Ahlstrom Corporation October-December 2011 & Financial ......Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 EUR million 1.3% Highlights –Higher selling prices –Favorable

Ahlstrom Interim report January-June 2013

Jan Lång

President & CEO

Seppo Parvi CFO

Helsinki

August 7, 2013

8/7/2013 © 2012 Ahlstrom Corporation Page 2

Agenda

– April-June 2013

– Business area review

– Cash flow and debt development

– Income statement and balance sheet

– Future prospects

April-June 2013 in brief

© 2012 Ahlstrom Corporation Page 3

Highlights

– Net sales and profitability improved slightly

– Advanced Filtration and integration of Munktell

– Higher selling prices and improved product mix

– LP Europe demerger completed, Coated Specialties in Brazil expected to be

completed during H2/2013

Lowlights

– Volatile demand in North America

– Higher indirect and administration costs

– Focus units at Food and Medical

– Higher gearing ratio due demerger effects

8/7/2013

Q2/2013 key figures


EUR million Q2/2013 Q2/2012

Change,

%

Q1-Q2/

2013

Q1-Q2/

2012

Change,

%

Net sales 265.0 261.6 1.3 520.3 521.9 -0.3

Operating profit excl. NRI 7.9 7.4 6.3 14.4 17.9 -19.9

% of net sales 3.0 2.8 2.8 3.4

Gearing* 83.7 56.4 83.7 56.4

ROCE, % 1.0 1.5 3.2 3.8

*Including discontinued operations

– Target to reach annual costs savings of EUR 35 million by the end of 2014

• Includes earlier announced EUR 15 million cost savings measures, of which approximately EUR 10

million relate to costs being transferred to Munksjö Oyj

• Net effect approximately EUR 25 million

– Key actions:

• Completion of demerger related transfers

• Reduction of selling, general and administration (SGA) costs

• Optimization and productivity improvements in the supply chain

– Personnel reductions of about 350 globally

– Completion of key development programs will increase efficiency and enable cost savings

– Ahlstrom to book non-recurring items of approximately EUR 15 million in 2013-14


Rightsizing program


Quarterly net sales development

264.4 266.6 251.9 242.8

260.3 261.6 248.8 240.1 255.3 265.0

0

25

50

75

100

125

150

175

200

225

250

275

300

325

350

Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13

EUR million

1.3%

Highlights

– Higher selling prices

– Favorable product mix

Lowlights

– Adverse currency effect

– Sales in North America

Quarterly operating profit development

10.5

7.4 7.3

-4.1

6.5

7.9

-3,0 %

-2,0 %

-1,0 %

0,0 %

1,0 %

2,0 %

3,0 %

4,0 %

5,0 %

6,0 %

7,0 %

-6

-4

-2

0

2

4

6

8

10

12

14

Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13

EUR million Operating profit excl. NRI % of net sales

Highlights

‒ Pricing management

Lowlights

‒ Higher indirect production

and administration costs,

mainly related to new units


2012 figures restated

Q2/2013 operating profit* increase driven by

higher selling prices and volumes


7.4 7.9

3.4

1.4

3.3

0.9

2.0 2.5

0.6

0

2

4

6

8

10

12

14

OP excl. NRIQ2/2012

Selling price Volume RM andEnergy

Indirectcosts

SGA Othercosts**

FX OP excl. NRIQ2/2013

EUR million

*Continuing operations, excluding non-recurring items

**Including change in inventory

– Price increases

implemented to

compensate for earlier

occurred higher input

costs

– Higher indirect and

administrative costs,

mainly in new units

Business area review

© 2012 Ahlstrom Corporation Page 9 8/7/2013


Advanced Filtration

Highlights

• Munktell acquisition

• Net sales growth 15.7% excluding

the acquisition

• Higher sales of gas turbine,

laboratory & life science

applications

• Increased selling prices

Lowlights

• Increased raw materials costs

18.9

26.2

0

5

10

15

20

25

30

35

Q2/2012 Q2/2013

Net sales

2.9

3.7 2.9

3.7

0

1

2

3

4

5

6

7

8

Q2/2012 Q2/2013

Operating profit EUR

million

EUR

million +39.1%

(volumes +26.8%)

