Ahlstrom-Munksjö Half-Year Report January-June 2020

HIGHLIGHTS DURING THE REPORTING PERIOD
-Solid comparable EBITDA and increased margin despite the decline in delivery volumes caused by the coronavirus pandemic
-Swift response and cost reduction actions cushioned the impact of the pandemic
-Customer activity varied within Ahlstrom-Munksjö’s broad geographical reach and product range as a result of the pandemic
-Strong growth in the healthcare and life science end-use segments, expansion of face mask materials production. Clear weakening in home building and furniture, transportation and industrial end uses.
-Signs of a gradual normalization of customer activity in certain segments towards the end of the quarter
-Improved financial flexibility and good liquidity with no major refinancing needs
-Launch of Ahlstrom-Munksjö FortiCell®, a new range of fiber-based solutions for energy storage applications

Q2/2020 compared with Q2/2019
-Net sales decreased by 16.6% to EUR 621.5 million (745.1), mainly due lower delivery volumes
-Comparable EBITDA decreased by 11.7% to EUR 74.0 million (83.8), representing 11.9% (11.2) of net sales, supported by variable and fixed costs reduction actions
-Operating result of EUR 25.8 million (35.0)
-Net result EUR 9.0 million (14.8)
-Earnings per share (basic) EUR 0.07 (0.13)
-Comparable EPS excluding depreciation and amortization arising from PPA EUR 0.18 (EUR 0.25)

Q1-Q2/2020 compared with Q1-Q2/2019
-Net sales decreased by 10.9% to EUR 1,339.6 million (1,502.8), negatively impacted by price, product mix and volumes
-Comparable EBITDA increased by 4.4% to EUR 165.7 million (158.8), representing 12.4% (10.6) of net sales, as lower variable costs more than offset lower selling prices and deliveries
-Operating result of EUR 99.6 million (52.9), including a capital gain of EUR 32.0 million from the sale of the fine art paper business
-Net result EUR 55.7 million (18.9)
-Earnings per share (basic) EUR 0.46 (0.16)
-Comparable EPS excluding depreciation and amortization arising from PPA EUR 0.48 (0.46)
-Net debt decreased to EUR 878.7 million (885.0 in Q4/2019), supported by the sale of the fine art paper business

CEO COMMENTS
I’m pleased with our performance in the second quarter, and particularly with our swift response and actions to mitigate the near-term impact of the coronavirus pandemic. Considering the exceptional circumstances, comparable EBITDA of EUR 74 million and an improved margin of 11.9% is a good achievement. We have been able to keep our plants operational and serve our customers, while ensuring the health and safety of our employees thanks to our COVID-19 Safety Protocol. In addition, we have increased our financial flexibility and currently have good liquidity, with no major near-term refinancing needs.

VARIED IMPACT ON CUSTOMER ACTIVITY – CUSHIONING WITH ACTIONS
Within our broad product range of advanced fiber-based solutions, the impact of the coronavirus pandemic on customer activity has varied. Demand remained strong in the healthcare and life science end-use segments, while it remained relatively stable in the consumer goods segment, albeit with some variation depending on end use. The biggest decline was in the home building and furniture, transportation and industrial end-use segments. All in all, the exceptional market environment led to a 10% reduction in our deliveries, which was the main driver behind the decrease in net sales and comparable EBITDA. However, we worked hard on our own actions to reduce variable and fixed costs, and this cushioned the impact of lower volumes.

I’m also pleased that we were able to drive our business forward during the pandemic. Our in-depth knowledge of fiber-based materials, agile organization and common manufacturing platform enabled us to expand our manufacturing capabilities of face mask fabrics globally to lines normally used for the production of other fiber-based materials. We also took further steps in supplying the electric vehicle battery market by introducing a platform of fiber-based energy storage applications solutions. Our other new value-added solutions include a replaceable filter media for branded outdoor apparel used as face masks.

Our work was awarded the EcoVadis Gold rating for the fourth consecutive year thanks to our good performance within environmental impact, labor practices, fair business practices and sustainable procurement. This reinforces our sustainability strategy.
https://www.ahlstrom-munksjo.com/Media/releases/stock-exchange-releases2/2020/ahlstrom-munksjo-half-year-report-january-june-2020-solid-result-under-exceptional-circumstances/

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