Suominen Corporation Interim Report 1 January - 30 September 2008
SUOMINEN CORPORATION INTERIM REPORT 22 OCTOBER 2008 AT 8.30 A.M. INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2008 SUOMINEN'S RESULT ON LOSS, POSITIVE CASH FLOW -------------------------------------------------------------------------------- | KEY FIGURES | 7-9/2008 | 7-9/2007 | 1-9/2008 | 1-9/2007 | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales, EUR | 55.2 | 55.7 | 164.8 | 161.2 | 215.2 | | million | | | | | | -------------------------------------------------------------------------------- | Operating profit | -0.8 | 0.5 | -0.3 | 2.2 | 1.7 | | before goodwill | | | | | | | amortisation, EUR | | | | | | | million | | | | | | -------------------------------------------------------------------------------- | Operating profit, | -0.8 | 0.5 | -0.3 | 2.2 | -6.8 | | EUR million | | | | | | -------------------------------------------------------------------------------- | Profit/loss for the | -1.5 | -0.3 | -2.9 | -0.4 | -10.1 | | period, EUR million | | | | | | -------------------------------------------------------------------------------- | Earnings/share, EUR | -0.06 | -0.01 | -0.12 | -0.02 | -0.43 | -------------------------------------------------------------------------------- | Cash flow from | 0.38 | 0.05 | 0.51 | 0.15 | 0.12 | | operations/share, | | | | | | | EUR | | | | | | -------------------------------------------------------------------------------- Outlook: Suominen's net sales for 2008 are expected to be on the level of 2007. The underlying operating profit is expected to be on the level of the previous year at best and the whole year result is expected to be negative. GROUP FINANCIAL RESULTS Suominen Corporation's net sales for the third quarter totalled EUR 55.2 million (55.7). Operating profit was EUR -0.8 million (0.5), profit before taxes EUR -2.0 million (-0.5) and profit after taxes EUR -1.5 million (-0.3). Net sales for the nine-month period totalled EUR 164.8 million (161.2). Operating profit was EUR -0.3 million (2.2), profit before taxes EUR -3.8 million (-0.6) and profit after taxes EUR -2.9 million (-0.4). The strong fluctuations in raw material prices continued, especially in the prices of oil-based raw materials used for flexible packaging. The quoted prices for supplies for the summer period reached a record high level, but during the autumn the prices have decreased. The costs of increased raw material prices that were not compensated by higher sales prices during the period under review exceeded those of the previous year by EUR 2 million. Reduced volumes and stocks as well as lower prices have weakened the operating profit by some EUR 3 million on the corresponding period in 2007. Energy and payroll costs increased by some EUR 2 million. The Company's operational enhancement programme has generated EUR 4.5 million since the previous year. Cost-saving and operational enhancement programme Suominen's Stairs to Top programme extending over a number of years under way covers both operational development and continuous improvement, as well an updated customer offering. During the period under review, efficiency-enhancement measures continued to focus on cost savings. Lower volumes than planned and the unfavourable development of wastage took their toll on the benefits gained from the continuous improvement of operations. The sales and product offering programmes promoted new sales, however, not to the extent targeted. The measures for 2008 included in the enhancement programmes to reduce the working capital and strengthen the cash flow are reflected in the stronger cash flow from operations. Financing Interest-bearing liabilities totalled EUR 91.2 million including capital loan of EUR 10 million issued in the spring. Repayments of non-current loans were EUR 10.9 million and net deduction of current loans was EUR 7.4 million. Net financial expenses were EUR 3.5 million (2.9) or 2.2 per cent (1.8) of net sales. A total of EUR 6.0 million was released in working capital. The equity ratio was 27.2 per cent (30.4). When the capital loans are included in shareholders' equity, the equity ratio was 33.4 per cent (31.5) and the ratio of liabilities to shareholders' equity 146.0 per cent (161.1). Cash flow from operations was EUR 0.51 per share (0.15). Investments The Company's gross investments in production totalled EUR 3.5 million (9.6). Planned depreciation amounted to EUR 9.6 million (10.4). Wet Wipes accounted for EUR 0.5 million (2.3), Nonwovens EUR 1.3 million (1.5) and Flexible Packaging EUR 1.6 million (5.8) of total investments. Investments were replacement and maintenance investments. SEGMENT RESULTS During the period under review, net sales of the Wipes and Nonwovens business area totalled EUR 108.2 million, an increase of 5 per cent on the corresponding period in 2007. The business area's operating profit was EUR -0.3 million (0.4). Net sales of Wet Wipes totalled EUR 55.4 million, an increase of 8 per cent on the previous year. Delivery volumes grew in personal care and moist toilet wipes. In baby wipes, deliveries were on the level of the previous year. Average sales prices continued to fall as expected, partly also due to changes in the sales mix. Despite the clear growth in volumes, the targets set for increasing sales to new customers and our own new product applications were not met. The stock of finished products that was increased for the summer period was reduced in August, and production during the third quarter was lower than sales. Despite this, the efficiency of operations developed positively and cost-saving measures were continued. Additional measures to improve specific profitability were launched in the business unit. Local employee negotiations regarding head count reduction were started. Net sales of Nonwovens increased by 4 per cent to EUR 60.8 million. Deliveries of thermobonded material for hygiene products increased. In hydroentangled nonwovens, the focus of sales shifted to Europe. There was an increase in internal deliveries. Average sales prices were slightly higher than those of the corresponding period in 2007. It was not possible to compensate the high raw material prices in the sales prices in full. Measures to improve the