Ahlstrom-Munksjö Q1 2018 Results April 24, 2018 HANS SOHLSTRÖM, PRESIDENT AND CEO PIA AALTONEN-FORSELL, CFO
Highlights Q1 2018 • EBITDA margin of 11.7% in an environment Comparable EBITDA and margin MEUR % of significant raw material cost escalation 100 20 14.0% • Good demand across most markets and 90 18 79 11.7% product segments globally 80 16 66 70 14 • Progressing in our strategic direction 63 60 12 – New investments to improve financial and 11.5% 50 10 environmental performance 40 8 – Three strategic growth investments 30 6 proceeding 20 4 – New synergy benefits and cost reduction 10 2 initiatives identified 0 0 – Agreement to acquire the Caieiras specialty paper mill 2
Good demand in most geographies and product segments Filtration Nonwovens Building & Wind FILTRATION & PERFORMANCE Insulation Abrasive Coated Specilaties Release Liners INDUSTRIAL SOLUTIONS Decor DECOR Beverage and Advanced Liquid Food packaging Tape Casings Medical Technologies SPECIALTIES
Good profitability in current market environment of significant input cost pressure Sales Comparable EBITDA and margin MEUR MEUR 700 % 100 20 547 572 600 567 90 18 79 80 16 500 66 63 70 14 400 60 12 50 10 300 40 8 200 30 6 20 4 100 10 2 0 0 0 4
Comparable EBITDA and margin by business area MEUR % MEUR Filtration and Performance % Decor 20 20 35 18,8% 20 17,2% 18 18 15,4% 30 31.8 16 16 15 25 28,7 14 11,8% 14 12 24.6 12 20 9,2% 10 10 10 11,3 15 6,2% 8 8 8,6 6 10 6 5 4 6,3 4 5 2 2 0 0 0 0 MEUR Specialties Industrial Solutions MEUR % % 35 20 20 20 17,4% 17.5 16,0% 18 18 30 14,1% 16 16 15 25 28.4 14 14 12,0 25.3 23,6 12 12 10.2 20 10 10 10 12,0% 15 8 8 6 6 10 7,3% 8,2% 5 4 4 5 2 2 0 0 0 0 5
Operating cash flow negatively impacted by net working capital, balance sheet remains solid Net debt to MEUR MEUR EBITDA 90 500 1,6 1,4x 77 80 450 1,4 400 70 1,2 Strong 395 350 60 Increase in balance 1,0 300 net working sheet 50 43 250 0,8 capital of 40 EUR 43m Net gearing 200 0,6 30 at 39.8% 150 0,4 20 100 0,2 10 5 50 0 0 0,0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q1/17 Q2 17 Q3/17 Q4/17 Q1/18 6
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 Market Outlook reflect the seasonal pattern. Selling price increases will continue to be implemented to mitigate cost inflation in raw materials. C omparable 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 EBITDA 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. *) Outlook published on February 13, 2018 is reiterated. Full-year 2018 capitital expenditure estimate has been specified and is disclosed in Q1 2018 interim report. 7
Strategic overview MISSION DIRECTION TARGET Sustainable and innovative Local Efficiency Customer Profitable Global leader in accountability and agility value growth fiber-based solutions chosen growth segments FILTRATION & PERFORMANCE FINANCIAL TARGETS: EBITDA > 14% over a INDUSTRIAL SOLUTIONS business cycle Net gearing < 100% Dividend: stable and annually DECOR increasing, paid bi-annually SPECIALTIES VALUES Long-term commitment Act as one Passion to innovate and improve
New investment decisions driving our strategic progress STRATEGIC DIRECTION Local Efficiency Customer Profitable accountability and agility value growth Billingsfors pulp line, Sweden Rebuilding the recovery boiler and de-bottlenecking the pulp line Aspa pulp plant, Sweden Modernizing the bailing line at Aspa pulp plant Dettingen plant, Germany Upgrade of pre-impregnated decor paper production line Pont Audemer, France Rebuilding a converting line
New investment decisions driving our strategic progress STRATEGIC DIRECTION Local Efficiency Customer Profitable accountability and agility value growth Abrasive backings, Arches plant Paper machine rebuild, start-up Q1/18 Filtration, Madisonville plant New saturation line, start-up H1/18 Vegetable parchment, Saint Severin plant New line installation, start-up Q4/18
