Ahlstrom interim report January-September 2009: Streamlining measures continued with success

Ahlstrom interim report January-September 2009: Streamlining measures continued with success

Ahlstrom Corporation STOCK EXCHANGE RELEASE 27.10.2009
 
 
July-September 2009 compared to July-September 2008
  •          Net sales were EUR 400.6 million (451.2).
  •          EBIT amounted to EUR 13.1 million (11.3) including non-recurring items of EUR -4.4 million (-0.2).
  •          Profit before taxes was EUR 7.3 million (3.5) and earnings per share were EUR 0.10 (0.04).
  •          Net cash from operating activities increased to EUR 67.3 million (24.7).
  • January-September 2009 compared to January-September 2008
  •          Net sales were EUR 1,175.6 million (1,383.4).
  •          EBIT amounted to EUR 12.1 million (50.0) including non-recurring items of EUR -8.2 million (0.6).
  •          Loss before taxes was EUR 6.6 million (profit before taxes 28.9) and
    earnings per share were EUR -0.11 (0.41).
  •          Net cash from operating activities increased to EUR 161.0 million (70.8).
  • Events in January-September 2009
  •          Restructuring programs and project to optimize working capital proceeded according to plan. Since the turn of the year, the number of employees decreased by 516 people and working capital by EUR 81.1 million with turnover improving by 15 days.
  •          Gearing ratio decreased to 81.9% (December 31, 2008: 95.3%).
  • Strategy review process
  •          Conclusions of the strategy review process started in April were completed.
  • Outlook for 2009
  •          No significant changes in the market situation are expected during the rest of the year. Despite the improved quarterly performance, both net sales and EBIT for 2009 are expected to fall short of the level in 2008.
  • Jan Lång, President & CEO, comments:
    -        Despite the challenging market environment, we reached a positive EBIT for July-September, particularly owing to streamlining efforts, cost control and lower raw material prices. Employees have committed themselves excellently to our target of shifting the focus towards cash flow and working capital reduction. Our net debt decreased by over EUR 87 million since the turn of the year. Still, our profitability is not satisfactory, so the streamlining efforts will continue. Due to risen raw material prices, we have also announced price increases.
    -        We have today published our new strategic direction. In the future, our business will be based on two very distinct business models: the value-added business and the operational excellence business. The focus is on profitable growth, with the return on capital employed (ROCE) as the most important indicator. Its target level of 13% remains unchanged.
    KEY FIGURES
     
    EUR million
    7-9/
    2009
    7-9/
    2008
    Change,
    %
    1-9/
    2009
    1-9/
    2008
    Change,
    %
    Net sales
    400.6
    451.2
    -11.2
    1,175.6
    1,383.4
    -15.0
    EBIT (Operating profit/loss)
    13.1
    11.3
    15.5
    12.1
    50.0
    -75.9
    Profit/loss before taxes
    7.3
    3.5
    -
    -6.6
    28.9
    -
    Profit for the period
    4.9
    2.5
    92.3
    -5.0
    20.9
    -
    Earnings per share
    0.10
    0.04
    -
    -0.11
    0.41
    -
    Return on capital employed (ROCE), %
    4.8
    3.9
    -
    1.5
    5.5
    -
    Equity ratio, %
    39.3
    39.5
    -
    39.3
    39.5
    -
    Gearing ratio, %
    81.9
    84.8
    -
    81.9
    84.8
    -
    Interest-bearing net liabilities
    511.3
    588.2
    -13.1
    511.3
    588.2
    -13.1
    Investments (excluding acquisitions)
    12.4
    36.5
    -66.0
    53.9
    90.5
    -40.5
    Net cash from operating activities
    67.3
    24.7
    -
    161.0
    70.8
    -
    Number of employees, average
    5,899
    6,544
    -9.9
    6,034
    6,537
    -7.7
    Number of employees,
    at the end of the period
    5,849
    6,452
    -9.3
    5,849
    6,452
    -9.3
     
    OPERATING ENVIRONMENT
     
    The very challenging market conditions resulting from the recession continued until the end of the first half of 2009, when the weakening of demand for Ahlstrom's products stopped and the demand for some products began to pick up. The positive trend continued during July-September, but demand did not increase to the level of the corresponding period last year.
     
