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

Helsinki, Finland, 2014-10-24 07:30 CEST (GLOBE NEWSWIRE) -- Suominen Corporation   Interim Report  24 October 2014 at 8:30am (EEST)

SUOMINEN CORPORATION’S INTERIM REPORT FOR JANUARY 1 – SEPTEMBER 30, 2014:

NET SALES, OPERATING PROFIT AND BALANCE SHEET IMPROVED; OUTLOOK REGARDING OPERATING PROFIT RAISED

 

KEY FIGURES Q3/
2014
Q3/
2013
Q1-Q3/
2014
Q1-Q3/
2013
Q1-Q4/
2013
Net sales, EUR million 103.3 93.5 297.0 283.8 373.7
Operating profit before
non-recurring items, EUR million
8.7 5.8 20.6 15.2 19.4
Operating profit, EUR million 8.4 5.8 19.8 15.2 18.9
Profit/loss for the period,
EUR million, continuing operations
0.6 2.6 5.4 5.1 5.7
Profit/loss for the period, EUR million,
discontinued operations
-1.5 -2.4 -5.2 -20.3 -21.8
Profit/loss for the period,
EUR million, total
-0.9 0.3 0.2 -15.2 -16.1
Earnings/share, EUR,
continuing operations
0.00 0.01 0.02 0.02 0.02
Earnings/share, EUR,
discontinued operations
-0.01 -0.01 -0.02 -0.08 -0.09
Earnings/share, EUR, Group 0.00 0.00 0.00 -0.06 -0.07
Cash flow from operations/share,
EUR*
0.07 0.02 0.11 0.02 0.09
Return on invested capital (ROI), % * 10.2 -5.9 10.2 -5.9 -0.7
Return on invested capital (ROI), %, continuing operations 13.5 9.5 13.5 9.5 12.4
Gearing, % ** 43.3 112.5 43.3 112.5 96.2

 

* Including discontinued operations.

All figures in this interim report refer to continuing operations of the Group unless otherwise stated. The figures are compared with those of the corresponding period in 2013 unless otherwise stated. In accordance with IFRS 5, the comparison data of the balance sheets have not been revised and, consequently, include discontinued operations.

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.”

 

GROUP NET SALES AND FINANCIAL RESULT (CONTINUING OPERATIONS)

July – September 2014

Suominen has two business areas, Convenience and Care. Convenience business area supplies nonwovens as roll goods for wiping products. Care business area manufactures nonwovens for hygiene products and medical applications. Until the end of the financial year 2013, both business areas were reported in the Wiping segment. In the interim report for January-March 2014, the business areas were reported in Nonwovens segment. As from the interim report for January-June 2014, Suominen does not report any segments.

In July-September 2014, Suominen’s net sales from continuing operations grew by 10.5% from the comparison period to EUR 103.3 million (93.5). Net sales of Convenience business area were EUR 94.4 million and net sales of Care business area EUR 8.9 million.

Operating profit before non-recurring items increased by 49% and amounted to EUR 8.7 million (5.8). Operating profit after non-recurring items was EUR 8.4 million (5.8). The non-recurring items reported in the review period amounted to EUR -0.3 million (0.0) and were attributable to restructuring costs as well as costs related to the acquisition of the Brazilian unit. Profit before taxes was EUR 4.0 million (4.5). Due to the refinancing and the discontinuing of the hedge accounting for the interest rate hedging, a non-recurring loss of EUR 0.9 million was recognized. Also the remaining costs of EUR 2.0 million for the previous syndicated loan were recognized in the financial expenses.

Profit for the period from continuing operations was EUR 0.6 million (2.6) and from discontinued operations EUR -1.5 million (-2.4). The Group profit for the period was EUR -0.9 million (0.3).

If calculated with the average USD exchange rate of July-September 2013, the operating profit before non-recurring items would have been EUR 8.8 million (5.8) and after them 8.4 (5.8).

Healthy demand for nonwovens continued in North American market. In Europe, the demand for Suominen’s products increased, partially due to temporary changes in the competitive environment. On top of the good demand for the products, the growth in net sales can be attributed to the increase of the share of products with higher value add in portfolio and to the acquisition of the Brazilian unit in February.

The increase in the share of products with higher added value in sales was mirrored also in gross profit and, consequently, in improved operating profit.

Cash flow from operations was EUR 16.9 million (4.3) in July-September. During the reporting period EUR 8.8 million (1.5 tied up) in working capital was released.

January – September 2014

In January-September 2014, Suominen’s net sales from continuing operations grew by 4.6% from the comparison period to EUR 297.0 million (283.8).

Net sales of Convenience business area were EUR 272.9 million and net sales of Care business area EUR 24.1 million. The main application areas for nonwoven materials supplied by Suominen were baby wipes (accounting for 40% of the sales), personal care wipes (22%), household wipes (17%), industrial wipes (12%), and hygiene and medical products (8%). All wiping products belong to the Convenience business area and all medical and hygiene products belong to the Care business area. The share of products with higher added value grew in the portfolio.

Operating profit before non-recurring items from continuing operations increased by 35% and amounted to EUR 20.6 million (15.2). Operating profit after non-recurring items was EUR 19.8 million (15.2). The non-recurring items reported in the review period totaled EUR -0.9 million (0.0), of which EUR -1.1 million were costs related to restructuring measures and to the acquisition of the Brazilian unit; and EUR 0.2 million were items related to the closing down of the fiber production in Nakkila in 2012. Profit before taxes was EUR 12.7 million (10.5). Profit for the period from continuing operations was EUR 5.4 million (5.1) and from discontinued operations EUR -5.2 million (-20.3). The Group profit for the period was EUR 0.2 million (-15.2).

