Ahlstrom Financial Statements Bulletin 2013: Ready to implement the new growth strategy
Ahlstrom Corporation STOCK EXCHANGE RELEASE January 30, 2014 at 12.55
This is a summary of the Financial Statements Bulletin 2013. The complete report
with tables is attached to this release and available at www.ahlstrom.com
Ahlstrom Financial Statements Bulletin 2013
Ready to implement the new growth strategy
Continuing operations October-December 2013 compared with October-December 2012
* Net sales EUR 243.4 million (EUR 240.1 million).
* Operating profit / loss EUR -5.5 million (EUR 1.0 million).
* Operating profit / loss excluding non-recurring items EUR -2.5 million (EUR
* Operating margin excluding non-recurring items -1.0% (-1.7%).
* Profit / loss before taxes EUR -11.1 million (EUR -8.4 million).
* Earnings per share EUR -0.29 (EUR -0.23).
October-December 2013 in brief
Â·Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Net sales at constant currency rates rose by 5.1% from the
* The company continued to launch new products to improve its sales mix and
profit margin. One key product launch was the Ahlstrom Flow2Save(TM), a new
high efficiency filtration media for improved indoor air quality.
* To strengthen focus and address the growth and profitability issues, the
Food and Medical business area was divided into two segments as of January
* The demerger of Ahlstrom's Label and Processing business in Brazil, Coated
Specialties, was completed. This was the final step in combining Label and
Processing business and MunksjÃ¶ AB. Ahlstrom also completed the sale of two
production lines in OsnabrÃ¼ck to comply with the regulatory commitments
related to the demerger.
* Ahlstrom completed the sale of its remaining shares in the thermal paper
manufacturer Jujo Thermal Ltd. and the divestment of the West Carrollton
Continuing operations January-December 2013 compared with January-December 2012
* Net sales EUR 1,014.8 million (EUR 1,010.8 million).
* Operating profit EUR 10.7 million (EUR 21.8 million).
* Operating profit excluding non-recurring items EUR 13.4 million (EUR 21.1
* Operating margin excluding non-recurring items 1.3% (2.1%).
* Profit / loss before taxes EUR -15.4 million (EUR -6.4 million).
* Earnings per share EUR -0.46 (EUR -0.44).
Â·Â Â Â Â Â Â Â Â Â Â Â Â Â The Board of Directors proposes to the Annual General Meeting
that a dividend consisting of MunksjÃ¶ Oyj shares and cash be paid for the
financial year that ended on December 31, 2013. According to the proposal,
Ahlstrom shareholders will receive one MunksjÃ¶ share for each 26 shares held in
Ahlstrom and a cash dividend of EUR 0.09 per share. The aggregate maximum amount
of the total dividend is EUR 14.0 million, or EUR 0.30 per share.
Outlook for 2014
* Net sales are expected to be EUR 930-1,090 million. The operating profit
margin excluding non-recurring items is expected to be 2-5% of net sales.
Jan LÃ¥ng, President & CEO
"Improving our financial performance is our highest priority this year.Â I am
confident that our enhanced product offering, in combination with our
rightsizing program will improve our results in 2014 and beyond. We are well on
track to achieve our long-term target of 20% of net sales from new products,
which will enhance our product mix and margins.Â "
"We were encouraged by the continued growth in net sales at constant currency
rates, although our operating profit remained unsatisfactory in the review
period. Following the demerger of Label and Processing and the earlier
divestment of Home and Personal, our cost structure is too heavy. We have
identified additional cost saving opportunities and have expanded the previously
announced rightsizing program from the EUR 35 million target to EUR 50 million."
"Towards the end of last year and at the beginning of this year, we completed a
number of transactions related to the transformation of the company. Now that
our business portfolio has been restructured, we can concentrate our efforts on
profitability and growth."
