1 Ahlstrom The global source for fiber-based materials Paris, October 31, 2006 CEO, Jukka Moisio
2 Table of contents • Ahlstrom in brief • Profitable growth through organic investments and acquisitions. Divestment of non-core assets • Latest financials
3 Section I Ahlstrom in brief
4 Ahlstrom in brief Ahlstrom essentials Financial overview ( 1 ) Q1 - Q3 Q1 - Q3 • High performance fiber-based materials 2 0 0 4 2 0 0 5 2 0 0 5 2 00 6 Sales (€'m) 1490 1553 1169 1210 EBIT 82 99 77 73 • Roll goods to converters EBIT margin % 5.5 % 6.4 % 6.6 % 6.0 % • Global sales network Asset turnover 1.6 1.6 1.6 1.7 ROCE % 9.1% 10.5% 10.8 % 10.4 % • Production facilities in Europe, US, South America, and Asia Sales split, 2 0 0 5 Others • Innovation in close co-operation Asia 5 % with customers 9 % • High growth and high value added businesses North America 22 % Europe 64 % Notes: 1) Continuing business excluding non-recurring items I FRS
5 Ahlstrom’s position vs. peers Ahlstrom business Main com petitors Ahlstrom vs. com petitors area BBA-Fiberweb, PGI, •Less PPE and energy dependent Nonw ovens FiberCom posites Buckeye, Dupont •No presence in hygiene sector H&V, Freudenberg, BBA- •Presence in all filtration segments Filtration Fiberweb, Neenah Paper (engine, air, liquid) •Non-integrated player Johns Manville, Owens •Strong market position in windmill Glass nonw ovens Corning and marine segments Release base: UPM, Cham •Higher asset turn than integrated Label & Packaging pulp and paper players Papers Label & Packaging: Stora Specialty Papers Enso •Less cyclical Arjo Wiggins •Presence in multiple niche segments Technical Papers Koehler, Munksjö � Ahlstrom is less PPE and energy dependent than its m ain nonw oven peers and has no presence in the hygiene sector � High capital efficiency and less cyclical business than in traditional pulp and paper com panies
6 Substantial share of new sales through innovation New products as % of sales ( 1 ) I nnovation in brief • Customer focused 35 35 – Business area learning and 35 cross-fertilization Target 30 range – Serving shared market 27 segments (e.g. transportation, 25 building, packaging) 22 % of sales 20 • Expertise based on broad market and technology exposure 15 10 • 3.4% of total personnel focusing on innovation (187 professionals) 5 0 2003 2004 2005 YTD 2006 New products Other innovations Notes: 1) 3M definition applied: New product perceived by customer as new, not older than 3 years; Other innovations represent a significant technical contribution, not older than 3 years
7 Presence in Russia, Americas and Asia offers platform for further growth Sales offices Production sites Glassfiber tissue plant, Tver, Russia, start up in Q4/2007 New wipes line, Filtration and nonwovens plant, Green Bay, USA Hyung Poong, South Korea, start up in Q1/2007 production started in 2004 Filtration plant, Wuxi, China acquired in 2005 Specialty reinforcement plant Engine filtration converting, started in 2006 Bishopville, USA, start up in Q1/2007 Needlepunch line, start-up in Q4/2007 Filtration plant, Louveira, Brazil, 1995 Wipes plant, Louveira, Brazil, start-up in Q1/2008
8 Section II Profitable growth through organic investments and acquisitions. Divestment of non-core assets
9 Major organic growth investments ongoing I nvestm ent Business area Start-up Mikkeli, Finland, specialty reinforcement plant expansion Glass nonwovens Q4/2006 Greenbay, USA, spunlance line for wipes Nonwovens Q1/2007 Bishopville, USA, specialty glassfiber reinforcement plant Glass nonwovens Q1/2007 La Gère, France, releaseliner capacity expansion Label & packaging Q2/2007 Wuxi, China, needlepunch line for dust filtration Filtration Q3/2007 Tver, Russia, glassfiber tissue plant Glass nonwovens Q4/2007 Brignoud, France, needlepunch line for industrial nonwovens Nonwovens Q4/2007 Louveira, Brazil, spunlace line for wipes Nonwovens Q1/2008 � I nvestm ent com m itm ent of approxim ately EUR 1 4 0 m illion � I nvestm ent criteria: � 1 .5 x investm ent in net sales in 3 -5 years � 1 3 % ROCE target
