Ahlstrom-Munksjö interim report January-September 2017: Strong organic sales growth


This release is a summary of Ahlstrom-Munksjö’s’ interim financial report January-September 2017. The complete report is attached to this release as a pdf-file. It is also available at www.ahlstrom-munksjo.com.

In this interim report, the January-September 2017 figures as well as all comparison figures are presented on a pro forma basis to illustrate the financial impact of the merger between Ahlstrom and Munksjö as if it had been completed at the beginning of 2015. Only the July-September 2017 and April-June 2017 figures are presented according to International Financial Reporting Standards (IFRS). The appendix including unaudited consolidated financial statements has been prepared according to IFRS standards.

July-September 2017 compared with July-September 2016

  • Net sales EUR 541.6 million (EUR 523.5 million), showing a gain of 3.5%. Comparable net sales increased by 5.7% at constant currency rates.
  • Comparable EBITDA EUR 70.4 million (EUR 70.2 million), representing 13.0% (13.4%) of net sales
  • EBITDA EUR 63.3 million (EUR 72.9 million) and included items affecting comparability (IAC) of EUR -7.0 million (EUR 2.7 million)
  • Operating result EUR 31.7 million (EUR 38.7 million)
  • Net result EUR 17.5 million (EUR 23.0 million)
  • Earnings per share EUR 0.18 (EUR 0.24)
  • Comparable EPS excluding merger related items (PPA) EUR 0.34 (EUR 0.24)
  • Net cash flow from operating activities EUR 51.6 million (EUR 72.0 million)

January-September 2017 compared with January-September 2016

  • Net sales EUR 1,685.5 million (EUR 1,620.4 million), showing a gain of 4.0%. Comparable net sales increased by 4.0% at constant currency rates.
  • Comparable EBITDA EUR 227.2 million (EUR 207.3 million), representing 13.5% (12.8%) of net sales
  • EBITDA* EUR 213.9 million (EUR 184.4 million) and IAC of EUR -13.4 million (EUR -22.9 million)
  • Operating result* EUR 117.9 million (EUR 81.8 million)
  • Net result* EUR 69.2 million (EUR 36.3 million)
  • Earnings per share* EUR 0.71 (EUR 0.37)
  • Comparable EPS excluding merger related items (PPA) EUR 0.98 (EUR 0.56)
  • Net cash flow from operating activities EUR 135.7 million (EUR 156.5 million)

Major events

  • Return on equity of EUR 0.23 per share, or about EUR 22 million in total, was paid to shareholders in September 2017

Major events after the reporting period

  • New long-term share-based incentive plan established

Key figures

EUR million Q3/2017 Q3/2016 Change, % 1-9/2017 1-9/2016 Change, % 2016
Net sales 541.6 523.5 3.5 1,685.5 1,620.4 4.0 2,147.9
Comparable EBITDA 70.4 70.2 0.3 227.2 207.3 9.6 268.7
Comparable EBITDA margin, % 13.0 13.4 13.5 12.8 12.5
EBITDA 63.3 72.9 -13.1 213.9* 184.4 15.9 239.9
Items affecting comparability included in EBITDA -7.0 2.7 -13.4* -22.9 -28.8
Operating result 31.7 38.7 -18.1 117.9* 81.8 44.2 104.7
Comparable operating result excluding merger related items (PPA) 46.7 44.7 4.4 154.9 131.3 18.0 168.7
Net result 17.5 23.0 -23.8 69.2* 36.3 90.6 49.8
Earnings per share, EUR 0.18 0.24 -23.9 0.71* 0.37 92.8 0.51
Comparable EPS excluding merger related items (PPA) 0.34 0.24 40.0 0.98 0.56 74.3 0.71
Cash generated from operating activities 51.6 72.0 -28.4 135.7 156.5 -13.3 232.1
Capital expenditure 17.8 16.7 6.2 49.5 46.9 5.6 77.7
Net debt** 404.2 N/A N/A 404.2 N/A N/A N/A
Gearing ratio, %** 39.3 N/A 39.3 N/A N/A
Average number of employees, FTE 5,918 5,987 -1.1 5,905 5,975 -1.2 5,974

*Fair valuation of EUR 11 million inventory adjustment excluded as already included in pro forma 2016 figures
**No comparative balance sheet figures on pro forma basis available

The actual figures for January-September 2017 and for the corresponding comparison periods are presented in the appendix only.

