We continued to execute our strategy with speed and determination on many fronts in order to strengthen our competitiveness and profitability as well as our balance sheet. We focused on the integration of acquired businesses and implemented profit improvement actions, strengthened our company culture and actively developed our business portfolio. Our cash flow was very strong in 2019 due to our relentless focus on working capital and this helped us to strengthen our financial position. However, market fundamentals turned out to be tougher than expected and our comparable EBITDA weakened slightly.
Lower end-use demand and destocking in the value chain put pressure on delivery and production volumes which in turn had a negative impact on our results. Despite the challenging market environment, our gross margin for products did, however, improve. This confirms that that our commercial strategy, based on leading positions in niche markets and a differentiated product offering, is working well. In addition, we benefitted from the achieved cost synergies from our recent acquisitions. Raw material and energy prices had a negative impact for the full year, while they started to have a positive impact in the second half of the year.
In the fourth quarter, our profitability was still unsatisfactory. Gross margin for products remained at a good level while volumes stabilized at a low level. This shows that while our cost reduction measures have been necessary, they have not been sufficient; in October, we identified further savings with an overall impact of at least EUR 50 million for the year 2020.
Actively developing our businesses
We actively developed our business structure. We took a step forward in the process where our Decor business could become a globally leading stand-alone operation by signing a letter of intent to acquire a Chinese decor manufacturer. We also made one acquisition to grow our highly attractive Liquid Technologies business and announced two divestments.
Our strategic investment program, which has kept our capital expenditure at an exceptionally high level for the past two years, is nearing completion and we expect to complete the remaining four projects by the end of 2021. On the product development front, we continued to develop new value-added solutions for our customers.
There are some early signs of improvement, although the market environment still remains uncertain. We will continue to develop our business structure, proceed with our investment program and deliver value-added solutions to our customers. This gives me confidence in our ability to reach our targets for this year.
Outlook for 2020
Ahlstrom-Munksjö’s comparable EBITDA reached EUR 313 million in 2019. The decline in volumes, which had a negative impact on the result in 2019, levelled off towards the end of the year. In the beginning of 2020, there are some early signs of improvement in demand. Raw material and energy prices had a negative impact for the full year 2019, while they started to have a positive impact in the second half. The ratio between average selling price and variable costs was at a good level at the start of 2020. Ahlstrom-Munksjö will continue its efforts to improve performance and competitiveness. Identified cost savings, mainly related to variable costs, are estimated to have an overall impact of at least EUR 50 million for 2020. Ahlstrom-Munksjö’s comparable EBITDA in 2020 is expected to be higher than in 2019.
Updated: Feb. 13, 2020