Ahlstrom's operating environment reflects rapid downturn of global economy
Key highlights of year 2008:
• Full-year net sales grew by 2.4% to EUR 1,802.4 million (EUR 1,760.8 million). Fourth-quarter net sales amounted to EUR 419.0 million (EUR 462.5 million), decreasing by 9.4% due to a strong decline in the demand especially in December.
• Full-year operating profit decreased to EUR 14.6 million (EUR 25.8 million), and to EUR 35.7 million (EUR 67.8 million) excluding non-recurring items. Profitability was burdened by high raw material and energy prices throughout the year, ramp-up and integration costs as well as a downturn of the market in the final quarter.
• Net cash from operating activities developed favorably and increased by EUR 58.5 million to EUR 102.4 million as a result of improvement in working capital turnover.
• Further restructuring actions have been started to adjust operations to the weakening demand, including plans on capacity closures in Italy and a reduction of personnel worldwide. This incurred non-recurring items of EUR 21.7 million booked in the fourth quarter results.
• The Board of Directors proposes a dividend of EUR 0.45 (EUR 1.00) per share to be paid for the fiscal year 2008.
• Based on the weak visibility, Ahlstrom changes its disclosure policy. An exact outlook on net sales and profitability is not given.
• In 2009, the operating environment is anticipated to remain very challenging, and the demand for Ahlstrom products will vary significantly by product line and depending on the general development of the customer industries.
Jan Lång, President & CEO, comments the year 2008:
In 2008, Ahlstrom finalized most of the growth investment program initiated after the IPO. Approximately EUR 500 million has been invested in growth initiatives in two years, and as a result of this, Ahlstrom's global reach is now stronger than ever before.
What I am not happy about is the weak financial performance in 2008, which was mainly driven by the low gross margin, weak demand in the fourth quarter as well as the higher than expected ramp-up and integration costs related to the growth investment program. On a positive note, we achieved growth in net sales that was in line with market growth, and cash flow improved significantly as a result of an improvement in working capital turnover.
Several measures were taken to improve profitability, and to adjust operations to the decline in demand. These included finalizing the work began at the end of 2007 to close down and restructure non-competitive operations in the USA and Europe. Towards the end of the year, production was cut down globally to adjust the operations to the changed market situation.
The operating environment is anticipated to remain very challenging throughout 2009. It is clear that in difficult times such as these, all means to maximize cash flow will be utilized, including a lower investment activity than in 2008. Ahlstrom has also announced further global restructurings for 2009 to respond to the decrease in demand. Despite the current challenges, I wish to stress that together with the strengthened Corporate Executive Team, we shall take an active approach in developing Ahlstrom over the longer term in addition to managing short-term matters.