Merger and integration successfully implemented New synergy benefits and further cost reduction initiatives identified New cost reducing initiatives of EUR 10 million identified • Synergy target Achieved run rate EURm 60 • Total impact increased to EUR 50 million annually, fully implemented at the end of Q1/2019 Current estimate Majority from SG&A and variable costs 50 – – Integration of the former Graphics and Packaging business area into Specialties to develop a combined 40 product and service offering – Incremental sales 30 26 – Production optimization – Product mix improvement 20 Previous estimate • New initiatives include also adjusting group structure to 10 Ahlstrom- Munksjö’s business unit based operating model with clear responsibilities that locally promotes 0 accountability and enables flexibility and lean group functions. – The plan include to concentrate and relocate the company head office in Helsinki, Finland 11
Acquisition of Caieiras mill supports the strategic ambition to maintain a leading position Caieiras mill • Caieiras specialty paper mill highly complementary Decor paper – – Crepe, grease and oil resistant papers – Flexible packaging and self-adhesive papers • Sales ~ EUR 80m in 2017 • Comparable EBITDA ~ EUR 13m in 2017 Debt free price ~ EUR 100m • • Synergy benefits of up to EUR 6m arising from SG&A and overlapping operations • The transaction is expected to be completed during Q3 2018 and is subject to customary completion 5 product lines terms, including merger clearance from the relevant 4 specialty paper machines competition authorities 12
The combined platform provides attractive opportunities • Caieiras product offering is a good match for Ahlstrom-Munksjö with 80% of sales in line with The combined plattform Ahlstrom- Munksjö’s current portfolio provides attractive opportunities • Caieiras and Ahlstrom-Munksjö: – strengthen position as a global leading decor paper manufacturer with local production in South America – strengthen global leading position in tapes Jacarei: Louveira: – improve production and delivery capability in Coated specialities Engine and industrial filters release liners – share best practices to enhance production and process technology Caierias • South America offers long-term growth potential, and the platform provides Ahlstrom-Munksjö with several growth options, synergies and further production optimization opportunities for the longer term 13
P roducts fit well into the Ahlstrom-Munksjö portfolio Decor papers Coffee filter paper Release liner Tape and grease proof paper, crepe and flexipble packaging 14
Ahlstrom-Munksjö has a leading position in many segment Examples of leading segments Voice of the customer • Engine filtration • Ahlstrom-Munksjö is considered the leading Tape Advanced Medical Liquid Release liners in Europe • Decor supplier in nearly all of its segments, in line Technologies with strategy to be #1 or #2 in each segment • Abrasive backings Beverage & Casing • Insulation papers • 90% likely to choose Ahlstrom-Munksjö again Filtration • Decor papers Foodpack • Over 80% have a positive attitude • Tea bag materials Main strengths are personal contact, service • Vegetable parchment • and product quality Coated papers Specialties • Masking tape • Product quality and service are the most Abrasive important purchasing criteria, fitting well to our • Fine art papers positioning as a solution provider Nonwovens • Glass fiber tissue for Insulation Buildin vinyl flooring applications Release g & Liners Wind Share of sales by business units Source: Voice of the Customer survey by Opticom 15
Summary • EBITDA margin of 11.7% in an environment of significant raw material cost escalation • Financial position remains solid Good demand across most markets and product segments globally • • Determinedly progressing in our strategic direction – Several new investment decisions for improved financial and environmental performance – Strategic investments proceeding: Ramp-up of abrasive backings and decor paper production, completion of the new saturation line investment for filtration material and the new parchmentizer line investment by year end – New synergy benefits and cost reduction initiatives identified – Agreement to acquire the Caieiras specialty paper mill • We have plentiful of opportunities to grow in our existing business segments, proceed with new product development and consider growth in adjacent segments. 16
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