Cash flow from operations was EUR 27.8 million (5.0) in January-September. As of the beginning of the year, EUR 4.0 million (7.1 tied up) in working capital was released.

BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS

Business combinations


Suominen
completed the acquisition of Paulínia plant in Brazil from Ahlstrom Corporation on 10 February 2014. The Paulínia plant was part of Ahlstrom´s former Home and Personal business operations, acquired by Suominen in 2011, but the acquisition of the Brazilian unit was prolonged due to delay in receiving approval from the authorities and consequent renegotiations. The transaction was implemented through acquisition of the shares of the local company. The enterprise value of the transaction was EUR 17.5 million and the final consideration EUR 19.6 million.

Due to the transaction Suominen’s nonwovens business has now a foothold in the growing South American market region. The acquired plant is the only nonwovens manufacturing facility utilizing modern spunlace technology in production of wiping products in Brazil. The plant employs some 40 people and its annual net sales have amounted approximately to EUR 20 million.

Discontinued operations

Suominen reports in the discontinued operations Codi Wipes business unit, divested in summer 2013 and the Flexibles business area sold in July 2014. Prior to June 2013, Codi Wipes was reported as part of Suominen’s Wiping segment and prior to June 2014 Flexibles business as an individual segment.

The enterprise value of the Flexibles business amounted to EUR 20.3 million, which includes a contingent consideration of EUR 1.0. Suominen has a loan receivable of EUR 8.5 million and retains a minority shareholding of 19.9% in the divested business. The cash component of the purchase price amounted to EUR 5.7 million. A revised non-recurring loss of EUR 5.9 million was recognized.

Suominen reported a non-recurring loss of EUR 5.2 million in the review period in its discontinued operations.

The profit after taxes from discontinued operations was EUR -21.8 million in January-December 2013.

GROUP PROFIT FOR THE PERIOD (INCLUDING DISCONTINUED OPERATIONS)

The Group profit for July-September 2014 including the discontinued operations was EUR -0.9 million (0.3).

The Group profit for January-September 2014 including the discontinued operations was EUR 0.2 million (-15.2).

FINANCING

In September 2014, Suominen renewed its financing. The syndicated credit facility withdrawn in 2011 was fully amortized and its mortgages were released. As a substitute, Suominen issued a bond and agreed a new syndicated EUR 55 million loan facility with banks.

On 23 September 2014, Suominen issued a EUR 75 million bond to be listed in the NASDAQ OMX Helsinki Stock Exchange. Principal amount of each book-entry unit of the senior unsecured notes is EUR 1,000, with an ISIN code FI40000108576. Each note will be freely transferable after it has been registered into the respective book-entry account.

The notes constitute direct and unsecured obligations of Suominen and they are guaranteed as for own debt by the Guarantors, i.e. subsidiaries of Suominen Corporation.

The notes bear interest from, and including, September 23, 2014 at the rate of 4.375 percent per annum until 23 September 2019, when the notes shall be repaid in full at their principal amount.

In connection with issuing the bond, Suominen entered into a syndicated credit facilities agreement totaling EUR 55 million in September. It consists of a term loan of EUR 10 million with a maturity of three years; a multicurrency revolving credit facility of EUR 30 million with a maturity of three years; and an investment loan of EUR 15 million with a maturity of four years. The facilities are guaranteed as for own debt by the subsidiaries of Suominen Corporation.

The Group’s interest-bearing net liabilities amounted to EUR 44.6 million (89.7) at the end of the review period.

In January–September, net financial expenses were EUR 7.1 million (4.7), or 2.4% (1.7%) of net sales. Due to the refinancing and the discontinuing of the hedge accounting for the interest rate hedging, a non-recurring loss of EUR 0.9 million was recognized. Also the remaining costs of EUR 2.0 million for the previous syndicated loan were recognized in the financial expenses.

A total of EUR 4.0 million of working capital was released (tied up 7.1). Trade receivables amounting to EUR 6.0 million were sold to the bank. The equity ratio was 41.0% (33.1%). Cash flow from operations was EUR 27.8 million (5.0), representing a cash flow of EUR 0.11 per share (0.02).

CAPITAL EXPENDITURE

The gross investments of the continued operations totaled EUR 4.4 million (1.4). Planned depreciation of the continuing operations amounted to EUR 11.4 million (10.4). Suominen invested EUR 1.7 million in capacity expansion of high value added nonwovens at the Windsor Locks plant in the United States and EUR 1.0 million in intangible assets. Other investments were in maintenance. The investments of the discontinued operations were EUR 0.6 (1.2) million.

INFORMATION ON SHARES AND SHARE CAPITAL

Share capital

The registered number of Suominen’s issued shares totals 247,934,122 shares, equaling to a share capital of EUR 11,860,056.00. 

Share trading and price

The number of Suominen Corporation shares traded on NASDAQ OMX Helsinki from 1 January to 30 September 2014 was 24,422,736 shares, accounting for 9.9% of the share capital and votes. The trading price varied between EUR 0.47 and EUR 0.62. The closing trading price was EUR 0.58, giving the company a market capitalization of EUR 142,755,750 on 30 September 2014.

