Ahlstrom The global source for fiber-based materials SEB Enskilda - PowerPoint PPT Presentation

1 Ahlstrom The global source for fiber-based materials SEB Enskilda Nordic Seminar Copenhagen, January 10, 2007 Jari Mäntylä, CFO

2 Table of contents I Ahlstrom in brief II Achieving profitable growth III Improving competitiveness IV Financial performance

3 Section I Ahlstrom in brief

4 Investment highlights I nvestm ent highlights Financial overview ( 1 ) Q1 - Q3 Q1 - Q3 • Leading specialty materials supplier 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 • Operating in global growth EBIT margin % 5.5 % 6.4 % 6.6 % 6.0 % businesses Asset turnover 1.6 1.6 1.6 1.7 ROCE % 9.1% 10.5% 10.8 % 10.4 % • Innovative products with leading market positions Sales split, 2 0 0 5 • Well positioned for growth outside Others Europe Asia 5 % 9 % • Efficient use of capital North • Attractive dividend policy America 22 % Europe 64 % Notes: 1) Continuing business excluding non-recurring items I FRS

5 Ahlstrom materials are found in everyday applications Business Exam ple applications Sales 2 0 0 5 areas • Wipes, medical gowns and drapes, wallcovering Nonw ovens 23% FiberCom posites and tea bags • Engine, indoor air, industrial and laboratory Filtration 18% filtration • Windmill blades, flooring Glass 6% and boat hulls Nonw ovens • Self-adhesive labeling, Label & 35% food packaging and Specialty Packaging beverage labels Papers • Furniture foils, abrasive 17% Technical paper, masking tape and Papers engine gaskets

6 Ahlstrom has a clear focus in the value chain Consumers Raw Primary Roll goods Marketer/ material Converter production producer seller supplier Industrial customers Natural Pulp Healthcare and Consumer or fibers producers consumer goods industrial (wood, suppliers brands cotton, Synthetic hemp) fiber Transportation producers industry Oil/petro- (PET, PP, suppliers chemicals glass) Other roll Air and liquid filter goods Chemical manufacturers producers: suppliers Packaging BBA PGI industry Arjo Wiggins Printers and siliconizers (label, decor, poster, wallcover)

7 Leading specialty materials supplier in the world Specialty papers m arket positions ( 1 ) Nonw ovens m arket positions ( 3 ) (2) Freudenberg Ahlstrom DuPont Stora Enso Kimberly- Mead Westvaco Clark BBA I P PGI Arjo Wiggins August Ahlstrom Koehler Felix- Johns Manville Schoeller Buckeye UPM Cham Paper Companhia Group Providencia Ow ens- Wausau- Mosinee Corning 0 500 1000 1500 1500 1000 500 0 $ 'm Tons'000 Notes: 1) Source: Jaakko Pöyry Consulting 2) Ahlstrom Specialty Papers volume 3) Source: Nonwovens I ndustry 2006

8 Substantial share of new sales through innovation I nnovation in brief New products as % of sales ( 1 ) • 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

9 Well positioned for growth outside Europe through organic investments and acquisitions Sales offices Production sites Glassfiber tissue plant, Russia, Q4/2007 New wipes line, USA Filtration and nonwovens plant, Q4/2006 South Korea, 2004 Filtration plant, China, 2005 Specialty reinforcement line, USA, Q1/2007 Engine filtration converting, 2006 Dust filtration line, Q4/2007 Filtration plant, Brazil, 1995 Wipes line, Q1/2008

10 Section II Achieving profitable growth

11 Operating in businesses with high growth FiberCom posites Specialty papers Grow th 6 -7 % grow th 3 -4 % grow th Drivers • Substitution of products • Driven by growth in release traditionally made from base and décor paper textiles, paper or plastic – Increased demand of product • Convenience and hygiene labelling in Eastern Europe and Asia • Product development and – Interior decoration boom new applications (i.e. IKEA type of furniture) � High grow th areas are w iping fabrics, filtration m edia, glass non- w oven for m arine and w indm ill m arkets and release base and décor papers � On average Ahlstrom m arkets are grow ing 4 -5 % per year

12 Product offering spans from technical papers to technical textiles Hybrid functional m aterials Transportation filter media Medical Décor fabrics paper Wiping fabrics Air filter Release media base paper Labels Glass and nonwovens flexible packaging Paper Textiles � € 3 0 billion m arket opportunity

13 Organic investments driving future sales 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 6 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 7 % New line, France, 2 0 0 7 Release base paper Capacity increase, I taly, 2 0 0 4 , 2 0 0 6 5 -7 % France, 2 0 0 7 I nfusion products New line, UK, 2 0 0 8 5 % 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 and Turin expansion, 2 % -4 % 2 0 0 4 , Brazil, 2 0 0 3 Notes: 1) Source for FiberComposites and Specialty Papers annual volume growth: I nda/ Edana, Pira I nternational, JEC Group and Ahlstrom management

14 Investments in implementation phase I nvestm ent Business area Start-up Darlington, 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 Chirnside, UK, spunmelt line for infusion materials Nonwovens Q4/2008 � I nvestm ent com m itm ent of approxim ately EUR 1 2 0 m illion � I nvestm ent criteria: � 1 .5 x investm ent in net sales in 3 -5 years � 1 3 % ROCE target

15 Leveraging advantages of scale Fiber-based specialty m aterials − Serving growing market of €30 billion Ahlstrom shared platform • Roll goods- technical papers to technical textiles • Shared manufacturing processes • Global sales network • Centralized raw material purchasing • Common IT solutions • Performance excellence- sharing of best practices � Platform available to add synergistic businesses through organic and acquisitive grow th

16 Section III Improving competitiveness

17 ROCE target of 13% Target ROCE 1 3 % Grow ing topline I m proving m argins I m proving capital efficiency Q1-Q3 2006 ROCE*:10.4% � EBI T range 6 % -9 % over cycle � Asset turnover m inim um 1 .7 x * excluding non-recurring items

18 Achieving good capital return Perform ance com pared to peers ( 2 ) 18 % Kimberly Clark 17 % 1 Average EBI T m argin 2 0 0 4 - 2 0 0 5 15 % 14 % 13 % Holmen 12 % 11 % 10 % Buckeye ROCE 1 3 % 9 % BBA- Fiberweb 8 % SCA Neenah Paper Huhtamaki 7 % PGI Billerud 6 % UPM Ahlstrom Cham Freudenberg 2005 4 % Norske Skog 3 % Stora Enso 2 % 1 % M-real 0 % 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 Asset Turnover 2 0 0 5 Notes: 1) Excluding non-recurring when possible 2) Sources: Company annual reports

19 Slightly counter cyclical to commodities 140 120 100 Other 2 % 80 Energy 16 % 60 Natural fibers 46 % 40 Chemicals 25 % 20 Synthetic fibers 11 % 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 Pulp price Gross margin Please note: Raw material and energy split based on 2005 financials

20 “Cutting tail” • Closing non-com petitive plants w hen cash flow dries out • Minim um investm ent in low grow th businesses Recent actions: • Nümbrecht plant closure, Germany, Q2/2007 • Converting of liquid filtration moved to South Carolina, Q1/2007 • Three sites in Europe with close to zero book value

21 Improving competitiveness • Continuous perform ance im provem ent program “aPlus” ( Kaitzen) since 2 0 0 2 – Rolled out to all sites by 2005 – Involving 1000 teams by end of 2006 Achievem ents: – Avoiding unnecessary investments – Optimizing working capital – Reducing direct costs and waste – Freeing capacity on production lines � Full effect of the program yet to be seen

22 Section IV Financial performance