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Suominen Corporation's Interim Report for January - June 2014: Suominen sets focus on nonwovens; operating profit excluding non-recurring items improved by 27%

Highlights in April – June 2014:

- Net sales increased by 2.4% and amounted to EUR 95.3 million (93.1).
- Operating profit excluding non-recurring items increased by 19.1% to EUR 5.5 million (4.6).
- The investment in the production capacity expansion of flushable nonwovens at Windsor Locks plant in the US was completed as planned.
- After the review period, Suominen divested its Flexibles business area. The deal was closed on 14 July 2014. The enterprise value amounted to EUR 20 million and Suominen recognized a non-recurring loss of approximately EUR 4.5 million in the result of its discontinued operations.
- Suominen repeats its estimate, announced on 11 July 2014, according to which Suominen expects that for the full year 2014, its net sales and operating profit excluding non-recurring items from continuing operations will improve from year 2013. Suominen’s net sales of the continuing operations (Nonwovens segment and unallocated items) in 2013 amounted to MEUR 373.7 and operating profit excluding non-recurring items was MEUR 19.4 (revised). Earlier, the comparison figures used in the outlook statement were, respectively, MEUR 433.1 and MEUR 18.3, as reported in the Financial Statements of 2013.

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

“The consumer confidence index in the euro zone strengthened in the second quarter. The positive momentum in the U.S. economy also continued, which led to a rise in consumer confidence. Suominen’s main market areas are North America and Europe.

The company’s positive financial development continued into the second quarter. Net sales from Suominen’s continuing operations (not including the divested Flexibles) improved from the comparison period, and operating profit excluding non-recurring items increased by nearly a fifth to EUR 5.5 million, accounting for 5.8% of Suominen’s net sales. Cash flow from operations also grew considerably from the comparison period, amounting to EUR 11.3 million.

In this strategy period – from the start of 2012 – Suominen’s reported operating profit has, with one exception, consistently improved, quarter on quarter. This is a clear indication of the success of our strategy. Additional proof of the successful implementation of the strategy is the achievement of our medium-term financial targets: two out of three of these targets are reviewed on quarterly basis and just like in the first quarter of the year, in the April–June period Suominen reached the target level in these two. Our gearing declined further and was 71.4% (target 40–80%) at the end of June. The ROI from Suominen’s continuing operations was 13.2% (target >10%).

After the review period, we sold our Flexibles business area to a UK-based private equity firm and the business area’s management. The transaction is a continuation of our efforts to clarify our group structure, the first step of which was the divestment of Codi Wipes in July 2013. The purchase of the Brazilian unit in February 2014 expanded our core business operations to emerging markets. The sale of Flexibles was the final step in Suominen’s transformation into a purely nonwovens company with operations on three continents. Our group structure is now clear: we are solely focused on nonwovens. This will allow us to focus all of our resources on developing and globally growing this business.

With the divestment of Flexibles, Suominen’s financial reporting will also be simplified. Beginning with this interim report, Suominen will no longer report on segments.

In connection with the sale of our Flexibles business unit, on 11 July 2014, we also revised our outlook for 2014. We essentially restated our comparison figures to reflect Suominen’s continuing business, which is now focused solely on developing and manufacturing nonwovens. Our estimate on the outlook for our continuing business remained unchanged: we expect that both our net sales and operating profit, excluding non-recurring items, will be better in 2014 than in 2013 when compared to Suominen’s continuing operations.

The organizational restructuring that took effect at the turn of the year was completed.  In May, Lynda A. Kelly was appointed Senior Vice President of the Care business area. Kelly brings her strong background in the nonwovens industry to Suominen’s Executive Team. Sourcing is a key function at Suominen, and in July, Dan Dunbar was named Vice President of Sourcing.

Following these crucial decisions, we are now preparing Suominen’s action plan for the 2015–2017 strategy period. The strategy for the approaching years will highlight the active development of a highly focused Suominen into a nonwovens company, In The Lead. In future, we will focus even more strongly on growth.”

Click to read the full Q2 Interim Report (pdf)