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Suominen Corporation's Interim Report for January 1 - September 30, 2014: net sales, operating profit and balance sheet improved ; outlook regarding operating profit raised

Highlights in July– September 2014:

- Net sales increased by 10.5% and amounted to EUR 103.3 million (93.5).
- Operating profit excluding non-recurring items increased by 49.4% to EUR 8.7 million (5.8).
- Suominen divested its Flexibles business area to a private equity company and the business area management on 14 July 2014.
- Suominen extended and diversified its financing by issuing a EUR 75 million bond and renewing its bank facilities.
- Suominen updates its outlook statement regarding operating profit. The company expects that for the full year 2014, its operating profit excluding non-recurring items from continuing operations will increase to the vicinity of EUR 25 million. Previously Suominen estimated that its operating profit excluding non-recurring items from continuing operations will improve from year 2013 (MEUR 19.4; Nonwovens segment and unallocated items).
- Concerning net sales, Suominen repeats its estimate announced on 18 July 2014, according to which the company expects that for the full year 2014, its net sales of the continuing operations will improve from year 2013 (MEUR 373.7)

President & CEO Nina Kopola comments on Suominen’s third quarter of 2014:

“In Suominen’s main market regions, Europe and North America, consumers’ confidence in the development of their personal finances weakened in the third quarter of the year. Consumer confidence indices turned downward in both the US and the euro area.

The weakening in confidence did not, however, have an effect on Suominen’s financial development during the period. Suominen’s net sales grew more than 10% from the comparison period and totaled EUR 103.3 million. Influencing the growth in net sales were the acquisition of the plant in Brazil in February 2014, the continuing favorable demand in the North American market and the temporary change in the competitive situation in the European markets, which boosted demand for Suominen’s products.

Operating profit excluding non-recurring items increased to a new level, EUR 8.7 million, accounting for 8.4% of net sales. I am particularly pleased with the improvement in our relative profitability. It reflects the increase in the share of products with higher added value in our sales and proves that we are heading in the right direction strategically. Cash flow from operations just about quadrupled from the comparison period, and amounted to EUR 16.9 million. Financial expenses were high in the third quarter due to refinancing costs.

Additional proof of the successful implementation of the strategy is the achievement of our medium-term strategic targets: two out of three of these targets are reviewed on quarterly basis and just like in the first and second quarters of the year, in the July – September period Suominen reached the target level in these two. Our gearing declined further and was 43.4% (target level 40–80%) at the end of September. The return on investment (ROI) from continuing operations was 13.5% (target level >10%).

During the review period, we sold the Flexibles business area to a private equity firm and the business area’s management. The sale further clarified Suominen’s corporate structure and completed its transformation into a nonwovens company with operations on three continents.

The purely nonwovens-focused, financially stable Suominen is ready for the new strategy period of 2015–2017. The strategy for the coming years will highlight the highly focused company’s active development into a forerunner in nonwovens. In terms of our financial targets, our emphasis for the future will be organic net sales growth that exceeds the industry average. If we succeed in that target, Suominen’s net sales in 2017 will be in the region of EUR 500 million. In September we renewed our financial base, including issuance of a bond, which will enable us to execute our growth strategy.

Alongside our growth targets, we will continue, however, to uphold our relative profitability and stable financial position. Our goal is to achieve a ROI of more than 12% in the future, and to maintain our gearing at a healthy level, i.e. between 40 and 80%. Today, 24 October 2014, we have also released a separate stock exchange release concerning the next phase of our strategy.

In connection with our strategy update, Suominen’s Board of Directors has approved a 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.”


Click to read the full Q3 Interim Report (pdf)