efficiency of production continued, but the change made in the production line late in the summer increased the amount of reject on the line during the period under review. The poorly profitable production of pulp-based nonwoven for wipes was terminated during the third quarter. At the end of the period under review, employee negotiations of temporary lay-off of 20 days concerning the entire personnel of the unit were started due to the low estimated demand during the rest of the year. Net sales of Flexible Packaging totalled EUR 57.1 million (58.1) and operating profit EUR 0.4 million (2.2). Net sales decreased slightly from the previous year due to the decrease in volumes of hygiene packaging. Deliveries of food packaging were on the level of the previous year. In retail sector, there were no changes in the deliveries of carrier bags. Sales of system and security packaging experienced a lower season, but the product area strengthened its order book at the end of the period. The prices for plastic raw materials and therefore also prices for plastics were determined in July for the third quarter at a high level. For this reason, Flexible Packaging conducted sales price negotiations with a range of its customers during the summer. However, the most of the agreed price increases have been effective since the end of the period. The stock of finished products that was increased during the summer as planned was reduced. Production at the Polish plant increased by more than 15 per cent due to the investment in the printing machine made in 2007. The head count reduction in the business area since the beginning of 2008 is 35 people. SHARE CAPITAL AND SHARES Share trading and price The number of Suominen Corporation's shares traded on the NASDAQ OMX Helsinki from 1 January to 30 September 2008 was 1 339 689 shares or 5.7 per cent of the shares included in the Company's share capital. The trading price varied from EUR 1.38 to EUR 2.25. The final trading price was EUR 1.51, giving the Company a market capitalisation of EUR 35.8 million on 30 September 2008. Share capital The registered number of issued shares of Suominen totals 23,720,112 shares or EUR 11,860,056. There were no changes in share capital during the period under review. The Company's own shares On 1 January 2008, the Company held 36,343 of its own shares, with an acquisition value of EUR 3.19 per share. The Annual General Meeting of Shareholders held on 27 March 2008 authorised the Board of Directors to decide on the acquisition of a maximum of 1,186,000 of the Company's own shares. The authorisation will be valid for 18 months after the decision of the General Meeting. The repurchased shares will be used as payment in business acquisitions or other arrangements in the Company's business, to finance investments, to implement incentive programmes, will be held by the Company, or will be otherwise conveyed or cancelled. The Company's own shares will be repurchased otherwise than in proportion to the holdings of the shareholders by using non-restricted equity through public trading on the NASDAQ OMX Helsinki at the market price prevailing at the time of acquisition. The General Meeting also authorised the Board of Directors to decide on the conveyance of a maximum of 1,222,000 of the Company's own shares. The authorisation will be valid for 18 months after the end of the General Meeting. Within the authorisation the Company has conveyed 31,286 of its own shares as emoluments to the Board of Directors in the period under review. The price of the conveyed shares was EUR 1.63 per share. During the period under review, the Board of Directors did not exercise its authorities to buy the Company's own shares. On 30 September 2008, Suominen Corporation held a total of 5,057 of its own shares, accounting for 0.0 per cent of the share capital and votes. Stock options 2006 and 2007 Under stock option plan 2006, a maximum of 300,000 stock options shall be issued to the President and CEO of Suominen Corporation as specified by the Board of Directors. Each stock option entitles its holder to subscribe for one Suominen Corporation's share with an equivalent book value of EUR 0.50. According to the 2006C stock option plan a total of 100,000 stock options has been issued in the period under review. The share subscription price for the stock options is the trade volume-weighted average price of the Company share on the NASDAQ OMX Helsinki in May 2008 or EUR 1.66. The subscription period for the 2006C stock options is from 2 May 2010 to 30 October 2011. Under stock option plan 2007, a maximum of 200,000 stock options shall be issued to the Executive Team of Suominen Corporation as specified by the Board of Directors. Each stock option entitles its holder to subscribe for one Suominen Corporation's share with an equivalent book value of EUR 0.50. During the period under review, a total of 35,000 stock options has been issued according to the 2007A stock option plan, and a total of 60,000 stock options according to the 2007B stock option plan. The share subscription price for the 2007A stock options is the trade volume-weighted average price of the Company share on the NASDAQ OMX Helsinki in May 2007 or EUR 3.44. The share subscription price for the 2007B stock options is the trade volume-weighted average price of the Company share on the NASDAQ OMX Helsinki in May 2008 or EUR 1.66. The subscription period for the 2007A stock options is from 2 May 2009 to 30 October 2010, and for the 2007B stock options from 2 May 2010 to 30 October 2011. As the registered number of Suominen's issued shares totals 23,720,112, the number of shares may rise to a maximum of 24,220,112 after stock option subscriptions. Other authorisation for the board of directors The Board of Directors is not currently authorised to issue shares, convertible bonds or bonds with warrants. ORGANISATION AND PERSONNEL Mikko Pellinen, the new Vice President and General Manager of Flexible Packaging, started on 1 October 2008. He is also a member of the Corporate Executive Team. Suominen's personnel has been reduced by some 50 people since the beginning of 2008. In addition, the implementation of the profitability programme started in Wet Wipes may result in further reductions later in 