Ahlstrom financial statements bulletin 2009: Cash flow and balance sheet strengthened considerably
(Thomson Reuters ONE) - Ahlstrom Corporation STOCK EXCHANGE RELEASE 3.2.2010 at 12.10Year 2009 compared to 2008· Net sales were EUR 1,596.1 million (1,802.4).· EBIT amounted to EUR -14.6 (14.6) including non-recurring items of EUR-54.3 million (-21.1).· Loss before taxes was EUR 40.1 million (loss before taxes 20.6) andearnings per share were EUR -0.72 (-0.38).· Net cash from operating activities increased to EUR 209.6 million(102.4), and gearing ratio decreased to 57.7% (95.3%).October-December 2009 compared to October-December 2008· Net sales were EUR 420.5 million (419.0).· EBIT amounted to EUR -26.6 (-35.4) including non-recurring items ofEUR-46.2 million (-21.7).· Loss before taxes was EUR 33.4 million (loss before taxes 49.5) andearnings per share were EUR -0.61 (-0.79).· Net cash from operating activities increased to EUR 48.6 million(31.5).Events in 2009· Ahlstrom's revised strategy was published in October.· In November, the company issued a EUR 80 million hybrid bond tostrengthen its balance sheet.· The number of employees decreased by 524 people and working capital byEUR 104.3 million with turnover improving by 23 days during the year.Outlook for 2010 * The market sentiment during the latter half of 2009 improved. Net sales for 2010 are expected to increase compared to 2009 but remain lower than the level for 2008. Operating profit (EBIT) excluding non-recurring items is expected to increase compared to 2009.Jan L?, President and CEO:- The personnel excellently implemented the streamlining efforts toimprove profitability and cash flow. The EUR 55 million annual savings will bereached in 2010 as planned. The streamlining and the recovering demand since thesummer returned our EBIT excl. non-recurring items back to a profitable pathtoward the end of the year. However, due to the difficult first months,non-recurring items from the streamlining efforts and impairment charges, theEBIT was negative and fell short of 2008. The utilization rates of the EUR 500million investments implemented in the previous years must be improved.- The improved cash flow and the November hybrid bond have strengthenedour balance sheet and financial position in line with our objective to improvethe financial ability to implement our revised strategy. Ahlstrom operates intwo distinct business clusters that require different kinds of competence andmanagement: value-added business and operational excellence business.KEY FIGURES+--------------------------------+-------+-------+-------+------+------+-------+|EUR million | 2009| 2008|Change,|10-12/|10-12/|Change,|| | | | | 2009| 2008| || | | | %| | | %|+--------------------------------+-------+-------+-------+------+------+-------+|Net sales |1,596.1|1,802.4| -11.4| 420.5| 419.0| 0.4|+--------------------------------+-------+-------+-------+------+------+-------+|EBIT (Operating profit/loss) | -14.6| 14.6| -| -26.6| -35.4| 24.8|+--------------------------------+-------+-------+-------+------+------+-------+|Profit/loss before taxes | -40.1| -20.6| -94.4| -33.4| -49.5| 32.5|+--------------------------------+-------+-------+-------+------+------+-------+|Profit for the period | -32.9| -16.1| -104.5| -27.9| -37.0| 24.6|+--------------------------------+-------+-------+-------+------+------+-------+|Earnings per share | -0.72| -0.38| -| -0.61| -0.79| -|+--------------------------------+-------+-------+-------+------+------+-------+|Return on capital employed | | | | | | ||(ROCE), % | -1.1| 1.4| -| -9.4| -10.8| -|+--------------------------------+-------+-------+-------+------+------+-------+|Equity ratio, % | 44.8| 36.8| -| 44.8| 36.8| -|+--------------------------------+-------+-------+-------+------+------+-------+|Gearing ratio, % | 57.7| 95.3| -| 57.7| 95.3| -|+--------------------------------+-------+-------+-------+------+------+-------+|Interest-bearing net liabilities| 395.9| 598.7| -33.9| 395.9| 598.7| -33.9|+--------------------------------+-------+-------+-------+------+------+-------+|Investments (excluding | | | | | | ||acquisitions) | 63.8| 128.0| -50.1| 10.0| 37.5| -73.4|+--------------------------------+-------+-------+-------+------+------+-------+|Net cash from operating | | | | | | ||activities | 209.6| 102.4| 104.8| 48.6| 31.5| 54.2|+--------------------------------+-------+-------+-------+------+------+-------+|Number of employees, average | 5,993| 6,510| -7.9| 5,855| 6,427| - 8.9|+--------------------------------+-------+-------+-------+------+------+-------+|Number of personnel, | | | | | | ||at the end of the period | 5,841| 6,365| -8.2| 5,841| 6,365| -8.2|+--------------------------------+-------+-------+-------+------+------+-------+OPERATING ENVIRONMENTThe year 2009 followed similar patterns in the markets of most of Ahlstrom'sproducts: the extremely challenging market situation caused by the recessioncontinued until the end of the first half of 2009. In the summer 2009, the dropin market demand stopped, and in most markets, the demand began to recover.Despite the favorable development in the latter part of the year, the demandfell short of the level of 2008. The globally increased unemployment weakenedthe demand in the consumer goods industry in general.In the Fiber Composites segment*, the