Q1 2018 Results April 24, 2018 HANS SOHLSTRM, PRESIDENT AND CEO - - PowerPoint PPT Presentation

Ahlstrom-Munksjö Q1 2018 Results

HANS SOHLSTRÖM, PRESIDENT AND CEO PIA AALTONEN-FORSELL, CFO

April 24, 2018

Highlights Q1 2018

• EBITDA margin of 11.7% in an environment
• f significant raw material cost escalation
• Good demand across most markets and

product segments globally

• Progressing in our strategic direction

– New investments to improve financial and environmental performance – Three strategic growth investments proceeding – New synergy benefits and cost reduction initiatives identified – Agreement to acquire the Caieiras specialty paper mill

MEUR

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2 4 6 8 10 12 14 16 18 20 10 20 30 40 50 60 70 80 90 100 66 79 63 Comparable EBITDA and margin

%

11.7% 14.0% 11.5%

Good demand in most geographies and product segments

DECOR SPECIALTIES INDUSTRIAL SOLUTIONS FILTRATION & PERFORMANCE

Filtration Building & Wind Nonwovens Release Liners Abrasive Insulation Coated Specilaties Decor Food packaging Tape Beverage and Casings Medical Advanced Liquid Technologies

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567 547 572

100 200 300 400 500 600 700

Sales Comparable EBITDA and margin

2 4 6 8 10 12 14 16 18 20 10 20 30 40 50 60 70 80 90 100 66 79 63

MEUR % MEUR

Good profitability in current market environment

• f significant input cost pressure

Comparable EBITDA and margin by business area

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11,3 8,6 6,3 11,8% 9,2% 6,2% 2 4 6 8 10 12 14 16 18 20 5 10 15 20 % MEUR

Decor

31.8 24.6 28,7 18,8% 15,4% 17,2% 2 4 6 8 10 12 14 16 18 20 5 10 15 20 25 30 35 % MEUR

Filtration and Performance

28.4 25.3 23,6 17,4% 16,0% 14,1% 2 4 6 8 10 12 14 16 18 20 5 10 15 20 25 30 35 % MEUR

Industrial Solutions

17.5 10.2 12,0 12,0% 7,3% 8,2% 2 4 6 8 10 12 14 16 18 20 5 10 15 20 % MEUR

Specialties

Operating cash flow negatively impacted by net working capital, balance sheet remains solid

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43 77 5 10 20 30 40 50 60 70 80 90 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

MEUR

395 1,4x 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 50 100 150 200 250 300 350 400 450 500 Q1/17 Q2 17 Q3/17 Q4/17 Q1/18

Net debt to EBITDA MEUR

Increase in net working capital of EUR 43m Strong balance sheet Net gearing at 39.8%

Outlook*)

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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 reflect the seasonal pattern. Selling price increases will continue to be implemented to mitigate cost inflation in raw materials. Comparable 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 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.

Market Outlook EBITDA

*) 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.

Local accountability Efficiency and agility Customer value Profitable growth MISSION Sustainable and innovative fiber-based solutions TARGET Global leader in chosen growth segments DIRECTION FINANCIAL TARGETS:

• EBITDA > 14% over a

business cycle

• Net gearing < 100%
• Dividend: stable and annually

increasing, paid bi-annually DECOR SPECIALTIES INDUSTRIAL SOLUTIONS FILTRATION & PERFORMANCE VALUES Long-term commitment Act as one Passion to innovate and improve

Strategic overview

Local accountability Efficiency and agility Customer value Profitable growth STRATEGIC DIRECTION

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

Local accountability Efficiency and agility Customer value Profitable growth STRATEGIC DIRECTION

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

New investment decisions driving our strategic progress

New synergy benefits and further cost reduction initiatives identified

• New cost reducing initiatives of EUR 10 million identified
• Total impact increased to EUR 50 million annually, fully

implemented at the end of Q1/2019 – Majority from SG&A and variable costs – Integration of the former Graphics and Packaging business area into Specialties to develop a combined product and service offering – Incremental sales – Production optimization – Product mix improvement

• New initiatives include also adjusting group structure to

Ahlstrom-Munksjö’s business unit based operating model with clear responsibilities that locally promotes accountability and enables flexibility and lean group functions. – The plan include to concentrate and relocate the company head office in Helsinki, Finland 10 20 30 40 50 60 Synergy target Achieved run rate EURm

Previous estimate Current estimate 26 Merger and integration successfully implemented

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Acquisition of Caieiras mill supports the strategic ambition to maintain a leading position

• 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 terms, including merger clearance from the relevant competition authorities

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5 product lines 4 specialty paper machines Caieiras mill

The combined platform provides attractive opportunities

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• Caieiras product offering is a good match for

Ahlstrom-Munksjö with 80% of sales in line with Ahlstrom-Munksjö’s current portfolio

• 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 – improve production and delivery capability in release liners – share best practices to enhance production and process technology

• South America offers long-term growth potential, and

the platform provides Ahlstrom-Munksjö with several growth options, synergies and further production

• ptimization opportunities for the longer term

Louveira: Engine and industrial filters Jacarei: Coated specialities

Caierias

The combined plattform provides attractive

• pportunities

Products fit well into the Ahlstrom-Munksjö portfolio

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Decor papers Release liner Coffee filter paper Tape and grease proof paper, crepe and flexipble packaging

Voice of the customer

• Ahlstrom-Munksjö is considered the leading

supplier in nearly all of its segments, in line with strategy to be #1 or #2 in each segment

• 90% likely to choose Ahlstrom-Munksjö again
• Over 80% have a positive attitude
• Main strengths are personal contact, service

and product quality

• Product quality and service are the most

important purchasing criteria, fitting well to our positioning as a solution provider

Source: Voice of the Customer survey by Opticom

Decor Filtration Nonwovens Buildin g & Wind Release Liners Insulation Abrasive Coated Specialties Foodpack Beverage & Casing Advanced Liquid Technologies Medical Tape

Share of sales by business units

Ahlstrom-Munksjö has a leading position in many segment

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Examples of leading segments

• Engine filtration
• Release liners in Europe
• Abrasive backings
• Insulation papers
• Decor papers
• Tea bag materials
• Vegetable parchment

papers

• Masking tape
• Fine art papers
• Glass fiber tissue for

vinyl flooring applications

Summary

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• 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.

Save the date for Ahlstrom-Munksjö’s Capital Markets Day in Helsinki on September 7, 2018

• Ahlstrom-Munksjö will arrange a Capital

Markets Day for investors and analysts in Helsinki on Friday, September 7, 2018

• Participants of the Capital Markets Day

will meet the members of Ahlstrom- Munksjö's management team and have the opportunity to discuss strategy, growth ambitions, new fiber-based applications and performance

• A formal invitation will be sent out in May

including venue, detailed program and registration

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Ahlstrom-Munksjö IR team

Further information, please contact Johan Lindh Head of Investor Relations Tel: +46 70 588 10 38 johan.lindh@ahlstrom-munksjo.com Juho Erkheikki Investor Relations Manager Tel: +358 50 413 4583 juho.erkheikki@ahlstrom-munksjo.com UPCOMING EVENTS IN 2018

• Half-year report January-June 2018 to be

published on July 26

• Capital Markets Day on September 7
• Interim report January-September 2018 to be

published on October 30