2008. OUTLOOK The global financial crisis and the expected slowing down of economic growth will probably affect consumer demand in Europe. However, consumption in Suominen's main product groups is expected to remain more stable than the global consumer demand. The focus of Suominen's operations is on securing improvement in profitability, cash flow and capital structure. The ongoing cost-saving and efficiency-enhancement programme is expected to improve Suominen's competitiveness. The price fluctuations of Suominen's main raw materials have been significant during the year. However, prices for oil-based raw materials have decreased during the autumn. The price of energy has remained high and payroll costs have continued to increase. Suominen's net sales for 2008 are expected to be on the level of 2007. The underlying operating profit is expected to be on the level of the previous year at best and the whole year result is expected to be negative. NEAR-FUTURE UNCERTAINTIES The estimate concerning the development of Suominen's net sales is based in part on forecasts and action plans provided by the Group's customers. Changes in these forecasts and plans resulting from changes in the market situation or changes in customers' inventory levels could affect Suominen's sales. Due to the uncertain global economic situation, the forecasts are more vulnerable to risks than before. Nonwovens and Flexible Packaging purchase oil-based raw materials to the value of some EUR 50 million annually. In addition, significant amounts of viscose, printing inks, and solvents are also purchased. Rapid fluctuations in the world market prices of raw materials affect Suominen's margins. Suominen's cost-saving and operational enhancement efforts are focused on areas such as improving yield, increasing machine speeds, and reducing changeover time. The benefits of these efforts will be most evident if production volumes will increase. Delays in the implementation of measures or their failure would have a negative impact on the Company's result. The possible personnel reductions at the end of the year may cause non-recurring costs arising from personnel costs for the notice period. The sensitivity of Suominen's group goodwill and possible changes in the general assumptions are described in the notes to the financial statements for 2007. Suominen's business risks are described in the report of the Board of Directors for 2007. The uncertainty of the financial markets has increased, and a significant amount of Suominen's loan instalments are scheduled to be paid in 2009. The Company has started negotiations with the banks about refinancing. These are expected to be completed by the end of the year. SUOMINEN CORPORATION CONSOLIDATED 1 JANUARY - 30 SEPTEMBER 2008 This interim report has been prepared in compliance with IAS 34 Interim Financial Reporting. Principles for preparing the interim report are the same as those used for preparing the financial statements for 2007, and this interim report should be read parallel to the financial statements for 2007. Amendments to and interpretations of published accounting standards and new accounting standards that came into effect on 1 January 2008 are presented in the financial statements for 2007. The Company complies with the interpretation of IFRIC 10 Interim Financial Reporting and Impairment, which prohibits, for example, the reversal of impairment losses recognised for goodwill during previous interim periods. In its principles for preparing the financial statements, Suominen has not applied any changes allowed by the published new standards and interpretations prior to their official introduction. The most important reform known concerns segment reporting, on which the standard will enter into force on 1 January 2009. The figures in this interim report have not been audited. STATEMENT OF INCOME -------------------------------------------------------------------------------- | EUR 1 000 | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | | | 2008 | 2007 | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET SALES | 55 151 | 55 701 | 164 781 | 161 173 | 215 245 | -------------------------------------------------------------------------------- | Cost of goods sold | -53 174 | -52 541 |-156 659 | -150 891 | -202 738 | -------------------------------------------------------------------------------- | GROSS PROFIT | 1 977 | 3 160 | 8 122 | 10 282 | 12 507 | -------------------------------------------------------------------------------- | Other operating income | 15 | 234 | 525 | 1 054 | 1 438 | -------------------------------------------------------------------------------- | Sales and marketing | -835 | -913 | -2 470 | -2 925 | -3 643 | | expenses | | | | | | -------------------------------------------------------------------------------- | Research and development | -503 | -487 | -1 565 | -1 443 | -2 121 | -------------------------------------------------------------------------------- | Administration expenses | -1 379 | -1 473 | -4 825 | -4 613 | -6 300 | -------------------------------------------------------------------------------- | Other operating expenses | -40 | 24 | -59 | -106 | -228 | -------------------------------------------------------------------------------- | OPERATING PROFIT BEFORE | -765 | 545 | -272 | 2 249 | 1 653 | | GOODWILL AMORTISATION | | | | | | -------------------------------------------------------------------------------- | Goodwill amortisation | | | | | -8 430 | -------------------------------------------------------------------------------- | OPERATING PROFIT | -765 | 545 | -272 | 2 249 | -6 777 | -------------------------------------------------------------------------------- | Interest and other | -1 260 | -1 047 | -3 544 | -2 891 | -3 922 | | financial income and | | | | | | | expenses | | | | | | -------------------------------------------------------------------------------- | Fair value gains and | | 1 | | 9 | 4 | | losses | | | | | | -------------------------------------------------------------------------------- | PROFIT BEFORE INCOME | - 2 025 | -501 | -3 816 | -633 | -10 695 | | TAXES | | | | | | -------------------------------------------------------------------------------- | Income taxes | 500 | 152 | 964 | 