Ahlstrom-Munksjö interim report January-March 2018: Strong sales growth in constant currency and synergy realization to continue


This release is a summary of Ahlstrom-Munksjö’s’ interim report January-March 2018. The complete report is attached to this release as a pdf-file. It is also available at www.ahlstrom-munksjo.com.

Q1/2018 highlights (vs Q1/2017 proforma)

  • Net sales EUR 572.4 million (EUR 566.9 million), an increase of 1.0%. In constant currency growth was 5.9%, driven by higher selling prices.

  • Continued good demand across most markets

  • Comparable EBITDA EUR 66.7 million (EUR 79.4 million), representing 11.7% (14.0%) of net sales in an environment of significant raw material cost escalation

  • Net profit EUR 21.2 million (EUR 24.2 million)

  • Earnings per share EUR 0.22 (EUR 0.25)

  • Comparable EPS excluding depreciation arising from mergers EUR 0.32 (EUR 0.33)

  • Ahead of schedule in delivering merger related synergy benefits

  • Four separate new investments to improve financial and environmental performance

  • Three strategic growth investments proceeding, ramp-up of abrasive backings production ongoing

Major events after the reporting period

  • Hans Sohlström started as President and CEO on April 16, 2018

  • New synergies and cost reducing initiatives identified

  • Agreement to acquire the Caieiras specialty paper mill in Brazil

Key figures

EUR MILLION Q1/2018 Q1/2017 Q4/2017 2017
Net sales 572.4 566.9 547.1 2,232.6
Comparable EBITDA 66.7 79.4 63.1 290.4
Comparable EBITDA margin, % 11.7 14.0 11.5 13.0
Items affecting comparability included in EBITDA -5.0 -4.0 -10.4 -23.8
EBITDA 61.7 75.5 52.7 266.6*
Comparable operating result excl. depreciation arising from mergers** 44.6 54.5 40.3 195.2
Comparable operating result 37.0 46.8 32.6 163.8
Comparable operating result margin, % 6.5 8.3 6.0 7.3
Items affecting comparability included in operating result -5.0 -4.0 -10.4 -23.8
Operating result 31.9 42.9 22.1 140.0*
Net profit 21.2 24.2 19.3 88.5*
Earnings per share (basic), EUR 0.22 0.25 0.20 0.91*
Comparable EPS excl. depreciation arising from mergers** 0.32 0.33 0.33 1.32
Cash generated from operating activities 5.2 42.9 77.2 212.9
Depreciation and amortization*** 29.7 32.6 30.6 126.5
Capital expenditure 25.6 16.4 40.2 89.7
Net debt 395.4 432.4 375.3 375.3
Gearing ratio, % 39.8 40.7 36.2 36.2

*Fair valuation adjustment EUR -11 million (EUR -7.6 million net of tax) on acquired Ahlstrom inventories is excluded as it is adjusted in the 2016 pro forma income statement.
** Excluding both depreciation and amortization from mergers
***Depreciation and amortization arising from mergers was EUR 7.6 million in January-March 2018

January-March 2017 and full-year 2017 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.

The appendix including unaudited consolidated financial statements has been prepared according to IFRS standards.


“I’m very pleased to start as the President and CEO of Ahlstrom-Munksjö. Our comparable EBITDA margin was 11.7% in an environment of significant raw material cost escalation. We need to execute our strategy and continue compensating for impacts of the increased raw material costs. We were already able to improve our cost efficiency, increase sales prices, and we will continue to sharpen our commercial strategy and develop new value-added products.

Investing in growth

We are making good progress towards our strategic priorities and financial targets. We have made decisions on four separate organic growth investments to improve our financial performance and reduce our environmental impact.

At the same time, our three ongoing strategic investment projects, targeting at profitable growth, are proceeding well. The machine rebuild for abrasive backings and decor papers in Arches, France was completed during the first quarter. We are also completing the new saturation line investment for filtration material in Madisonville, the US, and the new parchmentizer line investment in Saint Severin, France. All three projects increase our capacity and respond to growing customer demand.

Strengthening the latin american platform

As part of our ambition to also grow through acquisitions we have entered into an agreement to acquire the MD Papéis’ Caieiras specialty paper mill in Brazil from the Formitex Group. The Caieiras operation is an excellent fit in many product segments and drives our ambition to maintain a leading position in selected niches. Combining Ahlstrom-Munksjö’s and Caieiras expertise provides our customers with improved service, wider product offering and better delivery capability. At the same time, the acquisition offers us attractive growth opportunities, synergies and further production optimization possibilities in the long term.


Simultaneously we are proceeding well ahead of schedule in delivering the merger related synergy benefits. In addition to the earlier announced synergies of above EUR 40 million, we have continued the work and identified further synergies and cost reducing initiatives with an overall profit improvement impact of EUR 10 million annually to be reached by the end of Q1 in 2019.

