Ahlstrom Group, Finland

Ahlstrom Group, Finland

April 1999 Pump Industry Analyst Roper Industries Inc, USA Ahlstrom Group, Finland Key Figures (US$ million) Three months ended 31 .l Key Figures...

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April 1999

Pump Industry Analyst

Roper Industries Inc, USA

Ahlstrom Group, Finland

Key Figures (US$ million) Three months ended 31 .l

Key Figures (FM million) Year ended 31 .12

Net Sales Operating

Income

Income before Taxes and Extraordinary Items Net Income Personnel

(average for the year)

Ahlstrom’s earnings weakened considerably in 1998, mainly as a result of the economic crises in Asia and Russia. While 1998 net sales of FM14.5 billion remained unchanged on last year, operating income for the fiscal year fell substantially to FM520 million, down from FM962 million. Income before taxes and extraordinary items at FM165 million was also well down on 1997’s level of FM666 million. Extraordinary expenses of FM83 million were due to follow-up costs connected with the sale of businesses in previous years. Earnings were also hit by FM162 million of non-recurring charges and amortizations. The Group’s net income for the fiscal year was FM69 million, way short of the FM500 million reported a year earlier.

1998

1997

14 496

14 498

520

962

165

666

69

500

14 462

13 497

Ahlstrom Pumps’ net sales of FM770 million generated operating income of just FM0.4 million. This contrasts sharply with 1997 net sales of FM859 million and operating income of FM99 million. The net loss of FM33 million for fiscal 1998 was primarily due to the weakened Asian market. According to Ahlstrom, the sale of holdings in the Lexel Group and in Ahlstrom Energy Ltd as well as the intended merger of Ahlstrom Machinery Group and Kvaerner Pulp & Paper should significantly improve the Ahlstrom Group’s equity ratio and halve its net debt. However consolidated net sales will decrease to about FM10 billion. The result for 1999 will be improved by a non-recurring net profit of over FM2 billion from the

1999

1998

Net Sales Of Which: Fluid Handling

89.1

90.1

19.4

24.2

Cost of Sales

45.4

44.6

Gross Profit Of Which: Fluid Handling

43.6

45.5

8.8

10.9

Selling, General and Administrative Expenses

30.1

27.7

Income from Operations

13.5

17.7

Earnings before Income Taxes

11.9

16.3

Roper’s Fluid Handling segment’s 73 per cent decline in sales to the semiconductor capital equipment market overshadowed a 12 per cent sales gain in the segment’s centrifugal pump business and the inclusion for a full quarter of the December 1997 acquisition of Flow Technology. Net sales decreased 20 per cent to US$19.4 million, operating profits and declined 23 per cent to US$4.4 million over the prior-year period. Actual incoming orders were flat, and down 6 per cent on a pro-forma basis over the prior-year quarter. Excluding a 50 per cent decline in semiconductor market orders, actual and pro-forma orders

were up by 12 per cent and 4 per cent respectively, with strength in the centrifugal pump, metering pump and turbine flow meter product lines. Derrick Key, president and CEO, disclosed that continuing delays in major energy contract awards and genthe eral weakness in semiconductor and energy markets could offset strength elsewhere in the company’s business and give rise to modest year-on-year growth for the second quarter. He said projected earnings for the fiscal year ending 31 October 1999 are in the range of US$1.50-1.65, and stressed the importance of continuing cost control programmes. ??