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2014-04-29

Ahlstrom Oyj: Profitability shows signs of improvement

Ahlstrom Corporation STOCK EXCHANGE RELEASE April 29, 2014 at 09:00 a.m.

This is a summary of the January-March 2014 interim report. The complete
report with tables is attached to this release and available
atwww.ahlstrom.com

Ahlstrom interim report January-March 2014

Profitability shows signs of improvement

Continuing operations January-March 2014 compared with January-March 2013

* Net sales EUR 249.2 million (EUR 255.3 million).
* Operating profit EUR 4.4 million (EUR 8.3 million).
* Operating profit excluding non-recurring items EUR 7.2 million (EUR 6.5
million).
* Operating margin excluding non-recurring items 2.9% (2.5%).
* Profit before taxes EUR 5.2 million (EUR 3.6 million).
* Earnings per share EUR 0.05 (EUR 0.03).

January-March 2014 in brief

* Reported net sales fell by 2.4%, while profitability improved. Comparable
net sales grew 2.6% at constant currency rates and there was clear
improvement in the profitability of three business areas:Advanced
Filtration, Food, and Transportation Filtration .
* New products were introduced to accelerate growth and improve sales mix and
profit margin. One key product launch was Ahlstrom NatureMold(TM), a new
biodegradable molding material for food packaging.

Outlook for 2014

* The outlook published on January 30, 2014 remains unchanged. Net sales are
expected to be EUR 930-1,090 million. The operating profit margin excluding
non-recurring items is expected to be 2-5% of net sales.

Jan Lång, President&CEO

"I'm pleased that we were able to make good progress and improve our
profitability in three business areas. Advanced Filtration achieved excellent
profitability, Transportation Filtration posted solid growth in both sales
and profits, and Food showed very good comparable growth during the quarter.
Overall, our new products are gaining traction."

"Meanwhile, we continued to address the issues in our two underperforming
businesses, Building and Energy, and Medical. We still have work ahead of us
in these two businesses, but I'm confident that we are able to enhance
competitiveness with ongoing initiatives."

"Our rightsizing program, aimed at reducing costs by EUR 50 million annually
is progressing as planned. We are well placed to improve our profitability
this year and beyond through the rightsizing and growth initiatives."

Key figures from continuing operations

------------------------------------------------------------------------------
|EUR million Q1/2014 Q1/2013 Change, % 2013 |
|Net sales 249.2 255.3 -2.4 1,014.8 |
|Operating profit 4.4 8.3 -47.2 10.7 |
|% of net sales 1.8 3.3 1.1 |
|Operating profit excl. NRI 7.2 6.5 11.6 13.4 |
|% of net sales 2.9 2.5 1.3 |
|Profit / Loss before taxes 5.2 3.6 44.0 -15.4 |
|Profit / Loss for the period 3.1 1.9 60.9 -18.9 |
|Earnings per share 0.05 0.03 71.0 -0.46 |
|Return on capital employed, % 3.4 5.1 0.9 |
|Net cash flow from operative activities * -6.1 -21.4 71.6 41.0 |
|Capital expenditure 9.0 11.5 -22.0 76.1 |
|Number of personnel, at the end of period 3,502 3,821 -8.3 3,536 |
------------------------------------------------------------------------------
*Including discontinued operations

Operating environment

The operating environment in Ahlstrom's main markets in the first quarter of
2014 improved slightly from the comparison period. The North American economy
continued to grow and some positive signs were also seen in Europe.
Development varied in Asia with growth slowing in China. The economy in South
America continued to be soft.

In theAdvanced Filtration
business area, steady growth continued in the laboratory and life science
filtration markets in Europe and Asia, whereas the development was somewhat
softer in North America. Demand for water, gas turbine and high efficiency
air applications grew as well.

In theBuilding and Energy
business area, demand for construction related materials was stable in Europe,
but softened in Russia. The market for reinforced glass fiber products for
the wind energy industry in Europe was steady at a low level, whereas it
started to recover in North America supported by tax incentives. Demand for
wallpaper and wallcovering substrates in Europe and China softened during the
period.

In theFood
business area, demand for beverage, food packaging and tape products continued
to be solid in all main geographical regions except for South America. Growth
continued in the single-use coffee products market.

In theMedical
business area, demand for medical fabrics was stable in Europe and North
America, while it strengthened in Asia, supported by the growing trend for
single-use products.

In theTransportation Filtration
business area, solid growth continued in the transportation filtration
materials markets in Asia, North America and Europe. In South America, the
market started to show some positive signs following a slowdown in the second
half of 2013.

