Munksjö's interim report for January-March 2017: Continued profitability improvement building strong platform for Ahlstrom-Munksjö

Munksjö's interim report for January-March 2017: Continued profitability improvement building strong platform for Ahlstrom-Munksjö

AHLSTROM-MUNKSJÖ OYJ, INTERIM REPORT April 26, 2017 at 07:30 a.m. CEST This January-March 2017 interim report represents the stand-alone results for Munksjö Oyj. A separate final accounts report for Ahlstrom Corporation’s January-March 2017 results is available on www.ahlstrom-munksjo.com. Any forward-looking statements relate to Ahlstrom-Munksjö as a combined company.   Continued profitability improvement building strong platform for Ahlstrom-Munksjö Highlights of the first quarter 2017                                                   · Net sales increased by 2% to EUR 294.3 (288.0) million. · Adjusted EBITDA was EUR 37.3 (31.0) million and the adjusted EBITDA margin was 12.7% (10.8%). Items affecting comparability (IAC) amounted to EUR -7.2 (0.0) million, mainly related to the costs associated with the combination with Ahlstrom.  · Operating result was EUR 17.4 (16.3) million and net result EUR 9.9 (6.3) million. · Earnings per share (EPS) were EUR 0.20 (0.12). · Operating cash flow was EUR 16.5 (3.6) million.  · On 11 January 2017, the Extraordinary General Meeting (EGM) of Munksjö resolved to approve the combination of Munksjö and Ahlstrom. After approval of the merger by the European Commission on 13 March 2017, the Boards of Directors of Munksjö and Ahlstrom, respectively, on 31 March 2017 resolved to complete the merger. · On 16 March 2017, the Board of Directors of Munksjö resolved on an extra payment of funds from the reserve for invested unrestricted equity as return of equity of EUR 0.45 per share, based on the authorisation granted by the EGM on 11 January 2017. The payment date was 27 March 2017. Events after the reporting period  · On 1 April 2017, the merger between Munksjö and Ahlstrom was registered by the Finnish Trade Register and trading in the merger consideration shares commenced on 3 April 2017. · On 6 April 2017, the Board of Directors of Ahlstrom-Munksjö resolved on a new dividend policy, with the aim to distribute a stable, over time increasing dividend, to be paid biannually. The Board of Directors proposes to the Annual General Meeting on 16 May 2017 that it resolves on the payment of funds from the reserve for invested unrestricted equity as return of equity of EUR 0.23 per share, which would be paid in September 2017. · On 6 April 2017, the Board of Directors of Ahlstrom-Munksjö confirmed the payout of the long-term share-based incentive programs 2014-2016 and 2016-2018 for the members of the management team and other key personnel of Munksjö. KEY FIGURES (MEUR)             Jan-Mar Jan-Dec 2017 2016 Change, % 2016 Net   sales 294.3 288.0 2% 1,142.9 EBITDA   (adj.*) 37.3 31.0 20% 136.7 EBITDA   margin, % (adj.*) 12.7 10.8 12.0 EBITDA 30.1 31.0 -3% 130.1 EBITDA   margin, % 10.2 10.8 11.4 Operating   result (adj.*) 24.6 16.3 51% 81.5 Operating   margin, % (adj.*) 8.4 5.7 7.1 Operating   result 17.4 16.3 7% 74.9 Operating   margin, % 5.9 5.7 6.6 Net   result 9.9 6.3 57% 43.3 Earnings   per share (EPS), EUR 0.20 0.12 62% 0.85 Interest-bearing   net debt 184.7 234.4 -21% 169.5 * Adjusted for items affecting comparability (IAC)                                                                          Unless otherwise indicated, the figures in parentheses refer to the figures for the equivalent period in 2016. This financial report is unaudited. Comment from Jan Åström, President and CEO  “The first quarter of 2017 showed continued strength in terms of volumes and sales growth as well as profitability of Munksjö on a stand-alone basis. I am also pleased that Ahlstrom’s sales and result development in first quarter was very strong, giving a solid foundation for the future as one company, Ahlstrom-Munksjö. We have now started the integration work and we confirm the earlier announced plan to reach EUR 35 million in synergies. We are also working