Ahlstrom-Munksjö Oyj - Interim report (Q1 and Q3)

Munksjö's interim report for January-March 2017: Continued profitability improvement building strong platform for Ahlstrom-Munksjö

AHLSTROM-MUNKSJÖ OYJ, INTERIM REPORT April 26, 2017 at 07:30 a.m. CEST

This January-March 2017 interim report represents the stand-alone results for
Munksjö Oyj. A separate final accounts report for Ahlstrom Corporation’s January
-March 2017 results is available on www.ahlstrom-munksjo.com. Any forward
-looking statements relate to Ahlstrom-Munksjö as a combined company.

Continued profitability improvement building strong platform for Ahlstrom
-Munksjö

Highlights of the first quarter 2017


  · Net sales increased by 2% to EUR 294.3 (288.0) million.
  · Adjusted EBITDA was EUR 37.3 (31.0) million and the adjusted EBITDA margin
was 12.7% (10.8%). Items affecting comparability (IAC) amounted to EUR -7.2
(0.0) million, mainly related to the costs associated with the combination with
Ahlstrom.
  · Operating result was EUR 17.4 (16.3) million and net result EUR 9.9 (6.3)
million.
  · Earnings per share (EPS) were EUR 0.20 (0.12).
  · Operating cash flow was EUR 16.5 (3.6) million.
  · On 11 January 2017, the Extraordinary General Meeting (EGM) of Munksjö
resolved to approve the combination of Munksjö and Ahlstrom. After approval of
the merger by the European Commission on 13 March 2017, the Boards of Directors
of Munksjö and Ahlstrom, respectively, on 31 March 2017 resolved to complete the
merger.
  · On 16 March 2017, the Board of Directors of Munksjö resolved on an extra
payment of funds from the reserve for invested unrestricted equity as return of
equity of EUR 0.45 per share, based on the authorisation granted by the EGM on
11 January 2017. The payment date was 27 March 2017.

Events after the reporting period

  · On 1 April 2017, the merger between Munksjö and Ahlstrom was registered by
the Finnish Trade Register and trading in the merger consideration shares
commenced on 3 April 2017.
  · On 6 April 2017, the Board of Directors of Ahlstrom-Munksjö resolved on a
new dividend policy, with the aim to distribute a stable, over time increasing
dividend, to be paid biannually. The Board of Directors proposes to the Annual
General Meeting on 16 May 2017 that it resolves on the payment of funds from the
reserve for invested unrestricted equity as return of equity of EUR 0.23 per
share, which would be paid in September 2017.
  · On 6 April 2017, the Board of Directors of Ahlstrom-Munksjö confirmed the
payout of the long-term share-based incentive programs 2014-2016 and 2016-2018
for the members of the management team and other key personnel of Munksjö.

KEY FIGURES (MEUR)                           Jan-Mar             Jan-Dec
                                 2017   2016          Change, %  2016

Net   sales                      294.3  288.0         2%         1,142.9
EBITDA   (adj.*)                 37.3   31.0          20%        136.7
EBITDA   margin, % (adj.*)       12.7   10.8                     12.0
EBITDA                           30.1   31.0          -3%        130.1
EBITDA   margin, %               10.2   10.8                     11.4
Operating   result (adj.*)       24.6   16.3          51%        81.5
Operating   margin, % (adj.*)    8.4    5.7                      7.1
Operating   result               17.4   16.3          7%         74.9
Operating   margin, %            5.9    5.7                      6.6
Net   result                     9.9    6.3           57%        43.3
Earnings   per share (EPS), EUR  0.20   0.12          62%        0.85
Interest-bearing   net debt      184.7  234.4         -21%       169.5

* Adjusted for items affecting comparability
(IAC)

Unless otherwise indicated, the figures in parentheses refer to the figures for
the equivalent period in 2016. This financial report is unaudited.

Comment from Jan Åström, President and CEO

“The first quarter of 2017 showed continued strength in terms of volumes and
sales growth as well as profitability of Munksjö on a stand-alone basis. I am
also pleased that Ahlstrom’s sales and result development in first quarter was
very strong, giving a solid foundation for the future as one company, Ahlstrom
-Munksjö.

