2007-04-27 07:30:05 CEST
2007-04-27 07:30:05 CEST
REGULATED INFORMATION
Ahlstrom - Quarterly report
Ahlstrom's Interim report Q1/2007: Growth strategy implementation
Ahlstrom Corporation STOCK EXCHANGE RELEASE 27.4.2007
Ahlstrom's Interim report Q1/2007: Growth strategy implementation
well underway
Ahlstrom, a leader in high performance fiber-based materials,
reports an operating profit of EUR 23.3 million for the first
quarter of 2007 (EUR 29.6 million), representing a 5.6% margin
(7.1%). Profit before taxes was EUR 20.3 million (EUR 25.1
million). Return on capital employed (ROCE) was 10.0% (12.3%). Net
sales amounted to EUR 416.5 million (EUR 414.6 million) and
earnings per share (EPS) to EUR 0.29 (EUR 0.41).
Excluding non-recurring items, the operating profit for the first
quarter of 2007 was EUR 19.6 million (EUR 26.3 million),
representing a 4.7% margin (6.3%). Profit before taxes was EUR
16.5 million (EUR 21.8 million) and ROCE 8.4% (11.0%), both
excluding non-recurring items.
January-March 2007 in brief
- Net sales (adjusted for currency effect) grew by 3.4% from the
first quarter of 2006.
- Operating profit improved by 39% from the last quarter of 2006
due to increased sales volumes and lower fixed costs.
- Ahlstrom announced four acquisitions with combined annualized
net sales of approximately EUR 300 million.
- The defined benefit pension plan in the United Kingdom was
closed and the historical deficit was funded by EUR 21 million,
impacting Ahlstrom's cash flow.
Key figures
EUR million Q1/2007 Q1/2006 2006
Net sales 416.5 414.6 1,599.1
Operating profit 23.3 29.6 96.1
Operating profit excl. non-recurring 19.6 26.3 87.3
items
Profit before taxes 20.3 25.1 81.2
Profit before taxes excl. non-recurring 16.5 21.8 72.5
items
Profit for the period 13.4 15.8 57.6
Net cash flow from operating activities -12.0 26.0 119.2
Gearing ratio, % 24.3 30.0 20.3
Return on capital employed (ROCE),% 10.0 12.3 10.4
Return on capital employed (ROCE),% 8.4 11.0 9.5
excl. non-recurring items
Cash earnings per share, EUR -0.26 0.68 2.72
Earnings per share, EUR 0.29 0.41 1.31
Average number of shares 45,918 38,326 43,802
during the period, 1000s
Jukka Moisio, President & CEO, comments Ahlstrom's first quarter:
- The acquisitions in the FiberComposites segment will make us the
third largest nonwoven roll good supplier in the world and the
intended Brazilian joint venture in specialty papers provides
strategic access to raw materials and fast growing markets. The
next phase of the growth strategy is the integration of
acquisitions and starting up of the organic growth investments.
These growth actions will gradually start contributing to our
financial development in the coming quarters. I am satisfied with
the steps taken and the Ahlstrom team will have a full workload
ahead with exciting growth and business openings.
- We reported a 3% growth in comparable net sales versus Q1/2006
and a 10% return on capital employed for the first quarter. The
operating profit margin recovered from the low level we
experienced at the end of 2006. However, return on capital
employed remained below our long term target as increasing raw
material prices continued to put pressure on margins. We continued
our work to increase volumes and sales prices while fixed costs
declined.
Ahlstrom Group: Interim report January-March, 2007
Financial performance in the first quarter of 2007
The Group's net sales were affected by the weakened USD and
amounted to EUR 416.5 million (EUR 414.6 million). Adjusted for
the currency effect, Ahlstrom's net sales grew by 3.4%. Sales
volumes increased by 3.1% compared with the corresponding period
of 2006.
Operating profit for the first quarter amounted to EUR 23.3
million (EUR 29.6 million). The operating profit included non-
recurring items of EUR 3.8 million (EUR 3.3 million), which were
mainly related to the sale of three power plants in Italy.
Excluding the non-recurring items, the operating profit amounted
to EUR 19.6 million (EUR 26.3 million).
Prices for Ahlstrom's main raw materials continued to increase in
the first quarter of 2007. The average USD market price for NBSK
pulp was approximately 22% higher than in the first quarter of
2006 and 4% higher than in the last quarter of 2006. With sales
price increases, productivity improvements and fixed cost
reductions, Ahlstrom was able to partially compensate for the
effect of the rising raw material costs.
Total net financial expenses were EUR 3.0 million (EUR 4.5
million). Net interest expenses totaled EUR 2.4 million (EUR 2.2
million). Net foreign exchange gains on financial items were EUR
0.03 million (losses of EUR 1.7 million). The change was mainly
attributable to the actions to decrease the level of equity
hedging.
Ahlstrom's share of the losses of the associated companies (Jujo
Thermal) amounted to EUR 0.1 million (EUR 0.0 million).
Profit before taxes was EUR 20.3 million (EUR 25.1 million).
Excluding the non-recurring items, profit before taxes amounted to
EUR 16.5 million (EUR 21.8 million).
Income tax expenses were EUR 6.9 million (EUR 9.3 million). Profit
for the period was EUR 13.4 million (EUR 15.8 million).
Return on capital employed (ROCE) was 10.0% (12.3%) in the first
quarter. Excluding the non-recurring items, ROCE amounted to 8.4%
(11.0%). Return on equity (ROE) was 7.1% (9.5%). Earnings per
share (EPS) amounted to EUR 0.29 (EUR 0.41), the change being
primarily due to the issue of new shares in March, 2006.