right now on identifying further business synergies, such as the integration of the former business area Graphics and Packaging into the new business area Specialities, to develop a combined product and service offering. Through the combination a strong and well established platform will be created with multiple growth opportunities. I am honoured to lead our combined team of talented employees and look forward to our future as Ahlstrom-Munksjö.” Outlook  The outlook for the financial year 2017 is given for the combined Ahlstrom-Munksjö operations. Market outlook: The demand outlook for 2017 for Ahlstrom-Munksjö’s fibre-based products is expected to remain stable at the current good level for most of the product segments and to reflect the seasonal pattern. Price increases are implemented as customer contracts expire to mitigate for raw material price increases in certain segments, particularly in the Decor and Release Paper Europe businesses. The price increases will take effect towards the end of the second quarter. Shutdowns: The annual maintenance and vacation shutdowns in the second and third quarter as well as the seasonal shutdowns at the end of 2017 are expected to be carried out to about the same extent as in 2016. However the maintenance shutdown usually carried out in the third quarter in the Swedish plant Billingsfors, will be replaced by shorter stops in the second and fourth quarter, due to changes in the shift form. The next maintenance shut down at the pulp production facility in Aspa in Sweden will be carried out in the fourth quarter of 2017. Capital expenditure: The cash flow effect of current capital expenditure for fixed assets in 2017 is expected to be approximately EUR 70 million. In addition, the cash flow impact of the strategic investments in the Arches mill and in Madisonville is expected to be approximately EUR 10 million and EUR 8 million respectively. As from the release of the combined pro forma figures in May 2017, Ahlstrom-Munksjö will start providing EBITDA development guidance as well as comments on future synergy realizations. Ahlstrom and Munksjö complete the merger On 1 April 2017, Ahlstrom Corporation was merged into Munksjö Oyj and the name of the combined company was changed to Ahlstrom-Munksjö Oyj. The combination created a global leader in sustainable and innovative fiber-based solutions with combined annual net sales of approximately EUR 2.15 billion for the full year 2016 and EUR 567 million for Q1 2017, about 6,200 employees and 41 production and converting facilities in 14 countries. The transaction is expected to create significant value for the stakeholders through stronger global growth opportunities and improved operational efficiency. Ahlstrom-Munksjö’s growth ambitions are supported by a strong balance sheet and strong cash flow generation. Approvals from the Extraordinary General Meetings of Ahlstrom and Munksjö as well as the European Commission were received on 11 January 2017 and 13 March 2017, respectively. In connection with the merger, Ahlstrom and Munksjö distributed funds in the total amount of approximately EUR 46 million, corresponding to EUR 0.49 per share in Ahlstrom and EUR 0.45 per share in Munksjö, in lieu of the companies’ ordinary annual distribution.  Munksjö Oyj and Ahlstrom Corporation were listed companies prior to the merger and hence preparations for the combined opening balance sheet have been initiated only after the completion. Combined pro forma figures will be made available on or about 15 May 2017. More information of the combined company, such as composition of the management team can be found in the merger prospectus, published on 16 December 2016. Financial targets for Ahlstrom-Munksjö Financial targets for the combined company are: ·  an EBITDA margin above 14 per cent over a business cycle, ·  net gearing below 100 per cent, ·  a stable and annually increasing dividend, to be paid biannually.  The Munksjö Group            Jan-Mar Jan-Dec MEUR 2017 2016 Change, % 2016 Net   sales 294.3 288.0 2% 1,142.9 EBITDA   (adj.