impact of the recession on the demand forAhlstrom's products was twofold. The demand for Ahlstrom's food packaging andteabag materials or nonwovens in medical applications was not impactedsignificantly, but the markets for other products declined. After two weakfirst-half quarters, the market situation in the construction and automotiveindustries improved during the second half of the year, which increased thedemand for Ahlstrom's construction materials and transportation filtrationmedia. Nevertheless, the markets continued to be challenging. Preparations forthe possible spread of the H1N1 virus causing swine flu had a slightly positiveimpact on the demand for face masks and wipes in the summer and fall. However,the demand leveled off during the fourth quarter. As for wind power and marineindustries, Ahlstrom's main markets in Europe and North America were weakthroughout the year.In the Specialty Papers segment*, the demand for release and label papers beganto pick up during the second quarter and increased throughout the rest of theyear. The demand for posters, industrial papers, pre-impregnated furniturepapers and crepe papers also increased. The demand for the crepe papersincreased particularly in Asia. On the other hand, the automotive, constructionand textile specialty paper markets continued to be weak.Ahlstrom's main raw materials are natural fibers, mainly pulp, synthetic fibersand chemicals. The prices of pulp in particular, but also of other rawmaterials, began to increase in June, and the increase continued throughout therest of the year. Energy and transportation costs also increased.DEVELOPMENT OF NET SALES+-----------------+-------+-------+-------+------+------+-------+|Net sales | 2009| 2008|Change,|10-12/|10-12/|Change,|| | | | | | | ||by segment | | | %| 2009| 2008| %|| | | | | | | ||and business area| | | | | | |+-----------------+-------+-------+-------+------+------+-------+|Fiber Composites | 861.2| 987.4| -12.8| 223.4| 229.1| -2.5|+-----------------+-------+-------+-------+------+------+-------+| Advanced | | | | | | || | | | | | | || Nonwovens | 175.4| 189.2| -7.3| 44.1| 50.2| -12.2|+-----------------+-------+-------+-------+------+------+-------+| Filtration | 276.2| 306.5| -9.9| 71.1| 66.2| 7.4|+-----------------+-------+-------+-------+------+------+-------+| Glass & | | | | | | || | | | | | | || Industrial | | | | | | || | | | | | | || Nonwovens | 180.0| 235.6| -23.6| 45.9| 48.6| -5.6|+-----------------+-------+-------+-------+------+------+-------+| Home & | | | | | | || | | | | | | || Personal | | | | | | || | | | | | | || Nonwovens | 238.4| 268.5| -11.2| 64.6| 67.4| -4.2|+-----------------+-------+-------+-------+------+------+-------+|Specialty Papers | 743.8| 822.4| -9.6| 199.6| 191.6| 4.2|+-----------------+-------+-------+-------+------+------+-------+| Release & | | | | | | || | | | | | | || Label Papers | 282.0| 314.6| -10.4| 76.2| 73.5| 3.6|+-----------------+-------+-------+-------+------+------+-------+| Technical | | | | | | || | | | | | | || Papers | 464.1| 507.9| -8.6| 123.6| 118.2| 4.6|+-----------------+-------+-------+-------+------+------+-------+|Other functions* | | | | | | || | | | | | | ||and eliminations | -8.9| -7.4| -| -2.5| -1.7| -|+-----------------+-------+-------+-------+------+------+-------+|Total net sales |1,596.1|1,802.4| -11.4| 420.5| 419.0| 0.4|+-----------------+-------+-------+-------+------+------+-------+* Other functions include financing and taxation-related receivables,liabilities, and cost items, as well as earnings, costs, assets, and liabilitiesbelonging to holding and sales companies.Development of net sales in 2009Group net sales decreased in all business areas due to lower volumes in mostproducts. Net sales for 2009 amounted to EUR 1,596.1 million, decreasing by11.4% compared to the previous year (EUR 1,802.4 million).Quarterly net sales decreased to its lowest, EUR 376.1 million, during the firstquarter of 2009, after which they increased steadily toward the end of the year.Net sales increased by 12.4% in Asia-Pacific. The increase was particularlystrong in China and India. Net sales decreased in other geographic areas.Net sales of the Fiber Composites segment amounted to EUR 861.2 million (EUR987.4 million), representing 54% of the Group's net sales. Net sales decreasedby 12.8% compared to the previous year. The net sales of the Advanced Nonwovensbusiness area decreased the least (-7.3%). The decline was mainly due to theoptimization of the product mix improving profitability and the impact ofexchange rate fluctuations. The heaviest drop was seen in the Glass & IndustrialNonwovens business area (-23.6%). The decrease in the net sales of this businessarea was the steepest due to the weak demand in the windmill and marineindustries in Ahlstrom's main markets. However, sales of glassfiber tissue andindustrial nonwovens, such as wallcovers, increased toward the end of the year,and sales of specialty reinforcements used in windmills and the marine industryseemed to have bottomed out in the fourth quarter.Net sales of the Specialty Papers segment amounted to EUR 743.8 million (EUR822.4 million), representing 46% of the Group's net sales. Net sales decreasedby 9.6%. Net sales were reduced both in the Release & Label Papers (-10.4%) andTechnical Papers (-8.6%) business