We have now started the integration work and we confirm the earlier announced
plan to reach EUR 35 million in synergies. We are also working right now on
identifying further business synergies, such as the integration of the former
business area Graphics and Packaging into the new business area Specialities, to
develop a combined product and service offering.

Through the combination a strong and well established platform will be created
with multiple growth opportunities. I am honoured to lead our combined team of
talented employees and look forward to our future as Ahlstrom-Munksjö.”

Outlook

The outlook for the financial year 2017 is given for the combined Ahlstrom
-Munksjö operations.

Market outlook: The demand outlook for 2017 for Ahlstrom-Munksjö’s fibre-based
products is expected to remain stable at the current good level for most of the
product segments and to reflect the seasonal pattern. Price increases are
implemented as customer contracts expire to mitigate for raw material price
increases in certain segments, particularly in the Decor and Release Paper
Europe businesses. The price increases will take effect towards the end of the
second quarter.

Shutdowns: The annual maintenance and vacation shutdowns in the second and third
quarter as well as the seasonal shutdowns at the end of 2017 are expected to be
carried out to about the same extent as in 2016. However the maintenance
shutdown usually carried out in the third quarter in the Swedish plant
Billingsfors, will be replaced by shorter stops in the second and fourth
quarter, due to changes in the shift form. The next maintenance shut down at the
pulp production facility in Aspa in Sweden will be carried out in the fourth
quarter of 2017.

Capital expenditure: The cash flow effect of current capital expenditure for
fixed assets in 2017 is expected to be approximately EUR 70 million. In
addition, the cash flow impact of the strategic investments in the Arches mill
and in Madisonville is expected to be approximately EUR 10 million and EUR 8
million respectively.

As from the release of the combined pro forma figures in May 2017, Ahlstrom
-Munksjö will start providing EBITDA development guidance as well as comments on
future synergy realizations.

Ahlstrom and Munksjö complete the merger

On 1 April 2017, Ahlstrom Corporation was merged into Munksjö Oyj and the name
of the combined company was changed to Ahlstrom-Munksjö Oyj. The combination
created a global leader in sustainable and innovative fiber-based solutions with
combined annual net sales of approximately EUR 2.15 billion for the full year
2016 and EUR 567 million for Q1 2017, about 6,200 employees and 41 production
and converting facilities in 14 countries. The transaction is expected to create
significant value for the stakeholders through stronger global growth
opportunities and improved operational efficiency. Ahlstrom-Munksjö’s growth
ambitions are supported by a strong balance sheet and strong cash flow
generation.

Approvals from the Extraordinary General Meetings of Ahlstrom and Munksjö as
well as the European Commission were received on 11 January 2017 and 13 March
2017, respectively. In connection with the merger, Ahlstrom and Munksjö
distributed funds in the total amount of approximately EUR 46 million,
corresponding to EUR 0.49 per share in Ahlstrom and EUR 0.45 per share in
Munksjö, in lieu of the companies’ ordinary annual distribution.

Munksjö Oyj and Ahlstrom Corporation were listed companies prior to the merger
and hence preparations for the combined opening balance sheet have been
initiated only after the completion. Combined pro forma figures will be made
available on or about 15 May 2017.

More information of the combined company, such as composition of the management
team can be found in the merger prospectus, published on 16 December 2016.

Financial targets for Ahlstrom-Munksjö

Financial targets for the combined company are:

  ·  an EBITDA margin above 14 per cent over a business cycle,
  ·  net gearing below 100 per cent,
  ·  a stable and annually increasing dividend, to be paid biannually.

