Earnings Release • Jan 29, 2016
Earnings Release
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Ahlstrom Financial Statements Bulletin 2015: Clear improvement in profitability in the last quarter of 2015
Ahlstrom Corporation STOCK EXCHANGE RELEASE January 29, 2016 at 08.30
This is a summary of the Financial statements bulletin 2015. The complete report
with tables is attached to this release and available at www.ahlstrom.com
Ahlstrom Financial Statements Bulletin 2015
Clear improvement in profitability in the last quarter of 2015
October-December 2015 compared with October-December 2014
* Net sales EUR 255.0 million (EUR 247.0 million), showing an increase of
3.2%.Comparable net sales at constant currencies declined by 2.4%.
* Operating profit EUR -16.4 million (EUR -4.3 million).
* Operating profit excluding non-recurring items EUR 7.6 million (EUR -1.8
million), representing 3.0% (-0.7%) of net sales, and the ninth consecutive
quarter of year-on-year improvement.
* Profit before taxes EUR -20.5 million (EUR 5.7 million).
* Earnings per share EUR -0.46 (EUR 0.09).
* Net cash flow from operative activities EUR 23.3 million (EUR 18.9 million).
January-December 2015 compared with January-December 2014
* Net sales EUR 1,074.7 million (EUR 1,001.1 million), showing an increase of
7.4%. Comparable net sales at constant currencies declined by 0.7%.
* Operating profit EUR 21.9 million (EUR -3.7 million).
* Operating profit excluding non-recurring items EUR 47.5 million (EUR 28.6
million), representing 4.4% (2.9%) of net sales.
* Profit before taxes EUR 22.6 million (EUR -9.4 million), including a EUR
20.3 million capital gain booked from the sale of Munksjö Oyj shares.
* Earnings per share EUR 0.06 (EUR -0.22).
* Net cash flow from operative activities EUR 60.0 million (EUR 35.4 million).
Major events after the reporting period
* Jan. 21, 2016: Agreement to divest the glassfiber business signed
* Jan. 29, 2016: Redefined strategy and new long-term financial targets
announced
Marco Levi, President & CEO
"Improving profitability was the major theme of our performance in 2015, and
this was also reflected in the last quarter of the year, as we clearly delivered
according to our plans. We have achieved this through continued optimization of
the existing product portfolio, enhanced pricing, as well cost savings. In
addition, we have increased the capacity utilization of the new assets including
the Binzhou wallcoverings production line and the Longkou plant. The slowdown in
some of our key markets that started in the middle of last year persisted until
the end of the reporting period, and had a clear negative impact on net sales.
The slowdown was most visible in the Filtration business area, and particularly
in engine filtration. The Food and Medical business area was also impacted by
this to some extent, but as a whole it consistently improved during the year.
The Building and Energy business area continued to make very good progress in
terms of sales growth and profitability improvement. I'm also pleased with the
accelerated pace of the ramp-up of our wallcoverings production line in China.
We start the new year with a much stronger balance sheet thanks to improved cash
flow generation and the sale of non-core financial assets during last year. In
2016, our main focus will be on the implementation of the redefined strategy we
announced today. We are building a stronger customer-driven company that is lean
and focused, and have already taken action with the recently announced
divestment of the glassfiber business."
Outlook for 2016
The company expects net sales from continuing operations in 2016 to be between
EUR 950-1050 million. The adjusted operating profit from continuing operations
is expected to be 4.2%-5.2% of net sales.
The outlook excludes the Building & Wind business unit, which will be reported
as part of discontinued operations starting from the beginning of 2016. The
adjusted operating profit excludes restructuring costs, impairment charges and
capital gains or losses.
Dividend proposal
The Board of Directors proposes to the Annual General Meeting that a dividend
totaling EUR 0.31 per share be paid for the financial year ended on December
31, 2015.
