Ahlstrom financial statements bulletin 2011: Moving forward with strategy implementation
(Thomson Reuters ONE) -
Ahlstrom Corporation STOCK EXCHANGE RELEASE February 1, 2012 at 12.00
noon
Continuing operations October-December 2011 compared with October-December 2010:
* Net sales EUR 371.3 million (EUR 416.8 million).
* Operating loss EUR 4.2 million (EUR 9.0 million loss)
* Operating profit excluding non-recurring items EUR 1.7 million (EUR 12.7
million).
* Operating margin excluding non-recurring items 0.4% (3.1%).
* Loss before taxes EUR 10.7 million (EUR 14.5 million loss).
* Earnings per share EUR -0.22 (EUR -0.22).
Highlights in October-December 2011
* Divestment of the Home and Personal business area was concluded except for
the Brazilian operation that is expected to be transferred by the end of
first quarter 2012.
* A new vision 'Inspiring people, passionate about new ideas, growing with our
customers' was introduced to define the kind of company we aim to be in the
future.
* Acquisition of a 49.5% stake in a developer of battery technology Porous
Power Technologies, LLC.
* A new profit improvement program addressing underperforming businesses was
initiated and executed.
Continuing operations January-December 2011 compared with January-December 2010:
* Net sales EUR 1,607.2 million (EUR 1,636.3 million).
* Operating profit EUR 20.1 million (EUR 46.5 million)
* Operating profit excluding non-recurring items EUR 49.7 million (EUR 66.8
million).
* Operating margin excluding non-recurring items 3.1% (4.1%).
* Loss before taxes EUR 6.6 million (EUR 18.8 million profit).
* Earnings per share EUR -0.38 (EUR 0.11).
Dividend proposal
* The Board of Directors will propose to the Annual General Meeting that for
the financial year ended on December 31, 2011 a dividend totaling EUR 1.30
per share be paid: a dividend of EUR 0.87 per share and an extra dividend of
EUR 0.43 per share based on cash generated from the divestiture of the Home
and Personal business area.
Outlook for 2012
* Net sales from continuing operations are expected to be EUR 1,575-1,735
million. Operating profit excluding non-recurring items from continuing
operations is expected to be EUR 60-80 million.
Jan Lång, President & CEO:
- We had a good start of the year with improved performance. However, the
slowdown in global markets, particularly in Europe, negatively impacted our
financial performance starting from the second quarter. Nevertheless, we
continued to work vigorously on our key development programs. We also
streamlined our cost base further, addressing underperforming businesses and
closing unprofitable manufacturing lines.
- At the end of 2011, we introduced our new vision to crystallize the kind of
company we aim to be in the next 5-10 years. We have set ambitious goals that
provide us with a roadmap for the future.
- In line with our new vision, we took firm steps in executing our strategy.
There were a number of milestones: the acquisition of Porous Power Technologies,
divestment of the Home and Personal business and the strategic decision to exit
in-house glassfiber manufacturing. We will continue to seek new business
opportunities by leveraging our unique products, technologies and knowledge.
Key figures from continuing operations
EUR million Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Net sales 371.3 416.8 -10.9 1,607.2 1,636.3 -1.8
Operating profit -4.2 -9.0 -53.2 20.1 46.5 -56.7
% of net sales -1.1 -2.2 1.3 2.8
Operating profit excl. NRI 1.7 12.7 -87.0 49.7 66.8 -25.6
% of net sales 0.4 3.1 3.1 4.1
Profit/Loss before taxes -10.7 -14.5 26.1 -6.6 18.8 -135.1
Profit for the period -8.9 -8.8 -1.4 -12.2 10.9 -211.9
Earnings per share -0.22 -0.22 -0.38 0.11
Return on capital employed,
% -2.6 -3.9 2.0 5.2
Capital expenditure 35.9 20.2 77.6 66.4 47.2 40.6
Number of personnel, at the
end of period 5,202 5,131 1.4 5,202 5,131 1.4
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The Home and Personal business area is reported separately as discontinued
operations.
Operating environment
In the fourth quarter, the overall demand for most of our products continued to
decline. Geographically, demand in Europe was weak, whereas North America showed
some signs of recovery towards the end of the review period.
The global slowdown impacted many of our markets such as construction. This was
reflected in the demand for wallcovering and flooring materials, which started
to decline in the fourth quarter after a good growth in the earlier part of the
year. The demand for food packaging and tape materials also softened in the
review period.
The demand for the majority of the specialty paper materials, produced by the
Label and Processing business area, fell during the review period. The market
for specialty reinforcements used by the wind energy industry also remained at a
weak level in Ahlstrom's main markets.
The situation in the market for transportation filtration materials in North and
South America was more positive in the review period. The Advanced filtration
materials market served by Ahlstrom remained at a good level. The demand for
medical materials also remained strong.
The market prices of Ahlstrom's main raw materials such as pulp and synthetic
fibers continued to decline in the fourth quarter, driven by weaker global
demand. Prices of chemicals in general started to decline, although they
remained at a high level.
In March, the European Commission lowered the antidumping duty on imports of
certain glassfiber products originating from the People's Republic of China to
the European Union. This continued to have a negative impact on European
glassfiber manufacturers in the fourth quarter.
Development of net sales from continuing operations
Net sales by business area Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Building and Energy 65.8 75.3 -12.7 296.2 281.6 5.2
Filtration 79.7 84.9 -6.2 324.5 339.8 -4.5
Food and Medical 86.1 92.3 -6.7 361.9 354.7 2.0
Label and Processing 149.6 181.9 -17.7 678.1 724.3 -6.4
Other functions* and
eliminations -9.9 -17.7 -53.5 -64.1
Total net sales 371.3 416.8 -10.9 1,607.2 1,636.3 -1.8
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* Other functions include financing and taxation-related items, as well as
earnings and costs belonging to holding and sales companies. The Home and
Personal business area is reported separately as discontinued operations.
