Governance and economic responsibility

Economic impacts

Suominen remains an economically vital company. Net sales growth, healthy profitability, strong cash flow and a solid financial position are prerequisites in the long term for meeting our financial obligations to our various stakeholders and contributing to increasing general economic well-being.

Stakeholder

Direct financial impact in 2018

 

Customers

Net sales EUR 431.1 million

Suominen’s major customers include global consumer brands and private label manufacturers.

Employees

Wages and salaries EUR 35.6 million

Suominen employed some 676 people in Europe and in North and South America in 2018.

Partners

Materials and services EUR 328.7 million

Suominen purchases raw materials and other products and services from local and international business partners.

Society

Corporate income taxes paid EUR 0.8 million 

Suominen is a significant employer in the communities where we operate, which makes us a promoter of general well-being.

Financiers

Net financial expenses EUR 5.6 million.

 

Shareholders

Approximately EUR 6.3 million in total were paid as return of capital in 2018 from the financial year 2017. 

On 31 December 2018 Suominen had 3,920 shareholders

Tax footprint

Suominen Group’s (“Suominen”) tax footprint represents the economic impact on society arising from Suominen’s operations in the countries where it operates. Suominen’s business operations result in liabilities to pay taxes and similar payments,
as well as in a liability to collect and remit taxes and similar payments that arise from the business activities of the group companies.


Suominen’s tax footprint arises from the business operations in the countries where it operates. Suominen has not entered into any arrangements aiming to change or rearrange its tax burden from what arises from normal business
operations. The trading of goods between Suominen group companies is extremely limited. The group companies receiving intra-group services are charged a service fee. The pricing of the service fee is in line with the arm’s
length principle.


Suominen has companies only in those five countries – Brazil, Finland, Italy,Spain and the United States – where it has both production and sales operations. In respect of taxes and similar payments,
Suominen applies the laws and regulations of each country.


The main markets of the Finnish group companies are abroad. Due to this, the export sales of these companies significantly exceed their domestic sales. No value added tax is levied on export sales. This
leads to a situation where the Finnish group companies’ deductible value added tax on their purchases subject to value added tax is considerably higher than the value added tax they remit based on their taxable sales.
As a result, Suominen receives a refund of value added tax in Finland.


Suominen’s tax footprint includes not only the taxes and similar payments that are group companies’ costs, but also the taxes and similar payments which the group companies collect and remit, such as indirect taxes. Deferred taxes
which arise from the timing differences between taxation and accounting and are recognized in accounting are not included in the tax footprint.


In 2018, Suominen employed on average 676 people in its operations. As a result, Suominen generated a positive economic contribution to the surrounding society in the form of employees’ income taxes, as well as social security
contributions both by the company and the employees. Thus, Suominen’s tax footprint includes also the collected and remitted employees’ income taxes as well as social security contributions, but the employer’s taxes are clearly separated
from the employees’ taxes and payments in the report.


Suominen’s corporate income taxes are significantly affected by tax losses generated in the past in certain countries where Suominen operates. Based on local tax laws and regulations, tax losses are carried forward and deducted from the
taxable profits generated in the future. At the moment, Suominen’s taxable result does not incur corporate income tax payments in Finland, as it has tax losses carried forward from past years. Suominen is subject to group tax consolidation
methods in several countries based on each country’s tax laws and regulations, which effectively means that Suominen’s local companies are taxed on the local consolidated taxable income.


The corporate income taxes Suominen pays in the USA are impacted by local tax incentives, which allow companies to deduct up to 50 or 100% of the acquisition cost of the investments taken into use during the year as accelerated tax depreciations.
As Suominen made a large investment in the Bethune plant in South Carolina, the combined taxable result of the American subsidiaries decreased considerably in 2018 and 2017. The use of the accelerated tax depreciations decreases
the taxable result of the year in which they are utilized and defers the payment of corporate income taxes into the future. The utilization of the accelerated depreciations will decrease the taxdeductible expenses of future years and
concurrently increase the taxable result, as well as the paid corporate income of those years.


The group companies also pay property and real estate taxes based on the land and buildings they own, as well as different fiscal payments levied, for example, on manufacturing operations. In addition, there are some levied taxes, for
example in Brazil, that are based on a percentage of the company’s net sales. Suominen does not consider these as indirect taxes to be collected and remitted, but as taxes that are costs for the group companies.

 

EUR thousand 2018 2017
Taxes and similar payments borne Finland Other countries Finland Other countries
Corporate income tax, tax on profit* 4 -1,633 -13 6,335
Corporate income tax, tax on turnover - -1,129 - -786
Property taxes** -66 -801 -67 -591
Employer contributions and taxes -1,537 -9,292 -1,513 -9,077
VAT as expense -30 -34 -34 -7
Custom duties on export*** - -83 - -53
Custom duties on import*** -622 -2,306 -598 -1,706
Excise duties -129 -115 -110 -229
Other taxes and similar payments -35 -191 -38 -189
Total -2,415 -15,582 -2,374 -6,302

 

EUR thousand 2018 2017

Taxes and similar payments
collected and paid

Finland Other countires Finland Other countries
Net VAT 7,818 -3,231 7,981 -4,840
Payroll taxes and similar payments
collected and paid****
-2,768 -7,805 -2,652 -7,761
Withholding taxes on various payments -406 -133 -272 -119
Other taxes collected and paid - -13 - -
Total 1,644 -11,182 5,057 -12,720

* Corporate income taxes do not include any deferred taxes. The corporate income taxes for 2017 are in total positive thanks to utilization of accelerated tax depreciations in the USA.
** Taxes on real estates.
*** Custom duties are borne by the company importing or exporting goods and not collected and/or paid on behalf of some other tax payer. For these reasons custom duties are reported as taxes borne.
**** Employer does not withhold employee withholding tax in Italy.