Own shares

On 1 January 2014 Suominen Corporation held 1,924,367 of its own shares. On 5 June 2014, the portion of the remuneration of the Board of Directors to be paid in shares, in total 120,848 shares, was delivered in accordance with the decision by the Annual General Meeting. On 30 September 2014, Suominen held 1,803,519 own shares, accounting for 0.7% of the share capital and votes.

Share-based incentive plan

On 30 September 2014, the target group for Suominen’s share-based incentive plan included seven employees. One employee left the program during the review period. At the end of the financial period, the rewards to be paid on the basis of the plan corresponded to a maximum value of roughly 2,383,333 Suominen Corporation shares in total, including the portion to be paid in cash. The aim of the plan is to align the objectives of shareholders and key employees in order to increase the value of the company, to commit the key employees to the company, and to offer them a competitive reward plan based on long-term shareholding in the company. The plan covers one performance period: the calendar years 2012–2014. The potential reward from the performance period will be based on Suominen Group’s cumulative Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and cumulative cash flow, and it will be paid in 2015 partly in company shares and partly in cash.

Extraordinary General Meeting and hybrid bond

Suominen issued on 10 February 2014 a convertible hybrid bond of EUR 17,500,000, treated as equity, to finance the acquisition of the nonwovens business operations in Brazil. The bond was oversubscribed. The bond consists of 175 bond notes, each having the nominal value of EUR 100,000. The bond does not have a guarantee or other collateral. The principal of the bond has a fixed annual interest of 5.95% until 10 February 2018. After that date, the principal of the bond will have a fixed annual interest of 6.95% until 10 February 2019. After that date, the principal of the bond will have a fixed annual interest of 7.95%. The interest accrued for the bond by 10 February 2018 will be capitalized to the principal of the bond annually on 10 February. Thereafter and commencing on 10 May 2018, the interest is payable in the discretion of the Board of Directors quarterly on 10 February, 10 May, 10 August and 10 November. No interest shall be paid on the capitalized interest until 10 February 2018. After that date, the capitalized interest shall be a part of the actual principal of the bond and annual interest shall be paid to the whole amount of the principal according to the interest terms of the bond.

Suominen has the right to redeem the bond in whole or in part on 10 February 2018 or thereafter, on each interest payment date, at the nominal value of the bond together with the accrued interest.

A bond note entitles the bondholder to convert the bond note and the potential capitalized interest for shares in Suominen at the conversion rate of EUR 0.50 per share. The period for converting starts on 11 February 2014 and ends on 10 February 2018. The number of shares to be received through the conversion must always be at least 200,000. If the total value of the bond including interest accrued were converted through an issue of new shares, the number of shares in Suominen might increase by no more than 43,330,000 on the basis of the conversion.

The conversion rate shall be recorded under the invested non-restricted equity fund.

A precondition for issuing the hybrid bond was a resolution made by the Extraordinary General Meeting (EGM) held on 31 January 2014, according to which the Board of Directors of the company was authorized to decide on the granting of stock options and other special rights entitling to shares referred to in Chapter 10, Section 1 of the Companies Act. The special rights carry the right to receive against payment new shares in the company or own shares held by the company. A special right may also be granted to a creditor of the company on the condition that the creditor´s receivables are used to set off against the subscription price of shares. The maximum number of new shares that may be subscribed and/or own shares held by the company that may be conveyed by virtue of the special rights granted by the company is 43,333,000 shares in total.
 
The EGM authorized the Board of Directors of Suominen to decide on all terms and conditions related to granting the special rights. The authorization is valid until further notice, however no longer than five years from the date of the authorization given by the general meeting. The
authorizations did not revoke any earlier decisions regarding granting of stock options and other special rights entitling to shares.

Annual General Meeting

The Annual General Meeting (AGM) of Suominen Corporation was held on 26 March, 2014. The AGM decided that no dividend will be paid for the financial year 2013.

The AGM adopted the financial statements and the consolidated financial statements for the financial year 2013 and discharged the members of the Board of Directors and the President & CEO from liability.

The AGM confirmed the number of members of the Board of Directors to be five (5). The AGM re-elected Mr Risto Anttonen, Mr Jorma Eloranta, Ms Suvi Hintsanen and Mr Hannu Kasurinen as members of the Board of Directors, and elected Ms Jaana Tuominen as a new member of the Board of Directors for the next term of office, expiring at the end of the first Annual General Meeting following their election. The remuneration of the members of the Board of Directors was resolved to maintain unchanged. The resolutions were in accordance with the proposals submitted by the Nomination Board of Suominen’s shareholders.
In its constitutive meeting, the Board of Directors elected Jorma Eloranta as its Chair and Risto Anttonen as Deputy Chair.

PricewaterhouseCoopers Oy, Authorized Public Accountants, was re-elected as auditor, with Heikki Lassila, Authorized Public Accountant, as the principal auditor of Suominen Corporation.

The AGM authorized the Board of Directors to decide on the repurchase of the company’s own shares and to decide on a share issue and issuance of special rights entitling to shares referred to in Chapter 10, Section 1 of the Companies Act.


Nomination Board

In accordance with the decision taken by the Annual General Meeting of Suominen Corporation, the representatives notified by the company’s three largest shareholders were appointed to Suominen Corporation’s permanent Nomination Board. The shareholders entitled to appoint members to the Nomination Board were determined on the basis of the registered holdings in the company’s shareholders' register on 1 September 2014.

