Our profitability remained stable and cash flow was strong in the third quarter despite the uncertain market environment and rather weak demand. Our gross margin for products continued to improve and reached a new record. However, this positive impact was largely offset by the continued weak volumes. Excluding the machine closure in Stenay, France, our deliveries were 4% lower than in the previous year. As a result, our comparable EBITDA was EUR 84 million, on the same level as in the previous quarter. Excluding the negative EBITDA impact of EUR 6 million from bringing down inventory levels, the result was largely in line with last year’s level.
Following our increased focus and active working capital management, I am very pleased with the strong operative cash flow of EUR 125 million, which enabled us to reduce our net debt.
Savings program to support profitability
The prevailing market environment is not promising much tailwind and we are therefore proceeding with measures to improve competitiveness. We target savings with an overall impact of at least EUR 50 million for the year 2020 compared with 2019. In addition, the integration of the recent acquisitions has proceeded well, and we are on track to exceed the promised synergies.
Substantial steps dricing strategic progress
In September, as a result of our regular assessment of the most value creating structure for our businesses, we announced that we are exploring strategic alternatives for our Decor business. Today, we also announced that we have signed a non-binding memorandum of understanding to divest the fine art business in Arches, France.
In the third quarter, we completed two strategic investments. In the Insulation business, we completed the rebuild of the recovery boiler and debottlenecking of the pulp line in Billingsfors, Sweden, enabling improved environmental performance as well as higher pulp and electrotechnical paper production. In the Coated Specialties business, we expanded coating capabilities in Jacarei, Brazil. Furthermore, we also have continued to introduce new value-added products for our customers, including an expanded range of filter media for industrial air applications and an innovative plastic-free material for technically challenging U-shaped drinking paper straws.
We have implemented actions to improve our competitiveness and drive profitable growth, and we are taking action on our strategic opportunities. Therefore I have confidence in the future despite the weaker market environment.
Outlook for 2019
Ahlstrom-Munksjö’s pro forma comparable EBITDA reached EUR 330 million in 2018. At the beginning of 2019, customers reacted to signs of slowing economic growth. Demand has slowed in several product segments, and customers have reduced inventories. The overall market environment remains uncertain and demand continues to fluctuate. Ahlstrom-Munksjö will continue its efforts to improve performance and competitiveness. The gross margin for products continued to increase in the first nine months of 2019, and the targeted synergy benefits and cost reduction measures are expected to contribute positively to earnings for the full year.
In the fourth quarter of 2019 scheduled maintenance shutdowns at the Aspa, Mosinee and Thilmany pulp mills are expected to be carried out to about the same extent as in the fourth quarter of 2018, with a negative profitability impact of approximately EUR 6 million.
Updated: Oct. 30, 2019