The Munksjö Group

                                            Jan-Mar             Jan-Dec
MEUR                             2017   2016         Change, %  2016

Net   sales                      294.3  288.0        2%         1,142.9
EBITDA   (adj.*)                 37.3   31.0         20%        136.7
EBITDA   margin, % (adj.*)       12.7   10.8                    12.0
EBITDA                           30.1   31.0         -3%        130.1
EBITDA   margin, %               10.2   10.8                    11.4
Operating   result (adj.*)       24.6   16.3         51%        81.5
Operating   margin, % (adj.*)    8.4    5.7                     7.1
Operating   result               17.4   16.3         7%         74.9
Operating   margin, %            5.9    5.7                     6.6
Net   result                     9.9    6.3          57%        43.3
Capital   expenditure            11.1   9.9          12%        39.2
Employees,   FTE                 2,751  2,732        1%         2,755

* Adjusted for items affecting comparability (IAC)

First quarter 2017

  · Total group delivery volumes increased. The positive volume development was
particularly strong in Business Area Industrial Applications and Decor as well
as in the European release paper business, but was partly offset by lower
volumes in Business Area Graphics and Packaging and the specialty pulp business.
The seasonal shutdowns in the first quarter were on the same level as a year
ago.
  · Adjusted EBITDA increased to EUR 37.3 (31.0) million and the adjusted EBITDA
margin was 12.7% (10.8%). The positive result effect was driven by lower
variable costs and higher production.
  · IAC amounted to EUR -7.2 (0.0) million, whereof EUR 4.1 million were
transaction costs related to the merger with Ahlstrom, EUR 1.2 million related
to integration costs, and EUR 0.3 million to restructuring expenses.
Furthermore, approximately EUR 1.6 million were related to the terminated long
-term share-value-based incentive program.
  · The operating result was EUR 17.4 (16.3) million and net result EUR 9.9
(6.3) million.
  · In the reporting period the currency hedging result impacting operating
profit amounted to EUR -0.3 (-0.1) million. Exchange loss on financial assets
and liabilities were EUR 0.8 (2.6) million and are reported in financial items.

Webcast and conference call

A combined news conference, call and live webcast will be arranged on the
publishing day 26 April 2017 at 10:00 a.m. CEST (11:00 a.m. EEST, 8:00 a.m. GMT)
at restaurant Savoy (Eteläesplanadi 14, 7th floor, Helsinki). The January-March
2017 interim report of Munksjö Oyj as well as the Final Accounts Release of
Ahlstrom Corporation will be commented on by President and CEO Jan Åström,
Deputy CEO Sakari Ahdekivi and CFO Pia Aaltonen-Forsell. The event will be held
in English.

Webcast and conference call information

The combined webcast and teleconference can be viewed at:

http://qsb.webcast.fi/m/munksjo/munksjo_2017_0426_q1/

Finnish callers: +358 (0)9 7479 0404

Swedish callers: +46 (0)8 5065 3942

US callers: +1 719 325 2346

UK callers: +44 (0) 330 336 9412

Conference ID: 4282354

To join the conference call, participants are requested to dial one of the
numbers above 5-10 minutes prior to the start of the event. An on-demand version
of the conference call will be available on Ahlstrom-Munksjö’s website later the
same day.

Future financial reports

The complete IR calendar is available on www.ahlstrom-munksjo.com/investors.
Ahlstrom-Munksjö’s interim report for January-June 2017 will be published on
Tuesday 25 July 2017.

The financial reports are published in English, Finnish and Swedish and are
available at www.ahlstrom-munksjo.com after the publication. Ahlstrom-Munksjö
observes a 30 day silent period preceding the announcement of financial results.

For further information, please contact:
Jan Åström, President and CEO, tel. +46 10 250 10 01

Pia Aaltonen-Forsell, CFO, tel. +46 10 250 10 29
Ahlstrom-Munksjö in brief
Ahlstrom-Munksjö is a global leader in fiber-based materials, supplying
innovative and sustainable solutions to customers worldwide. Our offerings
include decor paper, filter media, release liners, abrasive backings, nonwovens,
electrotechnical paper, glass fiber materials, food packaging and labeling,
tape, medical fiber materials and solutions for diagnostics. Combined annual net
sales are about EUR 2.15 billion and we employ 6,200 people. The Ahlstrom
-Munksjö share is listed on the Nasdaq Helsinki and Stockholm. The company was
formed on April 1, 2017 through the merger of Ahlstrom Corporation and Munksjö
Oyj. Read more at www.ahlstrom-munksjo.com.

Priedai:

04252799.pdf