Capital Markets Day

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Capital Markets Day Capital Markets Day September 7, 2018 Agenda 9:00 – 9:30 Coffee and registration 09:30 – 11:45 – Hans Sohlström, President and CEO – Fulvio Capussotti, EVP, Filtration and Performance – Omar Hoek, EVP, Specialties – Tomas Wulkan, EVP, Decor – Daniele Borlatto, EVP, Industrial Solutions 11:45 – 12:00 Break 12:00 – 13:00 – Anna Bergquist, VP, Insulation business unit – Pia Aaltonen-Forsell, CFO and EVP, Communications & Investor Relations – Sakari Ahdekivi, Deputy CEO and EVP, Corporate Development 13:00 – 14:00 Lunch 2 Global leader in sustainable and innovative fiber-based solutions HANS SOHLSTRÖM PRESIDENT AND CEO Ahlstrom-Munksjö - Company overview o Fibers are the core in what we do, the common denominator for our products and solutions o We offer custom made specialized fiber based materials o Our value proposition is based on innovation, quality and service o Our offering contributes to a more sustainable everyday life • Pro forma net sales EUR 2.2 billion in 2017 • More than 7,000 customers in over 100 countries • 40 plants and converting facilities in 14 countries • Some 6,000 employees • EUR 1.5 billion market capitalization 4 FILTRATION – NONWOVENS – BUILDING & WIND One company – FILTRATION AND PERFORMANCE 13 businesses RELEASE LINERS - INSULATION - ABRASIVE - COATED SPECIALTIES INDUSTRIAL SOLUTIONS DECOR DECOR FOOD PACKAGING - BEVERAGE & CASINGS - TAPE - MEDICAL - ADVANCED LIQUID TECHNOLOGIES SPECIALTIES 5 Strategy overview MISSION CORNERSTONES VISION Sustainable and innovative Global leader in fiber-based solutions Local Efficiency Customer Profitable chosen growth segments accountability and agility value growth FILTRATION & PERFORMANCE TARGETS o EBITDA > 14% over a INDUSTRIAL business cycle SOLUTIONS o Net gearing < 100% DECOR o Dividend: stable and annually increasing, paid bi-annually SPECIALTIES VALUES Long-term commitment | Act as one | Passion to innovate and improve 6 SUSTAINABILITY PRIORITIES SUSTAINABILITY TARGETS 2018 – 2020 Sustainability (Alignment to UN Sustainable Development Goals) Priorities and People o 1. Human rights Human rights Targets o Health and Safety People 2. Community engagement o Employee Development and Engagement o 3. Employee well-being Gender Equality o Community Engagement - Contributor locally Totally 22 KPIs Planet o 4. Supply chain Supply Chain o Certified management processes Planet 5. Energy, water and waste o Efficient resource use; Energy, water, raw 6. Carbon dioxide materials o Carbon dioxide Scope 1 & 2 Prosperity 7. Profitability o Financial KPI’s Prosperity 8. Innovation o Sustainability in Innovation and in Products o Business Ethics internally and externally 9. Business ethics 7 Innovation and product development is the key to success Trinitex Advance ® – PureArmor™ – non- GenSaver™ cards are Disruptor ® – product filter media for industrial woven fabric protecting designed for the line of electrodsorptive air filtration from viruses, bacteria collection, transport and filter media that and particles storage at ambient improves water quality temperature of DNA from through a natural biological fluids positive charge New product sales 11% on average, ranging from 8-29% by BU, in 2017. Product launch has occurred no earlier than 36 months from the reporting. 8 Innovation and product development is the key to success GreenPod™ – ActiV® – release liner InFuse Fiber+ TEX-STYLE – abrasive compostable plastic free for more effective Plastic free, compostable backings of paper coffee pod material for siliconizing heat sealable tea bag substituting cloth espresso material. backings New product sales 11% on average, ranging from 8-29% by BU, in 2017. Product launch has occurred no earlier than 36 months from the reporting. 9 Transformation in progress Acquisition driven Growth Targeting global growth Creating a growth leadership in focus, Ahlstrom and Munksjö platform through the chosen growth increased Caieiras separately focused on merger of Ahlstrom segments capex Expera profitability improvement and and Munksjö deleveraging 2013-2016 2017 2018- Comparable Net debt MEUR EBITDA % MEUR 300 18 500 16 250 Net debt to 14 400 EBITDA 1.6x 200 12 10 300 150 8 200 100 6 4 50 100 EBITDA 2 Ahlstrom EBITDA-margin % 0 0 Munksjö 0 2015 LTM 2014* Q2 Q2/18 Ahlstrom-Munksjö 2018 *) excluding EUR 100m hybrid bond, which was redeemed in May 2017 10 Organic and acquisition driven growth Comparable EBITDA(* 500 (** 400 o Increased capital expenditure 300 Caieiras o Several new investment decisions in 2018 Expera 200 o Acquisition of Caieiras specialty paper mill o Acquisition of Expera Specialty Solutions 100 0 LTM, Q2 (* Illustrative, not a target or guidance 2018 (** Illustrative annual EBITDA impact from organic investments announced since 2016 11 Platform