Ahlstrom January-September 2015 interim report: Profitability improvement continued despite unfavorable demand in some markets

Ahlstrom Corporation STOCK EXCHANGE RELEASE October 28, 2015 at 12:00 noon

This is a summary of the January-September 2015 interim report. The complete report with tables is attached to this release and available at www.ahlstrom.com

Ahlstrom January-September 2015 interim report

Profitability improvement continued despite unfavorable demand in some markets

July-September 2015 compared with July-September 2014

  • Net sales EUR 266.9 million (EUR 252.0 million), showing an increase of 5.9%.Comparable net sales at constant currencies declined by 1.0%.
  • Operating profit EUR 9.9 million (EUR -13.4 million).
  • Operating profit excluding non-recurring items EUR 11.2 million (EUR 9.7 million), representing 4.2% (3.9%) of net sales, and the eighth consecutive quarter of year-on-year improvement.
  • Profit before taxes EUR 8.5 million (EUR -19.9 million), including a EUR 3.2 million capital gain booked from the sale of Munksjö Oyj shares.
  • Earnings per share EUR 0.06 (EUR -0.30).
  • Net cash flow from operative activities EUR 24.2 million (EUR 8.4 million).

January-September 2015 compared with January-September 2014

  • Net sales EUR 819.8 million (EUR 754.1 million), showing an increase of 8.7%.
  • Operating profit EUR 38.2 million (EUR 0.6 million).
  • Operating profit excluding non-recurring items EUR 39.9 million (EUR 30.4 million), representing 4.9% (4.0%) of net sales.
  • Profit before taxes EUR 43.2 million (EUR -15.1 million), including a EUR 20.3 million capital gain booked from the sale of Munksjö Oyj shares.
  • Earnings per share EUR 0.52 (EUR -0.32).
  • Net cash flow from operative activities EUR 36.7 million (EUR 16.5 million).

                  
Marco Levi, President & CEO

"We had another quarter of improved profitability over the comparison period. This has been achieved through continued optimization of our current product portfolio and enhanced pricing, as well as stringent cost control. The slowdown in demand in some of our key markets endured during the quarter, and this had a negative impact on our sales, especially in North America.

The slowdown was particularly visible in our Filtration business area, which suffered from weak demand for engine filtration materials. The Food and Medical business area made progress, predominantly in food packaging and beverage materials, while the Building and Energy business area had yet another good quarter in terms of sales growth despite still making a loss.

I'm also pleased with our cash flow generation, driven by a reduction in operative working capital. This has helped to push our gearing down further and the ratio is now well within our target range. Looking ahead, we are about to complete our ongoing strategy review process."

Outlook range for net sales in 2015 narrowed

Ahlstrom narrows the outlook range on net sales for 2015. The outlook for the operating profit margin excluding non-recurring items is unchanged.

New outlook:

The company expects net sales in 2015 to be in the range of EUR 1,050-1,100 million. The operating profit margin excluding non-recurring items is expected to be 3.85-4.5% of net sales.

Previous outlook:

The company expects net sales in 2015 to be in the range of EUR 1,025-1,125 million. The operating profit margin excluding non-recurring items is expected to be 3.85-4.5% of net sales.

Key figures

EUR million Q3/2015 Q3/2014 Change, % Q1-Q3/2015 Q1-Q3/2014 Change, %
Net sales 266.9 252.0 5.9 819.8 754.1 8.7
EBITDA excl. NRI 25.5 22.6 12.6 83.2 67.1 23.9
  % of net sales 9.5 9.0   10.1 8.9  
Operating profit 9.9 -13.4 N/A 38.2 0.6 N/A
  % of net sales 3.7 -5.3   4.7 0.1  
Operating profit excl. NRI 11.2 9.7 14.6 39.9 30.4 31.5
  % of net sales 4.2 3.9   4.9 4.0  
Profit / Loss before taxes 8.5 -19.9 N/A 43.2 -15.1 N/A
Profit / Loss for the period 4.1 -16.7 N/A 28.8 -15.9 N/A
Earnings per share 0.06 -0.30 N/A 0.52 -0.32 N/A
Return on capital employed, % 6.7 -8.0   8.6 0.2  
Net cash flow from operative activities * 24.2 8.4 N/A 36.7 16.5 121.9
Capital expenditure 5.5 9.9 -43.7 13.6 29.2 -53.3
Interest-bearing net liabilities * 203.7 289.7 -29.7 203.7 289.7 -29.7
Gearing ratio, % * 64.2 88.4   64.2 88.4  
Equity ratio, % * 34.8 33.3   34.8 33.3  
Number of personnel, at the end of period 3,367 3,487 -3.4 3,367 3,487 -3.4

EBITDA = earnings before interest, taxes, depreciation and amortization
NRI = non-recurring item
* Including discontinued operations.

Short-term risks

Uncertainty related to global economic growth poses risks to Ahlstrom's financial performance. Slower-than-anticipated growth may lead to lower sales volumes and force the company to initiate more market-related shutdowns at plants, which could affect profitability.

Further swings in foreign currency exchange rates may lead to fluctuations in net sales and profitability. Combined with the uncertainty related to global economic growth and increased volatility in our main markets, it is more challenging to forecast future developments.

Ahlstrom's main raw materials are wood pulp, chemicals, and synthetic fibers. The prices of these key raw materials are volatile, and possible increases could affect the company's profitability depending on its ability to mitigate the risk.

In recent years, Ahlstrom has undertaken investment projects that are in a ramp-up phase, such as the wallcoverings production line in Binzhou, China. The company's financial results may be negatively affected by the performance of individual production lines.

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 for 2014. The risk management process is also described in the Corporate Governance Statement, also available on the company's website.

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.

Disclosure procedure

Ahlstrom publishes its January-September 2015 interim report 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 www.ahlstrom.com.

Additional information

Marco Levi, President & CEO, tel. +358 (0)10 888 4700
Sakari Ahdekivi, CFO, tel. +358 (0)10 888 4768

Ahlstrom's President & CEO Marco Levi and CFO Sakari Ahdekivi will present the report at an analyst and press conference in Helsinki on Thursday, October 28 at 3:00 p.m. Finnish time (CET +1). The event will take place at Ahlstrom's head office, Alvar Aallon katu 3 C, second floor, meeting room Antti.

The combined web- and teleconference will be held in English and can be viewed at the following address: http://qsb.webcast.fi/a/ahlstrom/ahlstrom_2015_1028_q3
To participate via telephone, please dial +358 (0)9 2313 9201 in Finland or +44 (0)20 7162 0077 outside Finland a few minutes before the conference begins. The confirmation code is 955311.

An on-demand webcast including slides is available for viewing and listening on the company website for one year after the conference call.

The presentation material will be available at www.ahlstrom.com/en/Investors/Reports-and-presentations/2015/ after the report has been published.

Financial information in 2016

Report Date of publication Silent period
Financial statements bulletin 2015 Friday, January 29 January 1-28
Interim report January-April 2016 Thursday, April 28 April 1-27
Interim report January-June 2016 Wednesday, August 3 July 1-August 2
Interim report January-September 2016 Friday, October 28 October 1-27

During the silent period, Ahlstrom will not communicate with capital market representatives.

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 2014, Ahlstrom's net sales amounted to EUR 1 billion. Our 3,400 employees serve customers in 22 countries. Ahlstrom's share is quoted on the NASDAQ OMX Helsinki. More information available at www.ahlstrom.com.

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