The representatives appointed to the Nomination Board were Marco Levi, President & CEO of Ahlstrom Corporation; Timo Ritakallio, Deputy CEO of Ilmarinen Mutual Pension Insurance Company; and Reima Rytsölä, Chief Investment Officer of Varma Mutual Pension Insurance Company. Jorma Eloranta, Chair of Suominen’s Board of Directors, serves as the fourth member of the Nomination Board.

On 23 September 2014, the Nomination Board appointed from among its members Marco Levi, President & CEO of Ahlstrom Corporation, to act as the Chairman.

After the review period, the composition of the Nomination Board changed due to the change in the largest shareholder of Suominen Corporation after a share transaction announced on 7 October 2014. Marco Levi, CEO of Ahlstrom Corporation and Chairman of the Nomination Board of Suominen, resigned from his position. Mr Thomas Ahlström, Managing Director of Antti Ahlström Perilliset Oy and a member of the Board of Directors at Ahlström Capital Oy, was nominated to represent AC Invest Two B.V. in the Nomination Board on 13 October 2014. Further, the Nomination Board elected him as the Chairman of the Nomination Board.

Authorizations of the Board of Directors

The Annual General Meeting (AGM) held on 26 March 2014
authorized the Board of Directors to repurchase a maximum of 3,000,000 of the company’s own shares. The authorization shall be valid until 30 June 2015.

The Board of Directors is also authorized, by the AGM held on 26 March 2014, to decide on issuing new shares and/or conveying the company’s own shares held by the company and/or granting special rights entitling to shares referred to in Chapter 10, Section 1 of the Finnish Companies Act. New shares may be issued and/or company’s own shares held by the company or its group company may be conveyed at the maximum amount of 25,000,000 shares in aggregate. The maximum number of new shares that may be subscribed and own shares held by the company that may be conveyed by virtue of the options and other special rights granted by the company is 25,000,000 shares in total which number is included in the maximum number stated earlier. The authorizations revoke the authorizations decided by the AGM on 26 March 2013 regarding share issue and issuance of special rights entitling to shares, but do not revoke the authorization decided by the Extraordinary General Meeting on 31 January 2014 regarding granting of stock options and other special rights entitling to shares. The authorizations shall be valid until 30 June 2017.

The portion of the remuneration of the members of the Board of Directors which shall be paid in shares

The Annual General Meeting (AGM) of Suominen Corporation held on 26 March 2014 resolved to keep the remuneration to the members of the Board of Directors unchanged. In 2014, the Chair will be paid an annual fee of EUR 50,000, Vice Chair of the Board an annual fee of EUR 37,500 and other Board members an annual fee of EUR 28,000. Further, the members of the Board will receive a fee of EUR 500 for each meeting held in the home country of respective member and a fee of EUR 1,000 per each meeting held elsewhere than in the home country of respective member. 60 % of the annual remuneration is paid in cash and 40 % in Suominen Corporation’s shares.

The portion of the above remuneration to be paid in shares was delivered on 5 June 2014 by transferring own shares held by Suominen Corporation without consideration, in accordance with the authorization by the AGM. The transferred shares are of the same class as the company’s other shares. The number of shares transferred was determined based on the share value in the stock exchange trading maintained by NASDAQ OMX Helsinki Ltd, and calculated as the trade volume weighted average quotation of the share during the one month period immediately following the date on which the interim report of January-March 2014 of the company was published. In total 120,848 shares were given out of the own shares held by the company by the decision of the Board of Directors on 5 June 2014. Since the decision taken by the Board of Directors was essentially an execution of a detailed resolution taken by the AGM, the Board did not exercise independent discretion when it decided on the transfer of the shares.

Permanent committees

After the Annual General Meeting held on 26 March 2014, Suominen Corporation’s Board of Directors decided in its constitutive meeting that the earlier Remuneration Committee will be altered to Personnel and Remuneration Committee. Jorma Eloranta was elected as Chair and Risto Anttonen as a member of the committee.

Hannu Kasurinen was elected as Chair and Suvi Hintsanen and Jaana Tuominen as members of the Audit Committee.

Notifications under Chapter 9, Section 10 of the Securities Market Act in 1 January – 30 September 2014

During the review period, 1 January – 30 September 2014, Suominen received the following notifications referred to in Chapter 9, Section 5 of the Securities Market Act:

Oy Etra Invest Ab, business identity code 0672234-6 notified on 5 February 2014 about an agreement or other arrangement that, if realized, would result in the crossing of the 5% notification threshold as referred to in the Chapter 9 Section 5 of the Securities Market Act and calculated from the total number of shares and voting rights. The notification was made for Erkki Etola, Oy Etra Invest Ab and Tiiviste-Group Oy (business identity code 0115121-4) together. Erkki Etola has a controlling interest on Oy Etra Invest Ab and Tiiviste-Group Oy.

Share of all shares and voting rights after crossing of the notification threshold would be:

Oy Etra Invest Ab: number of shares 15,823,320 and share of all shares and voting rights 5.43%

Erkki Etola: number of shares 4,016 and share of all shares and voting rights 0.00%

Tiiviste-Group Oy: number of shares 3,000,000 and share of all shares and voting rights 1.03%

Oy Etra Invest Ab, Erkki Etola and Tiiviste-Group Oy in total: number of shares 18,827,336 and share of all shares and voting rights 6.46%

Ahlstrom Corporation (business identity code 1670043-1) notified on 5 February 2014 about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification, the ownership and the voting rights of Ahlstrom Corporation may decrease so that the following thresholds will be crossed: 25%, 20%, 15%, 10% or 5%.