October-December 2011 compared with October-December 2010
Ahlstrom's fourth-quarter 2011 net sales decreased by 10.9% to EUR 371.3
million, compared with EUR 416.8 million in the fourth quarter 2010.
Breakdown of the net sales change:
Change, %
------------------------------------
Q4/2010
Price and mix 1.8
Currency -0.7
Volume -9.2
Divestments and new assets -2.9
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Q4/2011 -10.9
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Total sales volumes in tons fell 12.0% from the comparison period. The decline
affected sales volumes in all business areas; Building and Energy (-15.3%),
Filtration (-7.6%), Food and Medical (-8.9%) and Label and Processing (-13.1%).
Total sales volumes, excluding the impact of divestments and new assets,
decreased by 10.5%.
January-December 2011 compared with January-December 2010
Net sales in January-December 2011 decreased 1.8% to EUR 1,607.2 million,
compared with EUR 1,636.3 million in January-December 2010.
Breakdown of the net sales change:
Change, %
------------------------------------
2010
Price and mix 3.7
Currency -1.4
Volume -1.2
Divestments and new assets -2.9
------------------------------------
2011 -1.8
------------------------------------
Total sales volumes in tons fell 4.1% from the comparison period. The decline
affected sales volumes in Filtration (-3.6%) and Label and Processing (-7.2%)
business areas, whereas Building and Energy (2.4%) and Food and Medical (2.6%)
showed an increase. Total sales volumes, excluding the impact of divestments and
new assets, decreased by 2.5%.
Result and profitability from continuing operations
Financial result by segment Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Building and Energy
Operating profit -7.7 1.2 -27.8 2.8
% of net sales -11.7 1.6 -9.4 1.0
Operating profit excl. NRI -1.1 1.2 1.2 2.8 -55.9
% of net sales -1.7 1.6 0.4 1.0
Filtration
Operating profit 4.6 -20.7 22.8 3.1 628.8
% of net sales 5.8 -24.4 7.0 0.9
Operating profit excl. NRI 3.5 4.2 -16.5 22.0 27.8 -20.9
% of net sales 4.4 5.0 6.8 8.2
Food and Medical
Operating profit 2.0 2.1 -2.6 12.0 13.0 -7.7
% of net sales 2.4 2.3 3.3 3.7
Operating profit excl. NRI 1.6 3.9 -58.1 11.7 14.0 -16.4
% of net sales 1.9 4.2 3.2 4.0
Label and Processing
Operating profit -1.5 5.0 11.6 32.2 -63.8
% of net sales -1.0 2.7 1.7 4.4
Operating profit excl. NRI -0.8 4.9 13.6 30.6 -55.4
% of net sales -0.5 2.7 2.0 4.2
Other functions* and eliminations
Operating profit -1.7 3.5 1.5 -4.6
Ahlstrom Group total
Operating profit/loss -4.2 -9.0 53.2 20.1 46.5 -56.7
% of net sales -1.1 -2.2 1.3 2.8
Operating profit excl. NRI 1.7 12.7 -87.0 49.7 66.8 -25.6
% of net sales 0.4 3.1 3.1 4.1
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*Other functions include financing and taxation-related items, as well as
earnings and costs belonging to holding and sales companies. The Home and
Personal business area is reported separately as discontinued operations.
October-December 2011 compared with October-December 2010
Ahlstrom's fourth-quarter 2011 operating loss was EUR 4.2 million (EUR 9.0
million loss) including non-recurring costs of EUR 5.9 million (EUR 21.7 million
loss). Operating profit excluding non-recurring items was EUR 1.7 million (EUR
12.7 million). The most significant non-recurring item in the fourth quarter
2011 was the following:
* Building and Energy booked a cost of approximately EUR 6.0 million from the
closure of the Bishopville plant in the U.S.
Operating profit was negatively impacted mainly by lower sales volumes and the
resulting drop in capacity utilization rates at plants. The recent declines in
key raw material prices did not yet have an impact on profitability. The ramp-up
and commercialization of the teabag material line in Chirnside, the medical
material plant in Mundra and the La Gere plant, which were part of the 2007 and
2008 investment program, continued to have a negative impact on profitability.
The hybrid wallcovering line in Turin, which was closed in October, also
burdened profitability.
Ahlstrom's market related downtime in production was 14.6% in the fourth quarter
2011, compared with 12.0% in the corresponding period.
Loss before taxes was EUR 10.7 million (EUR 14.5 million loss).
The company's deferred tax income amounted to EUR 1.8 million (EUR 5.7 million
tax income).
Loss for the period was EUR 8.9 million (EUR 8.8 million loss). Earnings per
share were EUR -0.22 (EUR -0.22).
January-December 2011 compared with January-December 2010
Ahlstrom's January-December 2011 operating profit was EUR 20.1 million (EUR
46.5 million) including non-recurring costs of EUR 29.6 million (EUR 20.3
million loss). Operating profit excluding non-recurring items was EUR 49.7
million (EUR 66.8 million). The 2010 figure was favorably impacted by a gain of
approximately EUR 6.3 million from selling carbon dioxide emission rights. In
January-December 2011, the figure was EUR 0.2 million.
The most significant non-recurring items in January-December 2011 in addition to
those booked in the fourth quarter were the following:
* Building and Energy booked a net non-recurring cost of about EUR 11.0
million as a result of the decision to end production of glassfiber and
glassfiber mats in Karhula, Finland.
* Building and Energy booked non-recurring costs of about EUR 11.0 million for
closing down its hybrid wallcover materials production line in Turin, Italy.
* Label and Processing booked non-recurring costs of about EUR 3.0 million for
the planned streamlining measures at its Osnabrück plant in Germany.
