Ahlstrom-Munksjö interim report January-March 2018: Strong sales growth in constant currency and synergy realization to continue

Q1/2018 highlights (vs Q1/2017 proforma)
• Net sales EUR 572.4 million (EUR 566.9 million), an increase of 1.0%. In constant currency growth was 5.9%, driven by higher selling prices.
• Continued good demand across most markets
• Comparable EBITDA EUR 66.7 million (EUR 79.4 million), representing 11.7% (14.0%) of net sales in an environment of significant raw material cost escalation
• Net profit EUR 21.2 million (EUR 24.2 million)
• Earnings per share EUR 0.22 (EUR 0.25)
• Comparable EPS excluding depreciation arising from mergers EUR 0.32 (EUR 0.33)
• Ahead of schedule in delivering merger related synergy benefits
• Four separate new investments to improve financial and environmental performance
• Three strategic growth investments proceeding, ramp-up of abrasive backings production ongoing

Major events after the reporting period
• Hans Sohlström started as President and CEO on April 16, 2018
• New synergies and cost reducing initiatives identified
• Agreement to acquire the Caieiras specialty paper mill in Brazil

“I’m very pleased to start as the President and CEO of Ahlstrom-Munksjö. Our comparable EBITDA margin was 11.7% in an environment of significant raw material cost escalation. We need to execute our strategy and continue compensating for impacts of the increased raw material costs. We were already able to improve our cost efficiency, increase sales prices, and we will continue to sharpen our commercial strategy and develop new value-added products.

Investing in growth
We are making good progress towards our strategic priorities and financial targets. We have made decisions on four separate organic growth investments to improve our financial performance and reduce our environmental impact.

At the same time, our three ongoing strategic investment projects, targeting at profitable growth, are proceeding well. The machine rebuild for abrasive backings and decor papers in Arches, France was completed during the first quarter. We are also completing the new saturation line investment for filtration material in Madisonville, the US, and the new parchmentizer line investment in Saint Severin, France. All three projects increase our capacity and respond to growing customer demand.

Strengthening the latin american platform
As part of our ambition to also grow through acquisitions we have entered into an agreement to acquire the MD Papéis’ Caieiras specialty paper mill in Brazil from the Formitex Group. The Caieiras operation is an excellent fit in many product segments and drives our ambition to maintain a leading position in selected niches. Combining Ahlstrom-Munksjö’s and Caieiras expertise provides our customers with improved service, wider product offering and better delivery capability. At the same time, the acquisition offers us attractive growth opportunities, synergies and further production optimization possibilities in the long term.

Simultaneously we are proceeding well ahead of schedule in delivering the merger related synergy benefits. In addition to the earlier announced synergies of above EUR 40 million, we have continued the work and identified further synergies and cost reducing initiatives with an overall profit improvement impact of EUR 10 million annually to be reached by the end of Q1 in 2019.

The new cost reduction initiatives include adjusting group structure to Ahlstrom-Munksjö’s operating model, which is based on business units with clear responsibilities, local accountability, and enabling operational flexibility and lean group functions. As part of the target towards lean group functions we have initiated a plan to concentrate and relocate all head office activities to Helsinki, Finland. Choosing between the two locations, both with their strengths, was not easy but dividing the activities in two locations is not a long-term viable solution.

Our market position and strategic opportunities gives me strong confidence in the future and I also believe in our ability to improve financial performance and grow shareholder value. We will improve our cost efficiency, sharpen our commercial strategy and develop new value added products in order to create long term success for the shareholders and all company stakeholders”, says Hans Sohlström, President and CEO of Ahlstrom-Munksjö as of April 16, 2018.
more at:  https://www.ahlstrom-munksjo.com/Media/releases/stock-exchange-releases2/2018/ahlstrom-munksjo-interim-report-january-march-2018-strong-sales-growth-in-constant-currency-and-synergy-realization-to-continue/

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