Sales Reports


January 1, 2006

Location: Helsinki, Finland

Sales: $928 million

Description: Personnel
Jukka Moisio, president and CEO; Randal Davis, senior vice president and general manager, filtration; Claudio Ermondi, senior vice president and general manager, nonwovens; Tommi Bjormann, senior vice president and general manager, glass nonwovens; Marco Aimo, global sales and marketing manager, Europe filtration; Jerome Barrillon, director of marketing, U.S. filtration; Valmir Piton, general manager Brazil filtration; Howard Jin, vice president and general manager, Korea filtration; Karen Renton, marketing and communications manager, Europe nonwovens; Ellen Miles, marketing and communications manager, North America and South America nonwovens; Jimmy Loh, general manager, Shanghai nonwovens; Juha Bohm, director of sales and marketing Europe glass nonwovens

Airlaid, carded drylaid, fine fiber, glass nonwovens, needlepunch, spunbond, spunlace, spunlace composites, Hydraspun, wetlaid, Trinitex and process enhancements such as embossing, extrusion coating, lamination, and textilization.

Acquisition and capital investment has continued for Ahlstrom’s Nonwovens business area, which reported sales and earnings growth in 2005. The company has attributed much of this success to new acquisitions and new equipment but credits its success to a sharp focus on core markets including wipes, medical, industrial, food packaging and filtration. “We are not interested in being involved in a number of niche areas,” explained Claudio Ermondi. “We aren’t making acquisitions just for the sake of it.”
Sales growth in 2005 came from increased activity on Ahlstrom’s spunlace composite line in Windsor Locks, CT, the fruits of its acquisition of Green Bay Nonwovens in late 2004 as well as improvements to lines in Turin, Italy and Hyun Poong, Korea, intended to support the local growing markets for nonwovens.
One major coup for Ahlstrom has been the wipes market, which is served through its spunlace composite lines in Windsor Locks and Chirnside, Scotland, as well as the Green Bay Nonwovens facility (renamed Ahlstrom Green Bay), where Ahlstrom is already adding a second spunlace line to respond to increased wipes demand in North America. This new line is expected to come onstream in January 2007.
Despite these coups, Ahlstrom faced several challenges in 2005. Growth in European markets remained unsatisfactory; prices for raw materials, energy and logistics increased in 2005. Ahlstrom offset these challenges by improved sourcing of raw materials, centralized purchasing and the use of less expensive raw materials where possible. These strategies allowed Ahlstrom to nearly double its earnings with operating profit growing to €117.2 million.
“Our strategy is pretty simple,” Mr. Ermondi explained. “We invest in capacity of new lines that will allow us to maintain our growth.” The acquisition and subsequent expansion to Ahlstrom Green Bay reflects the growth of the consumer wipes market, an area where Ahlstrom is a key supplier.
“We needed more capacity for the North American wipes market,” Mr. Ermondi explained. The challenge in wipes lies in meeting the diverse needs of converters such as natural-based wipes or water solubility, he continued. “They are continuously asking for new things and it is a good opportunity for you if you can meet these needs.”  Most recently, Ahlstrom added the ability to run cotton fibers through its Green Bay spunlace line to respond to the wipes market’s increased interest in incorporating cotton into the substrate.
Much of Ahlstrom’s efforts in wipes have centered on North America but other areas are on the radar. The big wipes opportunity remains in the U.S. so far,” Mr. Ermondi said. “It is the ‘driving’ market. Europe is growing but slower, South America is small but growing. We don’t see big growth in Asia yet.” In Europe, Ahlstrom currently operates only one spunlace line in Chirnside. Because this market is facing an overcapacity situation, building a new line there is probably not in Ahlstrom’s future but Mr. Ermondi would not rule out an acquisition in the region.
Another area receiving significant investment by Ahlstrom is filtration, where the company has played a role since the 1970s when it began producing media in Italy, mainly for the automotive market. More recently, however, the company has worked hard to broaden the scope of this business by adding new technologies, most often through acquisitions.
“It has been easier to buy some companies rather than starting from scratch,” Mr. Ermondi explained. These efforts began in 2004 with the purchase of Hollinee LLC’s filtration in the U.S., which has given Ahlstrom instant access to the $500 million HVAC market, and have more recently included a number of acquisitions across the filtration spectrum.