* Label and Processing booked a gain of approximately EUR 1.9 million from the
asset sale of its Ascoli plant in Italy. The plant was closed in 2008.
* In other functions, Ahlstrom booked a gain of EUR 1.0 million related to the
sale of the Wuxi plant in China.
The decline in 2011 operating profit was mainly due to lower sales volumes. In
addition, higher selling prices only partially compensated for increased raw
material costs. The successful waste reduction program as well as cost savings
in the supply chain had a positive impact on profitability.
The La Gere plant improved its profitability clearly during the review period,
but it still remained unprofitable. The Mundra plant started the production of
higher value-added medical products in December. The hybrid wallcover material
line in Turin was closed in October. Commercialization of the teabag material
line in Chirnside continues. The four units burdened the operating profit by
approximately EUR 14 million in 2011 (approximately EUR 19 million in 2010).
Ahlstrom's market related downtime in production in January-December 2011 was
8.6% compared with 9.5% in the comparison period.
Loss before taxes was EUR 6.6 million (EUR 18.8 million profit).
Income taxes amounted to EUR 5.6 million (EUR 7.8 million).
Loss for the period was EUR 12.2 million (EUR 10.9 million profit). Earnings per
share were EUR -0.38 (EUR 0.11).
Divestment of the Home and Personal business area
Ahlstrom confirmed the closing of the divestment of its wipes fabrics, the Home
and Personal business area, to Suominen Corporation. The business was
transferred on October 31, 2011, except for the Brazilian part of the business,
which is estimated to transfer in the first quarter of 2012.
The transaction was signed on August 4, 2011, and the total value was
approximately EUR 170 million. Ahlstrom will receive the remaining EUR 25
million of the total amount after the Brazilian part of the business is
transferred. Following the transaction, Ahlstrom became the largest shareholder
in Suominen with a 27.1% stake. Ahlstrom is committed to hold a minimum of 20%
stake in Suominen for the first two years.
Discontinued operations
Following the agreement to divest Home and Personal to Suominen, the segment has
been classified as an asset held for sale and reported separately as
discontinued operations as a consequence. The Brazilian operation will be
reported as discontinued operations until the transaction is concluded for that
part as well.
In October-December 2011, the loss for the period from discontinued operations
was EUR 6.0 million, compared with EUR 2.0 million profit in the comparison
period. The 2011 figure includes a loss from the impairment and the disposal of
assets of EUR 4.9 million after tax related to the divestment.
In January-December 2011, the loss for the period from discontinued operations
was EUR 20.0 million (EUR 7.0 million profit). The 2011 figure includes a loss
from the impairment and the disposal of assets of EUR 23.4 million after tax
related to the divestment.
Result including discontinued operations
In October-December 2011, the loss for the period including discontinued
operations was EUR 14.8 million (EUR 6.8 million loss). Earnings per share were
EUR -0.34 (EUR -0.18).
Return on equity (ROE) was -9.6% (-3.9%).
In January-December 2011, the loss for the period including discontinued
operations was EUR 32.2 million (EUR 17.9 million profit). Earnings per share
were EUR -0.81 (EUR 0.26).
Return on equity (ROE) was -4.9% (2.6%).
Business Area review
Building and Energy
EUR million Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Net sales 65.8 75.3 -12.7 296.2 281.6 5.2
Operating profit -7.7 1.2 - -27.8 2.8 -
% of net sales -11.7 1.6 -9.4 1.0
Operating profit excl. NRI -1.1 1.2 - 1.2 2.8 -
% of net sales -1.7 1.6 0.4 1.0
RONA, % -24.3 3.2 -19.8 1.8
Sales volumes, 000s tons 27.5 32.5 -15.3 127.1 124.2 2.4
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Net sales in October-December 2011 fell by 12.7% to EUR 65.8 million, compared
with EUR 75.3 million in October-December 2010. The decline was due to lower
sales volumes, particularly in wallcovering and flooring materials as
construction markets slowed globally.
Operating loss excluding non-recurring items amounted to EUR 1.1 million (EUR
1.2 million profit). The result was impacted by lower sales volumes. Demand from
the wind energy industry was stable at a weak level. The result was also
burdened by the hybrid wallcovering material line in Turin that was closed in
October. Operating loss amounted to EUR 7.7 million (EUR 1.2 million profit).
The 2011 figure includes a non-recurring cost of EUR 6.0 million for initiatives
related to the profit improvement program announced on October 18, 2011.
A strategic decision to discontinue in-house glassfiber production was taken and
Karhula furnaces were closed in the fourth quarter 2011. Ahlstrom has long-term
supply contracts to secure the supply of glassfiber, which is used as a raw
material in its specialty reinforcements manufacturing.
In January-December 2011, net sales were EUR 296.2 million (EUR 281.6 million)
and operating loss EUR 27.8 million (EUR 2.8 million profit). Operating profit
excluding non-recurring items was EUR 1.2 million (EUR 2.8 million).
Filtration
EUR million Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Net sales 79.7 84.9 -6.2 324.5 339.8 -4.5
Operating profit 4.6 -20.7 22.8 3.1 628.8
% of net sales 5.8 -24.4 7.0 0.9
Operating profit excl. NRI 3.5 4.2 -16.5 22.0 27.8 -20.9
% of net sales 4.4 5.0 6.8 8.2
RONA, % 11.1 -46.4 13.6 1.8
Sales volumes, 000s tons 26.3 28.5 -7.6 110.9 115.1 -3.6
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Net sales in October-December 2011 decreased by 6.2% to EUR 79.7 million,
compared with EUR 84.9 million in October-December 2010. The decline was due to
lower sales volumes, adverse currency effects and divested businesses. However,
transportation filtration sales in North and South America improved during the
review period. Advanced filtration such as gas turbine applications also
supported net sales. The ramp-up of the Binzhou plant in China was in line with
its target. Operating profit excluding non-recurring items fell to EUR 3.5
million (EUR 4.2 million) due to the lower sales volumes. Operating profit
amounted to EUR 4.6 million (EUR 20.7 million loss). The 2010 figure includes
non-recurring costs related to the divestment of the Groesbeck operation and
production lines in Bethune in the U.S.
