Highlights in April–June 2016:
Nina Kopola, President & CEO, comments on Suominen’s second quarter of 2016:
“In the second quarter of 2016, the consumer confidence index in the euro zone was behind the level of the corresponding period last year, but rose slightly from the first quarter of 2016. 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.
As we reported in the previous financial report, the sluggish demand early in the year began to show signs of picking up at the end of the first quarter. I am pleased that this positive development carried through into the second quarter. We expect the same trend to continue through the rest of the year and, consequently, our net sales of full year 2016 to improve from year 2015.
As demand improved, Suominen’s net sales grew from the first quarter, but nevertheless declined of the strong level of the comparison period, and amounted to EUR 108.8 million. Sales volumes were on par with the high figures of the comparison period. Gross profit improved from Q1 of 2016, but did not reach the level of the comparison period, which again affected operating profit. Cash flow from operations was once again strong and nearly doubled from the comparison period, reaching EUR 7.6 million.
Suominen has three financial targets: organic net sales growth, return on invested capital and gearing ratio. We follow up on the latter two targets on a quarterly basis, and net sales growth on an annual level. The return on investments exceeded the target level (> 12%) and was 13.5%. Our gearing was once again lower than our target range (40–80%), at 24.5%.
We combined our nonwoven range for workplace wiping applications under the suominen@work product concept. Suominen@work nonwovens are used, for instance, in wiping products used by fast-food restaurants, healthcare facilities and factory workshops. The new product concept allows us to serve our customers in an increasingly targeted way. Our investments in both the Alicante plant in Spain and the Bethune plant in the United States will enhance our capacity to serve the market for nonwovens for wipes intended for professional applications, which is expected to grow, depending on the region and end use, by as much as 7% per year. Reinforcing this product group in our portfolio clearly supports our strategy, which aims for an increased share of products with higher added value in our net sales.
The largest project in our investment program, a new wetlaid line at the Bethune plant in the US, proceeded and we expect the equipment installations to be completed by the end of this year. According to our plan, customer deliveries will begin in the first quarter of 2017. Our previously disclosed estimate of the total value of the project, close to EUR 50 million, is anticipated to be exceeded and consequently, the value of the entire growth investment program is expected to surpass EUR 60 million. This is due to an unexpectedly rapid increase in labor costs in South Carolina, improvements made to the production line during the project and other additional works made at the plant. The higher cost estimate has no impact on the financing arrangements of the project.”