    In the Fiber Composites segment*, the recession has not impacted the demand for Ahlstrom's food packaging and teabag materials or nonwovens in medical applications. In January-September, their demand remained close to the usual level. The demand for Ahlstrom's construction materials increased slightly in July-September compared to the first half of the year. Also the demand for wipes and transportation filtration media improved after the weak January-June. In addition, preparations for the possible spread of the A(H1N1) virus that causes swine flu had a slightly increasing impact on the demand for face masks and wipes. On the other hand, windmill and marine markets continued to be weak.
     
    In the Specialty Papers segment*, the market demand in release and label papers, which picked up during the second quarter, continued to increase and approached the level of the third quarter of 2008. The demand for wall covers and posters as well as industrial papers also increased. On the other hand, the automotive, furniture and textile markets continued to be weak.
     
    The increase in the market prices of Ahlstrom's main raw materials, natural and synthetic fibers and chemicals, which began in June, mainly continued.
     
    DEVELOPMENT OF NET SALES
     
    Net sales by segment
    and business area
    7-9/
    2009
    7-9/
    2008
    Change,
    %
    1-9/
    2009
    1-9/
    2008
    Change,
    %
    Fiber Composites
    216.5
    249.3
    -13.1
    637.7
    758.3
    -15.9
        Advanced Nonwovens
    41.6
    48.1
    -13.5
    131.3
    138.9
    -5.5
        Filtration
    70.5
    77.6
    -9.1
    205.0
    240.3
    -14.7
        Glass & Industrial Nonwovens
    46.8
    58.9
    -20.5
    134.1
    187.0
    -28.3
        Home & Personal Nonwovens
    59.5
    67.5
    -11.9
    173.8
    201.1
    -13.6
    Specialty Papers
    185.9
    204.0
    -8.9
    544.2
    630.7
    -13.7
        Release & Label Papers
    72.1
    80.7
    -10.7
    205.8
    241.0
    -14.6
        Technical Papers
    115.5
    123.4
    -6.4
    340.5
    389.7
    -12.6
    Other functions* and eliminations
    -1.8
    -2.1
    -
    -6.3
    -5.7
    -
    Total net sales
    400.6
    451.2
    -11.2
    1,175.6
    1,383.4
    -15.0
    * Other functions include financing and taxation-related receivables, liabilities and cost items, as well as earnings, costs, assets and liabilities belonging to holding and sales companies.
     
    Development of net sales in July-September 2009
     
    Net sales decreased in all of Ahlstrom's business areas compared to the third quarter of 2008. Compared to April-June 2009, net sales remained unchanged. Net sales for July-September amounted to EUR 400.6 million (EUR 451.2 million), reducing by 11.2% compared to July-September 2008.
     
    Net sales of the Fiber Composites segment amounted to EUR 216.5 million (EUR 249.3 million), representing 54% of the Group's net sales. The segment's net sales were decreased by 13.1% compared to July-September 2008. Net sales were reduced in all business areas due to lower volumes in most products. Net sales in the Advanced Nonwovens business area (-13.5%) was impacted by an extended summer shut-down. The steepest fall (-20.5%) was seen in the Glass & Industrial Nonwovens business area. On the other hand, net sales of Glass & Industrial Nonwovens increased by 9.6% compared to April-June this year, particularly owing to the picking up of the demand for construction materials.
     
    Net sales of the Specialty Papers segment amounted to EUR 185.9 million (EUR 204.0 million), representing 46% of the Group's net sales. Net sales were reduced by 8.9% compared to July-September 2008. Net sales were reduced in both business areas due to lower volumes and sales prices in most products. In the Technical Papers business area, the reduction was smaller (-6.4%), which is particularly due to an increase in the sales of wall covers and poster papers. Sales of Release & Label Papers decreased by 10.7% from July-September 2008, but increased slightly compared to April-June this year.
     
