Operating environment

Suominen is the global market leader in nonwovens for wipes and among the world’s largest producers of spunlace nonwovens. Suominen’s main market areas are Europe and North America. Suominen also holds a strong position in the South American markets.

The global demand for nonwovens is constantly growing. The growth depends mainly on consumer demand, which is a combination of the general economic situation and consumers’ confidence in their personal finances. However, the demand for fast-moving consumer goods – that is, end products for which most of Suominen’s products are used – is not very cyclical in nature. The growth in the demand for nonwovens has typically exceeded the growth of gross domestic product by a couple of percentage points.

The importance of sustainability continues to grow

Megatrends such as climate change and environmental degradation drive us to reduce the environmental impacts of our operations, innovate even more sustainable products and improve our raw material efficiency.

The market for sustainable nonwovens is growing globally and especially in Europe and North America. Legislation and regulations as well as consumer behavior are driving the market towards more sustainable products.

In Europe, one of the most significant changes in the operating environment is the European Plastic Strategy and European Commission’s Single-Use Plastics Directive (SUPD). The directive aims to protect the environment and to reduce marine pollution. SUPD impacts end products made of nonwovens as many wet wipes are traditionally made at least partially from raw materials containing plastics. Labeling requirements under the Directive for products containing plastic entered into force in 2021. Initiatives similar to SUPD have emerged also in other regions as concerns over sewer blockages and marine pollution caused by, among other reasons, the inappropriate disposal of nonwoven products have been raised.

The need for more ecological and sustainable nonwoven products is clear, and Suominen is well positioned to respond to this growing demand.

Demographic megatrends support our growth

Global megatrends shape Suominen’s operating environment and affect our business. Megatrends such as population growth, a growing middle class, aging populations, increasing consciousness of health and well-being, and rising healthcare expenditure support our growth forecasts due to their impact on consumer behavior.

There is a direct correlation between the rise in the standard of living and, for example, demand for hygiene products. The rise in the standard of living combined with evolving lifestyles is reflected in the consumer behavior of the prospering middle class. In addition to essential commodities, this demographic is increasingly interested in solutions that make daily routines easier and less time-consuming. Increased consumption of household wipes and beauty care wipes is an example of this phenomenon.

New needs are emerging with aging populations and changing healthcare models. The demand for nonwovens used in, for example, medical applications and incontinence products is increasing. On the other hand, the need to find cost-effective solutions to combat bacteria and viruses is also contributing to the increase in demand for nonwovens in the healthcare sector.

The war in Ukraine and the COVID-19 pandemic causes uncertainty

The war in Ukraine has worsened the inflationary pressures in raw material, energy and freight costs and increased uncertainty overall. Suominen has mitigated the rising energy costs by implementing surcharges in Europe and North America. The raw material markets turned more favorable towards the end of the year.

The operating environment continued to be marked by the COVID-19 pandemic still in 2022. The key uncertainties related to the pandemic concern the health and safety of Suominen personnel and customers, possible shortages of raw materials and issues linked to logistics as well as potential closures of customers’ or our own plants due to virus infections or decisions by the authorities. Throughout the pandemic, our primary focus has been safeguarding the health and safety of our employees and to maintain business continuity. In 2022, we were able to run our operations with limited impact.

In the market, the pandemic caused a spike in the demand of nonwovens which was followed by moderation of the demand. This led to inventory imbalances in the whole supply chain especially in the United States. The market expectation is that, in the long run, the end user demand for wipes will remain above pre-COVID-19 levels.

Risks and uncertainties

Risks are categorized into strategic, operational, financial and hazard risks. Information about Suominen's non-financial risks and their management can also be found here.

Customers and key competitors

Our customer relationships last, on average, more than ten years and are typically based on 2–3-year-long framework agreements.