Ahlstrom's operating environment reflects rapid downturn of global economy

05 Feb '09

6 min read

OPERATING ENVIRONMENT
In 2008, Ahlstrom's operating environment was very challenging and reflected the rapid downturn of the global economy. In the first half-year, demand for most of Ahlstrom's products was strong despite the early signs of eventual softness of demand in some product segments. Demand was especially strong in high-growth sectors, such as the windmill industry.

Demand started to gradually soften in the latter part of the year, resulting in a steeply declining order stock for most of Ahlstrom's products as well as a downsizing of inventory levels in the supply pipeline at the end of the year. Demand decreased especially strongly in filtration products due to the decline of the global automotive and construction industries. On the other hand, demand was brisk in medical and food nonwovens, crepe papers as well as release and label papers on the South American market.

Prices for Ahlstrom's main raw materials, wood pulp and rayon, and the price of oil, reached their historical peak levels during the first half of the year, which had a negative impact on Ahlstrom's gross margins. Towards the end of the third quarter, indications of a turn in the price trend started to emerge, and during the fourth quarter, the average USD market price of NBSK pulp was approximately 16% lower, polyester 18%, rayon 9% and crude oil over 51% lower than on the third quarter. The decreasing trend has continued in the beginning of 2009.

FINANCIAL PERFORMANCE
Ahlstrom's business is reported in two segments: the Fiber Composites segment and the Specialty Papers segment. The Fiber Composites segment comprises the Advanced Nonwovens, the Home & Personal Nonwovens, the Glass Nonwovens and the Filtration business areas. Customers served operate in the building, transportation, healthcare and hygiene, food and industrial packaging as well as the utilities industries.

The Specialty Papers segment covers the Release & Label Papers and the Technical Papers business areas. Customers served operate in the building, transportation, healthcare and hygiene, food and industrial packaging and graphics industries.

Financial performance in October-December 2008
Net sales
During the October-December period, the global economic downturn reflected on Ahlstrom's business significantly. A strong decline in the demand for most of Ahlstrom's products emerged towards the end of the year coupled with a downsizing of inventory levels in the supply chain. Group net sales totaled EUR 419.0 million (EUR 462.5 million), decreasing by 9.4% compared with the same period last year. Sales volumes decreased by 16.6% during the fourth quarter. Comparable net sales adjusted for the currency effect, plant closures and acquisitions decreased by 4.5% and comparable volumes by 6.1%.

The net sales of the Fiber Composites segment amounted to EUR 229.1 million (EUR 249.7 million), representing 55% ofthe Group net sales. The net sales of the segment decreased by 8.2% compared with he fourth quarter in 2007. Net sales decreased in all business areas, which was due to lower volumes and pricing pressures in many products, especially in transportation filtration, wipes for home and personal care as well as in industrial nonwovens products. On the other hand, net sales grew in medical and food nonwovens applications.

For more detials click here.

Ahlstrom Corporation

More Ahlstrom-Munksjo News... More Textiles News - Finland...