Ahlström Capital Oy (business identity code 1670034-3) and AC Invest Two B.V. (registration code 51490943) notified on 5 February about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification, the ownership and the voting rights may increase so that the following thresholds will be reached or crossed: 5%, 10%, 15%, 20% or 25%.

Ahlstrom Corporation (business identity code 1670043-1) notified on 10 January 2014 about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification the ownership and the voting rights may increase or decrease so that the following thresholds will be reached or crossed: 5%, 10%, 15%, 20%, 25% or 30%.

Ahlström Capital Oy (business identity code 1670034-3) and AC Invest Two B.V. (registration code 51490943) notified on 10 January 2014 about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification the ownership and the voting rights may increase so that the following thresholds will be reached or crossed: 5%, 10%, 15%, 20%, 25% or 30%.

CHANGES IN MANAGEMENT IN 1 JANUARY – 30 SEPTEMBER

Ms Lynda A. Kelly joined Suominen as Senior Vice President, Care business area and a member of the Corporate Executive Team on 12 May 2014. Lynda A. Kelly has a long and wide-ranging experience in nonwovens business, especially in hygiene, medical and wiping products. Lynda A. Kelly, a US citizen, will report to Ms Nina Kopola, President & CEO of Suominen Corporation.

Mr Dan Dunbar joined Suominen as Vice President, Sourcing and a member of the Corporate Leadership Team on 14 July 2014. Dan Dunbar is an experienced sourcing professional with a versatile background in globally operating organizations. Dan Dunbar, a US citizen, will report to Ms Nina Kopola, President & CEO of Suominen Corporation.

Mr Reima Kerttula, Senior Vice President, Flexibles, resigned from Suominen Corporate Executive Team on 14 July, 2014 due to the divestment of Flexibles business area.

EVENTS AFTER THE REVIEW PERIOD

Change in the shareholding

On 7 October 2014, Suominen Corporation received notifications referred to in Chapter 9, Section 5 of the Securities Market Act from both Ahlstrom Corporation (business identity code 1670043-1) and from AC Invest Two B.V. (business identity code 51490943), which is a group company of Ahlström Capital. According to the notifications, AC Invest Two B.V. acquires in total 66,666,666 Suominen shares from Ahlstrom Corporation, based on the option agreement disclosed on 10 January 2014. The number of shares to be acquired presents 26.89% of all shares and votes in Suominen Corporation. Due to the acquisition, the shareholding of AC Invest Two B.V. in Suominen Corporation exceeded the flagging threshold of 25% and increased into 67,724,176 shares, corresponding to 27.32% of shares and votes in Suominen Corporation. According to the notification by AC Invest Two B.V, their earlier shareholding in Suominen Corporation was below 5% of all shares and votes.

According to the notification by Ahlstrom Corporation, due to the divestment of the shares, the shareholding of Ahlstrom Corporation in Suominen Corporation decreases to zero. Ahlstrom Corporation’s earlier shareholding in Suominen Corporation was 26.89 % of all shares and votes.

Change in the Nomination Board

Due to the transaction described above, AC Invest Two B.V. became entitled to nominate a representative to Suominen’s Nomination Board. Marco Levi, CEO of Ahlstrom Corporation and Chairman of the Nomination Board of Suominen, resigned from his position. Mr Thomas Ahlström, Managing Director of Antti Ahlström Perilliset Oy and a member of the Board of Directors at Ahlström Capital Oy, was nominated to represent AC Invest Two B.V. in the Nomination Board. Further, the Nomination Board elected him as the Chairman of the Nomination Board.

The other members of the Nomination Board of Suominen Corporation are as announced on 2 September 2014: Timo Ritakallio, Deputy CEO of Ilmarinen Mutual Pension Insurance Company; Reima Rytsölä, Chief Investment Officer of Varma Mutual Pension Insurance Company; and Jorma Eloranta, Chair of Suominen’s Board of Directors.

BUSINESS RISKS AND UNCERTAINTIES

The estimate on the development of Suominen’s net sales is in part based on forecasts and delivery plans received from customers. Changes in these forecasts and plans resulting from changes in the market conditions or in customers’ inventory levels may affect Suominen’s net sales. Due to the continued uncertainty in the general economic situation and the cautious consumer purchasing habits, the forecasts include uncertainty.

Suominen’s customer base is fairly concentrated, which adds to the customer-specific risk. Long-term contracts are preferred in the case of the largest customers. In practice the customer relationships are long-term and last for several years. 

The continued positive development of Suominen’s business operations in the United States increases the relevance of the exchange rate risk related to USD in the Group’s total exchange risk position. Suominen hedges this foreign exchange position in accordance with its hedging policy.

Suominen purchases significant amounts of pulp- and oil-based raw materials annually. Raw materials are the largest cost item for operations. Rapid changes in the global market prices of raw materials affect the company’s profitability. Extended interruptions in the supply of Suominen’s main raw materials could disrupt production and have a negative impact on the Group’s overall business operations. As Suominen sources its raw materials from a number of major international suppliers, significant interruptions are unlikely.