The new cost reduction initiatives include adjusting group structure to Ahlstrom-Munksjö’s operating model, which is based on business units with clear responsibilities, local accountability, and enabling operational flexibility and lean group functions. As part of the target towards lean group functions we have initiated a plan to concentrate and relocate all head office activities to Helsinki, Finland. Choosing between the two locations, both with their strengths, was not easy but dividing the activities in two locations is not a long-term viable solution.

Our market position and strategic opportunities gives me strong confidence in the future and I also believe in our ability to improve financial performance and grow shareholder value. We will improve our cost efficiency, sharpen our commercial strategy and develop new value added products in order to create long term success for the shareholders and all company stakeholders”, says Hans Sohlström, President and CEO of Ahlstrom-Munksjö as of April 16, 2018.

Outlook for 2018

The outlook published on February 13, 2018 is reiterated. Full-year 2018 capital expenditure estimate has been specified and is disclosed on page 9 in the complete report.

Market outlook: Demand 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. Selling price increases will continue to be implemented to mitigate cost inflation in raw materials.

EBITDA: Comparable EBITDA in 2018 is expected to be approximately at the previous year’s level (pro forma EUR 290.4 million), or slightly below. In the first-half of 2018, comparable EBITDA is expected to be lower than in the comparison period and to gain momentum in the second half of the year.

Synergy benefits and cost reduction measures   

The merger creating Ahlstrom-Munksjö Oyj was completed on April 1, 2017. The combination created a global leader in innovative and sustainable fiber-based materials. Ahlstrom-Munksjö has completed nearly all of the original integration initiatives. The successful combination of businesses has created a solid basis for improved performance and the company has continued efforts to improve its operational efficiency.

Ahlstrom-Munksjö has identified further synergies and cost reducing initiatives with an additional profit improvement impact of EUR 10 million annually in its existing businesses. Including the new initiatives, the total impact is estimated to amount to EUR 50 million annually. The total impact of the synergy benefits and additional cost saving measures are expected to be gradually realized and fully visible by the end of Q1 2019. The company has previously estimated that the synergies, above EUR 40 million, would be fully visible from the second quarter of 2019.

At the end of the reporting period, the annual synergy achievement run rate was approximately EUR 25.6 million. The financial result for the first quarter of 2018 includes realized synergies of approximately EUR 5.8 million.

Cost synergies comprise mainly lower fixed costs as well as lower variable costs through coordination of sourcing activities and optimization of production. The plan includes also business synergies from incremental sales and product mix improvement, predominately relating to the integration of the former Graphics and Packaging business area into the new Specialties business area, and developing a combined product and service offering.

The measures identified include adjusting group structure to Ahlstrom-Munksjö’s operating model, where business units have clear responsibility and local accountability. The operating model enables operational flexibility and lean group functions.

The new identified initiatives include a plan to concentrate and relocate the company head office in Helsinki, Finland. The head office is currently located in Stockholm, with several administrative activities in Helsinki. Decisions in the issue will be made after the necessary employee consultation processes have been completed. The processes will be started as soon as possible, and they will be carried out according to local practices and legislation. Transformation costs related to the achievement of synergies and cost reduction measures are estimated to be EUR 30-35 million by the end of Q1 2019, higher than the previously estimated EUR 30 million.

Achieved synergy benefits and related costs, EUR million
Q2/17 Q3/17 Q4/17 Q1/18
Achieved annualized synergy benefits 13 17 19 26
Quarterly costs 4 7 8 2
Cumulative costs 11 19 21

Webcast and conference call

A combined news conference, call and live webcast will be arranged on the publishing day, April 24, 2018, at 11:00 a.m. CEST (12:00 noon EEST) at the World Trade Center in Stockholm (Klarabergsviadukten 70, the Conference Center). The report will be presented in English by President and CEO Hans Sohlström and CFO Pia Aaltonen-Forsell.

Webcast and conference call information

The combined webcast and teleconference can be viewed at: http://qsb.webcast.fi/a/ahlstrommunksjo/ahlstrommunksjo_2018_0424_q1/

Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
UK: +44 (0) 330 336 9105

Conference ID: 7990757

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.

For further information, please contact:

Hans Sohlström, President and CEO, tel. +358 10 8882520
Pia Aaltonen-Forsell, CFO, tel. +46 10 250 1029
Johan Lindh, Head of Investor Relations, + 46 (0)70 588 10 38
Juho Erkheikki, Investor Relations Manager, tel. +358 (0)10 888 4731

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 2.2 billion and we employ 6,000 people. The Ahlstrom-Munksjö share is listed on the Nasdaq Helsinki and Stockholm. Read more at www.ahlstrom-munksjo.com.