    Development of net sales in January-September 2009
     
    Group net sales were reduced in all business areas due to lower volumes in most products. Net sales for January-September 2009 amounted to EUR 1,175.6 million, down by 15.0% on the corresponding period the previous year (EUR 1,383.4 million). The comparison figures show that during the corresponding period in 2008, the global recession had only a slight negative impact on sales towards the end of the period.
     
    Net sales of the Fiber Composites segment amounted to EUR 637.7 million (EUR 758.3 million), representing 54% of the Group's net sales. Net sales fell by 15.9% compared to January-September 2008. Net sales of the Advanced Nonwovens business area were close to the level of January-September 2008 (-5.5%), while Glass & Industrial Nonwovens net sales fell by 28.3%.
     
    Net sales of the Specialty Papers segment amounted to EUR 544.2 million (EUR 630.7 million), representing 46% of the Group's net sales. Net sales decreased by 13.7% compared to January-September 2008. Net sales were reduced in both business areas, the Release & Label Papers (-14.6%) and Technical Papers
    (-12.6%).
     

    RESULT AND PROFITABILITY
     
    Financial result
    by segment
    7-9/
    2009
    7-9/
    2008
    Change,
    %
    1-9/
    2009
    1-9/
    2008
    Change,
    %
    Fiber Composites
      EBIT (Operating
      profit/loss)
    8.8
    7.7
    14.1
    11.6
    40.0
    -70.9
      EBIT (Operating
      profit/loss), %
    4.1
    3.1
    -
    1.8
    5.3
    -
      Return on net assets,
      RONA, %
    4.7
    3.8
    -
    2.0
    6.7
    -
    Specialty Papers
      EBIT (Operating
      profit/loss)
    7.3
    6.5
    12.6
    10.8
    16.7
    -35.4
      EBIT (Operating
      profit/loss), %
    3.9
    3.2
    -
    2.0
    2.6
    -
      Return on net assets,
      RONA, %
    7.6
    5.7
    -
    3.7
    4.9
    -
    Other functions* and eliminations
     
     
     
     
     
     
      Operating profit/loss
    -3.0
    -2.9
    -
    -10.3
    -6.7
    -
    Ahlstrom Group total
     
     
     
     
     
     
      EBIT (Operating
      profit/loss)
    13.1
    11.3
    15.5
    12.1
    50.0
    -75.9
      EBIT (Operating
      profit/loss), %    
    3.3
    2.5
    -
    1.0
    3.6
    -
      ROCE, %
    4.8
    3.9
    -
    1.5
    5.5
    -
    * Other functions include financing and taxation-related receivables, liabilities and cost items, as well as earnings, costs, assets and liabilities belonging to holding and sales companies.
     
    Result and profitability in July-September 2009
     
    Compared to July-September 2008, Ahlstrom's profitability was improved by low raw material prices and the improved demand pattern, but above all, by the implemented streamlining measures and internal cost control. The performance was burdened by lower sales volumes compared to July-September 2008 and increased price pressures due to the global recession. The Group EBIT was EUR 13.1 million (EUR 11.3 million). The figure includes non-recurring items of EUR -4.4 million (EUR -0.2 million).
     
    EBIT of the Fiber Composites segment amounted to EUR 8.8 million (EUR 7.7 million). The figure includes non-recurring items of EUR -1.1 million (EUR 0.3 million).
     
    EBIT of the Specialty Papers segment amounted to EUR 7.3 million (EUR 6.5 million). The figure includes non-recurring items of EUR -2.4 million (EUR 0.1 million).
     
    Result and profitability in January-September 2009
     
    The Group EBIT was EUR 12.1 million (EUR 50.0 million). The difference is above all due to the reduction in sales volumes because of the global recession, particularly during the first quarter, and increased price pressure. Implemented streamlining measures, market demand picking up at the end of the second quarter and lower raw material prices, particularly during the first two quarters of the year, improved the result.
     
