Ahlstrom's Label and Processing business in Brazil (Coated Specialties) was transferred to Munksjö Oyj through a partial demerger, which was registered with the Finnish Trade Register on December 2, 2013. In Finnish income taxation, part of the remaining acquisition cost of Ahlstrom shares will be transferred to the Munksjö shares received as demerger consideration in the Coated Specialties demerger. The acquisition cost is used for the calculation of capital gains and/or losses from share transactions for the basis of Finnish taxation.
Based on the average weighted trading prices, the proportion of the fair values of Munksjö shares received as demerger consideration in the Coated Specialties demerger and Ahlstrom shares do not differ significantly from the proportion of net assets of Coated Specialties and the total net assets of Ahlstrom. Thus, the acquisition cost of Ahlstrom's shares is divided based on the proportion of net assets at the effective date of the demerger. Coated Specialties' transferred net assets were 4.8% of the total net assets of Ahlstrom.
Ahlstrom's shareholders received as demerger consideration 0.265 Munksjö shares for each one share held in Ahlstrom prior to the completion of the Coated Specialties demerger. After the demerger of LP Europe on May 27, 2013, 4.8% of the remaining acquisition cost of each Ahlstrom share will be transferred to an acquisition cost per 0.265 Munksjö share.
For an Ahlstrom shareholder who has prior (May 24, 2013, at the latest) to the completion of the two demergers purchased 1,000 Ahlstrom shares at a total price of EUR 10,000 (EUR 10 per share), the acquisition cost of the shares is EUR 8,870 following the completion of LP Europe demerger on May 27, 2013. (EUR 1,130 or 11.3% of the original acquisition cost was transferred to the 250 Munksjö shares received as demerger consideration in the LP Europe demerger.)
Following the Coated Specialties demerger, 4.8%, or EUR 425.76, of the EUR 8,870 acquisition cost will be transferred to the 265 Munksjö Oyj shares received in the demerger. This equals to EUR 1.61 per received Munksjö share. Therefore the acquisition cost of 1,000 Ahlstrom shares remaining following both demergers is EUR 8,444.24 or EUR 8.44 per share.
This does not apply to Ahlstrom or Munksjö shareholders residing permanently outside of Finland. Shareholders who are tax resident outside of Finland are recommended to contact their tax advisors or local tax office regarding the split of the acquisition cost in taxation.
Ahlstrom, a global high performance fiber-based materials company, has published its renewed internet pages. The address of the pages remains unchanged, www.ahlstrom.com.
The main goal for renewing the pages is to improve the service to Ahlstrom's stakeholders and to promote the the company's strategy to provide a high performance product offering for a clean and healthy environment.
The biggest changes have been made to the visual layout and usability of the pages as well as to the structure and layout of the product section. The new pages are responsive, which means that the site adapts to different screen sizes of tablets and other mobile devices.
"Our target is to launch more products to the market and the renewed internet pages support this with the more versatile product pages. Since we aim to grow our business in Asia, especially in China, the need to expand the content in our Chinese pages has become more important," states Liisa Nyyssönen, Vice President, Communications.
The new pages have been built by Ahlstrom's Group Communications team together with the technical partner Knowit Oy. Euroland has provided the investor tools for the pages. EPiServer7 has been used as the platform for the new pages.
To explore the renewed pages, please visit www.ahlstrom.com.
Ahlstrom, a global high performance fiber-based materials company, announces that the European Commission and the Brazilian competition authority CADE have approved Perusa Group as the buyer for Ahlstrom's pre-impregnated décor papers and abrasive paper backings businesses.
The divestment is made to comply with the commitments made to the European Commission and to the Brazilian competition authority CADE as disclosed in May 2013. The transaction between Ahlstrom and Perusa was announced on October 18, 2013, and is expected to be completed during the first quarter of 2014 at the latest.
Ahlstrom, a global high performance fiber-based materials company, has signed an agreement to sell the converting operations of its West Carrollton plant in Ohio, USA, to West Carrollton Parchment and Converting Inc., an Ohio-based family-owned company. The transaction is expected to be completed by the end of 2013.
Under the agreement, Ahlstrom will sell its vegetable parchment converting assets and related order book to West Carrollton Parchment and Converting. The parties have agreed not to disclose the value of the agreement. The approximately 70 employees at the plant will transfer to West Carrollton Parchment and Converting. Ahlstrom will book a non-recurring cost of EUR 1.3 million related to the transaction in its fourth-quarter 2013 financial results.
