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Ahlstrom revises its full-year outlook
25 Jul '08
5 min read
OPERATING ENVIRONMENT:
The anticipated signs of softness in demand began to materialize towards the end of the second quarter of 2008 as a result of the uncertainty in the global economy. This was especially visible in Ahlstrom's products, which are linked with changes in consumer spending patterns, such as wiping fabrics, filtration and nonwovens for cars, housing filtration materials, as well as glass fiber reinforcement applications for the marine industry.
Within the Fiber Composites segment, the overall demand for the products of the Nonwovens business area continued to be on a good level. However, a slowdown in wiping fabrics in Europe emerged, but the demand was still stable in the USA. The demand for medical and technical nonwovens remained stable in all geographical areas.
In the Filtration business area, the demand in the transportation filtration market was solid in Europe, South America and Asia. In the USA, the growth of transportation filtration products was flat, and the air filtration market continued to suffer due to the weak construction market. Demand in the Glass Nonwovens business area continued at a very good level in the wind energy markets, but signs of softness of demand emerged in marine applications.
In the Specialty Papers segment, the demand in the Technical Papers business area was flat in most of the product lines, especially in abrasive and furniture papers. For the products of the Release & Label Papers business area, the demand was two-folded: South American label paper market grew strongly, but on the other hand, the current overcapacity of release base paper resulted in lower demand for Ahlstrom's products in Europe.
Raw material costs remained high during the review period. The average USD market price for BHKP pulp (Bleached Hardwood Kraft pulp, e.g. eucalyptus pulp), was on average approximately 23% higher than in the second quarter of 2007. The market price for NBSK pulp (Northern Bleached Softwood Kraft pulp) was on average approximately 16% higher than in the second quarter of 2007. Also the price for rayon, one of Ahlstrom's most important synthetic raw materials, increased significantly year-on-year, by approximately 28%. However, the price for rayon has decreased since the first quarter of 2008.
Energy prices increased significantly in the second quarter due to rising oil prices. Compared with the second quarter of 2007, the price of oil has risen by approximately 79%. Ahlstrom's main energy sources are natural gas and electricity.
Net sales in April-June 2008:
During the April-June period, Group net sales grew by 6.7%, amounting to EUR 465.9 million (EUR 436.9 million) compared with the same period last year. Excluding the currency effect, net sales grew by 12.3%. Recent acquisitions increased the net sales by 12.0% in the second quarter, whereas closing of unprofitable units decreased the net sales by 7.9%. Comparable net sales adjusted for the currency effect, acquisitions and closures grew by 8.1% from the same period last year.
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The anticipated signs of softness in demand began to materialize towards the end of the second quarter of 2008 as a result of the uncertainty in the global economy. This was especially visible in Ahlstrom's products, which are linked with changes in consumer spending patterns, such as wiping fabrics, filtration and nonwovens for cars, housing filtration materials, as well as glass fiber reinforcement applications for the marine industry.
Within the Fiber Composites segment, the overall demand for the products of the Nonwovens business area continued to be on a good level. However, a slowdown in wiping fabrics in Europe emerged, but the demand was still stable in the USA. The demand for medical and technical nonwovens remained stable in all geographical areas.
In the Filtration business area, the demand in the transportation filtration market was solid in Europe, South America and Asia. In the USA, the growth of transportation filtration products was flat, and the air filtration market continued to suffer due to the weak construction market. Demand in the Glass Nonwovens business area continued at a very good level in the wind energy markets, but signs of softness of demand emerged in marine applications.
In the Specialty Papers segment, the demand in the Technical Papers business area was flat in most of the product lines, especially in abrasive and furniture papers. For the products of the Release & Label Papers business area, the demand was two-folded: South American label paper market grew strongly, but on the other hand, the current overcapacity of release base paper resulted in lower demand for Ahlstrom's products in Europe.
Raw material costs remained high during the review period. The average USD market price for BHKP pulp (Bleached Hardwood Kraft pulp, e.g. eucalyptus pulp), was on average approximately 23% higher than in the second quarter of 2007. The market price for NBSK pulp (Northern Bleached Softwood Kraft pulp) was on average approximately 16% higher than in the second quarter of 2007. Also the price for rayon, one of Ahlstrom's most important synthetic raw materials, increased significantly year-on-year, by approximately 28%. However, the price for rayon has decreased since the first quarter of 2008.
Energy prices increased significantly in the second quarter due to rising oil prices. Compared with the second quarter of 2007, the price of oil has risen by approximately 79%. Ahlstrom's main energy sources are natural gas and electricity.
Net sales in April-June 2008:
During the April-June period, Group net sales grew by 6.7%, amounting to EUR 465.9 million (EUR 436.9 million) compared with the same period last year. Excluding the currency effect, net sales grew by 12.3%. Recent acquisitions increased the net sales by 12.0% in the second quarter, whereas closing of unprofitable units decreased the net sales by 7.9%. Comparable net sales adjusted for the currency effect, acquisitions and closures grew by 8.1% from the same period last year.
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