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

of 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

2

0

2

4

6

8

10

12

14

16

18

20

0

10

20

30

40

50

60

70

80

90

100

67

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

4

567 547 572

0

100

200

300

400

500

600

700

Sales Comparable EBITDA and margin

0

2

4

6

8

10

12

14

16

18

20

0

10

20

30

40

50

60

70

80

90

100

67

79

63

MEUR %

MEUR

Good profitability in current market environment

of significant input cost pressure

Comparable EBITDA and margin by business area

5

11,3

8,6 6,3

11,8%

9,2%

6,2%

02468101214161820

0

5

10

15

20

% MEUR Decor

31.8

24.6 28,7

18,8% 15,4%

17,2%

02468101214161820

0

5

10

15

20

25

30

35

% MEUR

Filtration and Performance

28.4 25.3 23,6

17,4% 16,0%

14,1%

02468101214161820

0

5

10

15

20

25

30

35%

MEUR Industrial Solutions

17.5

10.2 12,0

12,0%

7,3% 8,2%

02468101214161820

0

5

10

15

20

% MEUR Specialties

Operating cash flow negatively impacted by net working capital,

balance sheet remains solid

6

43

77

5

0

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

0

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*)

7

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

Ongoing investments 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

0

10

20

30

40

50

60

Synergy target Achieved run rateEURm

Previous estimate

Current estimate

26

Merger and integration successfully implemented

11

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

12

5 product lines

4 specialty paper machines

Caieiras mill

The combined platform provides attractive opportunities

13

• 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

optimization opportunities for the longer term

Louveira:

Engine and industrial filters

Jacarei:

Coated specialities

Caierias

The combined plattform

provides attractive

opportunities

Products fit well into the Ahlstrom-Munksjö portfolio

14

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

Building &

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

15

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

16

• 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

17

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