Capital efficiency improved and net asset turnover was 1.8 (1.6).
Financing and financial position in the first quarter of 2007
Net cash flow from operating activities amounted to EUR -12.0
million (EUR 26.0 million). The decrease in cash flow was mainly
attributable to the 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. The rest of
the deficit will be funded over the remaining years of the pension
plan. At the same time, Ahlstrom closed the defined benefit plan
and moved to defined contribution plan for the UK pensions.
Interest-bearing net liabilities increased by EUR 24.9 million to
EUR 180.1 million (December 31, 2006: EUR 155.2 million).
Gearing ratio was 24.3% (December 31, 2006: 20.3%) and the equity
ratio 53.0% (December 31, 2006: 56.5%).
Ahlstrom cancelled EUR 230 million of committed credit facilities,
reducing the total availability under such facilities to EUR 343
million at 31 March, 2007 (December 31, 2006: EUR 579 million).
Capital expenditure in the first quarter of 2007
Capital expenditure amounted to EUR 29.1 million (EUR 28.0
million). No acquisitions were closed during the first quarter
(EUR 8.1 million).
The full-year capital expenditure for Ahlstrom Group, excluding
acquisitions, is expected to exceed the 2006 level by
approximately 10-20% (EUR 120.1 million).
Implementation of the growth strategy in the first quarter of 2007
Ahlstrom continued to implement its growth strategy by investing
in attractive growth segments.
Ahlstrom's investments are expected to generate net sales
amounting to 1.5 times the investment value in 3-5 years and reach
a return of capital employed of at least 13%.
Announced acquisitions and investment decisions
On March 30, Ahlstrom signed an agreement to acquire the consumer
wipes business of Fiberweb plc. Following the acquisition,
Ahlstrom estimates to become the third largest producer of
nonwoven roll goods globally. The acquisition price is
approximately EUR 65 million. The acquired business includes four
plants in Europe and in the USA. In 2006, the net sales of the
acquired business amounted to EUR 110 million and it employed
approximately 400 people. The wiping fabrics currently produced by
Fiberweb's consumer wipes business are used mainly in personal
care, baby care and household wipes applications. Ahlstrom
anticipates to close the deal within the second quarter of 2007,
subject to antitrust clearances.
On February 23, Ahlstrom signed a Memorandum of Understanding with
Votorantim Celulose e Papel (VCP) to form a joint venture for
specialty paper production in Brazil. The assets in the joint
venture, currently owned by VCP, comprise a paper machine, an
offline coater and extensive finishing equipment at the Jacarei
mill, close to São Paulo. The joint venture will be part of
Ahlstrom's Specialty Papers segment and serve mainly the labeling
and flexible packaging markets. In addition, it will continue to
produce coated and uncoated paper grades for other end-uses.
According to the Memorandum of Understanding, Ahlstrom will hold a
majority of the joint venture. Ahlstrom expects to close the deal
on or before June 30, 2007, subject to antitrust clearances and
satisfactory conclusion of the ongoing due diligence process.
On February 2, Ahlstrom signed an agreement to acquire Fabriano
Filter Media SpA, based in Sassoferrato, Italy. Fabriano is a
manufacturer of microglass filter media, serving mainly the high
efficiency air filtration market. The transaction price is
approximately EUR 7 million. The transaction complements
Ahlstrom's air filtration portfolio and reinforces the company's
position as a leading provider of filtration solutions to the
global air filtration industry. The transaction includes one
manufacturing plant employing 32 people with net sales of
approximately EUR 7 million. The acquired business will be closely
integrated with Ahlstrom's current Italian operations in Turin.
The transaction is expected to be closed during the second quarter
of 2007.
On February 2, Ahlstrom decided to invest EUR 5 million in a new
drylaid nonwoven line to serve the North American air filtration
market. The new line, located at Ahlstrom's Groesbeck, TX, USA
facility, will provide Ahlstrom with an additional fast and modern
asset to better serve the Heating, Ventilation and Air
Conditioning (HVAC) filter media market in North America. The new
line is expected to start at the beginning of 2008.
On February 1, Ahlstrom signed an agreement to acquire the
spunlace nonwovens business of the Italian Orlandi Group. With
this acquisition, Ahlstrom will become one of the leading
producers of nonwoven roll goods for wipes globally. The
acquisition price is approximately EUR 60 million and the
transaction is expected to be EPS enhancing from 2007. The
acquired business includes two plants in Cressa and Gallarate in
Italy employing approximately 120 people in total. The transaction
expands Ahlstrom's technology portfolio with airlace technology
which is used to manufacture pulp-containing wiping fabrics. In
connection with the acquisition, Ahlstrom invested approximately
EUR 2.5 million in the airlace line at the Cressa plant. After the
investment, the acquired business will generate net sales of
approximately EUR 65 million in 2007. The deal is anticipated to
be closed within the first half of 2007, subject to antitrust
clearances and satisfactory conclusion of the ongoing due
diligence.
Investment start-ups
Ahlstrom's new specialty glassfiber reinforcement plant in South
Carolina, USA was ramping up its production in the first quarter
of 2007. The investment was valued at approximately EUR 10
million. The new plant further strengthens Ahlstrom's position as
a leading global developer and manufacturer of specialty
reinforcements especially for the wind energy, marine and
transportation markets.
Ahlstrom's new spunlace line located at the Green Bay, WI, USA
plant was started up in the end of December, 2006. The line was
ramping up during the first quarter of 2007. The total value of
the investment was approximately EUR 30 million.