areas due to a decrease in sales volumes ofmost products caused by the recession. However, the general trend in salesvolumes turned in the summer, and the net sales increased during the second halfof the year.Development of net sales in October-December 2009The Group's net sales remained on the level of October-December 2008. Net saleswere EUR 420.5 million (EUR 419.0 million). With regard to net sales, it shouldbe noted that the fourth quarter of 2008 was the first reporting period with theglobal recession reflected on Ahlstrom's sales to its full extent.Net sales of the Fiber Composites segment amounted to EUR 223.4 million (EUR229.1 million), representing 53% of the Group's net sales. The segment's netsales decreased by 2.5% compared to October-December 2008. Net sales increasedby 7.4% in the Filtration business area as the customers refilled theirinventories toward the end of the year to meet the increasing demand for theirproducts. Net sales in other business areas decreased. The net sales of theAdvanced Nonwovens business area fell the most (-12.2%), mainly due to exchangerate fluctuations. The euro strengthened compared to the main invoicingcurrencies in the business area, the US dollar and the pound sterling.Net sales of the Specialty Papers segment amounted to EUR 199.6 million (EUR191.6 million), representing 47% of the Group's net sales. Sales volumesincreased in both business areas following the picking up of market demand inthe summer generating higher consumption for Ahlstrom's products toward the endof the year. The net sales of the segment as a whole were 4.2% higher comparedto October-December 2008.RESULT AND PROFITABILITY+---------------------------------+-----+-----+-------+------+------+-------+|Financial result | 2009| 2008|Change,|10-12/|10-12/|Change,|| | | | | | | ||by segment | | | %| 2009| 2008| %|+---------------------------------+-----+-----+-------+------+------+-------+|Fiber Composites |+---------------------------------+-----+-----+-------+------+------+-------+| EBIT (Operating profit/loss) |-18.8| 15.3| -| -30.4| -24.7| -23.0|+---------------------------------+-----+-----+-------+------+------+-------+| EBIT (Operating profit/loss), %| -2.2| 1.5| -| -13.6| -10.8| -|+---------------------------------+-----+-----+-------+------+------+-------+| Return on net | | | | | | || | | | | | | || assets, RONA, % | -2.5| 2.0| -| -17.0| -12.3| -|+---------------------------------+-----+-----+-------+------+------+-------+|Specialty Papers |+---------------------------------+-----+-----+-------+------+------+-------+| EBIT (Operating profit/loss) | 14.6| 10.2| 42.4| 3.8| -6.5| -|+---------------------------------+-----+-----+-------+------+------+-------+| EBIT (Operating profit/loss), %| 2.0| 1.2| -| 1.9| -3.4| -|+---------------------------------+-----+-----+-------+------+------+-------+| Return on net | | | | | | || | | | | | | || assets, RONA, % | 3.8| 2.3| -| 4.1| -6.0| -|+---------------------------------+-----+-----+-------+------+------+-------+|Other functions* and eliminations| | | | | | |+---------------------------------+-----+-----+-------+------+------+-------+| Operating profit/loss |-10.4|-10.9| -| -0.0| -4.2| -|+---------------------------------+-----+-----+-------+------+------+-------+|Ahlstrom Group total | | | | | | |+---------------------------------+-----+-----+-------+------+------+-------+| EBIT (Operating profit/loss) |-14.6| 14.6| -| -26.6| -35.4| 24.8|+---------------------------------+-----+-----+-------+------+------+-------+| EBIT (Operating profit/loss), | | | | | | || | | | | | | || % | -0.9| 0.8| -| -6.3| -8.4| -|+---------------------------------+-----+-----+-------+------+------+-------+| ROCE, % | -1.1| 1.4| -| -9.4| -10.8| -|+---------------------------------+-----+-----+-------+------+------+-------+* Other functions include financing and taxation-related receivables,liabilities, and cost items, as well as earnings, costs, assets, and liabilitiesbelonging to holding and sales companies.Result and profitability in 2009The Group EBIT was EUR -14.6 million (EUR 14.6 million). The performance wasburdened by non-recurring expenses totaling EUR 54.3 million (EUR 21.1 million),the largest of which was the EUR 22.4 million impairment charge in the Home &Personal Nonwovens business area in December.The second most significant individual non-recurring item was the closing downof the paper machine in Barcelona, Spain, in the Filtration business area. Thedecision was made in December 2009, and non-recurring expenses related to theclosure amounting to EUR 7.3 million were booked in the fourth quarter of 2009.Of these, EUR 5.3 million were asset write-downs and EUR 2.0 millioncash-related items. A total of 37 employees were laid off.EBIT excluding non-recurring items amounted to EUR 39.8 million, slightly abovethe previous year (EUR 35.7 million). In particular, lower sales volumescompared to 2008 burdened the performance. It was improved by streamlining ofoperations, a fall in raw material costs during the first half of the year andthe picking up of demand that started in the summer. Profitability did notweaken significantly due to the increase in raw material prices toward the endof the year, as the company strived for sales price increases in proportion tothe higher raw material prices. Favorable