Operating profit Operating profit excl. NRI


Building and Energy

Highlights

• Flooring material sales in Europe

• Poster papers

• Stable sales of wallpaper/

wallcoverings

Lowlights

• Sales of wind energy applications

• Increased market-related downtime

in production

• Adverse product mix

• Lower sales of construction and

consumer-related applications in

Europe

72.4 71.0

10

20

30

40

50

60

70

80

Q2/2012 Q2/2013

Net sales

2.2 1.6 2.2 1.6

0

1

2

3

4

5

6

7

8

Q2/2012 Q2/2013


million

EUR

million -1.9%

(volumes -0.7%)



Food and Medical

Highlights

• Food packaging, beverage and

tape materials sales in North

America

• Increased selling prices and

improved product mix

Lowlights

• Sales of medical products

• Adverse currency effect

• Commercialization of Longkou

plant

• Mundra plant and Chirnside

production line

89.4 88.7

30

40

50

60

70

80

90

100

Q2/2012 Q2/2013

Net sales

1.1

1.5

1.6

1.7

0

1

2

3

4

5

6

7

8

Q2/2012 Q2/2013

Operating profit

EUR

million

EUR

million -0.8%

(volumes 1.7%)



Transportation Filtration

Highlights

• Higher sales volumes

• Sales growth in Asia

• Sales in Europe in difficult market

environment

• Improved product mix

Lowlights

• Sales of heavy duty filtration in

North America

• Increased raw material and energy

costs

77.4 81.0

20

30

40

50

60

70

80

90

Q2/2012 Q2/2013

Net sales

0.2

4.6 4.0

4.6

0

1

2

3

4

5

6

7

8

Q2/2012 Q2/2013


million

EUR

million +4.6%

(volumes +3.3%)


Cash flow and debt development

8/7/2013

Quarterly net cash from operating activities (including discontinued operations)

18.5

27.6 26.7

10.9 14.6

27.5

21.2

15.5

-21.4

35.5

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

35

40

Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13


– Cash flow increased

due to the release of

operative working

capital

EUR

million


Development of operative working capital (including discontinued operations)

230.7

194.3

176.7 179.1 171.8 169.9 169.3

198.3

155.5

20

25

30

35

40

45

50

55

100

125

150

175

200

225

250

275

Q1/10 Q4/10 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13

Days EUR million

Operative working capital* Turnover rate in days

– Operative working capital

released due to LP Europe

demerger

– Turnover rate was 39 days

on June 30, 2013 (41 days

on Dec. 31, 2012)

*Operative working capital = Accounts receivables + inventories – accounts payable


Gearing ratio (including discontinued operations)

– Lower net debt due to the completion

of LP Europe demerger

– Gearing ratio affected by:

– EUR 30.9 million net of tax

impairment loss and costs to

sell related to the Coated

Specialties demerger

– EUR 67.6 million recognition of

Coated Specialties distribution

liability

– Fair valuation of Munksjö Oyj

shares causing EUR 28.6

million write-down

– Gearing ratio was 83.7% on June 30,

2013

– Ahlstrom has an option to repay its

EUR 80 million hybrid bond in

November, 2013

– The company is exploring

refinancing options

375.9

330.1

237.8

241.2

290.2 279.8

303.4

348.9

294.5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

150

175

200

225

250

275

300

325

350

375

400

Q1/10 Q4/10 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13

EUR million

Interest bearing net liabilities Gearing ratio, %

Gearing ratio:

target range 50–80%

Gearing


Maturity profile of medium/long-term credit

facilities

– Total liquidity, including cash

and unused committed credit

facilities was EUR 326.0 million

at the end of Q2/2013.

– In addition, Ahlstrom had

undrawn uncommitted credit

facilities and cash pool overdraft

limits of EUR 143.2 million

available.