In January-December 2011, net sales were EUR 324.5 million (EUR 339.8 million)
and operating profit EUR 22.8 million (EUR 3.1 million). Operating profit
excluding non-recurring items was EUR 22.0 million (EUR 27.8 million).
Food and Medical
EUR million Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Net sales 86.1 92.3 -6.7 361.9 354.7 2.0
Operating profit 2.0 2.1 -2.6 12.0 13.0 -7.7
% of net sales 2.4 2.3 3.3 3.7
Operating profit excl. NRI 1.6 3.9 -58.1 11.7 14.0 -16.4
% of net sales 1.9 4.2 3.2 4.0
RONA, % 3.9 4.0 5.7 6.3
Sales volumes, 000s tons 29.2 32.1 -8.9 128.7 125.4 2.6
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Net sales in October-December 2011 fell by 6.7% to EUR 86.1 million, compared
with EUR 92.3 million in October-December 2010. The decrease was due to lower
sales volumes in food packaging, tea bags and masking tape materials,
particularly in Europe. The adverse currency effect also had an impact on net
sales. The market for medical products remained strong. Operating profit
excluding non-recurring items decreased to EUR 1.6 million (EUR 3.9 million).
The result was negatively impacted by lower volumes. Also, the Mundra plant in
India and the teabag material line in Chirnside, U.K. continued to weaken
profitability. However, new products from both lines have been qualified by
customers. Operating profit was EUR 2.0 million (EUR 2.1 million).
In January-December 2011, net sales were EUR 361.9 million (EUR 354.7 million)
and operating profit EUR 12.0 million (EUR 13.0). Operating profit excluding
non-recurring items was EUR 11.7 million (EUR 14.0 million).
Label and Processing
EUR million Q4/2011 Q4/2010 Change, % 2011 2010 Change, %
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Net sales 149.6 181.9 -17.7 678.1 724.3 -6.4
Operating profit -1.5 5.0 - 11.6 32.2 -63.8
% of net sales -1.0 2.7 1.7 4.4
Operating profit excl. NRI -0.8 4.9 - 13.6 30.6 -55.4
% of net sales -0.5 2.7 2.0 4.2
RONA, % -2.4 7.1 4.4 10.9
Sales volumes, 000s tons 124.6 143.3 -13.1 557.5 601.0 -7.2
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Net sales in October-December 2011 fell by 17.7% to EUR 149.6 million, compared
with EUR 181.9 million in October-December 2010. The decline was due to lower
sales volumes mainly in Europe and the divestment of the Altenkirchen plant at
the end of 2010. Operating loss excluding non-recurring items was EUR 0.8
million (EUR 4.9 million profit) due to lower sales volumes and increased price
competition. Operating loss amounted to EUR 1.5 million (EUR 5.0 million
profit). The 2011 figure includes non-recurring costs related to the profit
improvement program.
A new generation of release papers for silicone coating called Ahlstrom Acti-
V(TM) has been well received by the market after its launch in September. The
technology enables Ahlstrom's customers to reduce manufacturing costs and at the
same time improve quality.
In January-December 2011, net sales were EUR 678.1 million (EUR 724.3 million)
and operating profit EUR 11.6 million (EUR 32.2 million). Operating profit
excluding non-recurring items was EUR 13.6 million (EUR 30.6 million).
Financing (including discontinued operations)
Net cash flow from operating activities in January-December 2011 amounted to EUR
83.7 million (EUR 167.5 million), and cash flow after investments was EUR 140.4
million (EUR 118.8 million). In October-December 2011, net cash flow from
operating activities was EUR 10.9 million (EUR 22.8 million).
During January-December 2011, operative working capital decreased by EUR 17.6
million to EUR 176.7 million from the end of 2010. Its turnover rose by four
days and was 41 days at the end of the review period. Operative working capital
has remained well under control after a related focus project was completed at
the end of 2010.
Ahlstrom's interest-bearing net liabilities decreased by EUR 92.2 million from
the end of 2010 to EUR 237.8 million (December 31, 2010: EUR 330.1 million).
Ahlstrom's interest bearing liabilities amounted to EUR 332.2 million. The
duration of the loan portfolio (average interest rate fixing period) was 21
months and the capital weighted average interest rate was 4.64%. The average
maturity of the loan portfolio was 47 months.
In January-December 2011, net financial expenses and share of profits and losses
of associated companies were EUR -29.0 million (EUR -28.2 million). In October-
December 2011, the figure was EUR -8.5 million (EUR -5.6 million).
The company's liquidity continues to be good. At the end of the review period,
its total liquidity, including cash, unused committed credit facilities and cash
pool limits was about EUR 473 million. In addition, the company had uncommitted
credit facilities of about EUR 102 million available.
In June, Ahlstrom signed a new EUR 250 million five-year revolving credit
facility to refinance the company's EUR 200 million revolving credit facility
signed in 2009.
The gearing ratio decreased to 38.2% (December 31, 2010: 46.9%). The equity
ratio was 43.6% (December 31, 2010: 45.6%).
Capital expenditure
Ahlstrom's capital expenditure excluding acquisitions from continuing operations
totalled EUR 66.4 million in January-December 2011 (EUR 47.2 million). In
October-December 2011, investments totalled EUR 35.9 million (EUR 20.2 million).
In May, Ahlstrom announced that it will invest in additional capacity in
transportation filtration materials manufacturing at its site in Louveira,
Brazil. The investment will be completed in the first quarter of 2012.