    Non-recurring items in January-September totaled EUR -8.2 million (EUR 0.6 million), comprising mainly restructuring and reduction of personnel. The most significant item in the second quarter was a restructuring of EUR 1.4 million connected with the Bethune plant in the United States in the Home & Personal Nonwovens business area. Non-recurring items amounting to EUR 1.7 million were recognized in the third quarter due to the restructuring of the Filtration and Release & Label Papers business areas at the Turin plant in Italy.
     
    EBIT of the Fiber Composites segment decreased to EUR 11.6 million (EUR 40.0 million). Non-recurring items amounted to EUR -3.8 million (EUR 2.2 million).
     
    EBIT of the Specialty Papers segment was reduced to EUR 10.8 million (EUR 16.7 million). The figure includes non-recurring items of EUR -2.9 million (EUR -0.6 million).
     
    Ahlstrom continued an active approach in adjusting its daily production to weak demand. The market related downtime in production was 20.3% in January-September 2009 compared to 6.0% during the corresponding period in 2008. Ahlstrom pursued temporary layoffs and other flexible working hour solutions in different countries depending on the market conditions. Globally, approximately 2,400 employees were affected by the temporary layoffs and other flexible working hour arrangements during January-September (550 in the corresponding period in 2008) and 1,400 during July-September (350).
     
    Fixed costs were 4.1% lower than in January-September 2008 as a result of cost control and implemented streamlining measures.
     
    Total net financial expenses were EUR 19.8 million (EUR 20.4 million in January-September 2008). The net financial expenses include net interest expenses of EUR 18.3 million (EUR 17.8 million), exchange rate losses of EUR 0.2 million (EUR 0.4 million) and other financial expenses of EUR 1.2 million (EUR 2.1 million).
     
    Loss before taxes was EUR 6.6 million (profit before taxes of EUR 28.9 million).
     
    Tax income amounted to EUR 1.6 million (income tax expenses of EUR 7.9 million).
     
    Loss for the period was EUR 5.0 million (profit of EUR 20.9 million) and earnings per share (EPS) were EUR -0.11 (EUR 0.41).
     
    Return on capital employed (ROCE) amounted to 1.5% (5.5%), and return on equity (ROE) to -1.1% (3.9%).
     
    FINANCING
     
    In January-September 2009, net cash flow from operating activities amounted to EUR 161.0 million (EUR 70.8 million in January-September 2008). Cash flow was improved by significantly reduced working capital, to which particular attention has been paid since the beginning of the year. Operative working capital fell by EUR 81.1 million compared to the end of 2008.
     
    Interest-bearing net liabilities fell by EUR 87.4 million from the turn of the year to EUR 511.3 million (December 31, 2008: EUR 598.7 million). Ahlstrom's interest-bearing liabilities amounted to EUR 547.5 million on September 30, 2009. Of the loan portfolio, approximately 33% was tied to a fixed interest rate using interest rate derivatives or loan contracts. The duration of the loan portfolio (average interest rate tying period) was 10 months and the average interest rate was approximately 3.7%.
     
    The gearing ratio was 81.9% (December 31, 2008: 95.3%) and the equity ratio 39.3% (December 31, 2008: 36.8%).
     
    Ahlstrom has actively been extending the maturity structure of its loan portfolio during 2009. During the first half of the year, the company made agreements on new medium-term bilateral loan facilities amounting to EUR 55 million, and during the summer it signed a three-year, EUR 200 million agreement on the refinancing of the medium-term revolving credit facility of the same amount expiring in November 2009. In addition, Ahlstrom signed an agreement on pension loans amounting to EUR 56 million in the fall. The average maturity of the raised pension loans is 3.5 years, and they improve the repayment profile of the company's loan portfolio correspondingly.
     
    PERSONNEL
     
    The number of Ahlstrom employees during January-September was 6,034 on average (6,537 employees on the corresponding period in 2008) and at the end of September, 5,849 (6,452). At the end of 2008, the number of employees was 6,365.
     
