- Net sales increased by 9% and amounted to EUR 112.9 million (103.9).
- Operating profit improved by 13% to EUR 6.3 million (5.5).
- Cash flow from operations remained healthy and was EUR 6.1 million (9.1).
- The customer deliveries from the new manufacturing line at Bethune, SC, USA plant were not started in the targeted schedule. We are now planning to start up the new line during Q2.
- The Annual General Meeting decided to distribute in total EUR 5.6 million (EUR 0.11 per share) as dividends.
Suominen repeats its estimate disclosed on 31 January 2017 and expects that for the full year 2017, its net sales will improve from year 2016. Also the comparable operating profit is estimated to improve from year 2016, provided that the new production line at the Bethune plant will be started up as planned. In 2016, Suominen’s net sales amounted to EUR 416.9 million and comparable operating profit to EUR 25.6 million. The calculation of comparable operating profit is explained in the consolidated financial statements of 2016.
Nina Kopola, President & CEO, comments on Suominen’s first quarter of 2017:
"Consumer confidence remained strong in the beginning of 2017. In the United States, the consumer confidence index rose to its highest level since 2001. In the euro zone, the consumer confidence index also continued to rise. Nonwovens manufactured by Suominen are used mainly in daily consumer goods, which means the development of demand is affected by both the general economic situation and consumer confidence. North America and Europe are Suominen’s main market areas.
We are very pleased to see that Suominen returned to a growth track in the first quarter. The company’s net sales grew to EUR 112.9 million. While demand improved from the comparison period as we expected, the competitive situation remained tight, especially in nonwovens for baby wipes and flushables. Most of the sales growth was generated by increased volumes and we were able to improve our market share.
Moreover, our operating profit increased from the comparison period and amounted to EUR 6.3 million. The profit for the reporting period grew to EUR 4.2 million. Suominen’s cash flow from operations remained at a healthy level.
Three financial targets have been set for Suominen: organic net sales growth, return on invested capital and gearing ratio. The last two are monitored on a quarterly basis, and organic growth is monitored annually. Of the financial targets that are monitored quarterly, return on invested capital nearly reached its target level (over 12%) and was 11.7%. Due to the progress of our investment program, our gearing ratio grew to 50.2%, still well within the target range (40 – 80%).
The Annual General Meeting held on 15 March 2017 decided that a dividend of EUR 0.11 per share was to be paid for the financial year 2016. We were able to increase dividends again, as the dividends paid grew by 10% from the previous financial year.
As technology clearly plays an important role in creating our competitive edge, we established a new corporate function, Technology, to further strengthen Suominen’s competitiveness. The new function consolidates the company’s technological expertise and its development as well as R&D into one entity. In February, Mr. Markku Koivisto was appointed to lead the new function as Chief Technology Officer and as a member of Suominen’s Corporate Executive Team. Mr. Koivisto has long experience in successfully commercializing industrial innovations at UPM Group.
Suominen continued the determined work to execute its strategy during the review period. The largest project in our growth investment program, the new wetlaid production line focusing on high value-added products at the Bethune plant in SC, USA, is reaching its completion. We were not able to start customer deliveries during Q1 as we had targeted, due to certain problems concerning parts of the machinery. We are now planning to start up the new line during Q2.
To increase the share of high value-added products in our portfolio, we launched several new high value-added products in the market. To give a few examples, I would highlight GENESIS® Pro and AIRLACE® for Workplace for workplace wiping, as well as the Designer Series nonwoven patterns for household and baby wipes. The Designer Series is a totally new concept not only for Suominen, but for the entire industry: the patterns have been designed by professional designers and validated by consumers.
Suominen is heading towards a new strategy period and has today disclosed in a separate release the highlights of the upcoming strategy extending to year 2021.
The new strategy is based on three cornerstones: 1) Best in business; 2) Creating nonwovens that others cannot; and 3) Community of changemakers. In the cornerstones, we crystallize the competitive edges that will enable Suominen to grow: We are the best at turning end-user needs into a commercial success both for our customers and ourselves; we develop and produce unique nonwovens that other companies are not able to create; and we are a global community of highly capable people who are passionate about creating change.
Along with the strategy, Suominen also revised its vision to reflect the change-making approach. Our new vision is: "We change the way people think about nonwovens." The vision describes our aspiration not only to delight customers with our innovations, but also to elevate the overall perception of the role of nonwovens in society.
We continue to increase the share of products with high value-add in our portfolio, and thanks to our recent investments in capacity and capabilities, product development and competencies, our opportunities to grow through the transformation of our portfolio are better than ever. If we succeed in the portfolio transformation, our net sales will exceed EUR 600 million by 2021 and our operating profit margin will rise to a new level, above 10%.
In connection with the new strategy, Suominen’s Board of Directors also updated the financial targets for the period 2017–2021. The targets are set to measure profitability, growth and financial position. During the five-year strategic period ending in 2021, Suominen aims to
- reach an average return on investment (ROI) of 15% during the period
- reach an average annual net sales growth rate of 6% during the period
- operate with a gearing ratio principally in the range of 40-80%.
Suominen’s progress in the financial targets is reviewed on an annual basis.
The Board of Directors has also decided to update the company’s dividend policy. According to the updated policy, Suominen aims to distribute at least 30% of its profit for the period in annual dividends. Previously, the policy was to distribute approximately 30% of the profit for the period in annual dividends. In assessing its proposal for the payment of dividends, the company’s Board of Directors will also consider Suominen’s future investment needs and the solidity of its financial position."