of their annual net salary.
At the same time a cash-based long-term incentive plan for 2008-2010
was approved for other key employees of the Ahlstrom Group.
EVENTS AFTER THE REVIEW PERIOD
Annual General Meeting 2008
Ahlstrom Corporation's Annual General Meeting of Shareholders (AGM)
was held on April 2, 2008. The key decisions 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
Demand in Ahlstrom's main markets is expected to continue at a good
level in 2008. However, the uncertainty related with the market
development in the USA reduces short-term visibility. Initial signs
of eventual softness of demand have emerged, for example in nonwoven
wiping fabrics.
The recent acquisitions and the ongoing investment projects in
Brazil, Russia and China are expected to increase Ahlstrom's net
sales by 10% during the first half of 2008. If the USD remains at the
current weak level, the full-year net sales growth is anticipated to
be slightly below 10%.
Prices for Ahlstrom's main raw materials, especially pulp, are
expected to increase or stay at the current high level during 2008.
High oil prices are expected to keep energy and synthetic fiber costs
high. On the other hand, the slowdown of the Chinese textile industry
is anticipated to reduce the price of rayon. 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 of 2007, 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.
As a result of the implemented growth actions and recent
restructuring measures, Ahlstrom is well positioned to grow and
clearly improve its operating financial performance in 2008.
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, April 25, 2008
Ahlstrom Corporation
Board of Directors
ADDITIONAL INFORMATION ON APRIL 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,
April 25, 2008 at 10.00 Finnish time at the Helsinki Bourse Club,
address Fabianinkatu 14 A. 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 +44 (0) 20 7162 0025 a few minutes before the call. Use the
password: Ahlstrom. A replay number is available until May 2, 2008.
The number for the replay is + 44 (0) 20 7031 4064, access code:
792682.
The presentation material will be available at www.ahlstrom.com >
Investors > IR presentations on April 25, 2008 after the interim
report 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.
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
The above mentioned interpretation does not have an effect on the
consolidated financial statements.
Financial Statements are unaudited.
INCOME STATEMENT Q1 Q1 Q1-Q4
Eur million 2008 2007 2007
Net sales 466,2 416,5 1,760.8
Other operating income 3.1 11.3 20.4
Expenses -425.9 -384.9 -1,655.5
Depreciation, amortization
and impairment charges -24.1 -19.6 -99.8
Operating profit 19.3 23.3 25.8
Net financial expenses -8.6 -3.0 -25.6
Share of profit /
loss of associated companies 0.5 -0.1 -0.1
Profit before taxes 11.2 20.3 0.2
Income taxes -3.4 -6.9 1.2
Profit for the period 7.8 13.4 1.3
Attributable to
Equity holders of the parent 7.2 13.3 0.5
Minority interest 0.6 0.0 0.8
Basic earnings per share, EUR 0.15 0.29 0.01
Diluted earnings per share, EUR 0.15 0.29 0.01
BALANCE SHEET Mar 31, Mar 31, Dec 31,
Eur million 2008 2007 2007
ASSETS
Non-current assets
Property, plant and equipment 723.9 608.0 747.7
Goodwill 175.7 99.8 179.7
Other intangible assets 55.8 31.7 58.2
Investments in associated companies 13.0 12.7 12.4
Other investments 0.2 0.2 0.2
Other receivables 16.1 12.3 16.9
Deferred tax assets 31.1 27.6 29.7
Total non-current assets 1,015.9 792.3 1,044.8
Current assets
Inventories 248.8 216.1 246.3
Trade and other receivables 395.0 357.0 389.3
Income tax receivables 3.4 8.1 3.9
Other investments 0.0 0.0 5.8
Cash and cash equivalents 29.3 23.9 21.3
Total current assets 676.4 605.1 666.5
Total assets 1,692.3 1,397.4 1,711.4
EQUITY AND LIABILITIES
Equity attributable to
equity holders of the parent 708.1 739.5 716.4
Minority interest 33.8 0.8 36.0
Total equity 741.9 740.3 752.4
Non-current liabilities
Interest-bearing loans and borrowings 201.5 43.1 202.7
Employee benefit obligations 84.9 95.7 87.7
Provisions 4.6 5.0 4.6
Other liabilities 0.3 0.5 0.6
Deferred tax liabilities 26.7 27.4 27.6
Total non-current liabilities 318.1 171.8 323.2