185 | 564 | -------------------------------------------------------------------------------- | PROFIT/LOSS FOR THE | -1 525 | -349 | -2 852 | -448 | -10 131 | | PERIOD | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings/share, EUR | -0.06 | -0.01 | -0.12 | -0.02 | -0.43 | -------------------------------------------------------------------------------- KEY FIGURES ON STATEMENT OF INCOME -------------------------------------------------------------------------------- | | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | | | 2008 | 2007 | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales, change, % * | -1,0 | | 2,2 | | | -------------------------------------------------------------------------------- | Gross profit, % ** | 3,6 | 5,7 | 4,9 | 6.4 | 5.8 | -------------------------------------------------------------------------------- | Operating profit, % ** | -1,4 | 1,0 | -0,2 | 1.4 | -3.1 | -------------------------------------------------------------------------------- | Financial income and | -2,3 | -1,9 | -2,2 | -1.8 | -1.8 | | expenses, % ** | | | | | | -------------------------------------------------------------------------------- | Profit before income | -3,7 | -0,9 | -2,3 | -0.4 | -5.0 | | taxes, % ** | | | | | | -------------------------------------------------------------------------------- | Profit for the period, % | -2,8 | -0,6 | -1,7 | -0.3 | -4.7 | | ** | | | | | | -------------------------------------------------------------------------------- * Compared with the corresponding period of the previous year. ** As of net sales. BALANCE SHEET -------------------------------------------------------------------------------- | EUR 1 000 | 9/2008 | 9/2007 | 12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current assets | | | | -------------------------------------------------------------------------------- | Goodwill | 25 604 | 34 034 | 25 604 | -------------------------------------------------------------------------------- | Intangible non-current assets | 895 | 864 | 942 | -------------------------------------------------------------------------------- | Tangible non-current assets | 68 767 | 75 617 | 74 083 | -------------------------------------------------------------------------------- | Available-for-sale financial assets | 712 | 716 | 712 | -------------------------------------------------------------------------------- | Held-to-maturity investments | 100 | 100 | 100 | -------------------------------------------------------------------------------- | Deferred tax assets | 469 | 880 | 688 | -------------------------------------------------------------------------------- | Non-current assets, total | 96 546 | 112 211 | 102 129 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | -------------------------------------------------------------------------------- | Inventories | 27 224 | 29 327 | 30 765 | -------------------------------------------------------------------------------- | Trade receivables | 28 272 | 27 365 | 28 718 | -------------------------------------------------------------------------------- | Other current receivables | 5 139 | 9 899 | 8 873 | -------------------------------------------------------------------------------- | Income tax receivables | 828 | 1 511 | 841 | -------------------------------------------------------------------------------- | Cash at bank and in hand | 2 053 | 1 664 | 1 094 | -------------------------------------------------------------------------------- | Current assets, total | 63 515 | 69 766 | 70 291 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets, total | 160 061 | 181 977 | 172 420 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND LIABILITIES | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholders' equity | | | | -------------------------------------------------------------------------------- | Share capital | 11 860 | 11 860 | 11 860 | -------------------------------------------------------------------------------- | Share premium account | 24 681 | 24 681 | 24 681 | -------------------------------------------------------------------------------- | Fair value and other reserves | 1 513 | 1 455 | 1 661 | -------------------------------------------------------------------------------- | Translation differences | 1 452 | 758 | 1 202 | -------------------------------------------------------------------------------- | Other shareholders' equity | 3 981 | 16 487 | 6 903 | -------------------------------------------------------------------------------- | Shareholders' equity, total | 43 487 | 55 241 | 46 307 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | | | | -------------------------------------------------------------------------------- | Non-current liabilities | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 5 026 | 5 977 | 5 848 | -------------------------------------------------------------------------------- | Pension liabilities | | 235 | | -------------------------------------------------------------------------------- | Provisions | | 85 | | -------------------------------------------------------------------------------- | Capital loans | 8 000 | | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 41 896 | 64 561 | 62 186 | -------------------------------------------------------------------------------- | Other non-current liabilities | | 12 | | -------------------------------------------------------------------------------- | Non-current liabilities, total | 54 922 | 70 870 | 68 034 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current liabilities | | | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 39 258 | 30 716 | 34 933 | -------------------------------------------------------------------------------- | Provisions | | 115 | 100 | -------------------------------------------------------------------------------- | Capital loans | 2 000 | 2 000 | 2 000 | -------------------------------------------------------------------------------- | Income tax liabilities | 274 | 1 333 | | -------------------------------------------------------------------------------- | Trade payables and other current | 20 120 | 21 702 | 21 046 | | liabilities | | | | -------------------------------------------------------------------------------- | Current