Ahlstrom-Munksjö has adopted the European Securities and Markets Authority (ESMA) guidelines on Alternative Performance Measures to reflect the underlying business performance and improve comparability. These measures should, however, not be considered as a substitute for measures of performance in accordance with IFRS. Alternative performance measures are derived from performance measures reported in accordance with IFRS by adding or deducting items affecting comparability (IAC), or purchase price allocation (PPA,) and they are called “comparable”.

CEO comments, Jan Åström

“We achieved strong organic growth of over five percent in the quarter and were able to maintain our operational result despite the accelerated cost inflation in some of our key raw materials. Our performance was once again led by excellent results in the Filtration & Performance, and Industrial Solutions business areas. We will continue to work on our pricing to mitigate the cost pressure and address the challenges in the coated one-sided papers business.   

The integration work following the merger is gaining momentum as we achieved an annual run rate of about EUR 17 million in synergy benefits by the end of the quarter. We are now fully comfortable that we can exceed the original target of EUR 35 million and estimate that annual synergy benefits of above EUR 40 million can be reached by the second quarter of 2019.

I truly believe this company is creating value for our customers and stakeholders over the long-term. We are dedicated to further develop our products and solutions to achieve an even stronger position in the market. By innovating and co-creating with our customers we can continuously expand the use of fibers in a sustainable way.”  

Outlook for 2017

Ahlstrom-Munksjö reiterates the outlook published on July 25, 2017.

Market outlook: The demand outlook for 2017 for Ahlstrom-Munksjö’s fiber-based products is expected to remain stable at the current good level for most of the product segments and to reflect the seasonal pattern. Price increases will continue to be implemented to mitigate raw material cost inflation and they will take effect during the rest of the year.

EBITDA: Comparable EBITDA in 2017 is expected to be higher than in the previous year (pro forma EUR 268.7 million).

Shutdowns: The annual maintenance and vacation shutdowns in the fourth quarter are expected to be carried out to about the same extent as in 2016. However, the maintenance shutdown usually carried out in the third quarter at the Swedish Billingsfors plant is replaced by shorter stops in the second and fourth quarters due to changes in the shift form. The 2017 maintenance shut-down at the pulp production facility in Aspa in Sweden was carried out in October 2017.

Capital expenditure: The cash flow effect of current capital expenditure for fixed assets in 2017 is expected to be approximately EUR 80 million. In addition, the cash flow impact of the strategic investments in Arches and Madisonville is expected to be approximately EUR 18 million in 2017. 

Completion of the merger

On April 1, 2017, Ahlstrom Corporation was merged into Munksjö Oyj, and the name of the combined company was changed to Ahlstrom-Munksjö Oyj. The combination created a global leader in innovative and sustainable fiber-based materials with combined pro forma net sales of approximately EUR 2.15 billion, around 6,000 employees, and 41 production and converting facilities in 14 countries. A total of 45,376,992 new shares in Ahlstrom-Munksjö were issued to Ahlstrom shareholders as merger consideration, bringing the total number of shares to 96,438,573. Trading in the new shares started on April 3, 2017.            

Approvals from the Extraordinary General Meetings of Ahlstrom and Munksjö as well as the European Commission were received on January 11, 2017 and March 13, 2017, respectively. In connection with the merger, Ahlstrom and Munksjö distributed funds in the total amount of approximately EUR 46 million, corresponding to EUR 0.49 per share in Ahlstrom and EUR 0.45 per share in Munksjö.


Ahlstrom-Munksjö now estimates that annual synergies of above EUR 40 million (previously EUR 35 million) will be gradually realized and fully visible from the second quarter of 2019. The savings comprise mainly lower fixed costs as well as coordination of purchases and production following the merger. The plan also includes further business synergies, such as integrating the former Graphics and Packaging business area into the new Specialties business area, to develop a combined product and service offering.