In addition, Ahlstrom repaired the existing glass furnace and
increased the production capacity of the chopped strand mat
machine at its Karhula, Finland plant. The investments were valued
at approximately EUR 6 million in total.
Divestments in the first quarter of 2007
In March, Ahlstrom agreed to sell three hydropower plants close to
its Turin, Italy plant to a local energy company for approximately
EUR 7 million. The deal is consistent with the company's strategy
to focus on high performance fiber-based materials and to divest
non-core assets and reduce related costs.
Personnel
At the end of March 2007, Ahlstrom had 5,653 employees (5,622).
The average number of employees during the first quarter was 5,665
(5,572).
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 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 2006, on pages 22-23.
Shares and share capital
During the first quarter of 2007, 4.6 million Ahlstrom shares were
traded for a total of EUR 101.3 million. The lowest trading price
during the first quarter was EUR 21.20 and the highest EUR 24.50.
Closing price on March 30, 2007 was EUR 24.09 and market
capitalization was EUR 1,121 million.
Equity per share of Ahlstrom Group was EUR 15.88 at the end of the
review period (December 31, 2006: EUR 16.79).
At the end of the review period, the number of options entitling
to subscription of Ahlstrom shares was 62,611.
In the first quarter, a total of 946,260 new shares of Ahlstrom
Corporation were subscribed with option rights under the company's
stock option programs I (2001) and II (2001). After the
corresponding increases in Ahlstrom's share capital, the share
capital at the end of the first quarter amounted to EUR
69,911,995.50. The total number of shares at the end of the first
quarter was 46,607,997. Together with the stock options, the
number of shares may increase to a maximum of 46,670,608.
Ahlstrom's option rights of stock option program I a, b and c
(2001) and stock option program II b and c (2001) have been listed
on the Helsinki Stock Exchange as of January 2, 2007. Each option
right gives its holder the right to subscribe for one share in
Ahlstrom Corporation. The current subscription price is EUR 8.22.
The share subscription period with option rights of stock option
program I a, b and c (2001) commenced on May 1, 2002 and ends on
April 30, 2007. The share subscription period with option rights
of stock option program II b and c (2001) started on January 1,
2007 and ends on April 30, 2007.
Ahlstrom's Board of Directors is authorized to repurchase a
maximum of 4,500,000 Ahlstrom shares, corresponding to less than
10% of all issued Company shares. The Board of Directors is also
authorized to resolve to distribute the shares held by the
company. The shares may be used as compensation in acquisitions
and in other arrangements as well as to implement the company's
share-based incentive plans. The Board of Directors has also the
right to decide on the distribution of the shares in public
trading for the purpose of financing possible acquisitions.
Annual General Meeting 2007
Ahlstrom Corporation's Annual General Meeting of Shareholders
(AGM) was held on March 30, 2007. The AGM resolved to distribute a
dividend of EUR 1.00 per share, EUR 46.67 million in total, for
the fiscal year that ended on December 31, 2006 in accordance with
the proposal of the Board of Directors. The dividend record date
was April 4, 2007 and the pay date April 13, 2007. In addition,
the AGM resolved to reserve EUR 70,000 to be used for the public
good at the discretion 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, 2006.
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 will
be valid for 18 months from the close of the Annual General
Meeting but will 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 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 compensation 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 will
be valid for 18 months from the close of the Annual General
Meeting but will expire at the close of the next Annual General
Meeting, at the latest.
The Annual General Meeting resolved to amend the Articles of
Association in accordance with the proposal by the Board of
Directors.
The AGM confirmed the number of Board members unchanged at seven.
Sebastian Bondestam, Jan Inborr, Urban Jansson, Bertel Paulig,
Peter Seligson and Willem F. Zetteler were re-elected as members
of the Board of Directors and Thomas Ahlström was elected as a new
member as proposed by the Nomination Committee. The term of the
Board of Directors will expire at the close of the next Annual
General Meeting.
It was decided that the Chairman of the Board of Directors will
receive a remuneration of EUR 5,400 per month. For the members of
the Board of Directors, the remuneration was decided to be EUR
2,700 per month. In addition, the remuneration for attendance at
the meetings of the permanent Board committees was decided to be
EUR 1,150 per meeting.
After the AGM, the organization meeting of the Board of Directors
elected Peter Seligson as Chairman and Urban Jansson 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 Committee are Peter
Seligson (Chairman), Jan Inborr and Urban Jansson.
KPMG Oy Ab was re-elected as Ahlstrom's auditor as proposed by the
Audit Committee. KPMG Oy Ab has designated Authorized Public
Accountant Sixten Nyman as auditor in charge.
Outlook
Demand in Europe is expected to remain good. Ahlstrom's main
markets, Germany, France, and Italy, are expected to show stable
or positive development. Ahlstrom's products are primarily used in
industrial processes which react to changes in consumer demand
with a slight delay. In the USA, which is Ahlstrom's single
largest market, the demand is anticipated to be stable. The
visibility of the demand in the USA remains low. Demand in South
America and Asia is expected to develop well due to the positive
GDP development.
The price for Ahlstrom's most important raw material, wood pulp,
continued to rise through the first quarter of 2007. Costs for
fibers and chemicals for the coming months are expected to remain
at the current high level or increase but at a lower rate than in
2006. Sales price increases and cost reductions are implemented to
offset the effect of the raw material cost escalation. Energy
costs started to decline during the first quarter and are expected
to decrease further.