Key figures from continuing operations
EUR million Q4/2013 Q4/2012 Change, % Q1-Q4/2013 Q1-Q4/2012 Change, %
Net sales 243.4 240.1 1.4 1,014.8 1,010.8 0.4
Operating profit -5.5 1.0 Â 10.7 21.8 -50.9
% of net sales -2.3 0.4 Â 1.1 2.2
excl. NRI -2.5 -4.1 38.9 13.4 21.1 -36.7
% of net sales -1.0 -1.7 Â 1.3 2.1
Profit / Loss before
taxes -11.1 -8.4 -31.5 -15.4 -6.4 -139.6
Profit / Loss for
the period -12.2 -9.8 -24.5 -18.9 -16.4 -15.2
Earnings per share -0.29 -0.23 Â -0.46 -0.44
Return on capital
employed, % -3.5 -1.7 Â 0.9 2.3
Net cash flow from
activities* 3.7 15.5 -75.9 41.0 78.7 -48.0
Capital expenditure 26.1 26.1 -0.2 76.1 74.1 2.6
Number of personnel,
at the end of period 3,536 3,829 -7.7 3,536 3,829 -7.7
*Including discontinued operations
The operating environment in the fourth quarter remained in line with the
comparison period as the overall demand in Ahlstrom's main markets continued to
be soft with regional variations. Geographically, demand in Europe remained
weak, particularly in the southern part of the continent. The North American
market continued to show some positive signs, while growth was fastest in Asia.
In the Advanced Filtration business area, the markets for laboratory and life
science filtration continued to strengthen across the globe. Demand for water
and high efficiency air applications grew as well, whereas demand in gas turbine
filtration was stable.
In the Building and Energy business area, demand for flooring materials in
Europe stagnated towards year end. The market for wind energy applications was
steady at a low level. Demand for wallpaper and wallcovering substrates in
Europe showed signs of softening, while remaining stable in China. Demand for
construction-related materials remained soft.
In the Food and Medical business area, the market for food packaging products
continued to be solid, and demand for masking tape and beverage improved from
the comparison period, especially in Europe and Asia. Demand for medical fabrics
continued to be soft, particularly in North America.
In the Transportation Filtration business area, the market for transportation
filtration materials, including heavy duty applications, in North America and
Asia continued to grow, and Europe showed signs of improving. In South America,
the market slowdown caused by currency devaluation continued.
Market pulp prices either increased or were stable in the fourth quarter, and
they were higher than in the comparison period. The prices of synthetic fibers
such as polyester and viscose were stable, whereas polypropylene prices rose to
a higher level than in the comparison period. The prices of chemicals in general
were either stable or increased. In its production, Ahlstrom uses chemicals such
as latex, liquid solvents and starch. The prices of liquid solvents like
phenolic resins remained at a high level Natural gas prices increased slightly
and were higher than in the comparison period.
Combination of the Label and Processing business and MunksjÃ¶ AB
On May 24, 2013, Ahlstrom completed the first phase (LP Europe demerger) of the
combination of its Label and Processing business in Europe and MunksjÃ¶ AB. The
combination created a new global leader in high-quality specialty papers. The
second phase of the transaction, the demerger of Coated Specialties in Brazil,
was completed on November 29, 2013.
On December 31, 2013 Ahlstrom completed the divestment of its pre-impregnated
dÃ©cor papers and abrasive paper backings businesses to Perusa, a German-based
private equity group. The divestment was made to comply with the commitments
made to the European Commission and to the Brazilian competition authority CADE
as disclosed in May 2013.
Result from discontinued operations
The operative result for the European operation of the Label and Processing
business has been included until May 27, 2013 and the operative result from
Coated Specialties until December 2, 2013. The Brazilian operation of the former
Home and Personal business area and pre-impregnated dÃ©cor papers and abrasive
paper backings businesses were included throughout the review period. All
operative figures exclude depreciation. The sale of the Brazilian operation of
the former Home and Personal business area to Suominen Corporation is expected
to be completed in February 2014.
In October-December 2013, the profit from discontinued operations for the period
was EUR 20.6 million (EUR 7.5 million), including a demerger effect of
approximately EUR 23.9.
In January-December 2013, the profit from discontinued operations for the period
was EUR 75.9 million (EUR 16.4 million). The figure includes a net of tax EUR
42.3 million impairment loss recognized on the re-measurement to fair value and
costs to sell. In addition, it includes a demerger effect of approximately EUR
113.3 million, which includes among other things recognition of distribution
liability to fair value and a write down related to the fair valuation of
MunksjÃ¶ Oyj shares.