As part of the sale, Ahlstrom and West Carrollton Parchment and Converting will establish a long-term supply agreement for vegetable parchment paper, which is primarily used in food packaging.
Ahlstrom's Food and Medical business area will continue to operate 9 production plants in France, United Kingdom, USA, India, China and Finland.
Jan Lång, President & CEO - "We have now defined our new strategy to take us forward following the major transformation the company has undergone over the past few years. Our current businesses offer good opportunities for growth globally. We have identified three new high priority growth areas in clean water, medical diagnostics and composite materials for the construction and transportation industries."
"While our operating profit in the third quarter was disappointing, we are encouraged by the growth in net sales at constant currency rates. I'm confident that with the more focused business portfolio and the ongoing rightsizing program, we are well placed to improve our financial performance. The rightsizing program is progressing as planned."
"We continued to make progress in renewing our product portfolio and launched several new products during the quarter, including Ahlstrom TenderGuard(TM) in medical fabrics and Ahlstrom MasterTape(TM) for the Chinese market. With the good work we have done in improving our capabilities, I'm confident we can reach our ambitious long-term target of generating 20% of net sales from new products."
The operating environment in the third quarter remained in line with the comparison period as the overall demand in Ahlstrom's main markets continued to be soft with regional variations. Geographically, demand in Europe remained weak, particularly in the southern part of the continent. The North American market showed some positive signs, while growth was fastest in Asia.
In the Advanced Filtration business area, the markets for laboratory and life science, and gas turbine filtration continued to strengthen, particularly in North America and Asia. Demand for water applications grew as well.
In the Building and Energy business area, demand for flooring materials in Europe, and Russia in particular, stayed at a healthy level during the review period whereas the market for wind energy applications was steady at a low level. Demand for wallpaper and wallcovering materials in Europe was stable, while there were signs of improvement in China. Demand for construction-related materials remained soft.
In the Food and Medical business area, demand for food packaging products was solid, whereas markets for tape and beverage materials were soft, especially in Europe and Asia. Demand for medical materials weakened in North America.
In the Transportation Filtration business area, the market for transportation filtration materials, including heavy duty, in North America recovered towards the end of the review period. Demand for transportation filtration materials in Europe was stable despite the sluggish macroeconomic development in the region. Demand in Asia, and particularly in China, continued to grow. In South America, currency devaluation had a negative impact on the filtration market.
Market pulp prices varied in the third quarter, but they remained higher than in the comparison period. The prices of synthetic fibers such as polyester and viscose were stable or in decline, whereas polypropylene prices rose. The prices of chemicals in general were either stable or in decline. The prices of liquid solvents like phenolic resins remained at a high level. In its production, Ahlstrom uses chemicals such as latex, titanium dioxide, liquid solvents and starch. Natural gas prices increased in Europe and North America.
Strategic agenda and new long-term financial targets
Ahlstrom has defined its growth strategy extending to the year 2020. The company's current and future product offering is driven by global megatrends, such as resource scarcity, environmental awareness, demographics and urbanization. Ahlstrom aims to grow with a high performance product offering for a clean and healthy environment.
To support Ahlstrom's sustainable growth strategy, the Board of Directors has approved the company's updated long-term financial targets over the economic cycle:
Combination of the Label and Processing business and Munksjö AB
On May 24, 2013, Ahlstrom completed the first phase (LP Europe demerger) of the combination of its Label and Processing business in Europe and Munksjö AB. The combination created a new global leader in high-quality specialty papers.
The second phase of the transaction, the demerger of Coated Specialties in Brazil, is expected to be completed by the end of this year. On July 4, 2013, Ahlstrom's Extraordinary General Meeting approved the demerger of Coated Specialties.
The Label and Processing business in Europe was reported as discontinued operations until May 27, 2013. Coated Specialties in Brazil continues to be reported as part of the discontinued operations until the transaction has been completed for that part.
Ahlstrom has started the process of divesting its abrasive backings and pre-impregnated décor paper businesses in Osnabrück, Germany, to a third party as a consequence of the commitments provided to the European Commission to resolve the competition issues identified by the Commission. These two businesses are also reported as part of the discontinued operations. The divestment is expected to be finalized by the end of 2013.