In June, Ahlstrom announced that it will invest a total of EUR 7 million at its
Stenay plant in France in order to produce lower grammage grades, enhancing the
quality of one-side coated papers for metalized labels and flexible packaging.
The Stenay plant is part of the Label and Processing business area.
In June, Ahlstrom announced that it will invest a total of EUR 30 million in a
new wallcover substrates production line at its Binzhou plant in China, where
the company is already manufacturing filtration materials. Deliveries from the
new line are expected to start in early 2013 and the new line will be part of
the Building and Energy business area.
In December, Ahlstrom acquired a 49.5% stake in Porous Power Technologies, LLC.
The U.S.-based company develops technology for lithium-ion battery separators.
Ahlstrom has an option to acquire the remaining shares at a later stage.
Ahlstrom, together with Porous Power Technologies, will be offering a new
generation of separator solutions for safer batteries and capacitors in
electric-drive vehicles, e-bikes, portable electronics and utility-grade storage
products. Porous Power Technologies' current separator products are already
being evaluated by battery manufacturers around the world. The products for
electric vehicles will be commercially available in larger scale later.
Changes in the Executive Management Team
On March 11, 2011, Luc Rousselet was appointed Executive Vice President, Supply
Chain, and member of the Executive Management Team as of June 15, 2011.
On April 1, 2011, Paul H. Stenson was appointed Executive Vice President,
Business Development, and member of the Executive Management Team as of May
30, 2011.
On July 26, 2011, Claudio Ermondi, Executive Vice President, Product &
Technology Development, and member of the Executive Management Team, resigned
from Ahlstrom with immediate effect. His duties and responsibilities were
transferred to Paul Stenson.
Patrick Jeambar, Executive Vice President, Label and Processing, stepped down
from the Executive Management Team as of September 1, 2011. Daniele Borlatto,
Vice President, Release & Label and Supply Chain, succeeded Jeambar as the
Executive Vice President, Label and Processing. He also became a member of the
Executive Management Team.
Jean-Marie Becker, Executive Vice President, Home and Personal, stepped down
from the Executive Management Team as of October 31, 2011 following the transfer
of the business to Suominen Corporation.
Ahlstrom's Executive Management Team as of December 31, 2011:
Jan Lång, President and CEO
Seppo Parvi, CFO and deputy to the President
Paula Aarnio, EVP, Human Resources & Sustainability
Tommi Björnman, EVP, Filtration
Daniele Borlatto, EVP, Label and Processing
William Casey, EVP, Food and Medical
Laura Raitio, EVP, Building and Energy
Rami Raulas, EVP, Sales & Marketing
Luc Rousselet, EVP, Supply Chain
Paul H. Stenson, EVP, Product & Technology
Development programs
Development programs, aimed at enhancing the planning and harmonization of
common processes, were continued during the review period as communicated
earlier. Ahlstrom aims to increase customer focus and enhance the management of
the entire product and supply chain by strengthening and better aligning global
processes.
Approximately EUR 8 million was spent on development programs in 2011, less than
the EUR 12 million initially announced at the beginning of last year as external
consulting fees and travelling costs were lower than anticipated. Expenditure on
development programs this year is estimated to be in line with 2011.
Waste management program
The project to reduce material waste in manufacturing launched in 2010, reached
successfully its final stage and will be completed in the beginning of 2012.
Production waste was reduced by approximately 10% in volume by the end of 2011,
which equals annual savings of about EUR 14 million. The targeted reduction of
15% in waste in annual volume equalling annual savings of about EUR 20 million
is expected to be fully visible in 2012.
Profit improvement program
In December, Ahlstrom concluded its profit improvement program. The program,
announced on October 18, aims to improve annual operating profit by
approximately EUR 15 million starting from 2012 and affecting 362 employees at
various sites worldwide.
Ahlstrom recognized a total non-recurring cost of approximately EUR 31.5
million, of which EUR 25 million was booked in the third quarter and EUR 6.5
million in the fourth quarter of 2011. The overall impact of the non-recurring
items of the program is cash neutral.
In the Building and Energy business area, Ahlstrom ceased the production of
glassfiber and glassfiber mats in Karhula, Finland by the end of 2011 as the
operation was unprofitable. The production of glassfiber tissue at the site
continues as before.
Ahlstrom decided to close its Bishopville plant in South Carolina, USA in early
2012. The site, which manufactures glassfiber specialty reinforcements, has
suffered from weakening demand in the wind energy business in North America.
Also in the Building and Energy business area, Ahlstrom closed a hybrid
wallcover production line in Turin, Italy, in October. The loss-making line was
started in 2009.
In the Label and Processing business area, Ahlstrom initiated negotiations on
streamlining measures at its Osnabrück plant in Germany which are expected to
affect a maximum of 39 employees. In Jacarei, Brazil, the company decided to
reduce personnel by 35 employees due to weakened market conditions in coated
papers in South America.
Personnel
Ahlstrom employed on average 5,181 people* in January-December 2011 (5,264), and
5,202 people (5,131) at the end of the period. At the end of the period, the
highest numbers of employees were in France (23.7%), the United States (20.1%),
Italy (11.2%), Finland (10.9%), Germany (7.6%) and Brazil (6.7%).
Annual General Meeting
Ahlstrom Corporation's Annual General Meeting of Shareholders (AGM) was held on
March 30, 2011.
The AGM resolved to distribute a dividend of EUR 0.88 per share for the fiscal
year that ended on December 31, 2010 from the retained earnings in accordance
with the proposal of the Board of Directors. In addition, the AGM resolved to
reserve EUR 100,000 to be used for donations at the discretion of the Board of
Directors.
The AGM approved the financial statements and discharged the members of the
Board of Directors and the President & CEO from liability for the fiscal year
January 1-December 31, 2010.