Discontinued operations

The operative result of the Brazilian operation of the former Home and
Personal business area was included in discontinued operations until February
10, 2014, when its sale to Suominen Corporation was completed. The comparison
figures include the operative results from the Label and Processing business
as well as the Brazilian operations of the former Home and Personal business
area. All operative figures exclude depreciation.

Result from discontinued operations

In January-March 2014, the loss from discontinued operations for the period
was EUR 1.2 million (EUR 6.0 million profit). The figure includes a reversal
of EUR 2.2 million net of tax of an impairment loss and transaction costs to
divest the Brazilian operations of the former Home and Personal business
area. In addition, it includes a deferred tax cost in Germany.

Result including discontinued operations

In January-March 2014, profit for the period including discontinued operations
was EUR 1.9 million (EUR 7.9 million). Earnings per share with the effect of
interest net of tax on the hybrid bond were EUR 0.03 (EUR 0.16).

Return on equity (ROE) was 2.2% (6.6%).

Rightsizing program

Following the completion of the Label and Processing demerger in 2013,
Ahlstrom initiated a rightsizing program to bring down costs to reflect its
new size and scope. The company aims to achieve EUR 50 million in annual cost
savings. The majority of the planned actions related to the rightsizing
program will be realized by the end of 2014, and the full impact of the
program is expected to be visible in 2015.

As a result of the planned program, Ahlstrom's personnel is to be reduced by
approximately 400 people globally. The planned changes and personnel impacts
are subject to employee consultation processes according to local legislation
in the countries affected. The targeted savings will be derived from all
business areas and functions globally. In particular, the aim is to reduce
selling, general and administration (SGA) costs and further improve supply
chain efficiency. The aim is to bring the SGA costs back to a level of 10-11%
of net sales in 2015.

The program is moving ahead as targeted. As of March 31, 2014, approximately
EUR 19 million in total cumulative cost savings were achieved, corresponding
to an annualized run rate of EUR 25 million.

In continuing operations, approximately EUR 12 million in cumulative cost
savings were achieved, of which approximately EUR 4 million in the first
quarter of 2014. In addition, approximately EUR 7 million were derived from
costs transferred to Munksjö Oyj, of which EUR 2 million in the first quarter
of 2014.

Ahlstrom plans to book non-recurring costs of approximately EUR 15 million
related to rightsizing during the years 2014-2015. So far, EUR 6.3 million in
non-recurring costs have been booked, of which EUR 3.1 million was in the
first quarter of 2014.

Outlook

The outlook presented on January 30, 2014 remains unchanged. Based on
Ahlstrom's view of the development of its main markets, pricing and product
mix, competitive dynamics and expected cost savings, the company anticipates
net sales in 2014 to be EUR 930-1,090 million. The operating profit margin
excluding non-recurring items is expected to be 2-5% of net sales.

In 2014, investments excluding acquisitions are estimated to be approximately
EUR 50 million (EUR 76.1 million in 2013).

Short-term risks

The global economy is expected to gain momentum this year, with regional
variations. While the European economy has shown some signs of recovery, it
may be uneven and fragile. Recent indicators for the development of the U.S.
economy are more positive. In Asia, the Chinese economy in particular, may
grow at a slower pace than previously anticipated.

Slower-than-anticipated economic growth poses risks to Ahlstrom's financial
performance. It may lead to lower sales volumes and force Ahlstrom to
initiate more market-related shutdowns at plants, which could affect
profitability. The uncertainty related to global economic growth, increased
volatility in our main markets and limited visibility are making it more
difficult to forecast future developments.

In recent years, Ahlstrom has initiated investment projects, such as the
wallcoverings production line in Binzhou, China, that are in a start-up
phase. The company's financial performance may be negatively affected by the
commercialization of new production lines.

Ahlstrom's main raw materials are natural fibers, mainly pulp, synthetic
fibers, and chemicals. The prices of some of the key raw materials used by
Ahlstrom remain at a high level and are volatile.

If global economic growth slows down, maintaining current sales prices may be
at risk and sustaining the current level of profitability may be compromised,
even if raw material prices fall at the same time.

The general risks facing Ahlstrom's business operations are described in
greater detail on the company website at www.ahlstrom.com and in the report
by the Board of Directors in the company's Annual Report 2013. The risk
management process is also described in the Corporate Governance Statement,
also available on the company's website.

This report contains certain forward-looking statements that reflect the
present views of the company's management. The statements contain
uncer...

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