0

25

50

75

100

125

150

175

200

225

250

2013 2014 2015 2016 2017 2018-

EUR million

Mid-term and long-term loans Undrawn credit facilities EUR 100 million bond

Income statement and balance sheet

Income statement


Q2/2013 Q2/2012

EUR million

Net sales 265.0 261.6

Cost of goods sold -222.3 -225.2

Gross profit

42.7

36.4

Sales, administrative and research &

development expenses

Other income and expenses

-36.7

0.4

-33.7

1.3

Operating profit

6.4

4.0

Net financial expenses

Share of profit / loss of equity accounted

investments

-4.9

-5.0

-5.6

-1.7

Profit / loss before taxes

Income taxes

Profit / loss for the period from

continuing operations

Profit for the period from discontinued

operations

Profit for the period

-3.5

-1.4

-4.9

66.7

61.8

-3.3

-0.5

-3.8

3.1

-0.6

Higher selling prices and improved

product mix

NRI EUR -1.5 million in Q2/13 vs.

EUR -3.4 million in Q2/12

Includes EUR 90.6 million income

recognized from the demerger as

well as operative results.

Includes EUR 30.9 million net of

tax impairment loss and costs to

sell related to the Coated

Specialties demerger.

No tax revenues nor tax assets

were recognized for companies

with uncertain profit forecasts or for

associated companies

Suominen Oyj, Jujo Thermal

2012 figures are restated

Balance sheet


June 30, 2013 Dec. 31, 2012

EUR million

Total non-current assets

Inventories

Trade and other receivables

Other short-term receivables

Cash and cash equivalents

Assets classified as held for sale and

distribution to owners

Total assets

Total equity

Provisions

Interest bearing loans and borrowings

Employee benefit obligations

Trade and other payables

Others

Liabilities classified as held for sale and

distribution to owners

Total equity and liabilities

634.9

121.5

177.0

0.7

72.1

151.8

1,157.9

351.7

9.2

367.6

71.3

280.5

22.4

55.3

1,157.9

575.4

112.4

157.4

0.6

53.4

448.3

1,347.5

485.1

9.2

357.7

81.4

196.2

19.8

197.9

1,347.5

Gearing ratio

83.7

62.5

Demerger effect of Label and

Processing. Includes EUR 80

million hybrid bond.

Gearing ratio higher due to

impairment loss and recognition

of Coated Specialties distribution

liability and fair valuation of

Munksjö Oyj shares.

Coated Specialties, Brazilian

part of Home and Personal,

production lines to be divested

Coated Specialties, Brazilian

part of Home and Personal,

production lines to be divested


Market value of shareholding in

Munksjö Oyj EUR 49.9 million

and Suominen Oyj EUR 35.3

million

EUR 67.6 million recognition of

Coated Specialties distribution

liability

Statement of cash flows (including discontinued operations)


Q2/2013 Q2/2012

EUR million

EBITDA

Adjustments

Changes in net working capital

Financial items

Income taxes paid / received

Net cash from operating activities

Acquisition of Group companies

Purchases of intangible and tangible assets

Other investing activities

Net cash from investing activities

Dividends paid and other

Effect of partial demerger

Changes in loans and other financing activities

Net cash from financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at the beginning of the

period

Cash and cash equivalents at the end of the period

20.8

-1.4

19.9

-2.7

-1.2

35.5

-1.4

-23.5

-77.0

-102.0

-29.1

146.5

-18.8

98.6

32.2

43.1

73.1

28.4

-1.8

8.3

-5.5

-2.0

27.5

-20.8

7.2

-13.7

-60.0

6.6

-53.4

-39.6

88.2

48.8

Wallcovering materials in

Binzhou, China,

Filtration materials investment

in Turin, Italy

Operative working capital

released due to the LP

Europe demerger


EUR 78.5 million equity

contribution to Munksjö Oyj

Debt transfer related to LP

Europe demerger

Future prospects

Outlook for 2013


‒ Net sales from continuing operations are expected to be EUR 980-

1,140 million

‒ Operating profit margin excluding non-recurring items from continuing

operations is expected to be 2-5% of net sales

‒ Investments excluding acquisitions are estimated to amount to

approximately EUR 75 million

8/7/2013

Thank you

Ahlstrom Group

P.O. Box 329, Alvar Aallon katu 3c

FI-00100 Helsinki, Finland

T: +358 (0)10 888 0

F: +358 (0)10 888 4709

[email protected]

www.ahlstrom.com


Documents

Ahlstrom Corporation October-December 2011 & Financial ......Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 EUR million 1.3% Highlights –Higher selling prices –Favorable