liabilities, total | 61 652 | 55 866 | 58 079 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities, total | 116 574 | 126 736 | 126 113 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholders' equity and liabilities, | 160 061 | 181 977 | 172 420 | | total | | | | -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY -------------------------------------------------------------------------------- | EUR 1 000| Share | Share| Own | Trans-| Fair |Actuar- | Re- | Total | | |capital |premium|shares |lation | value | ial | tained | | | | |account| |differ-| re- | gains | earn- | | | | | | | ences|serves | and | ings | | | | | | | | | losses | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 11 860 |24 681 | -115 | 1 202 | 1 776 | 0 | 6 903 | 46 307 | | equity | | | | | | | | | | at 1 | | | | | | | | | | January | | | | | | | | | | 2008 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash | | | | | -334 | | | -334 | | flow | | | | | | | | | | hedges | | | | | | | | | -------------------------------------------------------------------------------- | Trans- | | | | 248 | | | | 248 | | lation | | | | | | | | | | differ- | | | | | | | | | | ences | | | | | | | | | -------------------------------------------------------------------------------- | Deferred | | | | 2 | 87 | | | 89 | | taxes | | | | | | | | | -------------------------------------------------------------------------------- | Share- | | | | | | | 54 | 54 | | based | | | | | | | | | | payments | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | | | | | -76 | -76 | | changes | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | 0 | 250 | -247 | | - 22 | - 19 | | income | | | | | | | | | | recognis-| | | | | | | | | | ed | | | | | | | | | | directly | | | | | | | | | | in | | | | | | | | | | equity | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | | | | | -2 852 | -2 852 | | income | | | | | | | | | | for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Total | 0 | 0 | 0 | 250 | -247 | 0 | -2 874 | -2 871 | | recognis-| | | | | | | | | | ed | | | | | | | | | | income | | | | | | | | | | and | | | | | | | | | | expense | | | | | | | | | | for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Business | | | | | | | | | | transac- | | | | | | | | | | tions | | | | | | | | | | with | | | | | | | | | | share- | | | | | | | | | | holders | | | | | | | | | -------------------------------------------------------------------------------- | Conveyan-| | | 99 | | | | -48 | 51 | | ce of | | | | | | | | | | own | | | | | | | | | | shares | | | | | | | | | -------------------------------------------------------------------------------- | Total | 11 860 |24 681 | -16 | 1 452 | 1 529 | 0 | 3 981 | 43 487 | | equity | | | | | | | | | | at 30 | | | | | | | | | | September| | | | | | | | | | 2008 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1 000| Share | Share | Own | Trans | Fair | Actuar | Re-tai | Total | | | capit | premi |shares |lation| value | -ial | ned | | | | al | um | | | re-ser | gains | earn-i | | | | | accou | | diffe | ves | and | ngs | | | | | nt | | r-enc | | losses | | | | | | | | es | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 11 860|24 681 | -163 | 738 | 1 348 | 1 372 | 16 907 | 56 743 | | equity | | | | | | | | | | at 1 | | | | | | | | | | January | | | | | | | | | | 2007 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash | | | | | 619 | | | 619 | | flow | | | | | | | | | | hedges | | | | | | | | | -------------------------------------------------------------------------------- | Translat | | | | 12 | | | | 12 | | ion | | | | | | | | | | differen | | | | | | | | | | ces | | | | | | | | | -------------------------------------------------------------------------------- | Deferred | | | | -2 | -158 | 10 | | -150 | | taxes | | | | | | | | | -------------------------------------------------------------------------------- | Share-ba | | | | | | | 25 | 25 | | sed | | | | | | | | | | payments | | | | | | | | | -------------------------------------------------------------------------------- | Actuaria | | | | | | -44 | | -44 | | l gains | | | | | | | | | | and | | | | | | | | | | losses | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | | | | | 44 | 44 | | changes | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | | 10 | 461 | -34 | 69 | 506 | | income | | | | | | | | | | recognis | | | | | | | | | | ed | | | | | | | | | | directly | | | | | | | | | | in | | | | | | | | | | equity | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | | | | | -99 | -99 | | income | | | | | | | | | | for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | | 10 | 461 | -34 | -30 | 407 | | recognis | | | | | | | | | | ed | | | | | | | | | | income | | | | | | | | | | and | | | | | | | | | | expense | | | | | | | | | | for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Business | | | | | | | | | | transac- | | | | | | | | | | tions | | | | | | | | | | with | | | | | | | | | | sharehol | | | | | | | | | | d-ers | | | | | | | | | -------------------------------------------------------------------------------- | Dividend | | | | | | | -1 420 | -1 420 | -------------------------------------------------------------------------------- | Conveyan | | | 47 | | | | 3 | 50 | | ce of | | | | | | | | | | own | | | | | | | | | | shares | | | | | | | | | -------------------------------------------------------------------------------- | Total |11 860 |24 681 | -116 | 748 | 1 809 | 1 338 | 15 460 | 55 780 | | equity | | | | | | | | | | at 30 | | | | | | | | | | September| | | | | | | | | | 2007 | | | | | | | | | -------------------------------------------------------------------------------- CASH FLOW STATEMENT -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/2008 | 1-9/2007 | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operations | | | | -------------------------------------------------------------------------------- | Operating profit | -272 | 2 250 | -6 777 | -------------------------------------------------------------------------------- | Total adjustments | 9 340 | 9 973 | 21 430 | -------------------------------------------------------------------------------- | Cash flow before change in working | 9 067 | 12 223 | 14 653 | | capital | | | | -------------------------------------------------------------------------------- | Change in working capital | 5 972 | -6 355 | -7 261 | -------------------------------------------------------------------------------- | Financial items | -2 790 | -2 436 | -3 852 | -------------------------------------------------------------------------------- | Taxes paid | -125 | 134 | -791 | -------------------------------------------------------------------------------- | Cash flow from operations | 12 125 | 3 566 | 2 749 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | | | | -------------------------------------------------------------------------------- | Investments in tangible and intangible | -3 536 | -11 026 | -12 898 | | assets | | | | -------------------------------------------------------------------------------- | Proceeds from disposal of fixed assets | 287 | 1 396 | 1 634 | | and other proceeds | | | | -------------------------------------------------------------------------------- | Cash flow from investing activities | -3 249 | -9 630 | -11 264 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financing | | | | -------------------------------------------------------------------------------- | Non-current loans drawn | | 7 447 | 18 371 | -------------------------------------------------------------------------------- | Repayments of non-current loans | -8 933 | -1 353 | -12 042 | -------------------------------------------------------------------------------- | Withdrawals of capital loans | 10 000 | | | -------------------------------------------------------------------------------- | Repayments of capital loans | -2 000 | -2 000 | -2 000 | -------------------------------------------------------------------------------- | Foreign exchange profit or loss | 408 | | 522 | -------------------------------------------------------------------------------- | Dividends paid | | -1 418 | -1 420 | -------------------------------------------------------------------------------- | Change in current loans | -7 440 | 3 847 | 4 934 | -------------------------------------------------------------------------------- | Cash flow from financing | -7 965 | 6 523 | 8 365 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in cash and cash equivalents | 911 | 459 | -150 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY FIGURES | 1-9/2008 | 1-9/2007 | 12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings/share, EUR | -0.12 | -0.02 | -0.43 | -------------------------------------------------------------------------------- | Equity/share, EUR | 1.83 | 2.33 | 1.96 | -------------------------------------------------------------------------------- | Cash flow from operations/share, EUR | 0.51 | 0.15 | 0.12 | -------------------------------------------------------------------------------- | Return on equity (ROE), % | -8.4 | -1.1 | -18.8 | -------------------------------------------------------------------------------- | Return on invested capital (ROI), % | -0.2 | 2.1 | -4.5 | -------------------------------------------------------------------------------- | Equity ratio, % | 27.2 | 30.4 | 26.9 | -------------------------------------------------------------------------------- | Gearing, % | 202.5 | 170.6 | 210.5 | -------------------------------------------------------------------------------- | Gross investments, EUR 1 000 | 3 536 | 9 622 | 11 266 | -------------------------------------------------------------------------------- | Depreciation and impairment losses, EUR | 9 639 | 10 416 | 13 934 | | 1 000 | | | | -------------------------------------------------------------------------------- | Goodwill amortisation, EUR 1 000 | | | 8 430 | -------------------------------------------------------------------------------- SEGMENT REPORTING WIPES AND NONWOVENS -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/2008 | 1-9/2007 | Change % | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales | | | | | -------------------------------------------------------------------------------- | - Wet Wipes | 55 367 | 51 256 | 8.0 | 70 032 | -------------------------------------------------------------------------------- | - Nonwovens | 60 820 | 58 390 | 4.2 | 76 970 | -------------------------------------------------------------------------------- | - eliminations | -8 023 | -6 134 | 30.8 | -9 413 | -------------------------------------------------------------------------------- | Total | 108 164 | 103 512 | 4.5 | 137 589 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit before | -318 | 425 | | -359 | | goodwill amortisation | | | | | -------------------------------------------------------------------------------- | % of net sales | -0.3 | 0,4 | | -0.3 | -------------------------------------------------------------------------------- | Goodwill amortisation | | | | -8 430 | -------------------------------------------------------------------------------- | Operating profit | -318 | 425 | | -8 789 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | 104 724 | 117 306 | | 108 295 | -------------------------------------------------------------------------------- | Liabilities | 13 474 | 14 262 | | 12 884 | -------------------------------------------------------------------------------- | Net assets | 91 250 | 103 044 | | 95 411 | -------------------------------------------------------------------------------- | Investments | 1 869 | 3 797 | | 4 379 | -------------------------------------------------------------------------------- | Depreciation and impairment | 5 702 | 6 282 | | 8 407 | | losses | | | | | -------------------------------------------------------------------------------- | Goodwill amortisation | | | | 8 430 | -------------------------------------------------------------------------------- | Average personnel | 456 | 470 | | 466 | -------------------------------------------------------------------------------- FLEXIBLE PACKAGING -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/2008 | 1-9/2007 | Change % | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales | 57 068 | 58 106 | -1.8 | 78 269 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 372 | 2 173 | | 2 407 | -------------------------------------------------------------------------------- | % of net sales | 0.7 | 3.7 | | 3.