trends of Ahlstrom's businessstrengthened toward the end of the year. However, some projects included in theEUR 500 million investment program carried out during 2007 and 2008 did not meetthe profitability targets set, mainly due to demand falling short ofexpectations.The sales of Ahlstrom's new glassfiber tissue production plant in Tver, Russia,showed noticeable progress by the fall 2009. After a challenging start, theplant opened in summer 2008 benefited from the recovered demand in the Russianmarket toward the end of 2009. On the other hand, the profitability of theincreased production capacity in La G?, France, implemented in the summer2007, fell short of expectations again in 2009. Sales of the plant's releasebase papers did increase, but sales prices suffered from overcapacity on themarket. Commercialization of the teabag material nonwovens line, opened inChirnside, the United Kingdom, at the end of 2008 started slowly, and thecustomer approval processes of the new products are still going on.The EBIT of the Fiber Composites segment decreased to EUR -18.8 million (EUR15.3 million). Non-recurring items amounted to EUR -44.2 million (EUR -18.0million).The EBIT of the Specialty Papers segment, on the other hand, increased to EUR14.6 million (EUR 10.2 million). Non-recurring items amounted to EUR -7.4million (EUR-2.4 million).During the year, Ahlstrom adjusted its production to the weak demand. The marketrelated downtime in production decreased significantly toward the end of theyear. The figure for the year as a whole was 18.2% (10.3%), but only 12.0%(22.7%) for the fourth quarter. Temporary layoffs and other flexible workinghour solutions were also implemented, depending on the market conditions.Globally, approximately 3,000 (1,200) employees were affected by the temporarylayoffs and other flexible working hour arrangements and 600 (900) employeesduring October-December.Fixed costs excluding non-recurring items decreased by 5.3% as a result of costcontrol and implemented streamlining measures.Net financial expenses were EUR 26.2 million (EUR 34.2 million). Net financialexpenses include net interest expenses of EUR 23.3 million (EUR 30.0 million),exchange rate losses of EUR 0.2 million (EUR 1.5 million), and other financialexpenses of EUR 2.7 million (EUR 2.6 million).Loss before taxes was EUR 40.1 million (loss before taxes of EUR 20.6 million).Deferred tax income amounted to EUR 7.1 million (EUR 4.5 million).Loss for the period was EUR 32.9 million (loss for the period of EUR 16.1million). Earnings per share were EUR -0.72 (EUR -0.38).Return on capital employed (ROCE) amounted to -1.1% (1.4%), and return on equity(ROE) to -5.0% (-2.3%).Result and profitability in October-December 2009Ahlstrom's EBIT in October-December was EUR -26.6 million (EUR -35.4 million).The EBIT was burdened by non-recurring expenses amounting to EUR 46.2 million(EUR 21.7 million).Operating profit excluding non-recurring items was better than in the comparisonperiod: EUR 19.5 million (EUR -13.7 million). The result was improved byincreased sales volumes due to favorable demand, but first and foremost by thecompany's streamlining efforts and internal cost control reflecting on the coststructure.EBIT of the Fiber Composites segment amounted to EUR -30.4 million (EUR -24.7million). The figure includes non-recurring expenses amounting to EUR 40.5million (EUR 20.2 million), of which EUR 22.4 million were impairment chargesand EUR 7.3 million due to the closure of the Barcelona paper machine.EBIT of the Specialty Papers segment amounted to EUR 3.8 million (EUR -6.5million). The figure includes non-recurring expenses amounting to EUR 4.4million (EUR 1.8 million).FINANCINGNet cash from operating activities amounted to EUR 209.6 million (EUR 102.4million) and cash flow after investing activities was EUR 143.3 million (EUR-51.0 million). Cash flow was improved by significantly reduced operativeworking capital, to which particular attention was paid throughout the year.Operative working capital decreased by EUR 104.3 million compared to the end of2008.Interest-bearing net liabilities decreased by EUR 202.8 million from the turn ofthe year to EUR 395.9 million (EUR 598.7 million). Ahlstrom's interest-bearingliabilities amounted to EUR 415.8 million on December 31, 2009. Of the loanportfolio, approximately 60% was tied to a fixed interest rate using interestrate derivatives or based on the loan contracts. The duration of the loanportfolio (average interest rate tying period) was 28 months and the averageinterest rate was approximately 3.4%.Ahlstrom actively strengthened its balance sheet during 2009, not only bystrengthening its cash flow but also by issuing a hybrid bond of EUR 80 millionin November. As it is treated as equity, it reduced the company's gearing ratioby approximately 20 percentage points. The coupon rate of the bond is 9.5% andissue price was 100%. The bond was clearly oversubscribed.The company also extended the maturity structure of its loan portfolio byagreeing on new loan facilities. During the first half of the year, the companyentered into agreements on new medium-term bilateral loan facilities amountingto EUR 55 million. During the summer it signed a three-year, EUR 200 millionagreement on the refinancing of the medium-term revolving credit