    During January-September 2009, the headcount decreased by 516 persons due to the programs announced in January and April 2009 as well as some restructuring actions taken in 2008, mainly the closure of the Ascoli plant in Italy.
     
    At the end of September, the highest numbers of employees were in the United States (24%), France (21%), Italy (13%), Finland (11%) and Germany (9%).
     

    CAPITAL EXPENDITURE
     
    Ahlstrom did not make any major investment decisions during the review period. Ahlstrom's capital expenditure for January-September totaled EUR 53.9 million (EUR 90.5 million excluding acquisitions in January-September 2008).
     
    The largest on-going investment project is the construction of a medical nonwovens plant in Gujarat, India. Operations at the plant are estimated to start in the first quarter of 2010. The project has proceeded according to plans, and the buildings and installations of equipment are nearly complete. The estimated total cost of the project is EUR 38 million.
     
    STREAMLINING PROGRAMS
     
    Restructuring programs
     
    Ahlstrom has launched two restructuring programs this year to improve and adjust operational activities to the changed market demand. In addition, a project to optimize working capital was initiated in early 2009. All of the programs have proceeded according to plan.
     
    January program
    On January 7, 2009, Ahlstrom announced global restructuring plans to improve profitability and adjust operations to the challenging market situation. Of the permanent layoffs of 210 people as part of the program, a total of 172 had been laid by the end of September. In addition, there were temporary layoffs at production sites as well as at the head office, and production was cut down in several countries by market related downtime**.
     
    The program involved the closing down of unprofitable operations at the plants in Italy that belong to the Home & Personal Nonwovens business area and produce nonwoven wipes. On July 6, 2009, the company announced that it will close down the Gallarate plant as well as one production line in Cressa. The reduction impact on personnel related to the closures was approximately 50. Non-recurring expenses were EUR 19 million, of which EUR 5.2 million have a cash flow effect. The non-recurring expenses have been booked in Ahlstrom's fourth quarter 2008 financial results.
     

    April program
    Ahlstrom announced on April 29, 2009 that it was to initiate another restructuring program, aiming for annual savings of EUR 50 million. The savings are estimated to have full effect in 2010.
     
    In April, Ahlstrom estimated that the restructuring may have an impact on 400 to 500 Ahlstrom employees globally. A total of 251 employees were laid off by the end of September.
     
    The largest personnel cut implemented so far was related to the company's June decision to permanently close down a production line at the plant in Bethune, USA, and move its production to Green Bay, USA. The production line belonged to the Home & Personal Nonwovens business area, producing wipes. Personnel cuts made as a result of the closing down total 65 employees, and most of them were laid off during the third quarter.
     
    Ahlstrom announced on September 14, 2009, that it will start new cooperation negotiations at the plant in Karhula, Finland, to reduce approximately 100 positions and temporarily lay off 80 employees. The actions are targeted to adapt the production volumes of specialty reinforcements and glass fiber tissue to match the demand. In addition, the company announced on October 6, 2009, that it will start negotiations to adjust production at its Altenkirchen plant in Germany. The adjustments are estimated to result in a reduction of approximately 65 positions (see Events after the review period). 
     
    When announcing the April program, its cost was estimated to be approximately EUR 40 million in 2009, of which 50% cash-related. Approximately 8 million of the costs were realized by the end of September, and the total cost of the program is now estimated to be about EUR 34 million by the end of 2009, of which 60% cash-related. The costs are lower than estimated due to the implemented measures differing slightly from the planned solutions. However, this will not impact upon the target for annual savings of EUR 50 million.
     
    Optimization of working capital
     
    The project to optimize working capital initiated at the beginning of 2009 is proceeding according to plan. The project aims at reducing the working capital by EUR 100 million over two years. So far, the project has been initiated at 12 plants and, in the next few months, it will be rolled out to most production sites and functions. During January-September, the operative working capital fell by EUR 81.1 million with turnover improving by 15 days to 61 days at the end of September.
     