The AGM confirmed the number of Board members as seven. Thomas Ahlström,
Sebastian Bondestam, Lori J. Cross, Anders Moberg and Peter Seligson were re-
elected as members of the Board of Directors. Esa Ikäheimonen and Pertti
Korhonen were elected as new members. The term of the Board of Directors will
expire at the close of the next Annual General Meeting.
PricewaterhouseCoopers Oy was re-elected as Ahlstrom's auditor as recommended by
the Audit Committee. PricewaterhouseCoopers Oy has designated Authorized Public
Accountant Eero Suomela as the Responsible Auditor.
Authorizations to repurchase and distribute the company's own shares as well as
to accept them as pledge
The AGM authorized the Board of Directors to repurchase and distribute the
company's own shares as well as to accept them as pledge as proposed by the
Board of Directors. The number of shares to be repurchased or accepted as pledge
by virtue of the authorization shall not exceed 4,000,000 shares in the company,
yet always taking into account the limitations set forth in the Companies' Act
as regards the maximum number of shares owned by or pledged to the company or
its subsidiaries. The shares may be repurchased only through public trading at
the prevailing market price by using unrestricted shareholders' equity. The
rules and guidelines of NASDAQ OMX Helsinki Oy and Euroclear Finland Ltd shall
be followed in the repurchase.
The authorization includes the right for the Board of Directors to decide upon
all other terms and conditions for the repurchase of the company's own shares,
or their acceptance as pledge, including the right to decide on the repurchase
of the company's own shares otherwise than in proportion to the shareholders'
holdings in the company.
By virtue of the authorization, the Board of Directors has the right to resolve
to distribute a maximum of 4,000,000 own shares held by the company. The Board
of Directors was authorized to decide to whom and in which order the own shares
will be distributed. The Board of Directors may decide on the distribution of
the company's own shares otherwise than in proportion to the existing pre-
emptive right of shareholders to purchase the company's own shares. The shares
may be used e.g. 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 authorization also includes the
right for the Board of Directors to resolve on the sale of the shares accepted
as a pledge. The authorization includes the right for the Board of Directors to
resolve upon all other terms and conditions for the distribution of the shares
held by the Company.
The authorizations for the Board of Directors to repurchase the Company's own
shares, to distribute them as well as to accept them as pledge 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.
Decisions taken by the Board of Directors
After the AGM, the organization meeting of the Board of Directors elected Peter
Seligson as Chairman and Pertti Korhonen as Vice Chairman of the Board.
The Board of Directors appointed three permanent committees. The members of the
Audit Committee are Esa Ikäheimonen (Chairman), Thomas Ahlström and Sebastian
Bondestam. The members of the Compensation Committee are Peter Seligson
(Chairman), Lori J. Cross and Anders Moberg. Five persons were appointed as
members of the Nomination Committee: Peter Seligson (Chairman), Pertti Korhonen
and Anders Moberg as well as the non-board members Carl Ahlström and Risto
Murto. The composition of the Nomination Committee aims to increase shareholder
influence in nomination matters.
During the period under review, the Board of Directors used the authorization
granted by the Annual General Meeting of March 30, 2011, to repurchase the
company's own shares for the implementation of the company's share-based
incentive plan. The number of shares purchased was 250,000, which accounts for
approximately 0.54% of the total number of shares. The repurchase reduced the
company's distributable capital and reserves. The purchases began on September
23, 2011 and ended on November 17. The average price was EUR 12.45.
Shares and share capital
Ahlstrom's shares are 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-December 2011, a total of 8.14 million Ahlstrom shares were
traded for a total of EUR 118.2 million. The lowest trading price was EUR 10.60
and the highest EUR 18.23. The closing price on December 30, 2011 was EUR
12.50. The market capitalization at the end of the review period was EUR 576.3
million, excluding the shares owned by the parent company and Ahlcorp Oy, which
is a management ownership company.
At the end of 2011, Ahlstrom held a total of 269,005 of its own shares,
corresponding to approximately 0.58% of the total shares and votes.
Ahlstrom Group's equity per share was EUR 11.50 at the end of the review period
(December 31, 2010: EUR 13.48).
The company received a notification in accordance with the Securities Market Act
Chapter 2, Section 9, from Erkki Etola dated October 19, 2011, on the change in
the shareholding of said shareholder. According to the announcement, on October
18, 2011 Etola's shareholding in Ahlstrom Corporation's shares and voting rights
fell below 5% (1/20).
Ownership in Suominen
At the end of 2011, Ahlstrom held a total of 66,666,666 shares in Suominen
Corporation, which equals 27.1 percent of the total shares and votes. The
closing price of the Suominen share on December 30, 2011 was EUR 0.39.
Suominen's financial figures are included in Ahlstrom's consolidated financial
statements as an associated company.
Other events during the review period
Ahlstrom's Louveira filtration materials plant in Brazil resumed full production
in February after the facility was hit by floods in January. During the shutdown
Ahlstrom was able to supply its customers from Louveira's inventory, which was
not damaged in the flooding, and from its global supply platform.
In February, Ahlstrom launched its renewed brand and brand identity to better
reflect the company's refined strategy, new operating model and values.
In September, the Label and Processing business area launched Acti-V(TM) , a new
generation of release papers for silicone coating. The technology enables
Ahlstrom's customers to reduce manufacturing costs and at the same time improve
reliability.
In September, a fire at Ahlstrom's Mozzate wipes fabrics plant in Italy caused
damage to one of the production lines. Financial damage was covered by
insurance. The Mozzate plant was part of the Home and Personal business area
divested to Suominen.
In November, Ahlstrom introduced a new vision to describe the kind of company it
aims to be in the future. The vision is made up of three components: inspiring
people, passionate about new ideas, and growing with our customers.
Proposal for the distribution of profits
Ahlstrom aims to pay a dividend of not less than one third of the net cash from
operating activities after operative investments, calculated as a three-year
rolling average to achieve stability in the dividend pay-out. Operative
investments include maintenance, cost reduction, and efficiency improvement
investments.
