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Suominen Corporation’s Financial Statement Release for 1 Jan–31 Dec 2017: Full year net sales increased, operating profit declined, profit for the period close to last year’s level

Suominen Corporation  Financial Statement Release  30 January 2018 at 1:00 pm (EET)

Suominen Corporation’s Financial Statement Release for 1 Jan–31 Dec 2017:

Full year net sales increased, operating profit declined, profit for the period close to last year’s level


Key figures












Net sales, EUR million





Comparable operating profit, EUR million





Operating profit, EUR million





Profit for the period, EUR million





Earnings per share, basic, EUR





Earnings per share, diluted, EUR





Cash flow from operations per share, EUR





Return on invested capital, rolling 12 months, %



Gearing, %



Return of capital per share / dividend per share, EUR




* Proposal to the Annual General Meeting.

In this Financial Statement Release, the figures shown in brackets refer to the comparison period last year if not otherwise stated.

Highlights in October–December 2017:

- Net sales decreased by 2% and were EUR 98.7 million (100.4).
- Operating profit fell to EUR -0.3 million (3.5).
- The total impact of the tax reform in the United States on Suominen’s Q4 profit for the period was EUR 8.3 million

- The ramp-up phase of the new manufacturing line at Bethune plant continued.

- Suominen expects that in 2018, its net sales and comparable operating profit will improve from 2017. In 2017, Suominen’s net sales amounted to EUR 426.0 million and operating profit to EUR 15.0 million. In financial years 2017 and 2016 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.

- Suominen’s Board of Directors proposes to the Annual General Meeting a return of capital of EUR 0.11 per share from the financial year 2017. On 30 January 2018, the company had 57,382,939 issued shares, excluding treasury shares. With this number of shares, the total amount of the return of capital would be EUR 6,312,123.29.

President & CEO Nina Kopola comments on Suominen’s full financial year 2017:

“Throughout the year 2017, the consumer confidence continued strong both in euro area and in the United States. Europe and North America are our main market regions. Consumers’ optimism was reflected in the demand of nonwoven products.

In 2017, our net sales increased by 2%, thanks to the positive development of sales volumes which grew by 4%. The transformation of our product portfolio did not develop as we expected in 2017, as the share of products with higher added value decreased in our net sales. Operating profit fell below last year’s level, and we revised our guidance in July 2017. The largest factor impacting Suominen’s operating profit in 2017 was the challenges faced with the start-up and ramp-up of the new manufacturing line in Bethune. The total negative impact of the costs of the growth investments on Suominen’s profitability was nearly EUR 5 million in 2017. In addition, the unfavorable development of sales prices due to the competitive situation in Europe, as well as product mix change, affected our gross profit and hence also the operating profit.

Based on the developments we saw in Bethune towards the end of 2017, I have all reasons to believe that we have now overcome the biggest hurdles. The performance of the new manufacturing line is continuously improving and we expect that the new line will contribute positively to Suominen’s gross profit as of the first quarter of 2018.

The implemented growth investments as well as enhanced capabilities – in R&D, Sales and Product Management, among others – will provide Suominen key stepping stones as we continue to execute our Changemaker strategy, launched in April 2017. If we succeed in its execution, our operating profit margin will exceed 10% by 2021. While our performance on the first year of our strategy period of 2017-2021 was below expectations, I remain confident that we are on a right path.

Our ability to generate cash flow remained healthy, even in spite of the challenges mentioned above. Our cash flow from operations was EUR 22.2 million.

The very favorable impact of the US tax reform, enacted in December 2017, raised Suominen’s profit for the period and earnings per share close to last year’s level, to EUR 14.5 million and EUR 0.27 per share, respectively. On 28 December, we announced our preliminary assessment on the impact of the tax reform and anticipated that the revaluation of Suominen’s net deferred tax liabilities in the US will in 2017 improve the profit for the period by approximately EUR 4 million. On top of that, our further analysis on the other impacts of the tax reform revealed that Suominen benefits also significantly from the revaluation of the deferred tax liabilities related to the accelerated tax depreciations of new investments. The total impact of the changes in US taxation in 2017 was EUR +8.3 million, which turned our income taxes positive. In the future, the decrease of the federal corporate income tax rate from 35% to 21% in the USA will have a beneficial effect on Suominen’s profit. Approximately half of Suominen’s net sales is generated in the USA. 

The Board of Directors of Suominen proposes to the Annual General Meeting that for the financial year 2017, a return of capital of EUR 0.11 per share shall be paid to the shareholders. As the hybrid bond issued in 2014 is now fully converted into Suominen shares, the Board of Directors proposes that we partially utilize the funds accumulated at the reserve for invested unrestricted equity for distribution to the shareholders. The proposal is also in line with our dividend policy, according to which Suominen distributes at least 30% of its annual profit as dividends to shareholders.

Suominen’s Board of Directors revised Suominen’s medium-term financial targets in April 2017 in connection with the launch of our new Changemaker strategy. During the five-year strategic period ending in 2021, Suominen aims to reach an average return on investment (ROI) of 15%, an average annual net sales growth rate of 6% and to operate with a gearing ratio principally in the range of 40–80%. In 2017, while our net sales increased, we did not achieve the targeted growth pace and our return on investments was 6.6%, below the target level. The gearing ratio remained within the target range, at 59.6%.”

Click to open the full Financial Statement Release (pdf)