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Ahlstrom ‘rightsizes’ to save EUR 35M

High performance fibre-based materials company Ahlstrom, published a January-June 2013 interim report this week with an overview of the international markets. The company will also initiate a ‘rightsizing programme’ aiming to reach annual cost savings of EUR 35 million by the end of 2014. “Our sales and operating profit excluding non-recurring items improved slightly from the comparison period, but our performance did not yet meet the targets we have set, despite the significant efforts we have taken to restructure our product portfolio and renew our way of working,” explained Jan LÃ¥ng, President & CEO. “To enhance our competitiveness, we have today announced a rightsizing programme, which aims at reducing our annual cost base by EUR 35 million in the next 18 months.”

9th August 2013

Innovation in Textiles
 |  Helsinki

Packaging, Medical/Hygiene, Interiors, Industrial

High performance fibre-based materials company Ahlstrom, published a January-June 2013 interim report this week with an overview of the international markets. The company will also initiate a ‘rightsizing programme’ aiming to reach annual cost savings of EUR 35 million by the end of 2014.

“Our sales and operating profit excluding non-recurring items improved slightly from the comparison period, but our performance did not yet meet the targets we have set, despite the significant efforts we have taken to restructure our product portfolio and renew our way of working,” explained Jan Lång, President & CEO.

“To enhance our competitiveness, we have today announced a rightsizing programme, which aims at reducing our annual cost base by EUR 35 million in the next 18 months.”

Rightsizing programme

Following the closing of the Label and Processing demerger, Ahlstrom is initiating a rightsizing programme 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 in cost savings by the end of 2014. The figure 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, a Swedish based speciality paper company.

According to the plans, the key actions to achieve the targeted cost base reduction include completion of demerger related transfers, consolidation of and efficiency improvements in functional activities to reduce selling, general and administration (SGA) costs, and optimisation and productivity improvements in the supply chain.

According to Ahlstrom’s interim report, the operating environment remained unchanged during the second quarter. © Ahlstrom

As a result of the planned programme, Ahlstrom's personnel are estimated to be reduced by approximately 350 people globally. “This new cost saving programme is fundamental in achieving the required improvement in our financial performance.  Unfortunately bringing the organisation to a level which can sustain our current business is not possible without personnel reductions," commented Lång.

Operating environment

According to Ahlstrom’s interim report, the operating environment remained unchanged during the second quarter. In the Advanced Filtration business area, the markets for gas turbine, laboratory and life science filtration, and water applications continued to strengthen, particularly in North America and Asia.

In the Building and Energy business area, demand for wind energy applications weakened. Demand for flooring materials in Europe, and Russia in particular, stayed at a healthy level during the review period. Demand for wallpaper and wall covering materials in Europe and China also remained stable.

The global economic outlook remains uncertain with limited visibility. © Ahlstrom

In the Food and Medical business area, the markets for tape, food packaging and beverage materials strengthened in North America. Demand for medical materials weakened.

In the Transportation Filtration business area, the market for transportation filtration materials was volatile during the second quarter, especially for heavy duty vehicles in North America. Demand for transportation filtration materials in Europe was stable whilst it continued to grow in Asia.

Outlook

Net sales from continuing operations are expected to be EUR 980-1,140 million in 2013. The operating profit margin excluding non-recurring items from continuing operations is expected to be 2-5% 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 global economic outlook remains uncertain with limited visibility. Slower economic growth, or even a temporary contraction, may lead to lower sales volumes for Ahlstrom and force the company to initiate more market-related shutdowns at plants, which could affect profitability.

The company's financial performance may also be negatively affected by the commercialisation of the new production lines.

www.ahlstrom.com

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