Suominen has numerous regional, national and international competitors in its different product groups. There is currently oversupply in several product groups, particularly in Europe. If Suominen is not able to compete through an attractive product offering, it may lose some of its market share, and the competition may lead to increased pricing pressure on the company’s products.

Due to the acquisition of the manufacturing plant in Brazil, the risks that are characteristic to any developing region, including significant changes in business environment or exchange rates, could have an impact on Suominen’s operations in Brazil.

The Group’s damage risks are insured in order to guarantee the continuity of operations. Suominen has valid damage and business interruption insurance according to which it is estimated that the damages can be covered and the financial losses caused by an interruption compensated.

The sensitivity of Suominen’s goodwill to changes in business conditions is described in the notes to the financial statements 2013. Actual cash flows may deviate from the forecasted future discounted cash flows, as the long economic lifetime of the company’s non-current assets, and changes in the estimated product prices, production costs, and interest rates used in discounting may result in write-downs. The fair value based on the value in use of assets or businesses in total or in part does not necessarily correspond to the price that a third party would pay for them.

General risks related to business operations are described in the Report of the Board of Directors 2013.

BUSINESS ENVIRONMENT

Suominen’s products are used in daily consumer goods, such as wet wipes, hygiene product and medical nonwovens. The general economic situation determines the development of consumer demand, even though the demand for consumer goods is not very cyclical in nature. Europe and North America are the main market regions for Suominen.

In 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 downwards in both the US and the euro area. The outlook of the general economic situation in Europe remains uncertain and the competitive environment of the European nonwovens market remains tight.

Suominen assesses the trend in the demand for its products on the basis of both the general market situation and, above all, on the basis of the framework agreements drawn up with its customers. Suominen estimates that in 2014, the demand for its products will continue to grow at the pace of 2013 on average.

OUTLOOK FOR 2014

Suominen updates its outlook statement concerning 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)

SUOMINEN GROUP CONSOLIDATED 1 JANUARY – 30 SEPTEMBER 2014

This interim report has been prepared according to the principles defined in IAS 34 Interim Financial Reporting. The principles for preparing the interim report are the same as those used for preparing the financial statements for 2013, and this interim report should be read parallel to the financial statements for 2013. Changes to published accounting standards and interpretations, together with the new accounting standards that came into force on 1 January 2014, are presented in the financial statements for 2013.

The figures in this interim report have not been audited.

 

BALANCE SHEET    EUR 1,000 30 Sep 2014 30 Sep 2013 31 Dec 2013
       
Assets      
Non-current assets      
Goodwill 15,496 15,496 15,496
Intangible assets 12,434 11,486 12,025
Tangible assets 88,553 101,355 98,640
Loan receivables 8,531    
Available-for-sale financial assets 942 25 939
Held-to-maturity investments 449 450 451
Other non-current receivables 980 511 511
Deferred tax assets 5,004 6,105 5,778
Non-current assets, total 132,389 135,428 133,838
       
Current assets      
Inventories 29,623 36,691 31,908
Trade receivables 50,639 52,973 46,908
Loan receivables 59   131
Other current receivables 5,971 7,373 6,359
Income tax receivables 697 1,260 1,182
Cash at bank and in hand 31,778 9,504 18,585
Current assets, total 118,767 105,801 105,073
       
Assets, total 251,156 241,229 238,911
       
Shareholders’ equity and liabilities      
Equity attributable to owners of the parent company      
Share capital 11,860 11,860 11,860
Share premium account 24,681 24,681 24,681
Invested non-restricted equity fund 97,192 97,054 97,123
Fair value and other reserves -96 -837 -1,042
Translation differences 2,650 -1,958 -3,022
Other shareholders’ equity * 51,386 -51,048 -51,094
Shareholders’ equity 84,901 79,752 78,506
Hybrid bond 18,162    
Shareholders’ equity, total 103,063 79,752 78,506
       
Liabilities      
Non-current liabilities      
Deferred tax liabilities 7,413 5,471 7,183
Provisions   605 132
Debentures 75,000    
Other non-current liabilities * 1,866 1,197 1,125
Interest-bearing liabilities 6,667 75,264 70,399
Non-current liabilities, total 90,946 82,537 78,839
       
Current liabilities      
Interest-bearing liabilities 3,367 24,071 24,071
Income tax liabilities 1,688 1,500 144
Trade payables and other current liabilities 52,092 53,369 57,351
Current liabilities, total 57,147 78,940 81,567
       
Liabilities, total 148,093 161,477 160,405
       
Shareholders’ equity and liabilities, total 251,156 241,229 238,911
         

 

 

 

STATEMENT OF INCOME
 

EUR 1,000 Q3/2014 Q3/2013 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
           
Net sales 103,291 93,484 296,984 283,847 373,684
Cost of goods sold -88,071 -83,326 -259,509 -253,107 -333,580
Gross profit 15,220 10,158 37,475 30,739 40,104
Other operating income 659 419 1,966 1,653 2,485
Sales and marketing expenses -1,428 -1,280 -4,585 -3,952 -5,583
Research and development -665 -721 -2,062 -2,408 -3,139
Administration expenses -3,428 -2,616 -10,327 -10,134 -13,659
Other operating expenses -1,648 -130 -1,849 -674 -810
Operating profit before non-recurring items 8,710 5,830 20,618 15,224 19,398
Non-recurring items -349   -860   -482
Operating profit 8,361 5,830 19,758 15,224 18,916
Financial income and expenses -4,334 -1,319 -7,077 -4,685 -5,781
Profit before income taxes 4,027 4,511 12,681 10,539 13,135
Income taxes -3,378 -1,877 -7,264 -5,450 -7,419
Profit/loss for the period, continuing operations 649 2,634 5,417 5,089 5,716

