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Suominen Corporation’s Interim Report for 1 January–30 September 2018: Net sales increased, operating profit declined

Suominen Corporation   Interim Report 25 October 2018 at 8:00 am (EET)

Suominen Corporation’s Interim Report for 1 January–30 September 2018:

Net sales increased, operating profit declined

 

KEY FIGURES

 

 

7-9/

7-9/

1-9/

1-9/

1-12/

 

2018

2017

2018

2017

2017

Net sales, EUR million

104.8

102.4

321.3

327.3

426.0

Comparable operating profit, EUR million

0.5

4.6

5.0

15.3

15.0

Operating profit, EUR million

0.5

4.6

5.0

15.3

15.0

Profit for the period, EUR million

-1.1

1.8

0.3

8.2

14.5

Earnings per share, basic, EUR

-0.02

0.03

0.01

0.15

0.27

Earnings per share, diluted, EUR

-0.02

0.03

0.01

0.14

0.25

Cash flow from operations per share, EUR

0.13

0.04

0.41

0.35

0.39

Return on invested capital, rolling 12 months, %

2.3

8.3

6.6

Gearing, %

58.1

56.5

59.5*

 

*restated In this financial report, figures shown in brackets refer to the comparison period last year if not otherwise stated. Highlights in July-September 2018:

- Net sales increased by 2% and amounted to EUR 104.8 million (102.4).

- Operating profit declined by 89% to EUR 0.5 million (4.6) due to continued price increases of raw materials and other resources and slower than expected impact of the 3P program

- Cash flow from operations strengthened to EUR 7.7 million (2.3).

- The new manufacturing line at Bethune, SC, US plant line continued to contribute positively on Suominen’s gross profit.

- Suominen’s President & CEO changed: Nina Kopola left the company on 3 August and Pekka Ojanpää was appointed as the new President & CEO. Tapio Engström acts as interim President & CEO.

- On 13 September, Suominen revised its guidance and announced that in 2018, its net sales will be at the level of 2017 and its comparable operating profit will be significantly lower than in 2017. In 2017, Suominen’s net sales amounted to EUR 426.0 million and operating profit to EUR 15.0 million. In financial year 2017 Suominen had no items affecting the comparability of the operating profit. The calculation of comparable operating profit is explained in the disclosures of this release. 

Tapio Engström, President & CEO (interim), comments on Suominen’s third quarter of 2018:

“Suominen’s main market areas are Europe and North America. In the euro area, the consumer confidence index turned to decline in the third quarter, however still remaining at a healthy level. In the United States, the consumer confidence index continued strong. Our nonwovens are, for the most part, used in daily consumer goods, and in these target markets the general economic situation and consumer confidence drive the development of consumer demand.

 

The decline in our profitability with an operating profit decrease to EUR 0.5 million reflects both the impact of the long economic upturn resulting in increased costs and a tense competitive situation with an oversupplied market. The costs of several of our key resources, including raw materials, energy and logistics, have continued to be in a steep rise. While the profitability developed negatively, Suominen’s cash flow from operations remained strong in the third quarter and was EUR 7.7 million, thanks to a positive development in net working capital.

 

In the end of 2017 we launched the so-called 3P program, which focuses on improving Suominen’s profitability through Pricing, Performance and Planning. Although the impacts of the program have been slower than what we expected, we have continued rigorously with the improvement actions.

 

Determined measures taken in pricing as well as the favorable change in the product portfolio had a positive impact on the net sales as our net sales increased to EUR 104.8 million. The global price increases announced on 19 September will improve our profitability in the longer term. Approximately half of our net sales is tied to contracts that include a pass-through clause concerning raw material price fluctuations. Passing on the price changes of these raw materials to the customers usually takes two to five months.

 

Considering performance, our new manufacturing line at the Bethune, SC, US plant continued to contribute positively to the company’s gross profit in the third quarter. The positive development of the net production volumes clearly indicate that the stability and efficiency of the new line has further improved. The ongoing growth investment initiative at our plant in Green Bay, WI, US is proceeding as planned. We expect the enhanced capabilities to be in full utilization by end of 2019.

 

In planning, our on-going group-wide ICT systems renewal plays an important role. The systems renewal continued as scheduled in the third quarter and the new systems were taken into use at our plant in Windsor Locks, CT, US. Today, five out of our eight plants operate through the new ICT systems. We expect all plants to have the new systems in place during the first half of 2019.

 

In September, Suominen took again one step forward in its strategy by introducing Suominen Intelligent Nonwovens™ concept to the market. The first of its kind in the world of nonwovens, the concept makes it possible to embed digital features into Suominen nonwovens. The launch really proves that we are able to create nonwovens that others cannot.

 

We announced on 13 September 2018 that Suominen decreases its estimate regarding the net sales and operating profit development. We expect that for the full year 2018, our net sales will be at the level of 2017 and the comparable operating profit will be significantly lower than in 2017.”

Click to open the full Interim Report (pdf)

Contact by email

President & CEO (interim)

Tapio Engström +358 10 214 300