facility of thesame amount expiring in November 2009. In the fall, Ahlstrom signed an agreementon pension loans amounting to EUR 56 million. The average maturity of the loanportfolio was 2.3 years.The company's liquidity is good. At the end of the year, its total liquidity,including cash, available committed credit facilities, and cash pool overdraftlimits totaled EUR 328.0 million. In addition, the company had uncommittedcredit facilities and domestic commercial paper programs totaling EUR 318.1million available.The gearing ratio decreased to 57.7% (95.3%). The equity ratio was 44.8%(36.8%).CAPITAL EXPENDITUREAhlstrom did not make any major investment decisions during the year. Thecompany's capital expenditure totaled EUR 63.8 million (EUR 128.0 millionexcluding acquisitions in 2008).The largest project in 2009 was the construction of a medical nonwovens plant inthe Mundra special economic zone in Gujarat, India. The total cost of theconstruction project was approximately EUR 38 million. Production at the plantis started during the first quarter of 2010.GUIDELINES AND IMPLEMENTATION OF THE REVISED STRATEGYAhlstrom announced its revised strategy in October 2009. The key conclusion isthat Ahlstrom operates in two distinct business clusters that require differentkinds of competence and management. The company's operations are based on twodistinct business models: value-added business and operational excellencebusiness.The value-added business will be Ahlstrom's future growth engine, developingthrough organic growth and possibly by making small acquisitions.Geographically, growth will particularly focus on Asia. New and innovativeproducts will create the foundation of success in this business. The products inthis cluster cover the majority of Ahlstrom's Fiber Composites segment as wellas crepe papers and vegetable parchment.The task of the operational excellence business is to support the growth of thecompany. In this business, it is important to be able to develop cost effectiveproducts serving customers' needs through, for instance, alternative rawmaterials or new technological solutions. The cluster covers the majority ofAhlstrom's Specialty Papers segment as well as the nonwoven materials used inconsumer wipes and air filters.The long-term target of the strategy is to ensure Ahlstrom's profitable growth,strengthen the company's competitive position and generate returns that are inline with the company's financial targets. At the same time, measures to managethe balance sheet and reduce the gearing ratio will continue. One of the mostimportant indicators is return on capital employed (ROCE), which should reachits target level of 13%. With regard to product lines and units falling short oftheir objectives, measures will be continued to meet the goals.During 2010, the implementation of the strategy will particularly focus onmaking Ahlstrom's vision, mission, values, and corporate image clearer, anddeveloping the personnel, organization, and processes.STREAMLINING PROGRAMSRestructuring programsAhlstrom carried out two restructuring programs during the year in accordancewith plans to improve and adjust operational activities to changed marketdemand. The total annual savings from these programs are approximately EUR 55million. In addition, a project to optimize working capital was initiated; thisproject will continue until the end of 2010.January programConcerning the permanent layoffs of 210 people as part of the restructuringprogram launched in January, a total of 176 employees were laid off by the endof the year. The EUR 5 million annual savings resulting from the program willhave full effect in 2010. In addition, there were temporary layoffs andproduction was cut down by market related downtime*.The program involved the closing down of unprofitable operations in Milan,Italy, that belong to the Home & Personal Nonwovens business area. The companyclosed down the Gallarate plant as well as one production line in Cressa. Thereduction impact on personnel related to the closures was approximately 50.Non-recurring expenses were EUR 19.0 million, of which EUR 5.2 million werecash-related. The expenses have been booked in Ahlstrom's fourth quarter 2008financial results.April programAhlstrom announced in April that it was to initiate another restructuringprogram, aiming for annual savings of EUR 50 million. The savings will have fulleffect in 2010.In April, Ahlstrom estimated that the restructuring may have an impact on400-500 -Ahlstrom employees globally. The measures taken in 2009 will, however,reduce the personnel by approximately 560 persons. According to the agreedtimetable, the cuts will be implemented in 2009 and 2010. The number ofpersonnel was decreased by a total of 384 employees in 2009, and approximately180 persons will leave the company in 2010.The company decided in June to permanently close down a production line at theplant in Bethune, USA, and move its production to Green Bay, USA. The productionline belonged to the Home & Personal Nonwovens business area. Personnel cutsmade as a result of the closure totaled 65 employees.In December, it was decided to close down the Filtration business area's papermachine in Barcelona, and a total of 37 employees were laid off. ()( )In addition, significant adjustment decisions reducing the amount