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | 56 192 | 58 813 | | 59 744 | -------------------------------------------------------------------------------- | Liabilities | 8 975 | 8 394 | | 9 896 | -------------------------------------------------------------------------------- | Net assets | 47 217 | 50 419 | | 49 848 | -------------------------------------------------------------------------------- | Investments | 1 632 | 5 791 | | 6 852 | -------------------------------------------------------------------------------- | Depreciation and impairment | 3 906 | 4 099 | | 5 481 | | losses | | | | | -------------------------------------------------------------------------------- | Average personnel | 571 | 597 | | 593 | -------------------------------------------------------------------------------- CONSOLIDATION ITEMS -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/2008 | 1-9/2007 | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales | -451 | -445 | -613 | -------------------------------------------------------------------------------- | Operating profit | -326 | -349 | -395 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | -855 | 5 858 | 4 381 | -------------------------------------------------------------------------------- | Liabilities | 94 125 | 104 080 | 103 333 | -------------------------------------------------------------------------------- | Investments | 35 | 34 | 35 | -------------------------------------------------------------------------------- | Depreciation and impairment losses | 31 | 35 | 46 | -------------------------------------------------------------------------------- | Average personnel | 12 | 11 | 11 | -------------------------------------------------------------------------------- NET SALES BY MARKET AREA -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/2008 | 1-9/2007 | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Finland | 26 134 | 25 257 | 34 139 | -------------------------------------------------------------------------------- | Scandinavia | 13 518 | 16 559 | 22 032 | -------------------------------------------------------------------------------- | The Netherlands | 13 694 | 14 111 | 19 022 | -------------------------------------------------------------------------------- | Other Europe | 91 117 | 74 989 | 104 539 | -------------------------------------------------------------------------------- | Other countries | 20 318 | 30 257 | 35 513 | -------------------------------------------------------------------------------- | Net sales, total | 164 781 | 161 173 | 215 245 | -------------------------------------------------------------------------------- QUARTERLY FIGURES -------------------------------------------------------------------------------- | EUR 1 000 | IV/2007 | I/2008 | II/2008 | III/2008 | IV/2007- | | | | | | | III/2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET SALES | | | | | | -------------------------------------------------------------------------------- | Wipes and Nonwovens | | | | | | -------------------------------------------------------------------------------- | - Wet Wipes | 18 776 | 18 507 | 17 379 | 19 481 | 74 143 | -------------------------------------------------------------------------------- | - Nonwovens | 18 580 | 20 559 | 21 109 | 19 152 | 79 400 | -------------------------------------------------------------------------------- | - eliminations | -3 280 | -3 564 | -1 966 | -2 493 | -11 303 | -------------------------------------------------------------------------------- | Total | 34 076 | 35 502 | 36 522 | 36 140 | 142 240 | -------------------------------------------------------------------------------- | Flexible Packaging | 20 163 | 19 094 | 18 817 | 19 157 | 77 231 | -------------------------------------------------------------------------------- | Consolidation items | -168 | -134 | -171 | -146 | -619 | | and eliminations | | | | | | -------------------------------------------------------------------------------- | Net sales, total | 54 071 | 54 462 | 55 168 | 55 151 | 218 852 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OPERATING PROFIT | | | | | | -------------------------------------------------------------------------------- | Wipes and Nonwovens | -784 | -97 | 295 | -516 | -1 102 | -------------------------------------------------------------------------------- | % of net sales | -2.3 | -0.3 | 0.8 | -1.4 | -0.8 | -------------------------------------------------------------------------------- | Flexible Packaging | 234 | 175 | 509 | -312 | 606 | -------------------------------------------------------------------------------- | % of net sales | 1.2 | 0.9 | 2.7 | -1.6 | 0.8 | -------------------------------------------------------------------------------- | Consolidation items | -46 | -203 | -186 | 63 | -372 | | and eliminations | | | | | | -------------------------------------------------------------------------------- | Operating profit | -596 | -125 | 618 | -765 | -868 | | before goodwill | | | | | | | amortisation | | | | | | -------------------------------------------------------------------------------- | % of net sales | -1.1 | -0.2 | 1.1 | -1.4 | -0.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | -8 430 | | | | -8 430 | | amortisation | | | | | | -------------------------------------------------------------------------------- | Operating profit, | -9 026 | -125 | 618 | -765 | -9 298 | | total | | | | | | -------------------------------------------------------------------------------- | % of net sales | -16.7 | -0.2 | 1.1 | -1.4 | -4.