Ahlstrom released financial information about the final quarter and full year of 2008. Annual net sales grew by 2.4% to 1.80 billion from 1.76 billion. Fourth-quarter net sales fell to 419 million from 462.5 million, a decrease of 9.4% due to a strong decline in demand especially in December.
Operating profit for the year decreased to 14.6 million from 25.8 million and to 35.7 million from 67.8 million excluding non-recurring items. The company reported that profitability was burdened by high raw material and energy prices throughout the year, ramp-up and integration costs as well as a downturn of the market in the final quarter. As a result of these conditions, the company has started further restructuring actions including capacity closures in Italy and the reduction of personnel worldwide.
In its Home & Personal Nonwovens business, net sales growth was especially strong as a result of acquisitions in 2007. Glass Nonwovens growth was mainly driven by windmill applications. Sales in Home & Personal Nonwovens were up 32% while Advanced Nonwovens sales saw a decrease of 1.9%. Ahlstrom reported lower volumes and pricing pressures in the following areas: transportation filtration, wipes for home and personal care and industrial nonwoven products.
Commenting on the 2008 results was Jan LŒng, president and CEO. "In 2008, Ahlstrom finalized most of the growth investment program initiated after the IPO. Approximately 500 million has been invested in growth initiatives in two years, and as a result of this, Ahlstrom's global reach is now stronger than ever before."
"What I am not happy about," he continued, "is the weak financial performance in 2008, which was mainly driven by the low gross margin, weak demand in the fourth quarter as well as the higher than expected ramp-up and integration costs related to the growth investment program. On a positive note, we achieved growth in net sales that was in line with market growth, and cash flow improved significantly as a result of an improvement in working capital turnover."
Based on the weak visibility, Ahlstrom has changed its disclosure policy. An exact outlook on net sales and profitability has not been given for 2009. The operating environment is anticipated to remain very challenging in 2009 and the demand for Ahlstrom products will vary significantly by product line and industry. Prices for Ahlstrom's main raw materials (wood pulp and rayon) as well as energy prices are anticipated to continue at the current low level. According to the company, it will focus on maximizing its cash flow in 2009, including lower capital expenditures than in 2008.