Two distinct biz models to strengthen Ahlstrom's operations
28 Oct '09
2 min read
Ahlstrom Corporation, leading supplier of nonwovens and specialty papers, has completed its conclusions of the strategy review process initiated in April. The aim of the process was to verify the future direction and ambitions of the company. The development of business operations will be based on profitable growth, with increased focus in Asia. At the same time, the company aims to manage its balance sheet and reduce its gearing ratio.
In accordance with the revised strategy, Ahlstrom's operations will be based on two distinct business models resulting from different competitive situations, market growth potential and possibilities to differentiate in various product lines. The first business model is based on providing customers with added value products and the second on operational excellence.
The value-added business will be the company's primary growth engine, developing through organic growth and possibly by making small acquisitions. Innovative new products that help Ahlstrom's customers become more competitive will create the foundation of success. The cluster will include the Fiber Composites segment's Advanced Nonwovens and Glass & Industrial Nonwovens business areas as well as the transportation and liquid filtration media in the Filtration business area.. It will also include crepe papers and vegetable parchment from the Technical Papers business area of the Specialty Papers segment.
The operational excellence business will be key to support the growth of the company. The main focus will be to develop cost effective products serving customer needs, through for instance, alternative raw materials or new technological solutions. The cluster covers the Release & Label Papers business area and the majority of the Technical Papers business area in the Specialty Papers segment. In the Fiber Composites segment, it will include the Home & Personal Nonwovens business area and air filtration media in the Filtration business area.
The long-term target of the strategy is to strengthen Ahlstrom's competitive position and generate returns that are in line with the company's financial targets. One of the most important indicators is return on capital employed (ROCE),which should reach its target level of 13%. In January-September ROCE was 1.5% and in July-September 4.8%. Measures to reach these targets will be continued with regard to the product lines and units falling below the target level.
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