personnel weremade at two other plants during the fourth quarter. A total of 76 employees werelaid off at the plant in Karhula, Finland, in connection with the productionadjustment of specialty reinforcements and glassfiber tissue. The plant is partof the Glass & Industrial Nonwovens business area. Reductions of 34 employees in2009 and a maximum of 30 in 2010 were agreed at the plant in Altenkirchen,Germany. The Altenkirchen plant is part of the Ahlstrom's Technical Papersbusiness area.The cost of the April program was initially estimated to be approximately EUR40 million in 2009, of which 50% cash-related. EUR 31.9 million of the costswere realized, of which EUR 18.3 million were cash-related. The costs were lowerthan estimated as more cost-efficient solutions than expected were found toreach the target for savings.Optimization of working capitalThe project to optimize working capital initiated at the beginning of 2009proceeded according to plan. The project aims to reduce working capital by EUR100 million over two years. The project had been initiated at 20 plants by theend of the year and it will be rolled out to all production sites and functionsduring 2010. Operative working capital decreased by EUR 104.3 million during2009 with turnover improving by 23 days to 53 days.CHANGES IN THE CORPORATE EXECUTIVE TEAMJan L? started as the President & CEO of Ahlstrom Corporation on January1, 2009. Risto Anttonen who had acted as interim CEO from February 28, 2008 toDecember 31, 2008, assumed the role of Deputy of the President & CEO, andcontinued as a member of the Corporate Executive Team.The following people changed tasks and started in their new positions on January1, 2009:Tommi Bj?an, Senior Vice President, Filtration.Claudio Ermondi, Senior Vice President, Innovations & Technology.Paul Marold, Senior Vice President, Advanced Nonwovens.Laura Raitio, Senior Vice President, Glass & Industrial Nonwovens.In addition, three new appointments were announced during the first quarter of2009:Rami Raulas was appointed onJanuary 9, 2009 as Senior Vice President, Sales &Marketing, as of February 1, 2009.Paula Aarnio was appointed Senior Vice President, Human Resources, onFebruary6, 2009. She assumed her responsibility on April 27, 2009.Seppo Parvi was appointed Chief Financial Officer onFebruary 6, 2009. He assumedhis position on May 25, 2009.Paul Marold, Senior Vice President, Advanced Nonwovens, resigned from Ahlstrom'sservice on August 14, 2009.Ahlstrom announced in December that it will change the structure of itsCorporate Executive Team as of February 1, 2010, with regard to sourcing andsustainability (see Events after the balance sheet date, p. 14).The current composition of the Corporate Executive Team and members' CVs areavailable on the company's website www.ahlstrom.com.PERSONNELThe number of Ahlstrom employees during 2009 was 5,993 on average (6,510) and atthe end of the year, 5,841 (6,365). Wages and salaries including bonus paymentstotaled EUR 249.1 million (EUR 249.9 million).The January and April restructuring programs together resulted in a reduction ofa total of 560 employees in 2009, and an additional decrease of approximately180 employees was agreed for 2010. On the other hand, the company hired newemployees in 2009 for the Mundra, India plant, among others. The number ofpersonnel was decreased by a total of 524 people in year 2009.At the end of the year, the highest numbers of employees were in the UnitedStates (24%), France (21%), Italy (12%), Finland (11%), Germany (9%) and Brazil(7%).ANNUAL GENERAL MEETING AND AUTHORIZATIONS OF THE BOARDAhlstrom Corporation's Annual General Meeting of Shareholders (AGM) was held onMarch 25, 2009. The AGM resolved to distribute a dividend of EUR 0.45 per sharefor the fiscal year that ended on December 31, 2008 from the retained earningsin accordance with the proposal of the Board of Directors. The AGM approved thefinancial statements and discharged the members of the Board of Directors andthe CEO from liability for the financial period January 1-December 31, 2008.The AGM confirmed the number of Board members as unchanged at seven. ThomasAhlstr?Sebastian Bondestam, Jan Inborr, Martin N?ern, Bertel Paulig andPeter Seligson were re-elected as members of the Board of Directors. AndersMoberg was elected as a new member. The term of the Board of Directors willexpire at the close of the next Annual General Meeting.The Board of Directors elected Peter Seligson as Chairman and Bertel Paulig asVice Chairman of the Board. Bertel Paulig (Chairman), Thomas Ahlstr?andMartin N?ern were elected as members of the Audit Committee. Peter Seligson(Chairman), Sebastian Bondestam, and Jan Inborr were elected as members of theCompensation and Nomination Committee.The AGM elected PricewaterhouseCoopers Oy (PwC) as Ahlstrom's auditor. PwCdesignated Authorized Public Accountant Eero Suomela as auditor in charge.The AGM authorized the Board of Directors to repurchase Ahlstrom shares. Themaximum number of shares to be purchased is 4,500,000. The shares may berepurchased only through public trading at the prevailing market price usingunrestricted shareholders' equity.The AGM also authorized the Board of Directors to distribute a maximum of4,500,000 own shares held by the company. The Board of Directors is authorizedto decide