Current liabilities
Interest-bearing loans and borrowings 305.7 161.0 315.5
Trade and other payables 285.2 294.8 273.1
Income tax liabilities 9.0 17.1 9.1
Provisions 32.4 12.5 38.1
Total current liabilities 632.4 485.3 635.8
Total liabilities 950.4 657.1 959.0
Total equity and liabilities 1,692.3 1,397.4 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
holders of the parent
Eur million 1) 2) 3) 4) 5) 6) 7) 8)
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 - - - - -3.2 - - -3.2
Gains and losses
from hedge of
net investments in
Foreign operations,
net of tax - - - - 1.5 - - 1.5
Other changes - - - - - 0.1 -0.0 0.1
Profit for the
period - - - - - 13.3 0.0 13.4
Total recognized
income and expense
for the period - - - -0.1 -1.7 13.5 0.0 11.7
Dividends paid - - - - - -46.6 - -46.6
Share options
exercised 1.4 - 7.3 - - - - 8.7
1.4 - 7.3 - - -46.6 - -37,9
Equity at
March 31, 2007 69.9 209.3 7.8 -0.0 -4.8 457.3 0.8 740.3
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 - - - -0.3 - - - -0.3
Translation
differences - - - - -18.5 - -2.1 -20.5
Gains and losses
from hedge of
net investments in
Foreign operations,
net of tax - - - - 3.9 - - 3.9
Purchases of
minority interest - - - - - -0.7 -0.7 -1.4
Other changes - - - - - -0.0 - -0.0
Profit for the
period - - - - - 7.2 0.6 7.8
Total recognized
income and expense
for the period - - - -0.3 -14.6 6.5 -2.2 -10.5
Dividends paid
and other - - - - - -0.0 - -0.0
Equity at
March 31, 2008 70.0 209.3 8.3 -0.3 -30.1 450.9 33.8 741.9
STATEMENT OF CASH FLOWS Q1 Q1 Q1-Q4
Eur million 2008 2007 2007
Cash flow from operating activities
Profit for the period 7.8 13.4 1.3
Adjustments, total 34.5 19.7 102.4
Changes in net working capital -0.2 -27.2 *) -35.6 *)
Change in provisions and pension liability -8.4 -14.0 *) 10.4 *)
Financial items 12.5 -1.0 -15.1
Taxes paid -5.5 -3.0 -19.7
Net cash from operating activities 40.7 -12.0 43.9
Cash flow from investing activities
Acquisition of Group companies -11.0 - -217.2
Purchases of property, plant & equipment -24.4 -32.8 -153.9
Other investing activities 9.2 14.5 13.1
Net cash from investing activities -26.2 -18.3 -358.1
Cash flow from financing activities
Share issue - 8.7 9.2
Dividends paid - - -46.8
Other financing activities -5.9 25.4 353.1
Net cash from financing activities -5.9 34.1 315.6
Net change in cash and cash equivalents 8.7 3.8 1.4
Cash and cash equivalents at beginning of
period 21.3 20.1 20.1
Foreign exchange adjustment -0.7 -0.0 -0.2
Cash and cash equivalents at end of period 29.3 23.9 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 Q1 Q1 Q1-Q4
2008 2007 2007
Operating profit, % 4.1 5.6 1.5
Operating profit (excluding non-recurring
items), % 4.0 4.7 3.8
Return on capital employed (ROCE), % 6.4 10.0 2.5
ROCE (excluding non-recurring items), % 6.2 8.4 6.3
Return on equity (ROE), % 4.2 7.1 0.2
Interest-bearing net liabilities, EUR million 477.9 180.1 491.1
Equity ratio, % 43.8 53.0 44.0
Gearing ratio, % 64.4 24.3 65.3
Earnings per share, EUR 0.15 0.29 0.01
Earnings per share, diluted, EUR 0.15 0.29 0.01
Equity per share, EUR 15.17 15.88 15.35
Cash earnings per share, EUR 0.87 -0.26 0.94
Average number of shares during the period,
1000's 46,671 45,918 46,476
Number of shares at the end of the period,
1000's 46,671 46,608 46,671
Capital expenditure, EUR million 20.9 29.1 154.7
Capital employed, at the end of the period,
EUR million 1,249.1 944.4 1,270.6
Number of employees, average 6,541 5,665 6,108
CHANGES OF PROPERTY, PLANT AND
EQUIPMENT Q1 Q1 Q1-Q4
Eur million 2008 2007 2007
Book value at Jan 1 747.7 601.7 601.7
Acquisitions through business combinations 3.4 - 116.8
Additions 20.3 28.7 150.3
Disposals -0.9 -0.1 -1.2
Depreciations and impairment charges -22.7 -18.5 -93.3
Translation adjustment and other changes -23.9 -3.8 -26.5
Book value at end of the period 723.9 608.0 747.7
TRANSACTIONS WITH RELATED PARTIES Q1 Q1 Q1-Q4
Eur million 2008 2007 2007
Transactions with associated companies
Sales and interest income 0.2 0.1 1.3
Purchases of goods and services -0.9 -2.1 -5.0
Trade and other receivables 0.2 0.1 0.1
Trade and other payables 0.3 0.1 0.5
Interest-bearing loans and borrowings - 2.9 0.1
Market prices have been used in transactions with associated
companies.