Several global growth initiatives are now proceeding to
implementation phase and will start to generate additional sales
volumes and net sales in 2007. The outlook period is marked by
intensive work related to integration of acquisitions and
investment start-ups. The impact of this work will be seen
gradually already towards the end of the outlook period. The
largest organic growth investment is the capacity expansion of
release base papers at the La Gère, France plant during the second
quarter. In acquisitions, the largest project is the integration
of Fiberweb's consumer wipes business. The new acquisitions and
investments will have a positive impact on Ahlstrom's financial
development from the last quarter of 2007 and onwards.
We continue to see promising growth opportunities in the fiber-
based materials business and are optimistic about Ahlstrom's
development in 2007 and 2008.
Financial information in 2007
Ahlstrom Corporation will publish its financial information in
2007 as follows:
Interim report January - June Wednesday, July 25
Interim report January - September Friday, October 26
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 26, 2007
Ahlstrom Corporation
Board of Directors
For additional information, please contact:
Jukka Moisio, President and CEO, tel. +358 (0)10 888 4700
Jari Mäntylä, CFO, tel. +358 (0)10 888 4768
Anna Ahlberg, Investor Relations Manager, tel. +358 (0)10 888 4718
A conference call for analysts and investors regarding the first
quarter results will be held on Friday, April 27, 2007 at 13.00
Finnish time. To participate in the teleconference, please dial
+44 (0) 20 7162 0125 a few minutes before the call. Use the
password: Ahlstrom. A replay number is available until May 4,
2007. The number for the replay is + 44 (0) 20 7031 4064, access
code: 747430.
The presentation material will be available at www.ahlstrom.com >
Investors > IR presentations on April 27, 2007 after the interim
report has been published.
Ahlstrom's stock exchange and press releases can be ordered on
www.ahlstrom.com > Media. Releases are delivered by e-mail.
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:
Helsinki Stock Exchange
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, e.g. in filters, wipes, flooring, labels, and
tapes. The company has a strong market position in several
business areas in which it operates, built upon the company's
unique fiber expertise and innovative approach. Ahlstrom's 5,700
employees serve customers via sales offices and production
facilities in more than 20 countries on six continents. In 2006,
Ahlstrom's net sales amounted to EUR 1.6 billion. Ahlstrom's share
is listed on the Helsinki Stock Exchange. The company website is
www.ahlstrom.com.
Appendices
1. Segment reviews
2. Financial statements
Appendix 1
Segment reviews
FiberComposites segment
Key figures, EUR million Q1/2007 Q1/2006 Change, % 2006
Net sales 206.4 212.7 -3.0 808.2
Operating profit 15.2 15.9 -4.2 52.3
Operating profit excl. 13.4 15.9 -15.7 54.1
non-recurring items
Operating profit, % excl. 6.5 7.5 6.7
non-recurring items
Return on net assets 9.6 10.3 8.6
(RONA), %
Return on net asses 8.5 10.3 8.9
(RONA), %
excl. non-recurring items
Net sales of the FiberComposites segment decreased by 3.0% and
amounted to EUR 206.4 million (EUR 212.7 million). Sales volumes
fell by 2.2% due to investment standstills within the Glass
Nonwovens business area. Additionally, the weakening of the USD
decreased the segment's net sales.
Compared with the fourth quarter of 2006, the average sales prices
increased in all business areas of the FiberComposites segment.
Excluding non-recurring items, the operating profit of the segment
was EUR 13.4 million (EUR 15.9 million). The non-recurring items
of EUR 1.8 million were primarily related to asset sales. The
decline in the segment's profitability was mainly attributable to
the ramp up of the new glass reinforcement plant in Bishopville,
SC, USA and the new production line at the Green Bay, WI, USA
plant as well as to the investment standstills at the Karhula,
Finland plant.
Nonwovens business area (23% of the Group's net sales)
The Nonwovens business area serves customers in the food
packaging, medical, wiping, building and technical goods sectors.
General market conditions were stable during the first quarter of
2007. Volumes sold increased by 3%, driven particularly by solid
demand for certain wipes products as well as for industrial
nonwovens. However, the business area's net sales decreased by 1%
due to the weakening of the USD against the euro. Approximately
50% of the business area's sales is denominated in USD.
Prices for raw materials continued to put pressure on the business
area's margins. As an example, prices for rayon used in wipes
increased strongly during the first quarter and are expected to
rise further also in the second quarter. Energy costs declined
from the corresponding quarter in 2006, but were still at a high
level.
The business area started a new spunlace wipes line at the Green
Bay, WI, USA plant in December 2006 with the first deliveries to
customers made during the first quarter.
In the first quarter, Ahlstrom signed an agreement to acquire the
consumer wipes business of Fiberweb plc including four plants in
Europe and in the USA. Following the acquisition, Ahlstrom
estimates to become the third largest producer of nonwoven roll
goods globally. The acquisition price is approximately EUR 65
million. The net sales of the acquired business amounted to EUR
110 million in 2006 and it employed approximately 400 people.
In the first quarter, Ahlstrom signed an agreement to acquire the
spunlace nonwovens business of the Italian Orlandi Group. The
acquisition price is approximately EUR 60 million. The acquired
business includes two plants employing approximately 120 people
and it will generate net sales of approximately EUR 65 million in
2007.
Demand for Ahlstrom's nonwovens is expected to remain generally
stable in the coming months, with a slight strengthening
anticipated for wipes.
Filtration business area (20% of the Group's net sales)
Filtration media produced by Ahlstrom are used in the
transportation industry and in liquid and air filtration
applications.