Key figures
Net sales 255.0 247.0 3.2 1 074.7 1 001.1 7.4
EBITDA excl. NRI 21.6 11.5 87.8 104.8 78.6 33.2
% of net sales 8.5 4.7 9.7 7.9
Operating profit -16.4 -4.3 21.9 -3.7
% of net sales -6.4 -1.7 2.0 -0.4
Operating profit
excl. NRI 7.6 -1.8 47.5 28.6 66.1
% of net sales 3.0 -0.7 4.4 2.9
Profit / Loss before
taxes -20.5 5.7 22.6 -9.4
Profit / Loss for
the period -20.2 5.6 8.6 -10.3
Earnings per share -0.46 0.09 0.06 -0.22
Return on capital
employed, % -11.4 -2.6 3.9 -0.5
Net cash flow from
operative activities
* 23.3 18.9 23.1 60.0 35.4 69.2
Capital expenditure 13.7 16.3 -16.1 27.3 45.4 -39.9
Interest-bearing net
liabilities * 195.9 253.8 -22.8 195.9 253.8 -22.8
Gearing ratio, % * 65.4 79.3 65.4 79.3
Equity ratio, % * 35.8 34.8 35.8 34.8
Number of personnel,
at the end of period 3,311 3,401 -2.6 3,311 3,401 -2.6
EBITDA = earnings before interest, taxes, depreciation and amortization
NRI = non-recurring item
* Including discontinued operations in 2014.
Major events after the reporting period
Divestment of the glassfiber business
On January 21, 2016, Ahlstrom signed an agreement to divest its Building & Wind
business unit to Owens Corning, a U.S.-based company listed on the New York
Stock Exchange. The initial debt and cash free purchase price, which is subject
to EBITDA adjustment, is EUR 73 million.
The Building & Wind business unit produces glassfiber tissue used mainly in
flooring applications as well as reinforcements used in windmill blades. In
2014 the net sales of the business was approximately EUR 77 million and the
business was profitable. The unit operates two plants in Finland in Karhula and
Mikkeli and one in Tver, Russia, employing in total approximately 260 persons.
It serves markets mainly in Europe and Russia as well as in North America and
Asia.
The transaction is expected to be completed during the first half of 2016 and is
subject to customary completion terms, such as merger clearances from relevant
competition authorities.
Ahlstrom expects to book a capital gain of approximately EUR 25 million
following the completion of the asset deal. From the beginning of 2016 the
Building & Wind business will be reported as part of discontinued operations
until the transaction has been completed.
Redefined strategy and long-term financial targets announced
Ahlstrom completed a comprehensive strategy review and has now redefined its
strategy extending to the year 2018. Global trends faced by our customers steer
our product offering and provide us with a wealth of opportunities. We are
committed to growing and creating stakeholder value by providing the best
performing sustainable fiber-based materials.
As part of the implementation the company's business structure was simplified
and reorganized into two business areas: Filtration & Performance and
Specialties. The aim of this change is to increase market and customer focus.
Both segments have business unit specific strategies and operating models. This
enables us to provide customer-driven product development and tailored customer
service, cost efficiency, better allocation of resources, and specific go-to-
market approaches.
The roadmap for execution outlines the change in strategy and is focused on
commercial excellence, a new lean operating model, organic growth via higher
asset turnover and growth via new platforms.
As part of the redefined strategy, the Board of Directors has approved
Ahlstrom's new long-term financial targets over the economic cycle:
* Operating profit margin: Adjusted operating profit margin to be above 8% by
2018
* Gearing: Gearing to be maintained below 100%
* Dividend policy: We aim for a stable dividend, increasing over time, based
on the annual net income performance
The adjusted operating profit margin excludes restructuring costs, impairment
charges, capital gains or losses, and discontinued operations.
Previous long-term financial targets were:
* Net sales: at least 5% underlying annual growth
* Net sales from new products: at least 20%
* Operating profit*: 7% of net sales by 2016 and 10% of net sales beyond 2016
* Gearing ratio: to be maintained within the 50-80% range
*Excluding non-recurring items.
Proposal for the distribution of profit
Ahlstrom aims to pay a stable and over time increasing dividend based on the
annual net income performance of the company.
The distributable funds on the balance sheet of Ahlstrom Corporation as of
December 31, 2015 amounted to EUR 415,834,745.25.
The Board of Directors will propose to the Annual General Meeting that for the
financial year which ended on December 31, 2015, a dividend totaling EUR 0.31
per share be paid based on the dividend policy mentioned above.
The company's shares will trade together with the right to dividend until April
5, 2016. The dividend will be paid to each shareholder who is registered in the
Company's shareholder register maintained by Euroclear Finland Ltd on the record
date of April 7, 2016. On December 31, 2015, the number of shares of the company
amounted to 46,670,608 based on which the maximum amount that can be distributed
as dividend would be EUR 14,467,888.48. No dividend will be paid based on shares
owned by the company or its subsidiaries. The Board of Directors proposes that
the dividend be paid on April 14, 2016.
