CEO word and outlook for Q3/2020

I’m pleased with our performance in the second quarter, and particularly with our swift response and actions to mitigate the near-term impact of the coronavirus pandemic. Considering the exceptional circumstances,  comparable EBITDA of EUR 74 million and an improved margin of 11.9% is a good achievement. We have been able to keep our plants operational and serve our customers, while ensuring the health and safety of our employees thanks to our COVID-19 Safety Protocol. In addition, we have increased our financial flexibility and currently have good liquidity, with no major near-term refinancing needs.

 

VARIED IMPACT ON CUSTOMER ACTIVITY - CUSHIONING WITH ACTIONS

Within our broad product range of advanced fiber-based solutions, the impact of the coronavirus pandemic on customer activity has varied. Demand remained strong in the healthcare and life science end-use segments, while it remained relatively stable in the consumer goods segment, albeit with some variation depending on end use. The biggest decline was in the home building and furniture, transportation and industrial end-use segments. All in all, the exceptional market environment led to a 10% reduction in our deliveries, which was the main driver behind the decrease in net sales and comparable EBITDA. However, we worked hard on our own actions to reduce variable and fixed costs, and this cushioned the impact of lower volumes.

I’m also pleased that we were able to drive our business forward during the pandemic. Our in-depth knowledge of fiber-based materials, agile organization and common manufacturing platform enabled us to expand our manufacturing capabilities of face mask fabrics globally to lines normally used for the production of other fiber-based materials. We also took further steps in supplying the  electric vehicle battery market by introducing a platform of fiber-based energy storage applications solutions. Our other new value-added solutions include a replaceable filter media for branded outdoor apparel used as face masks. 

Our work was awarded the EcoVadis Gold rating for the fourth consecutive year thanks to our good performance within environmental impact, labor practices, fair business practices and sustainable procurement. This reinforces our sustainability strategy.

LOOKING AHEAD  

We will continue with actions to mitigate the impact of the weak market demand in the third quarter. Meanwhile, we continue to work on ensuring competitiveness in the longer term and pursuing our previously announced cost saving programs. Overall, I’m very proud of how well our organization has performed in these very exceptional circumstances. This really highlights the strengths of our company culture, which relies on entrepreneurial leadership, customer collaboration, innovation and seamless worldwide teamwork.

OUTLOOK FOR Q3/2020  

The overall market environment remains uncertain, albeit with signs of a gradual normalization of customer activity in certain end-use segments. Good demand is expected to continue in the healthcare and life science end-use segments. Demand for consumer goods related products is expected to remain relatively stable, while continuing at a weak level in home building and industrial related products. Demand for furniture and transportation related products is expected to recover. Ahlstrom-Munksjö’s delivery volumes in the third quarter of 2020 are expected to be lower than in the third quarter of 2019.

In the third quarter of 2020, scheduled maintenance shutdown at the Aspa pulp mill is expected to be carried out, with a negative profit impact of approximately EUR 4 million.

Ahlstrom-Munksjö’s comparable EBITDA in the third quarter of 2020 is expected to be lower than in the third quarter of 2019.

Updated: July 28, 2020

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