Result from discontinued operations
The operative result for the European operation of the Label and Processing business has been included until May 27, 2013. The operative results from Coated Specialties and the Brazilian operation of the former Home and Personal business area were included throughout the review period. The two production lines at Osnabrück to be divested to a third party were also reported as discontinued operations. All operative figures exclude depreciation.
In July-September 2013, the loss from discontinued operations for the period was EUR 17.3 million (EUR 1.1 million profit). The 2013 figure includes a net of tax EUR 13.2 million impairment loss recognized on the re-measurement to fair value and costs to sell, mainly related to the two production lines to be divested in Osnabrück and the Brazilian operations of the former Home and Personal business.
In January-September 2013, the profit from discontinued operations for the period was EUR 55.4 million (EUR 8.8 million), including approximately a EUR 86.4 million demerger effect, which includes a recognition of distribution liability to fair value and a write down related to the fair valuation of Munksjö Oyj shares. The January-September figure also includes a net of tax EUR 44.3 million impairment loss recognized on the re-measurement to fair value and costs to sell, mainly related to the demerger effect of Coated Specialties in Brazil, which is expected to take place during the second half of 2013.
Result including discontinued operations
In July-September 2013, the loss for the period including discontinued operations was EUR 21.0 million (EUR 5.2 million loss). Earnings per share with the effect of interest on the hybrid bond were EUR -0.46 (EUR -0.13).
Return on equity (ROE) was -22.8% (-4.1%).
In January-September 2013, the profit for the period including discontinued operations was EUR 48.7 million (EUR 2.2 million). Earnings per share with the effect of interest on the hybrid bond were EUR 1.01 (EUR -0.03).
Return on equity (ROE) was 14.9% (0.5%).
The figures above include the demerger effects explained in the previous section.
Following the closing of the Label and Processing demerger, Ahlstrom initiated a rightsizing program to reflect the new size and scope of the company. The aim is to make the company's cost base leaner while maintaining sufficient resources globally. The company's target is to achieve EUR 35 million annualized cost savings by the end of 2014. The figure includes the previously announced EUR 15 million cost reductions, of which approximately EUR 10 million will be derived from costs that will be transferred to Munksjö Oyj.
The cost savings will be derived from rightsizing the activities and the common cost base of the functions worldwide. Ahlstrom will book non-recurring costs of approximately EUR 15 million in 2013-2014 from the program, which is estimated to affect 350 people globally.
The program is moving ahead as targeted. As of September 30, 2013, approximately EUR 6 million in cost savings, of which approximately EUR 2 million is derived from costs being transferred to Munksjö Oyj, were achieved and only minor restructuring costs were booked.
The outlook published on September 16, 2013 remains unchanged. Net sales from continuing operations are expected to be EUR 960-1,040 millionin 2013. The operating profit margin excluding non-recurring items from continuing operations is expected to be 0-2% of net sales.
In 2013, investments excluding acquisitions from continuing operations are estimated to be approximately EUR 75 million (EUR 74.1 million in 2012). The estimate includes investments that were already announced in 2011 and 2012, such as the wallcovering materials line Binzhou, China, and the additional capacity in filtration materials in Turin, Italy.
The global economic outlook remains uncertain with limited visibility. The European economy has shown some signs of recovery. However, the recovery may be uneven and fragile. Recent indicators for the U.S. economy are more positive, yet they continue to be mixed. 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, especially in China, that are in a start-up phase, or will be in the near future. The company's financial performance may be negatively affected by the commercialization of the 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 2012. The risk management process is also described in the Corporate Governance Statement, also available on the company's website.
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This report contains certain forward-looking statements that reflect the present views of the company's management. The statements contain uncertainties and risks and are thus subject to changes in the general economic situation and in the company's business.
Ahlstrom will redeem the remaining EUR 34.5 million of the original EUR 80 million hybrid bond (ISIN: FI4000006929) issued in November 2009. The company will redeem all of the outstanding capital securities at the principal amount together with accrued interest.
The redemption will be made on November 25, 2013 in accordance with the terms and conditions of the hybrid bond.
In September 2013, Ahlstrom issued a new EUR 100 million hybrid bond. At the same time, the company repurchased by a public tender offer a notional amount of EUR 45.5 million of the hybrid bonds originally issued in 2009.
After this transaction only the EUR 100 million hybrid bond issued in September 2013 will remain outstanding.