to whom and in which order the shares will be distributed. The sharesmay be used as consideration in acquisitions and in other arrangements as wellas to implement the company's share-based incentive plans in the manner and tothe extent decided by the Board of Directors. The Board of Directors also hasthe right to decide on the distribution of the shares in public trading for thepurpose of financing possible acquisitions.The authorizations are valid for 18 months from the close of the Annual GeneralMeeting but will, however, expire at the close of the next Annual GeneralMeeting, at the latest.On February 3, 2010, the Board of Directors decided to utilize the authorizationof the AGM to repurchase Ahlstrom's shares for the implementation of thecompany's share-based incentive plan (see Events after the balance sheet date,p. 14).OTHER EVENTS IN 2009Product innovationsAs in previous years, Ahlstrom launched new products and technologies toconsolidate its leading position in the fiber-based materials market. Both in2008 and 2009, as much as 48% of Ahlstrom's net sales were generated by new orimproved products* (39% in 2007).In 2009, Ahlstrom introduced a new advanced nonwoven material for medicalapplications, especially for drapes and gowns. This material based onbi-component spunbond is stronger than comparable basis weight fabric, it issoft and comfortable in gowns, and offers drapability and strength for drapes.The new material also suits for sterilization by means of radiation. The productgenerated significant sales in 2009 and further growth is expected in 2010.Hybrid wallcovering was among the significant product launches. Both naturalfibers and synthetic fibers are used in its production, which combines thefavorable properties of nonwovens and papers in a cost-efficient way. Thewallcovering is manufactured by Ahlstrom's Turin plant, whose equipmentinvestment was completed during the second quarter of 2009. Several wallcoveringmanufacturers approved the product during the fourth quarter, and commercialdeliveries were started.Ahlstrom introduced several filtration media innovations to match the stricterenvironmental criteria, e.g. in diesel filtration. In vehicles, the use of lowsulfur fuels and biodiesel requires advanced properties from the fuel waterseparator systems. In response, Ahlstrom launched the ultra-high surfacecoalescing media for reliable water removal from any commercial fuel. In 2009,Ahlstrom also introduced a new transmission filtration media. Transmissionfilters with the Micro Filtration Technology (MFT-series) are pleated, offeringmore surface area and enabling a smaller carbon footprint than conventionalfilters when using them in vehicles.Ahlstrom also developed a new range of dry wiping fabrics for general purposecleaning applications in home and industrial environments. The new products arebased on a composite spunlace technology, combining layers of differentmaterials into one fabric. These fabrics are soft, highly absorbent, strong andresistant to abrasion. The products were developed together with Ahlstrom'scustomers for their new innovative wiping products.The most significant new product in Specialty Papers was the one-side-coatedlabel paper Lumimax TT. Developed particularly for thermal transfer printing,the paper is used for printing barcodes and other labels, such as price tags orproduct identifiers. Lumimax TT enables excellent definition even at the lowestprinting temperatures. In 2009, Lumimax was used by Ahlstrom's customers inSouth America for both domestic and export businesses.The commercialization of one of the most significant innovations of 2008,Ahlstrom's Disruptor(TM) PAC water filtration material and a high-qualitycompostable teabag material, continued in 2009. The products have attractedconsiderable interest.Progress in sustainable developmentIn 2009, Ahlstrom was ranked among the ten best Finnish companies in the globalCarbon Disclosure Leadership index.Natural fibers are by far the most significant of Ahlstrom's raw materials. Thecompany considers it important that they come from sustainably managed forests.Also the rest of the company's pulp suppliers were certified in 2009 with regardto the chain of custody in accordance with either PEFC or FSC, i.e. the mostwidely used sustainable forest management certification systems.EVENTS AFTER THE BALANCE SHEET DATEChanges in the Corporate Executive TeamIn December 2009, Ahlstrom announced that it will change the structure of itsCorporate Executive Team. The changes took effect on February 1, 2010. Theresponsibility for Ahlstrom's Sourcing operations was transferred to CFO SeppoParvi. Diego Borello, Senior Vice President, Purchasing and Sustainability, tookon a new role outside the CET in Ahlstrom's Sourcing organization. Paula Aarnio,Senior Vice President, Human Resources, will be responsible for Ahlstrom'sSustainability in addition to her other responsibility areas.On January 26, 2010, William Casey was appointed Senior Vice President, AdvancedNonwovens, as of February 8, 2010. He will be based in Windsor Locks, USA.Casey's latest position was Chief Operations Officer at Shawmut Corporation.Shawmut Corporation is a supplier of laminates for the automotive industry.Repurchase of Ahlstrom's sharesToday, on February 3, 2010, Ahlstrom announced that its