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET FINANCIAL | -1 036 | -1 084 | -1 200 | -1 260 | -4 580 | | EXPENSES | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | PROFIT BEFORE | -10 062 | -1 209 | -582 | -2 025 | -13 878 | | INCOME TAXES | | | | | | -------------------------------------------------------------------------------- TAXES FOR THE PERIOD UNDER REVIEW Taxes for the period under review are calculated on the basis of the Group's tax rate for the whole year, which is estimated to be 25 per cent in 2008 (25 per cent in 2007). INFORMATION ON RELATED PARTIES Suominen has related party relationships with the members of the Board of Directors, and the members of the Corporate Executive Team. The Company has no investments in associated companies. Salaries paid to the related parties amounted to EUR 643 thousand, share-based payments EUR 67 thousand, and unsecured loans EUR 1 100 thousand. MOVEMENTS IN BORROWINGS -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/2008 | 1-9/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total borrowings on 1 January | 99 119 | 89 335 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Current loans from financial institutions on 1 | 3 000 | 8 000 | | January | | | -------------------------------------------------------------------------------- | Change in current loans from financial institutions | -1 000 | -8 000 | -------------------------------------------------------------------------------- | Current loans from financial institutions on 30 | 2 000 | 0 | | September | | | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Commercial papers on 1 January | 15 336 | 5 402 | -------------------------------------------------------------------------------- | Change in commercial papers | -6 440 | 11 847 | -------------------------------------------------------------------------------- | Commercial papers on 30 September | 8 896 | 17 249 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Non-current loans on 1 January | 78 783 | 71 933 | -------------------------------------------------------------------------------- | Change in non-current loans | -8 525 | 6 095 | -------------------------------------------------------------------------------- | Non-current loans on 30 September | 70 258 | 78 028 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Capital loans on 1 January | 2 000 | 4 000 | -------------------------------------------------------------------------------- | Change in capital loans | 8 000 | -2 000 | -------------------------------------------------------------------------------- | Capital loans on 30 September | 10 000 | 2 000 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | Total borrowings on 30 September | 91 154 | 97 277 | -------------------------------------------------------------------------------- CHANGES IN FIXED ASSETS -------------------------------------------------------------------------------- | EUR 1 000 | 1-9/ | | 1-9/ | | 1-12/ | | | | 2008 | | 2007 | | 2007 | | -------------------------------------------------------------------------------- | | Tangible | Intan- | Tangible | Intan- | Tangible | Intan- | | | | gible | | gible | | gible | -------------------------------------------------------------------------------- | Book value at | 74 083 | 942 | 77 168 | 944 | 77 168 | 944 | | the beginning | | | | | | | | of the period | | | | | | | -------------------------------------------------------------------------------- | Investments | 3 416 | 120 | 9 554 | 68 | 11 087 | 179 | -------------------------------------------------------------------------------- | Decreases | -132 | -2 | -917 | -177 | -1 600 | | -------------------------------------------------------------------------------- | Depreciation | -9 473 | -166 | -10 264 | -152 | -13 730 | -203 | | and | | | | | | | | impairments | | | | | | | -------------------------------------------------------------------------------- | Translation | 873 | 1 | 76 | 181 | 1 158 | 22 | | differences | | | | | | | | and other | | | | | | | | changes | | | | | | | -------------------------------------------------------------------------------- | Book value at | 68 767 | 895 | 75 617 | 864 | 74 083 | 942 | | the end of | | | | | | | | the period | | | | | | | -------------------------------------------------------------------------------- CONTINGENT LIABILITIES -------------------------------------------------------------------------------- | EUR 1 000 | 9/2008 | 9/2007 | 12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | FOR OWN DEBT | | | | -------------------------------------------------------------------------------- | Real estate mortgages | 5 045 | 5 045 | 5 045 | -------------------------------------------------------------------------------- | Corporate mortgages | | 1 177 | 1 177 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OTHER OWN COMMITMENTS | | | | -------------------------------------------------------------------------------- | Leasing payments and commitments | 11 218 | 11 303 | 11 105 | -------------------------------------------------------------------------------- | Rent commitments | 11 906 | 14 074 | 13 209 | -------------------------------------------------------------------------------- | Guarantee commitment for financial | 1 491 | 1 579 | 1 557 | | lease of discontinued operations | | | | -------------------------------------------------------------------------------- NOMINAL AND FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS -------------------------------------------------------------------------------- | EUR 1 000 | 9/2008 | 9/2007 | 12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENCY DERIVATIVES | | | | -------------------------------------------------------------------------------- | Nominal value | 3 234 | 10 428 | 10 724 | -------------------------------------------------------------------------------- | Fair value | 74 | -38 | 69 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INTEREST RATE DERIVATIVES | | | | -------------------------------------------------------------------------------- | Nominal value | 68 700 | 66 333 | 65 667 | -------------------------------------------------------------------------------- | Fair value | 867 | 1 122 | 1 123 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ELECTRICITY DERIVATIVES | | | | -------------------------------------------------------------------------------- | Nominal value | 3 115 | 5 445 | 4 683 | -------------------------------------------------------------------------------- | Fair value | 1 200 | 1 007 | 1 337 | -------------------------------------------------------------------------------- Helsinki, 22 October 2008 SUOMINEN CORPORATION Board of Directors For addition information please contact: Mr. Petri Rolig, President and CEO, tel. +358 (0)10 214 300 Mr. Arto Kiiskinen, Vice President and CFO, tel. +358 (0)10 214 300interim-22-10-2008.pdf
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