Ahlstrom to Expand Rightsizing Measures, 350 Job Cuts Included

Aug. 7, 2013 - Ahlstrom announced that it will initiate a rightsizing program aiming to reach annual cost savings of EUR 35 million by the end of 2014.

The target includes the earlier announced EUR 15 million rightsizing measures, of which approximately EUR 10 million will be derived from the transfer of certain sales, finance and information services related personnel and cost to Munksjö by the end of May 2014. During the transition period, Munksjö will pay for the services provided.

"Ahlstrom has in the past three years executed a significant transformation of the company, as our business portfolio has been reshaped through major transactions, including the divestment of our wipes business, Home and Personal, and the combination of our specialty papers business, Label and Processing, with Munksjö. At the same time, we have been reshaping our business processes through key development programs," said Jan Lång, President & CEO.

"Many of our key development programs are nearing completion, which will allow us to scale back our spending levels and make our cost base reflect the new size and scope of our business. As a result of the refocusing of the business, our net sales have been reduced by EUR 800 million to EUR 1.1 billion in the past two years. This new cost saving program is fundamental in achieving the required improvement in our financial performance. Unfortunately bringing the organization to a level which can sustain our current business is not possible without personnel reductions," stated Lång.

According to the plans, the key actions to achieve the targeted cost base reduction include in particular:

  • Completion of demerger related transfers
  • Consolidation of and efficiency improvements in functional activities to reduce selling, general and administration (SGA) costs
  • Optimization and productivity improvements in the supply chain

As a result of the planned program, Ahlstrom's personnel are estimated to be reduced by approximately 350 people globally.

The employee consultation processes will start in accordance with local legislation, Ahstrom said.

The company plans to book a one-time cost of approximately EUR 15 million during the years 2013-2014. The majority of the planned savings are estimated to take place by the end of 2014.

A separate project management team has been established to align the implementation of the program and to support a sustainable cost reduction that will not compromise the crucial activities in the company.

The plans are subject to the outcome of the employee consultation negotiations where required.

SOURCE: Ahlstrom