In addition, the Board of Directors proposes that EUR 60,000 will be reserved
for donations at the discretion of the Board.
Outlook in 2016
The company expects net sales from continuing operations in 2016 to be between
EUR 950-1050 million. The adjusted operating profit from continuing operations
is expected to be 4.2%-5.2% of net sales.
The outlook excludes the Building & Wind business unit, which will be reported
as part of discontinued operations starting from the beginning of 2016. The
adjusted operating profit excludes restructuring costs, impairment charges and
capital gains or losses.
Short-term risks
The global economic outlook remains uncertain. The euro area continues to suffer
from slower growth and the recent slowdown in China has raised concerns,
although the expected shift in the country's economic structure towards more
consumer consumption and less investment can also provide opportunities.
Slower-than-anticipated economic growth poses risks to Ahlstrom's financial
performance. It may lead to lower sales volumes and force the company to
initiate market-related shutdowns at plants, which could affect profitability.
Tightened competition through competitors' increased production capacity,
aggressive pricing as well as adoption of new technologies can also affect
profitability. Shifts in the pattern of demand for the company's products can
strain the flexibility of its asset base and leave some assets underutilized,
while others are over-loaded.
Further swings in currency exchange rates may lead to fluctuations in net sales
and profitability. Ahlstrom's main raw materials are wood pulp, synthetic
fibers, and chemicals. The prices of these key raw materials are volatile and
possible increases can affect the company's profitability depending on its
ability to mitigate the risk.
Disclosure procedure
Ahlstrom publishes its Financial statements bulletin 2015 enclosed to this
stock exchange release. The report is attached to this release in pdf format and
is also available on the company's web site at www.ahlstrom.com.
Additional information
Marco Levi, President & CEO, tel. +358 (0)10 888 4700
Sakari Ahdekivi, CFO, tel. +358 (0)10 888 4768
Ahlstrom's President & CEO Marco Levi and CFO Sakari Ahdekivi will present the
financial statements at an analyst and press conference in Helsinki on Friday,
January 29 at 11:00 a.m. Finnish time. The event will take place at Ahlstrom's
head office, Alvar Aallon katu 3 C, second floor, Antti meeting room.
The combined webcast and teleconference will be held in English and can be
viewed at the following address:
http://qsb.webcast.fi/a/ahlstrom/ahlstrom_2016_0129_q4/
Conference call details:
In Finland +358 (0)9 2313 1619
In Sweden +46 (0)8 5065 3933
In the U.K. +44 (0)20 3427 1929
To participate via telephone, please dial a few minutes before the conference
begins. A list of phone numbers for other countries is available at
www.ahlstrom.com/Investors. The confirmation code is 5738142.
An on-demand webcast of the conference will be available on Ahlstrom's website
for twelve months after the call.
The presentation material will be available at
www.ahlstrom.com/en/Investors/Reports-and-presentations/2015/ after the report
has been published
Financial information in 2016
+-------------------------------------+-------------------+---------------+
|Report |Date of publication|Silent period |
+-------------------------------------+-------------------+---------------+
|Interim report January-March 2016 |Thursday, April 28 |April 1-27 |
+-------------------------------------+-------------------+---------------+
|Interim report January-June 2016 |Wednesday, August 3|July 1-August 2|
+-------------------------------------+-------------------+---------------+
|Interim report January-September 2016|Friday, October 28 |October 1-27 |
+-------------------------------------+-------------------+---------------+
During the silent period, Ahlstrom will not communicate with capital market
representatives.
Ahlstrom in brief
Ahlstrom provides innovative fiber-based materials with a function in everyday
life. We are committed to growing and creating stakeholder value by proving the
best performing sustainable fiber-based materials. Our products are used in
everyday applications such as filters, medical fabrics, life science and
diagnostics, wallcoverings, tapes, and food and beverage packaging. In 2015,
Ahlstrom's net sales amounted to EUR 1.1 billion. Our 3,300 employees serve
customers in 22 countries. Ahlstrom's share is quoted on the Nasdaq Helsinki.
More information available at www.ahlstrom.com.
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