OPERATING LEASES Mar 31, Mar 31, Dec 31,
Eur million 2008 2007 2007
Current portion 5.1 5.7 5.3
Non-current portion 13.3 16.3 14.9
Total 18.4 22.0 20.3
CONTINGENT LIABILITIES Mar 31, Mar 31, Dec 31,
Eur million 2008 2007 2007
For own liabilities
Other loans
Amount of loans 0,9 1,3 0,9
Book value of pledges 1,1 1,5 1,0
For other own commitments
Guarantees 23,6 57,5 23,8
For commitments of associated companies
Guarantees 5,2 8,3 6,3
Capital expenditure commitments 23,6 48,0 32,4
Other contingent liabilities 4,3 5,2 4,7
Acquisitions in 2008
In February, Ahlstrom acquired the Friend Group Inc., which consist
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 the net profit 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
Q1 Q4 Q3 Q2 Q1
Eur million 2008 2007 2007 2007 2007
Net sales 466.2 462.5 444.9 436.9 416.5
Other operating income * 2.3 2.0 3.1 1.7 2.6
Expenses * -425.9 -429.0 -407.7 -396.5 -379.9
Depreciation, amortization,
impairment charges * -24.1 -24.5 -24.1 -21.0 -19.6
Non-recurring items 0.8 -45.7 -0.1 - 3.8
Operating profit / loss 19.3 -34.7 16.1 21.0 23.3
Net financial expenses -8.6 -8.6 -9.7 -4.3 -3.0
Share of profit (loss)
of associated companies 0.5 0.1 0.2 -0.3 -0.1
Profit / loss before taxes 11.2 -43.2 6.7 16.4 20.3
Income taxes -3.4 14.2 -1.6 -4.5 -6.9
Profit / loss for the period 7.8 -29.0 5.0 11.9 13.4
Attributable to
Equity holders of the parent 7.2 -29.6 4.9 11.9 13.3
Minority interest 0.6 0.6 0.1 0.0 0.0
Operating profit * 18.4 11.0 16.2 21.0 19.6
Operating profit, % * 4.0 2.4 3.6 4.8 4.7
* Excluding non-recurring items
QUARTERLY DATA BY SEGMENT
Q1 Q4 Q3 Q2 Q1
Eur million 2008 2007 2007 2007 2007
Net sales
Fiber Composites 252.0 249.7 249.8 235.5 206.4
Specialty Papers 217.0 214.4 196.3 202.7 211.4
Other operations and eliminations -2.8 -1.5 -1.2 -1.3 -1.3
Group total 466.2 462.5 444.9 436.9 416.5
Operating profit / loss
Fiber Composites 15.5 2.7 13.5 17.3 15.2
Specialty Papers 5.5 -33.6 2.7 5.4 13.0
Other operations and eliminations -1.7 -3.7 -0.1 -1.7 -4.9
Group total 19.3 -34.7 16.1 21.0 23.3
Operating profit / loss excluding
non-recurring items
Fiber Composites 15.0 15.7 14.1 17.3 13.4
Specialty Papers 5.2 -2.8 2.7 5.4 8.6
Other operations and eliminations -1.7 -1.9 -0.7 -1.7 -2.5
Total 18.4 11.0 16.2 21.0 19.6
Non-recurring items 0.8 -45.7 -0.1 - 3.8
Group total 19.3 -34.7 16.1 21.0 23.3
KEY FIGURES QUARTERLY
Q1 Q4 Q3 Q2 Q1
Eur million 2008 2007 2007 2007 2007
Net sales 466.2 462.5 444.9 436.9 416.5
Operating profit / loss 19.3 -34.7 16.1 21.0 23.3
Operating profit (excluding
non-recurring items) 18.4 11.0 16.2 21.0 19.6
Profit / loss before taxes 11.2 -43.2 6.7 16.4 20.3
Profit before taxes (excluding
non-recurring items) 10.4 2.5 6.7 16.4 16.5
Profit / loss for the period 7.8 -29.0 5.0 11.9 13.4
Gearing ratio, % 64.4 65.3 60.1 50.9 24.3
Return on capital
employed (ROCE), % 6.4 -10.7 5.5 8.0 10.0
ROCE (excluding
non-recurring items), % 6.2 3.6 5.5 8.0 8.4
Earnings per share, EUR 0.15 -0.64 0.10 0.26 0.29
Earnings per share (excluding
non-recurring items), EUR 0.14 0.02 0.11 0.25 0.24
Cash earnings per share, EUR 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 46,636 45,918
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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