of solid businesses on growing segments Position Growth rate Profitability Filtration # 1-2 3% € Nonwovens # 1 (high-end wall cover) 2-3% € Building & Wind # 1 (flooring) 3-8% € Release Liners # 2 4% € Insulation # 1-2 (electrotechnical) 2-3% € Abrasive # 1-2 2-3% € Coated Specialties # 1-2 (coated specialty papers) 2-4% € Decor # 2-4 3% € Food Packaging # 1 (baking and cooking) 2-3% € Beverage & Casing # 1-2 2-8% € Tape # 1-2 5% € Medical # 1-3 3% € Advanced Liquid Technologies # 2 1-10% € 12 Filtration and Performance Business Area FULVIO CAPUSSOTTI EXECUTIVE VICE PRESIDENT Filtration and Performance: Businesses FILTRATION BUILDING & WIND NONWOVENS 14 FILTRATION Business FILTRATION BUILDING & WIND NONWOVEN 15 We are a leading supplier for engine applications Applications: • Engine Oil - Auto and HD (Heavy Duty) • Engine Air Intake - Auto and HD • Engine Fuel - Auto and HD • Cabin Air • Transmission • Crank Case Ventilation We sell filtration media for Automotive & HD • OEM • OES • Aftermarket Highest volume growth in China, importance of filtration performance increasing Global Engine Filtration Market, approximately EUR 1 billion Heavy Cabin Air Duty Oil China EMEA Auto Oil Auto Air Heavy APAC Americas Duty Air Heavy Duty Fuel Auto Fuel China is the biggest single market in terms of volume, high-value add products in EMEA and Americas Engineered filtration material needed to meet tighter Ahlstrom-Munksjö presence has been limited in China regulation on air quality so far – growing demand due to new regulations Source: SuP 17 We also hold a strong position in Industrial Air various industrial applications Filtration Market EUR 1.5 billion Heating, Ventilation Gas Turbine and Air Conditioning Air Oil Separator Air Pollution Control Source: SuP Building a growth platform in Filtration business +20% delivery volumes in 2017 vs 2015 Rebuild of a Upgrade of filtration filtration machine in Debottlenecking production line in Turin, Italy; Acquisition of filtration Madisonville, USA modifications in New saturator in land at Louveira production line Malmedy, Belgium & Acquisition of a Turin, Italy site for future in Turin, Italy Ställdallen, Sweden filtration plant in expansion, Binzhou, China Brazil 2010 2012 2017 2018 2020 Industrial FILTRATION SALES Passenger cars, new sales BY END USE APPLICATION Heavy duty vehicles Passenger cars, aftermarket 19 Global filtration portfolio for global filtration customers Tampere - Finland Ställdalen - Sweden BUSINESS CHARACTERISTICS Binzhou - China Malmedy - Belgium Madisonville - US Turin - Italy o Large global customers o Brignoud - France Long qualification period Taylorville - US Fabriano - Italy Hyun Poong – Korea o Joint product development o Importance of filtration performance growing o Quality and custom made driven sales o Volume frame agreements o Raw material clauses Louveira - Brazil Malmedy and Ställdalen plants are building capabilities for manufacturing filtration material 20 Filtration – Business drivers and trends Tighter emission regulation Tighter regulation on air Total mileage drives drives demand for quality drives demand for the after-market sales of advanced filtration material industrial filtration material filtration material Electrification of New sales of heavy duty transportation implies vehicles and passenger shift mostly to hybrids in cars the next decade 21 Internal combustion engine (ICE) and hybrid car sales levelling off: after-market sales continue growing Million units in use New car sales 2015-2030, global 2000 1800 2030 1600 1400 1200 2025 ICE 1000 ICE w/start stop 800 2020 Hybrid 600 Electric 400 200 2015 0 2017 2022 2027 Light Duty ICE Light Duty EV Light Duty HEV 0% 20% 40% 60% 80% 100% 22 Source: schlegelundpartner Additionally, E-mobility adding opportunities for new applications Gasoline and Diesel with internal combustion engine Electric vehicles (EVs) with electric motor Degassing Unit for Battery Systems & Battery Housing Systems (membrane) Cabin Air Filter Cabin Air Filter Fuel Filter Air-Cooled Battery Systems Filter Oil Filter Coolant Filter Air dryer Cartridge for Battery Filter Transmission Automatic Air Intake Filter Transmission Automatic Filter Filter Hydraulic Power Steering Filter Hydraulic Power Steering Filter Legend = established Ahlstrom-Munksjo portfolio = available solution = technical solutions under investigation 23 We are focused on growing in non-engine filtration applications, such as industrial filtration applications and non-filtration applications Next generation wetlaid for Air Pollution Trinitex® Advance W3000 for New offering for EDM applications Control applications Gas Turbine (Launched) (Electrical Discharge Machining) (Launch 2018 ) Impregnated wetlaid for wet friction Energy storage: Absorption Glass Mat applications
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