The distributable funds on the balance sheet of Ahlstrom Corporation as of
December 31, 2011 amounted to EUR 636,497,787.52
The Board of Directors will propose to the Annual General Meeting that for the
financial year ended on December 31, 2011 a dividend totaling EUR 1.30 per share
be paid: a dividend of EUR 0.87 per share based on the dividend policy mentioned
above and an extra dividend of EUR 0.43 per share based on cash generated from
the divestiture of the Home and Personal business area.
The dividends will be paid to shareholders registered in the Register of
Shareholders held by Euroclear Finland Ltd. on the record date, April 11, 2012.
On December 31, 2011, the number of shares of the Company amounted to
46,670,608 based on which the maximum amount that can be distributed as dividend
would be EUR 60,671,790.40. The Board of Directors proposes that the dividend be
paid on April 18, 2012.
In addition, the Board of Directors proposes that EUR 100,000 will be reserved
for donations at the discretion of the Board.
Outlook
In the first half 2012, the main markets served by Ahlstrom are estimated to
remain soft with limited visibility, particularly in Europe.
Ahlstrom estimates net sales from continuing operations for the current year
will amount to EUR 1,575-1,735 million. Operating profit excluding non-recurring
items from continuing operations is estimated to be EUR 60-80 million.
The company maintains its long-term financial target of achieving a minimum
return on capital employed (ROCE) of 13%. However, Ahlstrom no longer expects to
reach the target by 2012 as previously communicated due to the continued
softness in Ahlstrom's main markets. The company continues to execute its
strategic agenda and continuous improvement programs to achieve its long-term
targets.
In 2012, investments excluding acquisitions from continuing operations are
estimated to be approximately EUR 100 million (EUR 66.4 million in 2011). The
estimate includes investments that have already been announced in 2011, such as
the wallcovering materials line in China.
Short-term risks
Economic growth in Europe has deteriorated further due to the sovereign debt
crisis, austerity measures by governments and uncertainty in the financial
markets. On the other hand, the North American economy showed some signs of
recovery towards the end of the review period. Growth in Asia and other emerging
markets has continued to be strong, but growth could be negatively impacted by
the debt crisis and demand slowdown in Europe. The possible further contagion of
the European debt crisis poses an additional risk to economic growth and sales
development at Ahlstrom.
Slower economic growth, or even a temporary contraction, may lead to lower sales
volumes and force Ahlstrom to initiate more market related shutdowns at plants,
thus hurting profitability. The increased uncertainty related to global economic
growth makes it more difficult to forecast future developments.
Ahlstrom's main raw materials are natural fibers, mainly pulp, synthetic fibers
and chemicals. The company is one of the world's largest buyers of market pulp.
Despite the recent declines, prices of some key raw materials used by Ahlstrom
remain at a high level.
If global economic growth slows down further, maintaining the current selling
price levels may be at risk and sustaining the current profitability level might
be compromised even if raw material prices decline at the same time.
The general risks facing Ahlstrom's business operations are described in greater
detail on the company website www.ahlstrom.com and in the report by the Board of
Directors in the company's Annual Report 2010. The risk management process is
also described in the Corporate Governance Statement available on the company
website.
* * *
This interim report has been prepared in accordance with International Financial
Reporting Standards (IFRS). Comparable figures refer to the same period last
year unless otherwise stated.
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, February 1, 2012
Ahlstrom Corporation
Board of Directors
Additional information
Jan Lång, President & CEO, tel. +358 (0)10 888 4700
Seppo Parvi, CFO, tel. +358 (0)10 888 4768
Ahlstrom's President & CEO Jan Lång and CFO Seppo Parvi will present the
financial statements bulletin 2011 in a Finnish-language press and analyst
conference in Helsinki today, February 1, 2012, at 2:30 p.m. (CET+1). The
conference will take place at Event Arena Bank, Unioninkatu 20, 2(nd) floor. The
meeting room will be announced on the display board in the lobby.
In addition, President & CEO Lång and CFO Parvi will hold a conference call in
English for analysts, investors and representatives of the media today, February
1, 2011, at 4:30 p.m. (CET+1). To participate in the conference call, please
dial (09) 2310 1621 in Finland or +44 (0)20 3450 9987 outside Finland a few
minutes before the conference begins. The access code is 2604599.
The conference call can also be listened to live on the Internet. The link to
the English-language presentation (an audio webcast) including slides is
available on the company website at www.ahlstrom.com. Questions may also be
submitted in writing via the Internet. Listening to the conference call requires
registration.
An on-demand webcast including slides is available for viewing and listening on
the company website for one year after the conference call.
Presentation material will be available on February 1, 2012 after the Interim
Report is published, at www.ahlstrom.com > Investors > Reports and presentations
/> 2011. Material in Finnish will be available at www.ahlstrom.fi > Sijoittajat >
Katsaukset ja presentaatiot > 2011.
Ahlstrom's financial information in 2012
Ahlstrom will publish financial information in 2012 as follows:
+--------------------------------+-------------------+---------------+
|Report |Date of publication|Silent period |
+--------------------------------+-------------------+---------------+
|Interim Report January-March |Friday, April 27 |April 1-27 |
+--------------------------------+-------------------+---------------+
|Interim Report January-June |Thursday, August 9 |July 1-August 9|
+--------------------------------+-------------------+---------------+
|Interim Report January-September|Monday, October 22 |October 1-22 |
+--------------------------------+-------------------+---------------+
During the silent period, Ahlstrom will not communicate with capital market
representatives.
