Ahlstrom recently announced its intent to exit its Label & Processing business, reaffirming its commitment to the specialty materials business and making it a company 100% invested in nonwovens technology. Even though Label & Processing comprised 41% of the company’s total sales, making it the largest business unit at Ahlstrom, and had customers across a range of industries, executives called the divestment a “significant step in our strategy execution,” as they continue to focus on value-added areas that protect people, purify air and liquids and provide surface and structure to customers’ products.
This transaction can be likened to Ahlstrom’s divestment of its wipes business late last year, in that the company has unloaded a business in which it once invested heavily. And, like the wipes deal, Ahlstrom will remain invested in this business as a shareholder, owning 15% of the new company, which will be known as Munsjö and be publicly traded in Helsinki.
The decision to exit this business reaffirms Ahlstrom’s narrower focus on value-added products as well as its increasing confidence in the nonwovens industry. While Label & Processing was Ahlstrom’s largest division in terms of sales with 41%, its income level was not as impressive, at 28%. Meanwhile, filtration, an area where Ahlstrom has reaffirmed its confidence countless times, accounted for 45% of profits even though it comprised only 20% of sales. Additionally, Food and Medical accounted for 21% of sales and 24% of profits, not as impressive as filtration but still strong. Business and energy, however, an area where Ahlstrom continues to invest—a new wallcoverings line is going into China—accounted for only 3% of profits even though it attributes 18% of net sales. It will be interesting to see what Ahlstrom’s plans might be for this business area. For now, the company is working on strengthening its wall-coverings business as well as its position in the cushion-vinyl flooring materials segment.
The divestment of wipes and now Label & Processing is transforming Ahlstrom into a new company with a more narrowed focus on products that not only add value to its shareholders but also provide protection and purification to consumers’ lives. It will be interesting to see where the company, which has never been shy with investment, will put the proceeds of these two major sales.