Result including discontinued operations
In October-December 2013, profit for the period including discontinued
operations was EUR 8.4 million (EUR 2.3 million loss). Earnings per share with
the effect of interest on the hybrid bond were EUR 0.15 (EUR -0.06).
Return on equity (ROE) was 9.2% (-1.8%).
In January-December 2013, the profit for the period including discontinued
operations was EUR 57.0 million (EUR 0.1 million loss). Earnings per share with
the effect of interest on the hybrid bond were EUR 1.17 (EUR -0.09).
Return on equity (ROE) was 13.8% (0.0%).
The figures above include the demerger effects explained in the previous
Following the completion of the Label and Processing demerger, Ahlstrom
initiated a rightsizing program to bring down the costs of the company to
reflect its new size and scope.
Ahlstrom expanded its rightsizing program from the previously communicated EUR
35 million to EUR 50 million as announced on January 30, 2014. The majority of
the planned actions related to the rightsizing program will be realized by the
end of 2014, and the full impact of the program is expected to be visible in
As a result of the planned program, Ahlstrom's personnel is estimated to be
reduced by approximately 400 people globally at the maximum, instead of the
earlier estimated 350 people as communicated with the previous cost savings
target on August 7, 2013.
The targeted savings will be derived from all business areas and functions
globally. In particular, the aim is to reduce selling, general and
administration (SGA) costs and further improve supply chain efficiency. The aim
is to bring the SGA costs back to a level of 10-11% of net sales in 2015.
The planned changes and personnel impacts are subject to employee consultation
processes, which will be initiated according to local legislation in the
Ahlstrom plans to book non-recurring costs of approximately EUR 15 million
related to rightsizing during the years 2014-2015.
The program is moving ahead as targeted. As of December 31, 2013, approximately
EUR 12 million in cost savings, of which approximately EUR 5 million is derived
from costs being transferred to MunksjÃ¶ Oyj and reported in discontinued
operations, were achieved and only minor restructuring costs were booked.
Proposal for the distribution of profit
Ahlstrom aims to pay a dividend of not less than one third of the net cash from
operating activities after operative investments, calculated as a three-year
rolling average to achieve stability in the dividend pay-out. Operative
investments include maintenance, cost reduction, and efficiency improvement
The distributable funds on the balance sheet of Ahlstrom Corporation as of
December 31, 2013 amounted to EUR 501,462,715.72.
The Board of Directors proposes to the Annual General Meeting that dividend in
the aggregate maximum amount of EUR 14.0 million, or EUR 0.30 per share, shall
be paid as follows:
(i) Dividend payable in MunksjÃ¶ Oyj's shares: Each 26 Ahlstrom's shares entitle
their holder to receive 1 share in MunksjÃ¶ Oyj as a dividend. Ahlstrom shall
distribute to its shareholders as dividend a maximum of 1,795,023 shares of
(ii) Dividend payable in cash: A dividend of approximately EUR 0.09 per share be
paid in cash from the retained earnings. As per January 30, 2014, the number of
shares of the Company amounts to 46,670,608 based on which the maximum amount to
be distributed as dividend payable in cash would be approximately EUR 4.3
Ahlstrom intends to pay dividends both in cash and in MunksjÃ¶ shares also in the
The share of the Company will trade together with the right to dividend until
March 25, 2014.The dividend will be paid to each shareholder who is registered
in the Company's shareholder register maintained by Euroclear Finland Ltd on the
record date March 28, 2014. No dividend will be paid based on shares owned by
the Company or its subsidiaries. The Board proposes that the dividend payable in
MunksjÃ¶ shares shall be paid on April 4, 2014.The cash payment corresponding to
the fractional entitlements and the dividend payable in cash shall be paid on or
about April 8, 2014.
In addition, the Board of Directors proposes that EUR 70,000 will be reserved
for donations at the discretion of the Board.
Based on Ahlstrom's view of the development of its main markets, pricing and
product mix, competitive dynamics and expected cost savings, the company
anticipates net sales in 2014 to be EUR 930-1,090 million. The operating profit
margin excluding non-recurring items is expected to be 2-5% of net sales.
In 2014, investments excluding acquisitions from continuing operations are
estimated to be approximately EUR 50 million (EUR 76.1 million in 2013).