Discontinued operations
Profit/loss for the period
-77 -915 716 -2,076 -3,518
Impairment loss recognized on the remeasurement to fair value and cost to sell -1,422 -1,436 -5,921 -18,196 -18,314
Profit/loss for the period, discontinued operations -1,499 -2,351 5,205 -20,272 -21,832
Profit/loss for the period -850 283 212 -15,183 -16,119
           
Earnings/share, EUR
Continuing operations
0.00 0.01 0.02 0.02 0.02
Discontinued operations -0.01 -0.01 -0.02 -0.08 -0.09
Total 0.00 0.00 0.00 -0.06 -0.07
Diluted, total 0.00 0.00 0.00 -0.06 -0.07

 

STATEMENT OF COMPREHENSIVE INCOME
 

EUR 1,000 Q3/2014 Q3/2013 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
           
Profit/loss for the period -850 283 212 -15,183 -16,119
           
Other comprehensive income:

 
         
Items that may be reclassified subsequently to profit or loss:        
Currency translation differences on
foreign operations
3,764 -1,423 5,997 -1,592 -2,664
Fair value changes of cash flow hedges 1,040 -140 1,182 551 353
Items related to discontinuing operations         355
Other reclassifications 83 191 25 -137 325
Total 4,887 -1,372 7,204 -1,178 -1,631
           
Items that will not be reclassified subsequently to profit or loss:        
Actuarial gains and losses   61   61 18
Total 0 61 0 61 18
           
Income tax on other comprehensive income -501 171 -561 107 120
Total other comprehensive income 4,386 -1,141 6,643 -1,010 -1,493
           
Total comprehensive income for the period 3,536 -857 6,855 -16,193 -17,612
           
Total comprehensive income arises from:          
Continuing operations 3,144 1,493 12,060 4,078 4,220
Discontinued operations -5,514 -2,351 -5,205 -20,272 -21,832
Total comprehensive income for the period 3,536 -857 6,855 -16,193 -17,612
           

 

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
 

a. Share capital
b. Share premium account
c. Invested non-restricted equity fund
d. Own shares
e. Translation differences
f. Fair value reserves
g. Other shareholders’ equity
h. Shareholders’ equity
i. Hybrid bond
j. Shareholders’ equity total

 

EUR 1,000 a. b. c. d. e. f. g. h. i. j.
                     
Total equity at
1 Jan 2014
11,860 24,681 97,123 -43 -3,022 -999 -51,094 78,506   78,506
                     
Profit/loss
for the period
            212 212   212
Other comprehensive
income
        5,672 946 14 6,632   6,632
Share-based payments             11 11   11
Conveyance
 of own
 shares
    69         69   69
Hybrid bond             -529 -529 18,162 17,633
Total equity at
30 Sep 2014
11,860 24,681 97,192 -43 2,650 -53 -51,386 84,901 18,162 103,063

 


 

 

EUR 1,000 a. b. c. d. e. f. g. h. i. j.
                     
Total equity at
1 Jan 2013
11,860 24,681 97,054 -43 -549 -1,209 -35,783 96,011   96,011
                     
Profit/loss
 for the
period
            -15,183 -15,183   -15,183
Other comprehensive
income *
        -1,409 416 -18 -1,011   -1,011
Share-based payments             3 3   3
Conveyance
 of own
 shares
            -69 -69   -69
Total equity at
30 Sep 2013
11,860 24,681 97,054 -43 -1,958 -793 -51,048 79,752   79,752


 

EUR 1,000 a. b. c. d. e. f. g. h. i. j.
                     
Total equity at
1 Jan 2013
11,860 24,681 97,054 -43 -549 -1,209 -35,783 96,011   96,011
                     
Profit/loss
for the
period
            -16,119 -16,119   -16,119
Other comprehensive
income
        -2,472 210 770 -1,493   -1,493
Share-based payments             38 38   38
Conveyance
of own shares
    69         69   69
Total equity at
31 Dec 2013
11,860 24,681 97,123 -43 -3,021 -999 -51,094 78,506   78,506

 


 

CASH FLOW STATEMENT
 

EUR 1,000 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
       
Operations      
Operating profit 19,758 15,224 18,916
Total adjustments 14,860 6,048 7,704
Cash flow before change in working capital 34,618 21,272 26,620
Change in working capital 3,985 -7,130 6,482
Financial items -5,982 -4,965 -6,216
Taxes paid -4,839 -4,143 -5,556
Cash flow from operations 27,783 5,035 21,330
       
Investment payments      
Investments in tangible and intangible assets -5,291 -2,693 -5,598
Business combinations -19,261    
Proceeds from disposed business operations 4,736 3,441 3,441
Proceeds from disposal of fixed assets and other proceeds 31 60 785
Cash flow from investing activities -19,785 807 -1,372
       
Financing      
Non-current loans drawn 10,000 113  
Repayments of non-current loans -78,213 -16,848 -21,042
Repayments of capital loans   -920 -920
Hybrid bond 17,500    
Debentures 75,000    
Change in current loans -18,318 6,300 6,300
Cash flow from financing 5,969 -11,355 -15,662
       
Change in cash and cash equivalents * 13,967 -5,513 4,296
       
Cash and cash equivalents 18,585 14,301 14,301
Unrealized exchange rate differences -775 715 -13
Change in cash and cash equivalents 13,967 -5,513 4,296
Cash and cash equivalents 31,778 9,504 18,585
       
Assets held for sale, cash and cash equivalents      
Cash and cash equivalents, continuing operations 31,778 9,504 18,585

Cash flow statement includes discontinued operations.