    AUTHORIZATIONS OF THE BOARD
     
    Ahlstrom Corporation's Annual General Meeting of Shareholders (AGM) held on March 25, 2009, authorized the Board of Directors to repurchase Ahlstrom shares. The maximum number of shares to be purchased is 4,500,000. The shares may be repurchased only through public trading at the prevailing market price by using unrestricted shareholders' equity.
     
    The AGM also authorized the Board of Directors to distribute a maximum of 4,500,000 own shares held by the company. The Board of Directors is authorized to decide to whom and in which order the shares will be distributed. The shares may be used as consideration in acquisitions and in other arrangements as well as to implement the company's share-based incentive plans in the manner and to the extent decided by the Board of Directors. The Board of Directors also has the right to decide on the distribution of the shares in public trading for the purpose of financing possible acquisitions.
     
    The authorizations are valid for 18 months from the close of the Annual General Meeting but will, however, expire at the close of the next Annual General Meeting, at the latest.
     
    SHARES AND SHARE CAPITAL
     
    Ahlstrom's share is listed on the NASDAQ OMX Helsinki. Ahlstrom has one series of shares. The share is classified under NASDAQ OMX's Materials sector and the trading code is AHL1V.
     
    During January-September 2009, a total of 3.4 million Ahlstrom shares were traded for a total of EUR 25.1 million. The lowest trading price during the review period was EUR 6.15 and the highest EUR 10.00. The closing price on September 30, 2009, was EUR 9.25, and market capitalization was EUR 431.7 million on September 30, 2009.
     
    Ahlstrom Group's equity per share was EUR 13.38 at the end of the review period (December 31, 2008: EUR 13.46).
     
    Ahlstrom has not used the AGM authorization to repurchase or distribute company shares.
     
    EVENTS AFTER THE REVIEW PERIOD
    Key conclusions of the strategy review process
     
    Ahlstrom has published a stock exchange release today, October 27, 2009, announcing that it has completed the conclusions of the strategy review process initiated in April 2009. The aim of the process was to verify the future direction and ambitions of the company. The development of business operations will be based on profitable growth, with increased focus in Asia. At the same time, the company aims to manage its balance sheet and reduce its gearing ratio.
     
    In accordance with the revised strategy, Ahlstrom's operations will be based on two distinct business models resulting from different competitive situations, market growth potential and possibilities to differentiate in various product lines. The first business model is based on providing customers with added value products and the second on operational excellence.
     
    The value-added business will be the company's primary growth engine, developing through organic growth and possibly by making small acquisitions. Innovative new products that help Ahlstrom's customers become more competitive will create the foundation of success. The cluster will include the Fiber Composites segment's Advanced Nonwovens and Glass & Industrial Nonwovens business areas as well as transportation and liquid filtration media in the Filtration business area. It will also include crepe papers and vegetable parchment from the Technical Papers business area of the Specialty Papers segment.
     
    The operational excellence business will be key to support the growth of the company. The main focus will be to develop cost effective products serving customer needs, through, for instance, alternative raw materials or new technological solutions. The cluster covers the Release & Label Papers business area and the majority of the Technical Papers business area in the Specialty Papers segment. In the Fiber Composites segment, it will include the Home & Personal Nonwovens business area and air filtration media in the Filtration business area.
     
    The long-term target of the strategy is to strengthen Ahlstrom's competitive position and generate returns that are in line with the company's financial targets. One of the most important indicators is return on capital employed (ROCE), which should reach its target level of 13%. In January-September ROCE was 1.5% and in July-September 4.8%. Measures to reach these targets will be continued with regard to the product lines and units falling below the target level.
     
    Negotiations on production adjustments at the Altenkirchen plant in Germany
     
    As part of the April restructuring program, Ahlstrom announced on October 6, 2009, that it will start negotiations to adjust production at its Altenkirchen plant in Germany. The adjustments are estimated to result in a reduction of approximately 65 positions.
     
    The specialty materials produced at the plant are used in the automotive, construction and other industries, and the target is to adjust their production to the current demand. The plant is part of the Technical Papers business area.
     
