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Suominen Corporation’s Financial Statement Release for January 1 – December 31, 2014: Net sales improved, operating profit grew by 37 %

Highlights in October– December 2014:

- Net sales increased by 16.6% and amounted to EUR 104.8 million (89.8).
- Operating profit excluding non-recurring items increased by 49.3% to EUR 6.2 million (4.2).
- Suominen published its strategy for 2015 – 2017 aiming at growth and product leadership.
- To execute the strategy, Suominen initiated a growth investment program. The first investments will be implemented at Suominen’s plants in Paulínia, Brazil and Alicante, Spain.
- After the end of the review period, Suominen announced it has started to plan the largest single project of its growth investment program, building of a new manufacturing line in North America. The value of the investment is not yet disclosed.
- Suominen expects that for the full year 2015, its net sales and operating profit excluding non-recurring items will improve from year 2014. In 2014, Suominen’s net sales amounted to EUR 401.8 million and operating profit excluding non-recurring items to EUR 26.9 million.

- Suominen’s Board of Directors proposes to the Annual General Meeting a EUR 0.01per share fund distribution from the financial year 2014, in total approximately EUR 2.5 million.

President & CEO Nina Kopola comments on Suominen’s fourth quarter of 2014 and full financial year:

“In the fourth quarter, the consumer confidence indices indicated that the situation in Suominen’s main markets of Europe and North America continued to be divided: In the euro zone, consumer confidence weakened further, whereas in the US, the slight drop in the index in the third quarter proved temporary, as at the end of the year consumer confidence reached its highest level since February 2008.

I am very pleased both with Suominen’s fourth quarter and the full financial year 2014. Suominen’s fourth-quarter net sales from continuing operations grew 16.6% on the comparison period and totaled EUR 104.8 million. The positive development in net sales was influenced by the strengthening US dollar, the acquisition of the Paulínia plant in February 2014 and the improved demand in European markets. Net sales for the full year increased 7.5% to EUR 401.8 million.

Suominen’s profitability also showed quite positive development. Operating profit excluding non-recurring items grew nearly 50% in the fourth quarter and 38% in the full financial year compared to the comparison periods and amounted to EUR 6.2 million in October–December and EUR 26.9 million for the full year. The share of products with higher added value in Suominen’s portfolio grew, which was reflected in the gross profit as well as in operating profit.

Suominen’s substantially lower gearing ratio is further proof of the favorable development in the company’s balance sheet in 2014. The company’s debt repayment capacity and its healthy financial position, both thanks to the good operative cash flow, facilitated the refinancing.

In 2014, we achieved the targeted level for all of the financial targets set by the company’s Board of Directors in 2012: the return on investments of continuing operations increased to 15.7% percent (target level >10%) and gearing ratio fell to 34.7% (target level 40–80%). The third target, organic net sales growth at a rate faster than the industry average (approx. 3%), was also achieved. Net sales from Suominen’s continuing operations increased organically 3.5%.

Considering the above-mentioned figures, Suominen is in an excellent position to embark on a new strategy period. We announced our revised strategy for 2015–2017 in October. Our strategy for the future continues to be based on the three cornerstones: The Suominen Way, Step Change in Profitability, and In the Lead. In this new strategy period, however, we will place greater focus on the In the Lead cornerstone, aiming for growth, a market-driven way of operations and product leadership.

In the strategy period, we will target a higher return on investments (target level increased to >12%), a gearing ratio principally between 40–80%, and organic growth that exceeds the industry average, which is estimated to be roughly 3% in Suominen’s market areas.

In December we announced the launch of our growth investment program to execute our strategy. As announced, the overall value of the investment program covering the strategy period is in the region of EUR 30 to 50 million. The initial projects will target the Alicante and Paulínia plants in Spain and Brazil respectively. In addition, we confirm that the previously considered investment project to boost the capacity of the Nakkila plant will be executed to allow Suominen to flexibly respond to the current market demand. The combined value of these three growth investments is roughly EUR 4 million, and they will enhance Suominen’s ability to further increase the share of value-adding products in its portfolio.

After the review period, we announced our plans to build a new production line in North America. The new production line using wetlaid technology will serve, in accordance with our strategy, several end use application areas with higher added value. This investment project is still in the preparation phase; we have not, for example, selected machine suppliers. For that reason, we have not yet disclosed the total value of the project. The project is, however, clearly the most substantial one in our growth investment program.

In connection with the revised strategy, Suominen’s Board of Directors confirmed the dividend policy for the company. Suominen’s policy is to distribute approximately 30% of its 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.

In keeping with the dividend policy, the Board will propose to the Annual General Meeting a EUR 0.01 per share fund distribution. After a hiatus of several years, Suominen is again able to distribute funds to its shareholders. This demonstrates the success of our chosen strategy.”

Click to open the full Financial Statement Release (pdf)