The overall market for filtration material was steady during the
first quarter. The uncertain demand situation in Northern America
was largely offset by strong demand in the European, South
American and Asian markets. The North American market for air
filtration continued to be affected mainly by the weakness of the
housing markets. Sales volumes rose slightly compared with the
corresponding period last year while net sales decreased by 4% due
to the weakening of the USD versus EUR.
Costs for energy and raw materials, especially for methanol and
related products, increased significantly. Even though these costs
started to gradually decline, they were still at a higher level
than in the first quarter of 2006. Price increases have been
implemented across the board with an aim to compensate for the
increased costs, with the exception of the North American air
filtration market. In addition to the price increases, the
business area took several actions to improve its profitability,
including the transfer of the converting operations from Mt Holly
Springs, PA plant to Bishopville, SC, USA.
In the first quarter, Ahlstrom signed an agreement to acquire
Italian Fabriano Filter Media SpA, a manufacturer of microglass
filter media for approximately EUR 7 million. As Fabriano serves
mainly the high efficiency air filtration market, the transaction
complements Ahlstrom's air filtration portfolio and reinforces the
company's position in the global air filtration market. The
transaction includes one manufacturing plant employing 32 people
with net sales of approximately EUR 7 million.
Ahlstrom decided to invest EUR 5 million in a new drylaid nonwoven
line to serve the North American air filtration market. The new
line, located at Ahlstrom's Groesbeck, TX, USA facility, will
further enhance Ahlstrom's ability to better serve the Heating,
Ventilation and Air Conditioning (HVAC) filter media market in
North America. The new line is expected to start at the beginning
of 2008.
The outlook for the coming months is cautiously optimistic despite
the continued uncertainty in the North American air filtration
market.
Glass Nonwovens business area (6% of the Group's net sales)
Ahlstrom's glass nonwovens products are used in the building
materials, marine, transportation, windmill, and sporting goods
sectors.
Market conditions for Ahlstrom's glass nonwovens developed
favorably during the first quarter with a particularly strong
demand seen for building materials, windmill and marine
applications. However, sales volumes declined temporarily by 16%
and net sales by 3% due to the planned investment standstills
(glass furnace repair and speed up of the chopped strand mat
machine) at the Karhula, Finland plant. The sales in Eastern
Europe increased strongly, while in Central Europe sales declined
temporarily.
The new glass nonwovens plant built in Bishopville, SC, USA
started production during the first quarter. Additionally, the
above-mentioned investment projects at the Karhula plant were
initiated and completed successfully during the quarter.
High raw material and energy costs continued to put pressure on
the business area's margins. However, price increases as well as
favorable changes in the product mix partially offset the effect
of high input costs.
Demand for Ahlstrom's glass nonwovens is anticipated to remain
good in the coming months.
Specialty Papers segment
Key figures, EUR million Q1/2007 Q1/2006 Change, % 2006
Net sales 211.4 203.3 4.0 794.0
Operating profit 13.0 13.0 -0.1 32.2
Operating profit excl. 8.6 13.0 -33.8 36.4
non-recurring items
Operating profit, % excl. 4.1 6.4 4.6
non-recurring items
Return on net assets 16.1 17.1 10.5
(RONA), %
Return on net asses 10.7 17.1 11.8
(RONA), %
excl. non-recurring items
Net sales of the Specialty Papers segment grew by 4.0% and
amounted to EUR 211.4 million (EUR 203.3 million). Sales volumes
grew by 5.1%. The growth was driven by improved demand in the
Technical Papers business area.
Compared with the fourth quarter of 2006, the average sales prices
increased in the Technical Papers business area, but decreased
slightly in the Label and Packaging Papers business area.
Excluding non-recurring items, operating profit of the segment was
EUR 8.6 million (EUR 13.0 million). The non-recurring items of EUR
4.4 million were primarily related to asset sales. The decline in
the segment's operating profit was mainly due to increased raw
material costs.
Label & Packaging Papers business area (32% of the Group's net
sales)
The Label & Packaging Papers business area manufactures a number
of different specialty papers for use in the self-adhesive
industry, as well as in the labeling, packaging and graphic
industries.
The demand for release base papers remained good in the first
quarter despite the temporary excess supply in the market. In wet
glue labels, demand was solid throughout the quarter as the peak
season of the beverage label industry started. Demand for
metalizing labels also improved towards the end of the quarter for
the same reason. In flexible packaging, the market situation
remained challenging.
Volumes sold increased by 3% compared with the first quarter of
2006 due to improved demand. Additionally, the business area's
major production line at the Turin, Italy plant was stopped in
January 2006 due to an investment for capacity expansion, thus
decreasing the volumes of the review period in comparison. Net
sales grew in the first quarter by 2% from the corresponding
period in 2006. In the release base paper market, sales prices
were under pressure.
Price for wood pulp, the business area's main raw material,
continued to increase and was at a remarkably higher level than in
the corresponding period of 2006. Also the energy costs increased
from the first quarter 2006 despite the slight decline experienced
at the end of the quarter.
In the first quarter, Ahlstrom signed a Memorandum of
Understanding with Votorantim Celulose e Papel (VCP) to form a
joint venture for specialty paper production in Brazil. The joint
venture will serve mainly the labeling and flexible packaging
markets. According to the Memorandum of Understanding, Ahlstrom
will hold a majority of the joint venture. Ahlstrom expects to
close the deal on or before June 30, 2007, subject to antitrust
clearances and satisfactory conclusion of the ongoing due
diligence process.