In December, Ahlstrom acquired the filtration business of Lantor, Inc. to reinforce its position in the air filtration and automotive filtration markets by adding additional needlepunch production capacity and expanding its product portfolio with high temperature dust filtration and other specialty filtration products.
The Lantor acquisition will add approximately $20 million in sales to Ahlstrom’s filtration business and includes a Bellingham, MA facility  as well as a new facility in Wuxi, China, which started production in May 2005. The new entity in the U.S.  is operating under the name Ahlstrom Lantor LLC.
Mr. Ermondi said the Chinese arm of the business shows particular potential for growth. “China with increasing power generation needs and growing industrial manufacturing has a high demand for air filtration products. The fact that Lantor has built a successful filtration business in the U.S. and that they have transferred this knowledge to China will allow Ahlstrom to accelerate its presence in this geography.”
Also in December, Ahlstrom acquired FiberMark’s North American absorbent materials business and integrated this operation into its existing product offering supplied from its Mt. Holly Spring, PA site. “This transaction strengthens Ahlstrom’s position and increases its product offering in the specialty filtration market. We know the market and have the structure to service it, we have the right production capabilities and we are now well positioned to be a major supplier to this market.”  
Then, in January, Ahlstrom reached a deal to acquire HRS Textiles, a South Carolina supplier of specialty nonwovens to the North American air and liquid filtration markets. This transaction will add $20 million to Ahlstrom’s filtration business and strengthen its position in air and liquid filtration.
“Ahlstrom has been in filtration for more than 35 years already. We grew in transportation filtration being one of the biggest players of the segment. We also accumulated an important experience and knowledge in filter media design and production. Then we started to approach different filtration markets, using our competencies and enhancing them with selected acquisitions (companies that support market know-how and have complementary-to-Ahlstrom technologies),” Mr. Ermondi said.
Also expected to add to Ahlstrom’s filtration business is a new fine fiber line in Turin, Italy, which came onstream in June 2005. Based on custom melt-spinning technology, this line can use multiple polymers and create multilayer and calendered products to serve multiple applications, particularly filtration. Where traditional meltblown technology produces most fibers above one micron, Ahlstrom’s Fine Fiber technology produces a much higher proportion of fibers in the sub-micron range. This greater amount of finer fibers opens up many possibilities to increase filtration efficiencies while maintaining performance. In addition, the compositing capabilities of the line combined with its ability to produce multiple density materials will allow it to create novel structures, opening up new avenues for filtration product development.
Also receiving attention is Ahlstrom’s medical and consumer business, which continues to benefit from a large-scale composite spunbond line added in Windsor Locks in November 2001.  While demand for medical nonwovens has been softer in early 2006 than it was in 2005, Ahlstrom continues to focus on offering higher protection and increased comfort to its customers.
In November, Ahlstrom formed an alliance with SAAF, a Saudi Arabian nonwovens producer, to sell its Medalon range of spunmelt medical drape and gown fabrics alongside Ahlstrom’s existing product range. The cooperation enables both companies to benefit from SAAF’s manufacturing expertise and innovative product range, allied to Ahlstrom’s global presence, strong relationships and wide product offering.
Whether through capital investment, acquisition of joint ventures, Ahlstrom clearly is willing to do anything it takes to grow its nonwovens business and these efforts will continue, said Mr. Ermondi. “Ahlstrom aims to continue to expand and further improve its operations mainly through the following ways: investments in new capacity, new technologies and productivity improvements in existing capacity; investments and expansion in Asia, Russia/Eastern Europe and the Americas to grow with its global customer base and possible acquisitions to expand its geographic presence and enhance its product offering.”
And, Ahlstrom won’t be haphazard. “We want to be sure that if we invest it will benefit the company and that’s not always easy,” Mr. Ermondi said.   "