Ahlstrom in brief
Ahlstrom is a high performance materials company, partnering with leading
businesses around the world to help them stay ahead. Our products are used in a
large variety of everyday applications, such as filters, wallcovers, flooring,
labels and food packaging. We have a leading market position in the businesses
in which we operate. Our 5,200 employees serve customers in 28 countries on six
continents. In 2011, Ahlstrom's net sales amounted to EUR 1.6 billion. The
company's share is quoted on the NASDAQ OMX Helsinki. More information is
available atwww.ahlstrom.com.
Appendix
Consolidated financial statements
Appendix: Consolidated financial statement
Financial statements are unaudited.
--------------------------------------------------------------------------------
INCOME STATEMENT Q4 Q4 Q1-Q4 Q1-Q4
EUR million 2011 2010 2011 2010
--------------------------------------------------------------------------------
Continuing operations
Net sales 371.3 416.8 1,607.2 1,636.3
Cost of goods sold -331.8 -367.5 -1,421.9 -1 414,0
--------------------------------------------------------------------------------
Gross profit 39.6 49.3 185.4 222,3
Sales and marketing expenses -13.6 -11.7 -50.0 -49,2
R&D expenses -4.0 -5.0 -17.9 -18,6
Administrative expenses -22.6 -25.2 -90.1 -96,8
Other operating income 4.2 8.3 12.3 16.8
Other operating expense -7.6 -24.6 -19.6 -28.0
--------------------------------------------------------------------------------
Operating profit / loss -4.2 -9.0 20.1 46.5
Net financial expenses and share of profit /
loss
of associated companies -6.5 -5.5 -26.7 -27.7
--------------------------------------------------------------------------------
Profit / loss before taxes -10.7 -14.5 -6.6 18.8
Income taxes 1.8 5.7 -5.6 -7.8
--------------------------------------------------------------------------------
Profit / loss for the period from continuing
operations -8.9 -8.8 -12.2 10.9
--------------------------------------------------------------------------------
Discontinued operations
Profit/loss for the period -1.1 2.0 3.4 7.0
Impairment loss recognised on the
remeasurement
to fair value and gain/loss from sales -4.9 - -23.4 -
--------------------------------------------------------------------------------
Profit / loss for the period from discontinued
operations -6.0 2.0 -20.0 7.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit/loss for the period -14.8 -6.8 -32.2 17.9
--------------------------------------------------------------------------------
Attributable to
Owners of the parent -14.6 -6.8 -32.2 17.9
Non-controlling interest -0.2 -0.0 -0.0 0.0
--------------------------------------------------------------------------------
Continuing operations
--------------------------------------------------------------------------------
Earnings per share, EUR
- Basic and diluted * -0.22 -0.22 -0.38 0.11
--------------------------------------------------------------------------------
Including discontinued operations
Earnings per share, EUR
- Basic and diluted * -0.34 -0.18 -0.81 0.26
--------------------------------------------------------------------------------
* With the effect of interest on hybrid bond
for the period, net of tax
-------------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME Q4 Q4 Q1-Q4 Q1-Q4
EUR million 2011 2010 2011 2010
-------------------------------------------------------------------------
Profit / loss for the period -14.8 -6.8 -32.2 17.9
Other comprehensive income, net of tax
Translation differences 15.5 12.9 -11.9 39.2
Share of other comprehensive income of associates - - - -
Hedges of net investments in foreign operations - - - -2.8
Cash flow hedges 0.1 1.2 - 0.8
-------------------------------------------------------------------------
Other comprehensive income, net of tax 15.7 14.2 -11.9 37.3
-------------------------------------------------------------------------
Total comprehensive income for the period 0.8 7.4 -44.1 55.2
-------------------------------------------------------------------------
Attributable to
Owners of the parent 1.0 7.4 -44.0 55.2
Non-controlling interest -0.2 -0.0 -0.0 0.0
-----------------------------------------------------------------------
BALANCE SHEET Dec 31, Dec 31,
EUR million 2011 2010
-----------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 553.4 590.1
Goodwill 113.8 114.1
Other intangible assets 47.6 41.1
Investments in associated companies, other investments
and other receivables 89.0 57.6
Deferred tax assets 61.2 54.9
-----------------------------------------------------------------------
Total non-current assets 865.0 857.7
Current assets
Inventories 185.8 173.6
Trade and other receivables 241.4 266.9
Income tax receivables 2.4 2.4
Other investments - -
Cash and cash equivalents 94.0 23.5
-----------------------------------------------------------------------
Total current assets 523.6 466.3
Assets classified as held for sale 42.3 234.8
-----------------------------------------------------------------------
Total assets 1,430.8 1,558.9
-----------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 530.1 623.0
Hybrid bond 80.0 80.0
Non-controlling interest 12.6 0.9
-----------------------------------------------------------------------
Total equity 622.7 703.8
Non-current liabilities
Interest-bearing loans and borrowings 274.2 261.7
Employee benefit obligations 73.3 75.4
Provisions 4.5 3.0
Other liabilities 4.8 4.4
Deferred tax liabilities 28.8 27.4
-----------------------------------------------------------------------
Total non-current liabilities 385.5 371.9
Current liabilities
Interest-bearing loans and borrowings 58.1 95.0
Trade and other payables 328.8 327.1
Income tax liabilities 5.6 4.4
Provisions 20.4 6.7
-----------------------------------------------------------------------
Total current liabilities 412.8 433.2
-----------------------------------------------------------------------
Total liabilities 798.3 805.1
Liabilities directly associated with assets
classified as held for sale 9.8 49.9
-----------------------------------------------------------------------
Total equity and liabilities 1,430.8 1,558.9
-----------------------------------------------------------------------
Statement of changes in equity
1) Issued capital
2) Share premium
3) Non-restricted equity reserve
4) Hedging reserve
5) Translation reserve
6) Own shares
7) Retained earnings
8) Total attributable to owners of the parent
9) Non-controlling interest
10) Hybrid bond
11) Total equity
EUR million 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)
-------------------------------------------------------------------------------
--------------------------------------------------------------
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