The investment to increase the production capacity of release base
papers at the La Gère, France plant will take place during the
second quarter of 2007. The project is equivalent in size with the
investment at the Turin, Italy plant, completed in January 2006.
Demand for release base papers is anticipated to remain at the
current good level in the coming months. In both metalizing and
wet glue labels, the peak season for the beverage label industry
strengthens the demand in the coming months. In flexible packaging
papers market situation remains challenging.
Technical Papers business area (19% of the Group's net sales)
The main products of the Technical Papers business area are
abrasive base papers, crepe papers (such as masking tape base,
wipes, medical applications), pre-impregnated decor papers,
sealing & shielding materials (for gaskets, heat shields, calender
bowls), coated papers (e.g. wallpaper base and poster papers) as
well as vegetable parchment papers. The business area's main
markets include the furniture and home decoration, healthcare,
food and automotive industries.
The overall demand for Ahlstrom's technical papers developed
favorably from the corresponding period last year, though varying
by product area. Market situation was particularly positive in
vegetable parchment, crepe papers, pre-impregnated decor papers,
poster papers and in certain sealing & shielding applications,
while within abrasive base papers and wallpaper base papers the
market was more challenging.
Volumes sold increased by 10% from the first quarter of 2006.
Mainly due to the changes in product mix and the exchange rate
impact, net sales increased by 8%.
Price for pulp continued to escalate during the first quarter. In
addition, electricity costs of the business area increased. Price
increases, implemented despite the tight competition, only
partially offset the increased input costs. In addition, the
business area was able to reduce costs e.g. by decreasing waste
levels and by improving its overall productivity.
The market environment is expected to remain stable in the coming
months, with stronger demand anticipated for abrasive base papers,
wallpaper base papers and calender bowl materials.
Appendix 2
CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
This report has been prepared in accordance with the International
Financial Reporting Standards (IFRS) and the accounting policies
set out in IAS 34 (Interim Financial reporting) as adopted by EU
and in the Group's Financial Statements for 2006.
Application of amended or new IFRS-standards as of January 1, 2007
The Group has adopted the following new or amended standards and
interpretations as of January 1, 2007:
- IFRS 7 Financial Instruments: Disclosures
- Amendment to IAS 1 Presentation of Financial Statements -
Capital disclosures
- IFRIC 9 Reassessment of Embedded Derivatives
The above mentioned standards and interpretations do not have a
material effect on the consolidated financial statements. They
will impact the format and extent of year-end 2007 notes to the
financial statements.
Financial Statements are unaudited.
INCOME STATEMENT Q1 Q1 Q1-Q4
Eur million 2007 2006 2006
Net sales 416.5 414.6 1 599.1
Other operating income 11.3 10.3 36.7
Expenses -384.9 -375.5 -1 458.2
Depreciation, amortization and -19.6 -19.8 -81.6
impairment charges
Operating profit 23.3 29.6 96.1
Net financial expenses -3.0 -4.5 -14.9
Share of profit (loss) of -0.1 -0.0 0.0
associated companies
Profit before taxes 20.3 25.1 81.2
Income taxes -6.9 -9.3 -23.6
Profit for the period 13.4 15.8 57.6
Attributable to
Equity holders of the parent 13.3 15.8 57.5
Minority interest 0.0 0.0 0.1
Basic earnings per share, EUR 0.29 0.41 1.31
Diluted earnings per share, EUR 0.29 0.40 1.29
BALANCE SHEET Mar 31, Mar 31, Dec 31,
Eur million 2007 2006 2006
ASSETS
Non-current assets
Property, plant and equipment 608.0 586.2 601.7
Goodwill 99.8 107.0 101.0
Other intangible assets 31.7 38.4 32.6
Investment property - 4.0 -
Investments in associated 12.7 49.4 12.9
companies
Other investments 0.2 0.2 0.2
Other receivables 12.3 7.1 6.1
Deferred tax assets 27.6 28.0 25.9
Total non-current assets 792.3 820.2 780.4
Current assets
Inventories 216.1 205.2 214.4
Trade and other receivables 357.0 349.0 328.0
Income tax receivables 8.1 2.0 8.7
Other investments 0.0 12.7 5.0
Cash and cash equivalents 23.9 69.6 20.1
Total current assets 605.1 638.5 576.1
Total assets 1,397.4 1,458.7 1,356.6
EQUITY AND LIABILITIES
Equity attributable to equity 739.5 733.7 765.8
holders of the parent
Minority interest 0.8 0.9 0.8
Total equity 740.3 734.5 766.6
Non-current liabilities
Interest-bearing loans and 43.1 95.9 44.0
borrowings
Employee benefit obligations 95.7 112.7 112.4
Provisions 5.0 3.7 3.7
Other liabilities 0.5 0.6 0.6
