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Suominen Corporation’s Interim Report for January 1 – March 31, 2016: Cash flow from operations improved markedly, net sales and operating profit declined, guidance for full year remains unchanged

Highlights in January–March 2016:

- Net sales decreased by 7.2% and amounted to EUR 103.9 million (111.9).
- Operating profit decreased by 24.0% to EUR 5.5 million (7.3).
- Cash flow from operations increased to EUR 9.1 million (4.5).
- Both financial targets monitored on a quarterly basis, return on invested capital and gearing ratio, surpassed their target levels.
- The execution of the growth investment program focused on the new production line to be built at the Bethune plant.

- Suominen carried out a reverse share split with 5:1 ratio.
- The Annual General Meeting decided to distribute in total EUR 5.0 million as dividends.

-  Suominen repeats its previous estimate, disclosed on 29 January 2016, that for the full year 2016 the company expects its net sales and operating profit excluding non-recurring items to improve from year 2015. In 2015, Suominen’s net sales amounted to EUR 444.0 million and operating profit excluding non-recurring items to EUR 31.2 million. The non-recurring items are explained in the disclosures of this Interim Report.

Nina Kopola, President & CEO, comments on Suominen’s first quarter of 2016:

“In the first quarter of 2016, the consumer confidence index in the euro zone fell short of its level of the first quarter of 2015, but remained above the long-term average. In the United States, the consumer confidence index showed relatively stable development, but remained slightly below the level of the comparison period. Europe and North America are Suominen’s largest market areas.

Suominen’s first-quarter net sales decreased from the comparison period to EUR 103.9 million. As we reported earlier, demand was not at the same level as in the comparison period. This also affected the competitive situation in the markets. However, the situation is believed to be temporary and to have mostly resulted from new capacity that has recently been built in our main market areas. We saw signs of improvement in demand already towards the end of the review period. Overall, we expect demand growth in our target markets to continue in 2016 at the same level as in 2015 on average.

Suominen’s operating profit decreased from the comparison period to EUR 5.5 million. However, the profit for the reporting period remained more or less unchanged, thanks mainly to lower financial expenses. Suominen’s cash flow from operations doubled from the comparison period to EUR 9.1 million.

There’s three financial targets set for Suominen: organic net sales growth, return on invested capital and gearing ratio. The last two are monitored quarterly and organic growth on an annual basis. Of the financial targets monitored on a quarterly basis, return on invested capital was 14.7%, exceeding the target level of over 12%. Our gearing ratio remained below the target range of 40–80%, at 28.6%.

During the reporting period, Suominen’s Annual General Meeting decided to merge Suominen’s shares in a reverse share split using a split ratio of 5 to 1. The purpose of merging the shares is to raise interest in the company’s shares, to facilitate trade in the shares and to increase flexibility in defining the amount of dividend.

The Annual General Meeting also decided that a dividend of EUR 0.02 per share (prior to the reverse share split) was to be paid for the financial year 2015, which means that the shareholders were distributed double the amount of funds compared to the previous financial year.

Suominen continues to consistently implement its strategy. Our product portfolio developed in line with our targets, as the proportion of sales of products with higher added value grew by 3 percentage points. During the reporting period, we also strengthened our R&D team further with three new hires and continued our 60-million-euro growth investment program. Our modernized plants in Alicante and Paulínia have delivered their first orders and now we are focusing on the new production line being built at our plant in Bethune, SC, United States. The goal is for the equipment installations for the investment in Bethune to be completed during the second half of this year, according to the schedule announced earlier.”

Click here to read the full interim report (pdf).