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2016-10-28

Ahlstrom January-September 2016 interim report: All-time high quarterly operating profit combined with solid sales growth

Ahlstrom Corporation STOCK EXCHANGE RELEASE October 28, 2016 at 08:00

This is a summary of the January-September 2016 interim report. The complete
report with tables is attached to this release and available
atwww.ahlstrom.com

Ahlstrom January-September 2016 interim report

All-time high quarterly operating profit combined with solid sales growth

July-September 2016 compared with July-September 2015

* Net sales EUR 273.2 million (EUR 266.9 million).At constant currency rates,
growth was 3.7%.
* Adjusted EBITDA EUR 39.5 million (EUR 25.5 million), representing 14.4%
(9.5%) of net sales
* Operating profit EUR 28.9 million (EUR 9.9 million)
* Adjusted operating profit EUR 26.7 million (EUR 11.2 million), representing
9.8% (4.2%) of net sales, and the 12th consecutive quarter of year-on-year
improvement
* Profit before taxes EUR 25.1 million (EUR 8.5 million. The comparison
figure includes a capital gain of EUR 3.2 million from share sales.)
* Earnings per share EUR 0.35 (EUR 0.06)
* Net cash flow from operating activities EUR 35.6 million (EUR 24.2 million)

January-September 2016 compared with January-September 2015

* Net sales EUR 819.8 million (EUR 819.8 million).At constant currency rates,
growth was 1.9%.
* Adjusted EBITDA EUR 104.5 million (EUR 83.2 million), representing 12.8%
(10.1%) of net sales
* Operating profit EUR 62.9 million (EUR 38.2 million)
* Adjusted operating profit EUR 66.2 million (EUR 39.9 million), representing
8.1% (4.9%) of net sales
* Profit before taxes EUR 51.4 million (EUR 43.2 million. The comparison
figure includes a capital gain of EUR 20.3 million from share sales.)
* Earnings per share EUR 0.61 (EUR 0.52)
* Net cash flow from operating activities EUR 98.9 million (EUR 36.7 million)

Marco Levi, President&CEO

"July-September 2016 was an excellent quarter for us, with very strong
performance from our organization. We achieved 3.7% sales growth at constant
currency rates and profitability reached yet another record in the current
structure of the company. This was also the 12thconsecutive improvement in
quarterly operating profit. Our hard work towards enhancing operational
efficiency and achieving a more competitive cost structure is clearly paying
off and we continued to benefit from lower variable costs during the quarter.

I am pleased that we have been able to grow our net sales for the past two
quarters on a comparable basis. This is particularly true for glassfiber,
wallcover, filtration, and tape products, as well as single-serve coffee
materials, where we achieved a breakthrough in the North American market
during the reporting period. All of our business units reported higher
operating profits and most of them increased net sales. We have also
announced a EUR 23 million investment into our engine and industrial
filtration portfolio to show our commitment to growth and the further
development of the company.

We will continue to execute our strategic agenda at full speed. The benefits
are clearly visible when looking at higher margins through commercial
excellence, our lean operating model, the increased capacity utilization at
our recent investments and capitalizing on new growth opportunities. As a
result, we have further accelerated our progress towards reaching our
financial target of above 8% adjusted operating margin by 2018. Also, we are
already well below our gearing target thanks to the very strong cash flow
generation this year."

Outlook for 2016

Ahlstrom reiterates the outlook published on September 13, 2016. The company
expects net sales in 2016 to be in the range of EUR 1,060-1,100 million. The
adjusted operating profit is expected to be 6.5%-7.5% of net sales.

The adjusted operating profit excludes restructuring costs, impairment charges
and capital gains or losses.

Key figures

-----------------------------------------------------------------------------------------------------------------
| EUR million Q3/2016 Q3/2015 Change, % Q1-Q3/2016 Q1-Q3/2015 Change, % |
| Net sales 273.2 266.9 2.4 819.8 819.8 0.0 |
| EBITDA 41.6 24.2 71.9 101.2 81.6 24.0 |
| % of net sales 15.2 9.1 12.3 10.0 |
| Adjustment items included in EBITDA 2.2 -1.2 -3.4 -1.6 |
| Adjusted EBITDA 39.5 25.5 55.0 104.5 83.2 25.6 |
| % of net sales 14.4 9.5 12.8 10.1 |
| Operating profit 28.9 9.9 192.8 62.9 38.2 64.4 |
| % of net sales 10.6 3.7 7.7 4.7 |
| Adjustment items included in operating profit 2.2 -1.3 -3.4 -1.7 |
| Adjusted operating profit 26.7 11.2 139.3 66.2 39.9 65.9 |
| % of net sales 9.8 4.2 8.1 4.9 |
| Profit before taxes 25.1 8.5 194.0 51.4 43.2 19.2 |
| Profit for the period 17.9 4.1 33.5 28.8 16.3 |
| Earnings per share 0.35 0.06 0.61 0.52 |
| Return on capital employed, % 23.4 6.7 16.3 8.6 |
| Net cash flow from operative activities 35.6 24.2 47.0 98.9 36.7 169.5 |
| Capital expenditure 6.0 5.5 9.0 18.0 13.6 31.8 |
| Interest-bearing net liabilities 130.5 203.7 -36.0 130.5 203.7 -36.0 |
| Gearing ratio, % 42.4 64.2 42.4 64.2 |
| Equity ratio, % 38.1 34.8 38.1 34.8 |
| Number of personnel, at the end of the period 3,277 3,367 -2.7 3,277 3,367 -2.7 |
-----------------------------------------------------------------------------------------------------------------
Ahlstrom has adopted the European Securities and Markets Authority (ESMA)
guidelines on Alternative Performance Measures, which became effective on
July 3, 2016. The company uses alternative performance measures to reflect
the underlying business performance and to improve comparability. These
alternative performance measures should, however, not be considered as a
substitute for measures of performance in accordance with IFRS.
Ahlstrom has used revised terminology since the beginning of 2016. In
accordance, the previously used terms "Operating profit excluding
non-recurring items" has been replaced by "Adjusted operating profit"
and "EBITDA excluding non-recurring items" by "Adjusted EBITDA"
.

Adjusted items affecting comparability and alternative performance measures
used by Ahlstrom are defined:

Adjustment items: restructuring costs, impairment charges, capital gains or
losses
EBITDA = Operating profit + depreciation and amortizations + impairments
Adjusted EBITDA = EBITDA - Adjustment items
Adjusted operating profit = Operating profit - Adjustment items

Redefined strategy and long-term financial targets

Ahlstrom's redefined strategy and new long-term financial targets extending to
the year 2018 were announced in January 2016. 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 business areas have business unit-specific strategies and operating
models. This enables Ahlstrom 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.

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.

Outlook in 2016

Ahlstrom reiterates the outlook published on September 13, 2016. The company
expects net sales in 2016 to be in the range of EUR 1,060-1,100 million. The
adjusted operating profit is expected to be 6.5%-7.5% of net sales.

The adjusted operating profit excludes restructuring costs, impairment charges
and capital gains or losses.

Short-term risks

The global economic outlook remains uncertain. The European markets continue
to suffer from slower growth, and Britain's decision to leave the European
Union has increased uncertainty. In addition, 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 for 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. Tougher competition through competitors' increased production
capacity, aggressive pricing as well as adoption of new technologies may also
affect profitability. Shifts in the pattern of demand for the company's
products may strain the flexibility of its asset base and leave some assets
underutilized, while others may become 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 any increases may affect the company's profitability ...

Författare Hugin

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