Board of Directors hasdecided to utilize the authorization given by the Annual General Meeting held onMarch 25, 2009, to repurchase Ahlstrom shares for the implementation of theCompany's share-based incentive plan.The maximum number of shares to be acquired is 75,000 corresponding to less than0.2% of the total number of shares. The repurchases shall decrease thedistributable capital and reserves.The share repurchases shall start on February 10 at the earliest, and end by theend of the next AGM on March 31, 2010, at the latest.The shares shall be acquired through public trading on the NASDAQ OMX Helsinkiat market price prevailing at the time of repurchase. Evli Bank Plc will act asstock broker in the repurchases.SHARES AND SHARE CAPITALAhlstrom's share is listed on the NASDAQ OMX Helsinki. Ahlstrom has one seriesof shares. The share is classified under NASDAQ OMX's Materials sector and thetrading code is AHL1V.During 2009, a total of 4.5 million Ahlstrom shares were traded for a total ofEUR 35.7 million. The lowest trading price was EUR 6.15 and the highest EUR10.00. The closing price on December 30, 2009 was EUR 9.23 and marketcapitalization was EUR 430.8 million at year's end.Ahlstrom Group's equity per share was EUR 12.98 at the end of the review period(EUR 13.46).In 2009, Ahlstrom did not use the AGM authorization to repurchase or distributecompany shares.DIVIDEND POLICY AND PROPOSAL FOR THE DISTRIBUTION OF PROFITSAhlstrom's dividend policy was revised in December 2009. The new dividend policyis based on the company's cash generating capabilities and will be applied asfrom the dividend paid for the financial year 2009.The company will aim to pay a dividend of not less than one third of the netcash from operating activities after operative investments, calculated as athree-year rolling average to achieve stability in the dividend payout.Operative investments include maintenance, cost improvement, and efficiencyimprovement investments.According to the previous dividend policy, the aim was to pay a dividend of notless than 50% of the result for the financial year on average.The distributable funds in the balance sheet of Ahlstrom Corporation as perDecember 31, 2009 amounted to EUR 652,268,818.91.The Board of Directors proposes to the Annual General Meeting that a dividend ofEUR 0.55 per share be paid for the fiscal year that ended on December 31, 2009.The dividend will be paid to shareholders registered in the Register ofShareholders held by Euroclear Finland Ltd on the record date, April 7, 2010. Asper February 3, 2010, the number of shares of the Company amounts to 46,670,608based on which the maximum amount to be distributed as dividend would be EUR25,668,834.40. The Board of Directors proposes that the dividend be paid onApril 14, 2010.In addition, the Board of Directors proposes that EUR 535,000.00 be reserved tobe used for the public donations at the discretion of the Board.OUTLOOKThe market sentiment in the latter half of 2009 improved. The situation seemsstable in most business areas. However, demand is expected to fall short of thelevel of 2008. The biggest challenges continue to be found in specialtyreinforcements in the Glass & Industrial Nonwovens business area, as there areno clear signs of a revival in the demand in the windmill and marine industriesin Ahlstrom's main markets, Europe and North America. Net sales for 2010 areexpected to increase compared to 2009 but remain lower than the level for 2008.The more efficient cost structure and improved demand are expected to improveprofitability. The restructuring programs of 2009 are almost complete, but thecontinuous efficiency improvement measures will remain a priority also in 2010.EBIT excluding non-recurring items is expected to increase compared to 2009.In 2010, investments excluding acquisitions are estimated at approximately EUR60 million (EUR 63.8 million in 2009).SHORT-TERM RISKSDespite the improved market sentiment, it is difficult to predict the rate atwhich the world economy will recover. If the recovery from the recession isprolonged, it may be necessary to limit production more than planned and therisk of a decrease in sales prices increases. So far, bad debts have remainedlow, but Ahlstrom's customer credit risks have increased due to the weakeningeconomic situation and are more difficult to cover with credit insurance.In addition, raw material prices, the price of pulp, man made fibers andpolymers in particular, have been increasing since last summer and they areexpected to remain at a high level during 2010. If the prices remain high andthe increased raw material costs cannot be transferred to selling prices, thegrowth in profitability achieved in 2009 might be compromised.The weaker-than-expected utilization rate of the investments of the past fewyears due to the low demand may, if it continues, extend the payback period ofAhlstrom's EUR 500 million investment program carried out in 2007 and 2008. Thestart-up of operations of the Mundra, India plant in early 2010 andcommissioning of capacity are also critical.The general risks of Ahlstrom's business operations are described in more detailon the company website, www.ahlstrom.com
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Datum: 03.02.2010 - 05:11 Uhr
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