    OUTLOOK
     
    At the beginning of the year, Ahlstrom estimated that the market environment would continue to be challenging and difficult to forecast during 2009. As a result, Ahlstrom announced that it would change its disclosure policy so that during a period of major uncertainty, the outlook would only include forecasts of the business and market environment. The company reported that forecasts of net sales development would be included only when the predictability of the operating environment had returned to the previous level. As predictability has returned to a better level than during the first half of the year, Ahlstrom has decided to start again the estimation of the future outlook on a calendar year basis in terms of the development of both net sales and EBIT.
     
    The slight increase in the market demand for Ahlstrom's products towards the end of the second quarter continued during the third quarter. Despite the improved quarterly performance, demand nevertheless remains low. Net sales for January-September 2009 were 15% down on January-September 2008, and the market related downtime in the production was approximately 20%. No significant changes in the market situation are expected during the rest of the year. Ahlstrom's net sales for 2009 are estimated to fall short of the level of 2008.
     
    The Group EBIT is also expected to fall short of the previous year, mainly due to lower sales volumes, price pressure and non-recurring items. Successfully implemented streamlining measures and adaptation of operations to market situation combined with lower raw material prices were not sufficient to compensate for the impact of low sales volumes.
     
    In addition to the restructuring programs announced in January and April, the company will continue adjusting its operations to the market situation as necessary.
     
    Investments in 2009 are estimated to be approximately EUR 70 million (EUR 167.0 million in 2008, or EUR 128.0 million excluding acquisitions).
     
    SHORT-TERM RISKS
     
    Despite some positive signs, the global recession still continues and causes several factors of uncertainty that might impact Ahlstrom's business. Production may need to be cut more than planned, and the risk of a decrease in sales prices will increase if the low demand continues. So far, bad debts have remained low, but Ahlstrom's customer credit risks have increased due to the weakening economic situation and are more difficult to cover with credit insurances.
     
    In addition, raw material prices which decreased during the first months of the year, the price of pulp in particular, have been increasing since last summer and the increase is estimated to continue also during the fourth quarter.
     
    If the challenging market conditions persist, they may prolong the payback period of the EUR 500 million investment program carried out by Ahlstrom in 2007 and 2008.
     
    The general risks in Ahlstrom's business operations are described in more detail in the company's annual report 2008 on pages 24 to 29, and on the Internet at www.ahlstrom.com.
     
    *   *   *
     
    This interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS). Comparable figures refer to the same period last year unless otherwise stated. The report is unaudited.
     
    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.
     
    Helsinki, October 27, 2009
     
    Ahlstrom Corporation
    Board of Directors

    ADDITIONAL INFORMATION
     
    Jan Lång, President & CEO, tel. +358 10 888 4700
    Seppo Parvi, CFO, tel. +358 10 888 4768
     
    Ahlstrom's President & CEO Jan Lång will present the third quarter results in Finnish at a press conference in Helsinki on October 27, 2009, at 2:00 p.m. Finnish time. The conference will take place at Event Arena Bank, address Unioninkatu 20, 2nd floor. The name of the meeting room will be displayed on the display board in the lobby. You are welcome to attend.
     
    In addition, an international conference call for analysts and investors will be held on October 27, 2009, at 4:00 p.m. Finnish time. The discussion will be led by President & CEO Jan Lång. To participate in the teleconference, please dial +358 9 2313 9201 in Helsinki or +44 20 7162 0077 in London a few minutes before the conference begins. When connecting to the conference call, please use the conference id 848199. A replay number is available until November 3, 2009. The numbers for the replay are +358 9 2314 4681 (instructions in Finnish) and +44 20 7031 4064 (instructions in English). The access code is the same as the conference call id (848199).
     
    The presentation material will be available at www.ahlstrom.com > Investors > IR presentations on October 27, 2009, after the interim report has been published.
     
    AHLSTROM'S FINANCIAL INFORMATION IN 2010
     
    Ahlstrom will publish its financial information in 2010 as follows:
     
    During the silent period, Ahlstrom will refrain from contact with the representatives of the capital market.
     
    The annual report 2009 will be published during the week starting March 15.
     