Ahlstrom, a global high performance fiber-based materials company, has signed an agreement to divest its pre-impregnated décor papers and abrasive paper backings businesses to Perusa, a German-based private equity group. At completion of the transaction, the ownership base of the divested businesses will be broadened to also include the current management of the sold business. The divestment is made to comply with the commitments made to the European Commission and to the Brazilian competition authority CADE as disclosed in May 2013.
The enterprise value of the transaction is approximately EUR 20 million. Under the agreement, Ahlstrom's pre-impregnated décor paper and abrasive paper backings businesses in Osnabrück, Germany, will be transferred to an entity held by Perusa Partners Fund 2, LP, a private equity firm advised by Munich-based Perusa GmbH. The parties have also formed a joint venture to operate the power plant and the water facilities for the site. Ahlstrom will book a write-down of approximately EUR 6 million in the third quarter of 2013 as a result of the agreement.
Ahlstrom continues to manufacture wallpaper, hybrid wallcover and poster paper materials in Osnabrück and produces release papers as a contract manufacturer to Munksjö Oyj.
The completion of the transaction is subject to certain closing conditions, such as the European Commission's approval of the buyer and the agreements between Ahlstrom and the buyer. The transaction is expected to be completed during the first quarter of 2014, at the latest.
Ahlstrom, a global high performance fiber-based materials company, lowers its full-year guidance for net sales and operating profit due to lower than expected sales volumes as demand has continued to be soft in Ahlstrom's key markets in Europe and North America.
Also maintenance related downtime at Osnabrück plant in Germany and adverse currency fluctuations have impacted net sales and operating profit development negatively.
Ahlstrom now forecasts net sales from continuing operations to be EUR 960-1,040 million in 2013. The operating profit excluding non-recurring items from continuing operations will be 0-2% of net sales. The company had previously expected net sales from continuing operations to be EUR 980-1,140 million, and operating profit excluding non-recurring items from continuing operations of 2-5% of net sales in 2013.
The company will publish its January-September 2013 interim report on October 24, 2013.
Ahlstrom, a global high performance fiber-based materials company, announces price increases in the fourth quarter of 2013 for its filtration materials globally. The price increases will be made to compensate for the continued rise in raw material costs such as specialty pulps, chemicals and energy as well as adverse currency fluctuations.
Prices of specialty fibers including mercerized pulp, cotton and glass, as well as energy and chemicals have continued to rise steadily over recent months.
The price increase will affect filtration materials produced by Ahlstrom globally. The level and timing of the increase will depend on the markets served, the raw material content of the product and the agreements in place. The increase will be up to 10%. Specific details will be discussed with each customer individually by the appropriate sales teams in the coming days.
Ahlstrom, a global high performance fiber-based materials company, will initiate a rightsizing program aiming to reach annual cost savings of EUR 35 million by the end of 2014.
The target includes the earlier announced EUR 15 million rightsizing measures, of which approximately EUR 10 million will be derived from the transfer of certain sales, finance and information services related personnel and cost to Munksjö by the end of May 2014. During the transition period, Munksjö will pay for the services provided.
"Ahlstrom has in the past three years executed a significant transformation of the company, as our business portfolio has been reshaped through major transactions, including the divestment of our wipes business, Home and Personal, and the combination of our specialty papers business, Label and Processing, with Munksjö. At the same time, we have been reshaping our business processes through key development programs," said Jan Lång, President & CEO.
"Many of our key development programs are nearing completion, which will allow us to scale back our spending levels and make our cost base reflect the new size and scope of our business. As a result of the refocusing of the business, our net sales have been reduced by EUR 800 million to EUR 1.1 billion in the past two years. This new cost saving program is fundamental in achieving the required improvement in our financial performance. Unfortunately bringing the organization to a level which can sustain our current business is not possible without personnel reductions," stated Lång.
According to the plans, the key actions to achieve the targeted cost base reduction include in particular:
As a result of the planned program, Ahlstrom's personnel are estimated to be reduced by approximately 350 people globally. The employee consultation processes will start in accordance with local legislation.
The company plans to book a one-time cost of approximately EUR 15 million during the years 2013-2014. The majority of the planned savings are estimated to take place by the end of 2014.
A separate project management team has been established to align the implementation of the program and to support a sustainable cost reduction that will not compromise the crucial activities in the company.
The plans are subject to the outcome of the employee consultation negotiations where required.