Ahlstrom The global source for fiber- based materials Roadshow in - - PowerPoint PPT Presentation

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Ahlstrom

The global source for fiber- based materials

Roadshow in London 19 September 2007 CEO Jukka Moisio

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Table of contents

I In brief II Business environment and drivers III Achieving profitable growth IV Financial review

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I In brief

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Nonw ovens Exam ple applications Business areas Filtration Glass Nonw ovens Label & Packaging Technical Papers Sales 2 0 0 6 FiberCom posites Specialty Papers

23% 21% 7% 32% 17%

Presence in everyday applications

• Wipes, medical gowns

and drapes, wallcovering and tea bags

• Engine, indoor air,

industrial and laboratory filtration

• Windmill blades, flooring

and boat hulls

• Self-adhesive labeling,

food packaging and beverage labels

• Furniture foils, abrasive

paper, masking tape and engine gaskets

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Roll goods producer

Pulp producers Synthetic fiber producers (PET, PP, glass) Chemical suppliers Healthcare and consumer goods suppliers Transportation industry suppliers Air and liquid filter manufacturers Packaging industry Printers and siliconizers (label, decor, poster, wallcover) Consumer or industrial brands

Raw material supplier Primary production Converter Marketer/ seller

Consumers Industrial customers Natural fibers (wood, cotton, hemp) Oil/petro- chemicals Other roll goods producers: BBA PGI Arjo Wiggins

Ahlstrom has a clear focus in the value chain

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Specialty papers m arket positions( 1 )

Leading specialty materials supplier in the world

(2)

Nonw ovens m arket positions( 3 )

1) Source: Jaakko Pöyry Consulting, Ahlstrom 2) Ahlstrom Specialty Papers volume 3) Source: Nonwovens I ndustry 2006 Notes:

Brazil and China joint ventures continue to strengthen market position

W ausau- Mosinee Cham Paper Group UPM Felix- Schoeller August Koehler Arjo W iggins I P Stora Enso Mead W estvaco Ahlstrom

500 1000 1500

Tons'0 0 0

Ow ens- Corning Com panhia Providencia Buckeye Johns Manville Ahlstrom PGI Fiberw eb Kim berly- Clark Freudenberg DuPont

500 1000 1500 $ 'm

Ahlstrom # 3 nonwovens company

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Current status

• Global growth initiatives identified and announced - time for

implementation

• Creating platform for future expansion - Europe, USA, South America,

Russia, Asia

• Target to improve raw material cost base

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II Business environment and drivers

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Global markets growing 4-5% per year (EUR 1-2 billion)

EUR 3 0 billion m arket opportunity Focus areas:

7% 5-7% Wipes Glassfiber reinforcements Release base paper Windmill 10% Marine 5% 2-4% 5% Air & liquid filtration Transport filtration Industrial nonwovens 7% 5% Infusion products Fiber Composites 6-7% growth Specialty Papers 3-4% growth Medical fabrics 5%

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Low volatility in demand…

Building & furniture 13 % Consumer food & healthcare 32 % Industrial applications 9 % Labeling, printing &

• ffice

27 % Filtration & automotive 19 %

• Long customer relationships
• Business-to-business
• Frame agreements for

majority of business

• Production against received
• r anticipated frame orders
• Direct sales 90%, agents

10%

• Serving wide range of end

user industries

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…and countercyclical to raw materials

20 40 60 80 100 120 140 160 Q1 97 Q3 97 Q1 98 Q3 98 Q1 99 Q3 99 Q1 00 Q3 00 Q1 01 Q3 01 Q1 02 Q3 02 Q1 03 Q3 03 Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07 Gross margin* Pulp price

* The new acquired units will be included from Q4 2007 onwards when they are included in Ahlstrom’s figures for full quarters

Natural fibers 40 % Chemicals 24 % Energy 17 % Other 3 % Synthetic fibers 16 %

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Good demand to continue but raw material prices will remain high

• Demand in Europe, South America and Asia expected to remain good
• Demand anticipated to be stable in USA, however low visibility
• Prices for pulp, Ahlstrom’s main raw material, continues to increase

– To date the average USD market price for NBSK has increased by 3% from Q2, BHKP by 4%

• High oil prices keep energy costs high and increase pressure on synthetic

fibers and chemicals prices

This presentation contains certain forward-looking statements that reflect the present views of the company’s management. Due to the nature of these statements, they contain uncertainties and risks and are subject to changes in the general economic situation and in the company’s business.

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III Achieving profitable growth

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Growing with customers by…

• Increasing presence in emerging markets
• Innovating (primarily with a target customer)

− Investing in new technologies and complementing product offering

..through

• Organic investments
• Complementary add-on acquisitions

Implementing growth strategy

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Ahlstrom - a truly global supplier

• Footprint on five continents
• Growing with key customers
• Serving customers with local and global products

Ability to supply Ahlstrom fiber-based materials successfully anywhere in the world => aim to achieve our vision

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Investment parameters

Ahlstrom’s investment criteria

Meets ROCE 13% criteria and generates 1.5 x the investment value in net sales in 3-5 years

How to enter new markets

• Presence through sales offices
• Learning markets and establishing customer relationships
• Establishing own production when applicable