    The Annual General Meeting of Shareholders (AGM) will be held on Wednesday, March 31, 2010, at 1:00 p.m. in Finlandia Hall, address Mannerheimintie 13 e, Helsinki, Finland.
     
     
    Distribution:
    NASDAQ OMX Helsinki
    www.ahlstrom.com
    Principal media
     
     
    Ahlstrom in brief
    Ahlstrom is a global leader in the development, manufacture and marketing of high performance nonwovens and specialty papers. Ahlstrom's products are used in a large variety of everyday applications, such as filters, wipes, flooring, labels, and tapes. Based upon its unique fiber expertise and innovative approach, the company has a strong market position in several business areas in which it operates. Ahlstrom's 6,000 employees serve customers via sales offices and production facilities in more than 20 countries on six continents. In 2008, Ahlstrom's net sales amounted to EUR 1.8 billion. Ahlstrom's share is quoted on the NASDAQ OMX Helsinki. The company website is at www.ahlstrom.com.
     
     
    APPENDIX
    Consolidated financial statements
     

    APPENDIX
     
    CONSOLIDATED FINANCIAL STATEMENTS
     
     
    Financial Statements are unaudited.
     
     
     
     
    STATEMENT OF CHANGES IN EQUITY
     
    1) Issued capital
    2) Share premium
    3) Non-restricted equity reserve
    4) Hedging reserve
    5) Translation reserve
    6) Retained earnings 
    7) Minority interest
    8) Total equity
     
     

     
     

     
     

    ACCOUNTING PRINCIPLES
     
    This interim report has been prepared in accordance with IAS 34, Interim Financial reporting, as adopted by EU and the accounting policies set out in the Group's Financial Statements for 2008 except for the changes below.
     
    Changes in accounting principles
     
    The Group has adopted the following new or amended standards and interpretations as of January 1, 2009:
     
    - IFRS 8 Operating segments
    The Group has two reportable segments: the Fiber Composites segment and the Specialty Papers segment.
    The adoption of IFRS 8 does not have an impact on reportable segments.
     
    - Revised IAS 23 Borrowing costs
    The Group has already earlier applied this accounting policy and the adoption of the revised standard has no impact on the consolidated financial statements.
     
    - Amendment to IAS 1 A Revised presentation
    The amendment has changed the presentation of financial statements. The income statement is presented in two statements: income statement and statement of comprehensive income. The statement of changes in equity includes only transactions with owners and all non-owner changes are presented in equity as a single line.
     
    The below mentioned new and amended standards and interpretations do not have an impact on the consolidated financial statements.
     
    - Amendment to IFRS 2 Share-based payment: Vesting Conditions and Cancellations  
     
    - Amendments to IAS 32 and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation
     
    - IFRIC 13 Customer Loyalty Programmes  

     
     
    Segment information is presented according to the IFRS standards.
     

     
     
     
     
     
     
    Market prices have been used in transactions with associated companies.

     
     
     
     
     

     
     
     
     

     
     

     
    CALCULATION OF KEY FIGURES
     
     
     
     
     



    *Ahlstrom's business is reported in two segments: the Fiber Composites segment and the Specialty Papers segment. The Fiber Composites segment comprises the Advanced Nonwovens, Filtration, Glass & Industrial Nonwovens and Home & Personal Nonwovens business areas. The Specialty Papers segment covers the Release & Label Papers and Technical Papers business areas.
     
    *Ahlstrom's business is reported in two segments: the Fiber Composites segment and the Specialty Papers segment. The Fiber Composites segment comprises the Advanced Nonwovens, Filtration, Glass & Industrial Nonwovens and Home & Personal Nonwovens business areas. The Specialty Papers segment covers the Release & Label Papers and Technical Papers business areas.
     
    ** Market related downtime = downtime taken due to market reasons, lack of orders or too high product stock. Otherwise plants could have run normally without any other downtime.
    Market related downtime % = market related downtime / manned time. Manned time = available time - unmanned time. Time the machines were running according to their shift system.
     
     
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