The global economy is expected to gain momentum this year with regional
variations. While the European economy has shown some signs of recovery, it may
be uneven and fragile. Recent indicators for the development of the U.S. economy
are more positive. In Asia, the Chinese economy in particular, may grow at a
slower pace than previously anticipated.
The slower than anticipated economic growth poses risks to Ahlstrom's financial
performance. It may lead to lower sales volumes and force Ahlstrom to initiate
more market-related shutdowns at plants, which could affect profitability. The
uncertainty related to global economic growth, increased volatility in our main
markets and limited visibility are making it more difficult to forecast future
In recent years, Ahlstrom has initiated investment projects such as the
wallcoverings production line in Binzhou, China, that are in a start-up phase.
The company's financial performance may be negatively affected by the
commercialization of new production lines.
Ahlstrom's main raw materials are natural fibers, mainly pulp, synthetic fibers,
and chemicals. The prices of some of the key raw materials used by Ahlstrom
remain at a high level and are volatile.
If global economic growth slows down, maintaining current sales prices may be at
risk and sustaining the current level of profitability may be compromised, even
if raw material prices fall at the same time.
The general risks facing Ahlstrom's business operations are described in greater
detail on the company website at www.ahlstrom.com and in the report by the Board
of Directors in the company's Annual Report 2012. The risk management process is
also described in the Corporate Governance Statement, also available on the
*Â Â *Â Â *
This report contains certain forward-looking statements that reflect the present
views of the company's management. The statements contain uncertainties and
risks and are thus subject to changes in the general economic situation and in
the company's business.
Ahlstrom follows the disclosure procedure enabled by the Finnish Financial
Supervision Authority and hereby publishes its Financial Statements Bulletin
2013 enclosed to this stock exchange release. The report is attached to this
release in pdf format and is also available on the company's web site at
Jan LÃ¥ng, President & CEO, tel. +358 (0)10 888 4700
Seppo Parvi, CFO, tel. +358 (0)10 888 4768
Ahlstrom's President & CEO Jan LÃ¥ng and CFO Seppo Parvi will present the
financial statements bulletin 2013 at a Finnish-language press and analyst
conference in Helsinki today,Â January 30, 2014, at 2:00 p.m. (CET+1). The
conference will take place at Ahlstrom's head office at Alvar Aallon katu 3 C
(second floor, meeting room Antti).
In addition, President & CEO LÃ¥ng and CFO Parvi will hold a conference call in
English for analysts, investors and representatives of the media today, January
30, 2014, at 4:00 p.m. (CET+1). To participate in the conference call, please
call (09) 6937 9543 in Finland or +44 (0)20 3427 1903 outside Finland a few
minutes before the conference begins. The access code is 1736357.
The conference call can also be listened to live on the Internet. The link to
the English-language presentation (an audio webcast) including slides is
available on the company website at www.ahlstrom.com. Questions may also be
submitted in writing via the Internet. Listening to the conference call requires
An on-demand webcast including slides is available for viewing and listening on
the company website for one year after the conference call.
Presentation material will be available on January 30, 2014, after the Interim
Report is published, at www.ahlstrom.com > Investors > Reports and presentations
> 2013. Material in Finnish will be available at www.ahlstrom.fi > Sijoittajat >
Katsaukset ja presentaatiot > 2013.
Financial information in 2014
|Report |Date of publication|Silent period |
|Interim report January-March |Tuesday, April 29 |April 1-29 |
|Interim report January-June |Wednesday, August 6|July 1 - August 6|
|Interim report January-September|Friday, October 24 |October 1-24 |
During the silent period, Ahlstrom will not communicate with capital market
Ahlstrom in brief
Ahlstrom is a high performance fiber-based materials company, partnering with
leading businesses around the world to help them stay ahead. We aim to grow with
a product offering for clean and healthy environment. Our materials are used in
everyday applications such as filters, medical fabrics, life science and
diagnostics, wallcoverings and food packaging. In 2013, Ahlstrom's net sales
from the continuing operations amounted to EUR 1 billion. Our 3,500 employees
serve customers in 24 countries. Ahlstrom's share is quoted on the NASDAQ OMX
Helsinki. More information available atÂ www.ahlstrom.com.
Financial Statements Bulletin 2013:
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Source: Ahlstrom Oyj via GlobeNewswire