Criteria for acquisitions

• Roll good focus
• Shared sourcing benefits
• Strengthens geographical presence and/or complements

product and/or technology offering

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EUR 150 million ongoing growth investments in BRIC- countries

Sales offices Production sites Glassfiber tissue plant, Russia, Q4/2007 Dust filtration line, China, Q4/2007 Specialty paper joint venture, China, signing expected in Q3/07 Wiping fabrics line, Brazil, Q1/2008 Specialty paper joint venture Ahlstrom VCP, Brazil, closed in Q3/2007 Production planned to India in 2009

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Five acquisitions adding annualized net sales of EUR 300 million

• Specialty paper joint venture in China with Zhejiang Kan Specialty

Material Co. Memorandum of Understanding signed

• Joint venture with Votorantim Celulose e Papel for specialty paper

production in Brazil, annual net sales approx. EUR 100 million

• Fiberw eb’s consumer wipes business, annual net sales of approx.

EUR 110 million

• Orlandi’s wiping fabrics business, annual net sales of approx. EUR 65

million

• Fabriano Filter Media SpA, manufacturer of micro glass filter media,

annual net sales approx. EUR 7 million

• Expected to m eet ROCE 1 3 % criteria generating EBI T of EUR

2 5 m illion w hen integration com pleted

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Specialty paper expansion to China

• Joint venture with KAN Paper holding

70% of shares

• Assets: 12,000 tons crepe paper

machine, water treatment, power plant, 15 hectares of land

• Crepe paper markets growing at 15 %

p.a.

• Serving customers from 13 sales
• ffices in Asia Pacific
• Competitive platform for future

expansion of businesses, space for several new lines

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Wiping fabrics line, USA Specialty glassfiber reinforcement plant, USA Q1 2007 Release base paper capacity expansion, France Closing of Orlandi, Fiberweb and Fabriano acquisitions. Integration starts Closing of Ahlstrom VCP joint venture. Integration starts Glassfiber tissue plant, Russia Q3 2007 Q2 2007 Q4 2007

Implementation of growth actions continues

Joint venture, China. MoU signed

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Actions to improve profitability

• Price increases to pass on escalating raw material costs
• Migration to more competitive raw material cost base
• Continuous performance improvement program “aPlus”

(Kaizen)

• Improving operating leverage by investing at current sites
• Cutting tail

−Closing non-competitive plants when cash flow dries out −Minimum investment in low growth businesses

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IV Financial review

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Highlights Q2 2007

• Net sales (adjusted for currency effects) grew by 8.7%
• Operating profit improved by 7% from Q1/07 due to increased sales volumes
• Integration of three acquisitions was started
• The rebuild of the release base paper machine in France was completed,

impact on operating profit EUR 3.5 million

Q2 2 0 0 7 Q1 2 0 0 7 Q2 2 0 0 6 2 0 0 6 Net sales, EUR million 436.9 416.5 409.6 1,599.1 Operating profit, EUR million 21.0 23.3 28.9 96.1 Operating profit excl. non-recurring item s, EUR million 21.0 19.6 26.0 87.3 Profit before taxes, EUR million 16.4 20.3 25.2 81.2 Profit before taxes excl. non-recurring item s, EUR million 16.4 16.5 22.3 72.5 Profit for the period, EUR million 11.9 13.4 16.6 57.6 Return on capital em ployed ( ROCE) ,% 8.0 10.0 11.7 10.4 ROCE excl. non-recurring item s,% 8.0 8.4 10.6 9.5 Earnings per share ( EPS) , EUR 0.26 0.29 0.36 1.31 Cash earnings per share ( CEPS) , EUR 0.20

• 0.26

0.21 2.72 Average num ber of shares, 1000s 46,636 45,918 45,587 43,802

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+ organic investments + acquisitions EUR 300 million

Ahlstrom to become +2 billion euro company

500 1000 1500 2000 2500 2004 2005 2006 after announced investments MEUR

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Investments of 350 million in 2007 including acquisitions

2 0 0 7 Capex estim ate: EUR 130-140 million + announced acquisitions: EUR 212 million Total: EUR 342-352 million Capex % of net sales Maintenance 2% Improvement 1-2% + growth

} 60-70 MEUR

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Financing organic growth investments with cash generated from operating activities

Cash flow, MEUR 2006 Cash from operations 167.2 Change in working capital

• 14.6

Financial items

• 3.7

Income taxes

• 29.6

Net cash from operating activities 119.2 Capex incl. acquisitions

• 124.3

Sale of assets 45.3 Cash flow before financing activities 40.2 Share issue 195.1 Dividends paid

• 65.3

Other financing activities

• 165.8

Net change in cash and cash equivalents 4.3 Cash earnings per share, EUR 2.72

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Gearing after announced investments

Gearing ratio target level: 5 0 - 8 0 %

62 % 58 % 20 % 55 % 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % 2004 2005 2006 after announced investments MEUR 50 100 150 200 250 300 350 400 450 500 Interest-bearing net debt Gearing ratio

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Attractive dividend policy

Dividend payout ratio averaging at least 5 0 % of the profit for the period 2 0 0 6

• Dividend paym ent: MEUR 46
• Pay out ratio: 76%
• Dividend yield: 4.6%

Foreign holders 12 % Public and financial institutions 11 % Nominee registered 6 % Finnish private 57 % Corpora- tions 12 % Non-profit institutions 2 %