*) 37.3 31.0 20% 136.7 EBITDA   margin, % (adj.*) 12.7 10.8 12.0 EBITDA 30.1 31.0 -3% 130.1 EBITDA   margin, % 10.2 10.8 11.4 Operating   result (adj.*) 24.6 16.3 51% 81.5 Operating   margin, % (adj.*) 8.4 5.7 7.1 Operating   result 17.4 16.3 7% 74.9 Operating   margin, % 5.9 5.7 6.6 Net   result 9.9 6.3 57% 43.3 Capital   expenditure 11.1 9.9 12% 39.2 Employees,   FTE 2,751 2,732 1% 2,755 * Adjusted for items affecting comparability (IAC) First quarter 2017   · Total group delivery volumes increased. The positive volume development was particularly strong in Business Area Industrial Applications and Decor as well as in the European release paper business, but was partly offset by lower volumes in Business Area Graphics and Packaging and the specialty pulp business. The seasonal shutdowns in the first quarter were on the same level as a year ago. · Adjusted EBITDA increased to EUR 37.3 (31.0) million and the adjusted EBITDA margin was 12.7% (10.8%). The positive result effect was driven by lower variable costs and higher production. · IAC amounted to EUR -7.2 (0.0) million, whereof EUR 4.1 million were transaction costs related to the merger with Ahlstrom, EUR 1.2 million related to integration costs, and EUR 0.3 million to restructuring expenses. Furthermore, approximately EUR 1.6 million were related to the terminated long-term share-value-based incentive program. · The operating result was EUR 17.4 (16.3) million and net result EUR 9.9 (6.3) million. · In the reporting period the currency hedging result impacting operating profit amounted to EUR -0.3 (-0.1) million. Exchange loss on financial assets and liabilities were EUR 0.8 (2.6) million and are reported in financial items. Webcast and conference call A combined news conference, call and live webcast will be arranged on the publishing day 26 April 2017 at 10:00 a.m. CEST (11:00 a.m. EEST, 8:00 a.m. GMT) at restaurant Savoy (Eteläesplanadi 14, 7th floor, Helsinki). The January-March 2017 interim report of Munksjö Oyj as well as the Final Accounts Release of Ahlstrom Corporation will be commented on by President and CEO Jan Åström, Deputy CEO Sakari Ahdekivi and CFO Pia Aaltonen-Forsell. The event will be held in English. Webcast and conference call information The combined webcast and teleconference can be viewed at: http://qsb.webcast.fi/m/munksjo/munksjo_2017_0426_q1/ Finnish callers: +358 (0)9 7479 0404 Swedish callers: +46 (0)8 5065 3942 US callers: +1 719 325 2346                         UK callers: +44 (0) 330 336 9412 Conference ID: 4282354 To join the conference call, participants are requested to dial one of the numbers above 5-10 minutes prior to the start of the event. An on-demand version of the conference call will be available on Ahlstrom-Munksjö’s website later the same day. Future financial reports   The complete IR calendar is available on www.ahlstrom-munksjo.com/investors. Ahlstrom-Munksjö’s interim report for January-June 2017 will be published on Tuesday 25 July 2017. The financial reports are published in English, Finnish and Swedish and are available at www.ahlstrom-munksjo.com after the publication. Ahlstrom-Munksjö observes a 30 day silent period preceding the announcement of financial results. For further information, please contact:

Jan Åström, President and CEO, tel. +46 10 250 10 01 Pia Aaltonen-Forsell, CFO, tel. +46 10 250 10 29

Ahlstrom-Munksjö in brief Ahlstrom-Munksjö is a global leader in fiber-based materials, supplying innovative and sustainable solutions to customers worldwide. Our offerings include decor paper, filter media, release liners, abrasive backings, nonwovens, electrotechnical paper, glass fiber materials, food packaging and labeling, tape, medical fiber materials and solutions for diagnostics. Combined annual net sales are about EUR 2.15 billion and we employ 6,200 people. The Ahlstrom-Munksjö share is listed on the Nasdaq Helsinki and Stockholm. The company was formed on April 1, 2017 through the merger of Ahlstrom Corporation and Munksjö Oyj. Read more at www.ahlstrom-munksjo.com.

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