10 Investing in businesses with high growth Volum e grow th yOy 1 Ahlstrom actions Glassfiber tissue* Machine speed-up, Finland, 2 0 0 5 * Russia 1 0 % New plant, Russia, 2 0 0 7 W ipes New plant, Brazil, 2 0 0 8 New lines, USA, 2 0 0 4 , 2 0 0 7 9 -1 0 % Acquisition of Greenbay, USA 2 0 0 4 Glassfiber reinforcem ents W indm ill + 1 0 % Expansion, Finland, 2 0 0 6 New line, USA, 2 0 0 7 Marine + 5 % I ndustrial nonw ovens New line, France, 2 0 0 7 7 % Release base paper Capacity increase, I taly, 2 0 0 4 , 2 0 0 6 France, 2 0 0 7 5 -7 % Air & liquid filtration New line, China, 2 0 0 7 Acquisitions: Hollinee, 2 0 0 4 , Lantor 5 % 2 0 0 5 , HRS Textiles 2 0 0 5 Transport filtration Korea, Brazil and Turin 2 % -4 % expansion, 2 0 0 4 Notes: 1) Source for FiberComposites and Specialty Papers annual volume growth: I nda/ Edana, Pira I nternational, JEC Group and Ahlstrom management
11 Wipes expansion Market grow th • Spunlace wipes market growing 10-20% annually Latin Am erica • USD 22 million investment in new spunlace line in Brazil. Start-up in Q1/2008 USA • USD 30 million investment in spunlace line in USA. Start up in Q1/2007 Spunlace � I nvestm ents utilizing existing infrastructure composite line, New spunlace Brazil to start line, Greenbay to in 2008, USD Capabilities for start in 2007, cotton containing 22 million Acquisition of USD 30 million Spunlace Greenbay spunlace products composite line to Greenbay in Nonwovens in 2004 Windsor Locks, added sales of USD 2006 2 0 0 8 start-up in 35 million 2 0 0 7 2004, USD 40 million 2 0 0 6 2 0 0 5 2 0 0 4
12 Global expansion of glass nonwovens High underlying grow th • +10% yOy growth expected globally in windmill and +5% in the marine industry • Construction market in Russia growing above 10% yOy Russia • EUR 38 million investment in glassfiber tissue plant in Tver, Russia. Start-up in Q4 2007 • Serving building and composites materials industries USA • EUR 10 million investment in a specialty glassfiber reinforcement plant in South Carolina. Start-up in early 2007 • Serving wind energy and marine industry Finland • EUR 5 million investment in capacity expansion of Mikkeli glassfiber plant. Start up in Q4 2006
13 Filtration growth in China • Chinese dust filtration market growing 15% annually • New needlepunch line in China, USD 5 million, start up in Q3/2007 • Targeting high temperature dust filtration segment • Main customers are power, energy and steel industries • Utilizing operating leverage W uxi, production lines: Dust filtration, 2005 Engine filtration converting operations, 2006 High temperature dust filtration, 2007
14 Release base paper growth Market grow th • Worldwide demand for release base papers growing approximately 5-7 % annually Europe • EUR 30 million investment to expand release base paper capacity in France. Start-up in Q2/2007 • EUR 18 million capacity increase successfully launched in Italy in Q1/2006
15 Expansion of industrial nonwovens in Europe • Global markets for needlepunch applications growing 7% annually • New needlepunch line in France, EUR 6.0 million. Start up in Q4/2007 • Offering possibility to expand product offering by developing new innovative products • Serving building, graphics, automotive, wipes and niche hygiene segments • Utilizing operating leverage
16 Improving capital efficiency Divestm ent of Sonoco-Alcore cores and board joint venture • Shareholding (35.5%) sold to Sonoco in July for EUR 39.5 million including capital gain of EUR 3 million • Net sales of Sonoco-Alcore was EUR 270 million in 2005 Sale of property in Germ any • EUR 11.7 million incl. capital gain of approximately EUR 7 million • Previously part of Ahlstrom's packaging operations � Ahlstrom aim s to continue to divest non-core assets w hich generate no top line but burden balance sheet
17 Actions to improve profitability • Minim um investm ent in low grow th businesses • “Cutting tail” by closing non-com petitive plants • Utilizing operating leverage Recent actions: • Nüm brecht plant closure, Germ any, by Q2 / 2 0 0 7 – Wallcover production transferred to Osnabrück – 37 people affected • Converting of liquid filtration planned to be m oved to South Carolina by Q1 / 2 0 0 7 – Relocation could affect 60 people – Negotiations currently ongoing with United Steel Workers Union � Annual fixed cost savings potential of EUR 4 -5 m illion
18 Section III Latest financials
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