Deferred tax liabilities 27.4 23.8 26.8
Total non-current liabilities 171.8 236.8 187.4
Current liabilities
Interest-bearing loans and 161.0 206.9 136.4
borrowings
Trade and other payables 294.8 246.1 241.0
Income tax liabilities 17.1 21.5 12.4
Provisions 12.5 12.8 12.8
Total current liabilities 485.3 487.4 402.6
Total liabilities 657.1 724.1 590.0
Total equity and liabilities 1,397.4 1,458.7 1,356.6
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of Mino- Total
the parent
Sha- Non- Hedg- Trans- rity equ-
Issued re re- ing latio Re- inte- ity
n
cap- pre- strict re- re- tained rest
ital mium equity serve serve earn-
re- ings
Eur serve
million
Equity
at Dec
31, 2005 54,6 26,7 - 1,0 3,7 503,7 0,8 590,5
Cash
flow
hedges,
net of
tax:
Gains
and
losses
taken
to
equity - - - -0,4 - - - -0,4
Trans-
lation
differ-
ences - - - - -4,3 - - -4,3
Gains
and
losses
from
hedge of
net
invest-
ments in
foreign
oper-
ations,
net of
tax - - - - 3,1 - - 3,1
Other
changes - - - - - -0,1 0,0 -0,1
Profit
for the
period - - - - - 15,8 0,0 15,8
Total
recogn-
ized
income
and
expense
for the
period - - - -0,4 -1,2 15,7 0,1 14,1
Divid-
ends
paid - - - - - -65,2 - -65,2
Share
issue 13,7 182,5 - - - - - 196,3
Share
options
exercise 0,0 0,2 - - - - - 0,2
d
Redem-
ption of
share
options - - - - - -1,4 - -1,4
13,8 182,7 - - - -66,6 - 129,9
Equity
at
Mar 31, 68,4 209,4 - 0,6 2,5 452,8 0,9 734,5
2006
Equity
at
Dec 31, 68,5 209,3 0,5 0,1 -3,1 490,4 0,8 766,6
2006
Cash
flow
hedges,
net of
tax:
Gains
and
losses
taken to - - - -0,1 - - - -0,1
equity
Trans-
lation
differ-
ences - - - - -3,2 - - -3,2
Gains
and
losses
from
hedge of
net
invest-
ments in
foreign
operatio
ns,
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
recogn-
ized
income
and
expense
for the
period - - - -0,1 -1,7 13,5 0,0 11,7
Divid-
ends - - - - - -46,6 - -46,6
paid
Share
options
exercise 1,4 - 7,3 - - - - 8,7
d
1,4 - 7,3 - - -46,6 - -37,9
Equity
at
Mar 31, 69,9 209,3 7,8 -0,0 -4,8 457,3 0,8 740,3
2007
STATEMENT OF CASH FLOWS Q1 Q1 Q1-Q4
Eur million 2007 2006 2006
Cash flow from operating
activities
Profit for the period 13.4 15.8 57.6
Adjustments, total 19.7 34.1 109.8
Changes in net working capital -27.2*) -11.4 -14.4
Change in provisions and pension -14.0*) -0.4 -0.5
liability
Financial items -1.0 -6.9 -3.7
Taxes paid -3.0 -5.2 -29.6
Net cash from operating -12.0 26.0 119.2
activities
Cash flow from investing
activities
Acquisition of Group companies - -8.1 -7.8
Purchases of property, plant & -32.8 -29.6 -116.5
equipment
Other investing activities 14.5 -12.3 45.3
Net cash from investing -18.3 -50.0 -79.0
activities
Cash flow from financing
activities
Share issue 8.7 194.7 195.1
Dividends paid - -65.2 -65.3
Other financing activities 25.4 -51.9 -165.8
Net cash from financing 34.1 77.6 -36.0
activities
Net change in cash and cash 3.8 53.6 4.3
equivalents
Cash and cash equivalents at 20.1 16.0 16.0
beginning of period
Foreign exchange adjustment -0.0 -0.1 -0.1
Cash and cash equivalents at end 23.9 69.6 20.1
of period
*) Includes EUR -20.8 million payment to the pension fund to cover
approximately half of the historical deficit of the defined
benefit pension plan in the United Kingdom.
KEY FIGURES Q1 Q1 Q1-Q4
2007 2006 2006
Operating profit, % 5.6 7.1 6.0
Operating profit (excluding non- 4.7 6.3 5.5
recurring items), %
Return on capital employed (ROCE), 10.0 12.3 10.4
%
ROCE (excluding non-recurring 8.4 11.0 9.5
items), %
Return on equity (ROE), % 7.1 9.5 8.5
Interest-bearing net liabilities, 180.1 220.6 155.2
EUR million
Equity ratio, % 53.0 50.4 56.5
Gearing ratio, % 24.3 30.0 20.3
Earnings per share, EUR 0.29 0.41 1.31
Earnings per share, diluted, EUR 0.29 0.40 1.29
Equity per share, EUR 15.88 16.11 16.79
Cash earnings per share, EUR -0.26 0.68 2.72
Average number of shares during 45,918 38,326 43,802
the period, 1000's
Number of shares at the end of the 46,608 45,587 45,662
period, 1000's
Capital expenditure, EUR million 29.1 28.0 120.1
Capital employed, at the end of 944.4 1 037.4 946.9
the period, EUR million
Number of employees, average 5,665 5,572 5,687
CHANGES OF PROPERTY, PLANT AND EQUIPMENT
Q1 Q1 Q1-Q4
Eur million 2007 2006 2006
Book value at Jan 1 601.7 577.4 577.4
Additions 28.7 32.6 121.6
Disposals -0.1 -0.0 -1.0
Depreciations and impairment -18.5 -18.4 -75.7
charges
Translation adjustment and other -3.8 -5.4 -20.6
changes
Book value at end of the period 608.0 586.2 601.7
TRANSACTIONS WITH RELATED PARTIES Q1 Q1 Q1-Q4
Eur million 2007 2006 2006
Transactions with associated
companies
Sales and interest income 0.1 0.4 1.3
Purchases of goods and services -2.1 -2.4 -10.9
Trade and other receivables 0.1 1.2 0.5
Trade and other payables 0.1 0.9 0.8
Interest-bearing loans and 2.9 4.6 6.6
borrowings
Market prices have been used in transactions with associated
companies.