At the end of the reporting period, the annual synergy achievement run rate was approximately EUR 17 million. Of the annual synergy savings arising from the merger, the vast majority are related to lower SG&A costs, and the remainder are related to reduced costs of goods sold and improved operational efficiency, as well as planned revenue synergies. The financial result for the third-quarter 2017 includes realized synergies of approximately EUR 3.5 million.

Non-recurring costs to achieve the synergy savings amounted to EUR 10.9 million at the end of the reporting period, of which EUR 7.0 million was booked in the third-quarter of 2017. The previously communicated full cost related to the achievement of synergies within two years from the merger is EUR 30 million. The cash flow effect was EUR -5.7 million in the third quarter of 2017. 

Financial targets

The company’s Board of Directors has set the following long-term financial targets:

  • EBITDA margin above 14% over a business cycle
  • Net gearing below 100%
  • A stable and annually increasing dividend, to be paid bi-annually

Short-term risks

Ahlstrom-Munksjö is exposed to changing market conditions and uncertainty caused by both macroeconomic and industry related events and is exposed to risks that may arise from its operations, changes in the business environment, developments in the global economy or potential changes in the legislative framework. The materialization of such risks could have a material adverse effect on the company’s operations, earnings and financial position.

The company’s significant risks and uncertainty factors mainly consist of developments in demand for and prices of sold products, the cost and availability of significant raw materials, financial risks, as well as other business factors including developments in the financial markets. Currently there is a risk related to the availability of titanium dioxide, a key raw material for decor paper, due to a shortage of supply. Ahlstrom-Munksjö’s key financial risks include interest rate and currency risks, liquidity risk and credit risk. The Group has exposure to tax risks due to potential changes in tax laws or regulations or their application, or as a result of on-going and future tax audits or claims.

Ahlstrom-Munksjö has operations in many countries, and sometimes disputes cannot be avoided in daily operations. The company is sometimes involved in legal actions, disputes, claims for damages and other procedures. The result of these cannot be predicted, but taking into account all available information to date, the impact is not expected to have a significant impact on the financial position of the company.

More information about risks and uncertainty factors related to Ahlstrom-Munksjö’s business and the company’s risk management is available at www.ahlstrom-munksjo.com.

Additional information

Jan Åström, President and CEO, tel. +46 10 250 1001
Pia Aaltonen-Forsell, CFO, tel. +46 10 250 1029
Anna Selberg, EVP, Communications and Investor Relations, tel. ++46 703 231 032

Webcast and conference call

A combined news conference, call and live webcast will be arranged on the publishing day, October 25, 2017, at 10:00 a.m. CEST (11:00 a.m. EEST) at the restaurant Savoy in Helsinki (Eteläesplanadi 14). The report will be presented in English by President and CEO Jan Åström and CFO Pia Aaltonen-Forsell.

Webcast and conference call information

The combined webcast and teleconference can be viewed at:

Finnish callers: +358 (0)9 7479 0404
Swedish callers: +46 (0)8 5065 3942
UK callers: +44 (0) 330 336 9411
US callers: +1 719 325 4746

Conference ID: 5895267

To join the conference call, participants are requested to dial one of the numbers above 5-10 minutes prior to the start of the event. An on-demand version of the conference call will be available on Ahlstrom-Munksjö’s website later the same day.

Next financial report

  • Financial Statements Release 2017                              February 13, 2018

Ahlstrom-Munksjö in brief
Ahlstrom-Munksjö is a global leader in fiber-based materials, supplying innovative and sustainable solutions to customers worldwide. Our offerings include decor paper, filter media, release liners, abrasive backings, nonwovens, electrotechnical paper, glass fiber materials, food packaging and labeling, tape, medical fiber materials and solutions for diagnostics. Combined annual net sales are about EUR 2.15 billion and we employ 6,000 people. The Ahlstrom-Munksjö share is listed on the Nasdaq Helsinki and Stockholm. The company was formed on April 1, 2017 through the merger of Ahlstrom Corporation and Munksjö Oyj. Read more at www.ahlstrom-munksjo.com.