Streamlining efforts will continue - Ahlstrom

27 Oct '09

5 min read

Ahlstrom announces interim report for January-September 2009.

Jan Lång, President & CEO, comments:
- Despite the challenging market environment, we reached a positive EBIT for July-September, particularly owing to streamlining efforts, cost control and lower raw material prices. Employees have committed themselves excellently to our target of shifting the focus towards cash flow and working capital reduction. Our net debt decreased by over EUR 87 million since the turn of the year. Still, our profitability is not satisfactory, so the streamlining efforts will continue. Due to risen raw material prices, we have also announced price increases.
- We have today published our new strategic direction. In the future, our business will be based on two very distinct business models: the value-added business and the operational excellence business. The focus is on profitable growth, with the return on capital employed (ROCE) as the most important indicator. Its target level of 13% remains unchanged.

OPERATING ENVIRONMENT
The very challenging market conditions resulting from the recession continued until the end of the first half of 2009, when the weakening of demand for Ahlstrom's products stopped and the demand for some products began to pick up.The positive trend continued during July-September, but demand did not increase to the level of the corresponding period last year.

In the Fiber Composites segment, the recession has not impacted the demand for Ahlstrom's food packaging and teabag materials or nonwovens in medical applications. In January-September, their demand remained close to the usual level. The demand for Ahlstrom's construction materials increased slightly in July-September compared to the first half of the year. Also the demand for wipes and transportation filtration media improved after the weak January-June. In addition, preparations for the possible spread of the A(H1N1) virus that causes swine flu had a slightly increasing impact on the demand for face masks and wipes. On the other hand, windmill and marine markets continued to be weak.

In the Specialty Papers segment, the market demand in release and label papers, which picked up during the second quarter, continued to increase and approached the level of the third quarter of 2008. The demand for wall covers and posters as well as industrial papers also increased. On the other hand, the automotive, furniture and textile markets continued to be weak.

The increase in the market prices of Ahlstrom's main raw materials, natural and synthetic fibers and chemicals, which began in June, mainly continued.

DEVELOPMENT OF NET SALES
Development of net sales in July-September 2009
Net sales decreased in all of Ahlstrom's business areas compared to the third quarter of 2008. Compared to April-June 2009,net sales remained unchanged. Net sales for July-September amounted to EUR 400.6 million (EUR 451.2 million), reducing by 11.2% compared to July-September 2008.

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