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Ahlstrom Corp, Finland
Filtration Industry Analyst
September 2005
Ahlstrom Corp, Finland
Ceco Environmental Corp, USA Key Figures (US$ million) Second quarter ended 30.6
COMPANY WATCH
Key Figures ( million) Second quarter ended 30.6 2005
2004
Net Sales Of Which: FiberComposites
402.8
405.2
193.3
166.2
Operating profit Of Which: FiberComposites
30.3
20.3
17.3
12.4
Net Profit
14.3
11.6
Net Cash Flow from Operations
25.9
2005
2004
Net Sales
20.0
15.1
Cost of Sales
15.7
11.9
Gross Profit
4.3
3.2
Operating Income
1.2
0.1
Income / (Loss) Before Income Taxes
0.6
(0.5)
Net Income / (Loss)
0.2
(0.3)
(3.2) Six months ended 30.6
Six months ended 30.6
2005
2004
2005
2004
Net Sales
35.1
29.1
Net Sales Of Which: FiberComposites
787.1
802.6
Cost of Sales
28.6
23.2
369.6
330.0
Gross Profit
6.4
5.9
Operating profit Of Which: FiberComposites
58.9
27.9*
Operating Income
0.2
(0.1)
30.8
24.7
Income / (Loss) Before Income Taxes
(0.9)
(1.3)
Net Profit
32.3
14.0
Net Income / (Loss)
(0.4)
(0.7)
Net Cash Flow from Operations
37.1
17.6
COMMENT
*Includes restructuring costs of 11.6 million due to the streamlining of operations in 2004.
COMMENT Ahlstrom’s filtration business unit, part of its FiberComposites division, performed below expectations in its second quarter. Filtration accounted for 38% of the segment’s net sales for the period, totalling approximately 73 million, reflecting lower than anticipated demand in the automotive industry. Overall demand for Ahlstrom’s filtration materials remained relatively steady, although its raw materials and energy costs rose significantly compared with the previous year. The business area was able to partially offset these higher input costs by implementing price increases.
8
Net sales in the filtration business unit increased 15.7%, and volumes sold by 6.7% compared with the second quarter of 2004. Sales in Latin America improved, and Ahlstrom was able to expand exports from Brazil to other Latin American countries. In the coming quarter, market conditions for the filtration unit are expected to remain soft in Europe and the USA, while the outlook for the Latin American and Asian market is seen as positive. Ahlstrom expects seasonally low demand in the third quarter and slight growth for the year. ■
Ceco Environmental Corp posted second quarter revenues of US$20.0 million, up 32.8% on the same period in 2004. For the corresponding six month period, revenues were up 20.3% compared to the 2004 figure at US$35.1 million. Gross profit for the second quarter was US$4.3 million, an increase of 33.4% on the year-earlier figure. The gross profit margin of 21.3% also represented a significant increase from the 14.4% reported in the first quarter of 2005. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the second quarter was US$1.5 million compared to US$430 000 in 2004, an increase of 249%. After tax net income for the second quarter was US$235 000, compared with net loss of US$282 000 for
the same period a year earlier. Net loss for the six months period was US$397 000, an improvement of US$306 000 on the 2004 figure. Chairman and ceo, Phillip DeZwirek, commented that the company’s unusually weak first quarter had negatively impacted the halfyear results. However, he added that the strength of the second quarter, together with the companys backlog and historically strong second half, should result in a very good year for the company. Ceco president Rick Blum said that the company’s backlog was continuing to grow, reaching US$26.3 million as of 30 June 2005, a 27% increase from the end of the 2004 calendar year. He said this was further evidence of the company’s improving performance. ■
September 2005
Ahlstrom Corp, Finland
Ceco Environmental Corp, USA Key Figures (US$ million) Second quarter ended 30.6
COMPANY WATCH
Key Figures ( million) Second quarter ended 30.6 2005
2004
Net Sales Of Which: FiberComposites
402.8
405.2
193.3
166.2
Operating profit Of Which: FiberComposites
30.3
20.3
17.3
12.4
Net Profit
14.3
11.6
Net Cash Flow from Operations
25.9
2005
2004
Net Sales
20.0
15.1
Cost of Sales
15.7
11.9
Gross Profit
4.3
3.2
Operating Income
1.2
0.1
Income / (Loss) Before Income Taxes
0.6
(0.5)
Net Income / (Loss)
0.2
(0.3)
(3.2) Six months ended 30.6
Six months ended 30.6
2005
2004
2005
2004
Net Sales
35.1
29.1
Net Sales Of Which: FiberComposites
787.1
802.6
Cost of Sales
28.6
23.2
369.6
330.0
Gross Profit
6.4
5.9
Operating profit Of Which: FiberComposites
58.9
27.9*
Operating Income
0.2
(0.1)
30.8
24.7
Income / (Loss) Before Income Taxes
(0.9)
(1.3)
Net Profit
32.3
14.0
Net Income / (Loss)
(0.4)
(0.7)
Net Cash Flow from Operations
37.1
17.6
COMMENT
*Includes restructuring costs of 11.6 million due to the streamlining of operations in 2004.
COMMENT Ahlstrom’s filtration business unit, part of its FiberComposites division, performed below expectations in its second quarter. Filtration accounted for 38% of the segment’s net sales for the period, totalling approximately 73 million, reflecting lower than anticipated demand in the automotive industry. Overall demand for Ahlstrom’s filtration materials remained relatively steady, although its raw materials and energy costs rose significantly compared with the previous year. The business area was able to partially offset these higher input costs by implementing price increases.
8
Net sales in the filtration business unit increased 15.7%, and volumes sold by 6.7% compared with the second quarter of 2004. Sales in Latin America improved, and Ahlstrom was able to expand exports from Brazil to other Latin American countries. In the coming quarter, market conditions for the filtration unit are expected to remain soft in Europe and the USA, while the outlook for the Latin American and Asian market is seen as positive. Ahlstrom expects seasonally low demand in the third quarter and slight growth for the year. ■
Ceco Environmental Corp posted second quarter revenues of US$20.0 million, up 32.8% on the same period in 2004. For the corresponding six month period, revenues were up 20.3% compared to the 2004 figure at US$35.1 million. Gross profit for the second quarter was US$4.3 million, an increase of 33.4% on the year-earlier figure. The gross profit margin of 21.3% also represented a significant increase from the 14.4% reported in the first quarter of 2005. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the second quarter was US$1.5 million compared to US$430 000 in 2004, an increase of 249%. After tax net income for the second quarter was US$235 000, compared with net loss of US$282 000 for
the same period a year earlier. Net loss for the six months period was US$397 000, an improvement of US$306 000 on the 2004 figure. Chairman and ceo, Phillip DeZwirek, commented that the company’s unusually weak first quarter had negatively impacted the halfyear results. However, he added that the strength of the second quarter, together with the companys backlog and historically strong second half, should result in a very good year for the company. Ceco president Rick Blum said that the company’s backlog was continuing to grow, reaching US$26.3 million as of 30 June 2005, a 27% increase from the end of the 2004 calendar year. He said this was further evidence of the company’s improving performance. ■