OPERATING LEASES Mar 31, Mar 31, Dec 31,
Eur million 2007 2006 2006
Current portion 5.7 5.8 6.1
Non-current portion 16.3 21.0 18.2
Total 22.0 26.8 24.3
CONTINGENT LIABILITIES Mar 31, Mar 31, Dec 31,
Eur million 2007 2006 2006
For own liabilities
Loans from financing
institutions
Amount of loans - 0.1 -
Amount of mortgages - 0.1 -
Other loans
Amount of loans 1.3 1.9 1.5
Book value of pledges 1.5 2.0 1.6
For other own commitments
Guarantees 57.5 23.1 29.1
For commitments of associated
companies
Guarantees 8.3 8.3 8.3
Capital expenditure commitments 48.0 22.6 50.6
Other contingent liabilities 5.2 9.7 5.3
QUARTERLY DATA Q1 Q4 Q3 Q2 Q1
Eur million 2007 2006 2006 2006 2006
Net sales 416.5 389.0 385.9 409.6 414.6
Other operating income 2.6 4.3 4.4 5.6 7.0
*
Expenses * -379.9 -359.3 -349.6 -368.7 -375.5
Depreciation, -19.6 -19.9 -19.8 -20.5 -19.8
amortization,
impairment charges *
Non-recurring items 3.8 -1.9 4.4 2.9 3.3
Operating profit 23.3 12.3 25.3 28.9 29.6
Net financial expenses -0.1 -0.2 -0.2 0.4 -0.0
Share of profit (loss) -3.0 -2.6 -3.7 -4.1 -4.5
of
associated companies
Profit before taxes 20.3 9.4 21.4 25.2 25.1
Income taxes -6.9 -0.7 -5.0 -8.6 -9.3
Profit for the period 13.4 8.8 16.4 16.6 15.8
Attributable to
Equity holders of the 13.3 8.8 16.4 16.5 15.8
parent
Minority interest 0.0 -0.0 0.0 0.1 0.0
Operating profit * 19.6 14.1 20.8 26.0 26.3
Operating profit, % * 4.7 3.6 5.4 6.4 6.3
* Excluding non-
recurring items
QUARTERLY DATA BY Q1 Q4 Q3 Q2 Q1
SEGMENT
Eur million 2007 2006 2006 2006 2006
Net sales
FiberComposites 206.4 195.4 195.3 204.9 212.7
Specialty Papers 211.4 193.9 191.5 205.2 203.3
Other operations and -1.3 -0.3 -0.9 -0.5 -1.5
eliminations
Group total 416.5 389.0 385.9 409.6 414.6
Operating profit
FiberComposites 15.2 9.2 13.3 13.9 15.9
Specialty Papers 13.0 3.0 6.0 10.3 13.0
Other operations and -4.9 0.1 6.0 4.8 0.7
eliminations
Group total 23.3 12.3 25.3 28.9 29.6
Operating profit
excluding
non-recurring items
FiberComposites 13.4 11.0 13.3 13.9 15.9
Specialty Papers 8.6 4.4 8.7 10.3 13.0
Other operations and -2.5 -1.2 -1.2 1.9 -2.6
eliminations
Total 19.6 14.1 20.8 26.0 26.3
Non-recurring items 3.8 -1.9 4.4 2.9 3.3
Group total 23.3 12.3 25.3 28.9 29.6
KEY FIGURES QUARTERLY Q1 Q4 Q3 Q2 Q1
Eur million 2007 2006 2006 2006 2006
Net sales 416.5 389.0 385.9 409.6 414.6
Operating profit 23.3 12.3 25.3 28.9 29.6
Operating profit 19.6 14.1 20.8 26.0 26.3
(excluding non-
recurring items)
Profit before taxes 20.3 9.4 21.4 25.2 25.1
Profit before taxes 16.5 11.3 17.0 22.3 21.8
(excluding non-
recurring items)
Profit for the period 13.4 8.8 16.4 16.6 15.8
Gearing ratio, % 24.3 20.3 25.0 30.0 30.0
Return on capital 10.0 5.3 10.3 11.7 12.3
employed
(ROCE), %
ROCE (excluding non- 8.4 6.1 8.5 10.6 11.0
recurring items), %
Earnings per share, EUR 0.29 0.18 0.36 0.36 0.41
Cash earnings per -0.26 0.54 1.29 0.21 0.68
share, EUR
Average number of 45,918 45,602 45,592 45,587 38,326
shares
during the period,
1,000's
CALCULATION OF KEY FIGURES
Interest- Interest-bearing loans and borrowings - Cash and
bearing cash equivalents - Other investments (current)
net
liabilities
Equity Total equity x 100
ratio,
% Total assets - Advances
received
Gearing Interest-bearing net liabilities x 100
ratio,
% Total equity
Return on Profit (loss) for the period x 100
equity
(ROE), % Total equity (annual average)
Return on Profit (loss) before taxes + Financing x 100
capital expenses
employed
(ROCE), % Total assets (annual average) - Non-interest
bearing liabilities (annual average)
Earnings per Profit for the period attributable to
share,EUR equity holders of the parent
Average adjusted number of
shares during the period
Cash Net cash from operating activities
earnings
per share,
EUR
Average adjusted number of
shares during the period
Equity per Equity attributable to equity holders
share, EUR of the parent
Adjusted number of shares at
the end of the period
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