 

KEY FIGURES Q3/2014 Q3/2013 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
Net sales, change, % * 10.5 -4.3 4.6 4.3 4.7
Gross profit, % ** 14.7 10.9 12.6 10.8 10.7
Operating profit, % ** 8.1 6.2 6.7 5.4 5.1
Financial income and
expenses, % **
-4.2 -1.4 -2.4 -1.7 -1.5
Profit before income taxes,
 % **
3.9 4.8 4.3 3.7 3.5
Profit for the period, %,
continuing operations
0.6 2.8 1.8 1.8 1.5
Profit for the period, %, 
discontinued operations **
-1.5 -2.5 -1.8 -7.1 -5.8
Profit for the period, % ** -0.8 0.3 0.1 -5.3 -4.3
Earnings/share, EUR,
continuing operations
0.00 0.01 0.02 0.02 0.02
Earnings/share, EUR,
discontinued operations
-0.01 -0.01 -0.02 -0.08 -0.09
Earnings/share, EUR, Group 0.00 0.00 0.00 -0.06 -0.07
Diluted earnings/share,
EUR, total
0.00 0.00 0.00 -0.06 -0.07
           
Equity/share, EUR 0.42 0.32 0.42 0.32 0.32
Cash flow from
operations/share, EUR
0.07 0.02 0.11 0.02 0.09
Return on equity (ROE), % -0.8 -28.5 -0.8 -28.5 -18.6
Return on invested capital (ROI), 10.2 -5.9 10.2 -5.9 -0.7
Return on invested capital
(ROI), %, continuing
operations
13.5 9.5 13.5 9.5 12.4
Equity ratio, % 41.0 33.1 41.0 33.1 32.9
Gearing, % 43.3 112.5 43.3 112.5 96.2
           
Gross investments,
EUR 1,000, continuing
operations
951 700 4,441 1,420 4,413
Depreciation, EUR 1,000,
continuing operations
3,953 3,480 11,434 10,445 13,892
Average personnel,
continuing operations
    592 544 550


*Compared with the same period last year.

** Share of net sales.
 

Non-current interest-
bearing liabilities
81,667 75,264 81,667 75,264 70,399
Current interest-bearing
liabilities
3,367 24,071 3,367 24,071 24,071
Interest-bearing receivables * -40,443 -9,606 -40,443 -9,606 -18,985
Interest-bearing net liabilities 44,591 89,729 44,591 89,729 75,485


* Includes interest-bearing loan receivables of EUR 8.5 million granted to the divested Flexibles business.

BUSINESS COMBINATIONS

Suominen acquired the Brazilian unit of the Ahlstrom Home and Personal nonwovens business on 10 February 2014. The main parts of the Home and Personal nonwovens business were acquired in 2011, but due to the delays for some licenses and authorizations the acquisition of the Brazilian business was prolonged. Thanks to the acquisition, Suominen’s nonwovens business has a better coverage on the South American markets.

The balance sheet and the income statement of the Brazilian company were consolidated to Suominen as from 1 February 2014.

The shares of the local company were acquired. The enterprise value was EUR 17.5 million. The final consideration was EUR 19.6 million.

 

Consideration Fair value
Cash 19,558


Recognized amounts of identifiable assets acquired and liabilities assumed according to the initial calculations:

1 000 e
Fair values
Property, plant and equipment 10,463
Intangible assets 20
Other non-current receivables 1,392
Inventories 3,195
Trade and other receivables 5,084
Cash 297
Total assets 20,452
   
Financial liabilities 416
Other liabilities 478
Total liabilities 894
   
The identifiable net assets 19,558


The transaction costs of EUR 0.2 million are reported in the non-recurring items.

The Group´s net sales would have been EUR 298.5 million and operating profit EUR 20.2 million, if the transaction had been realized at the start of 2014 and the costs in the end of 2013.

 


 

DISCONTINUED OPERATIONS

 

EUR 1,000 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
       
Net sales 32,521 44,115 59,438
Costs -31,608 -45,836 -62,601
Profit before income taxes from discontinued operations 913 -1,721 -3,163
Income taxes -197 34 -231
Profit after income taxes from discontinued operations 716 -1,687 -3,394
Impairment loss recognized on the remeasurement to fair value and cost to sell -5,921    
Profit/loss for the period from discontinued operations -5,205 -1,687 -3,394
       
The impact of the divestment of the Flexibles business on the Group´s financial position      
       
Tangible and intangible assets 17,942    
Non-current receivables 1,511    
Inventories 7,340    
Trade receivables and other current receivables 9,004    
Cash at bank and in hand 997    
Total 36,794    
       
Non-current liabilities 4,642    
Trade payables and other current liabilities 10,157    
Total 14,799    
 
Total net assets sold
 
21,995    
Cash consideration 5,733    
Cash equivalents held by discontinued operations -997    
Net cash flow 4,736    
       
Cash flow from discontinued operations      
       
Cash flow from operations 774    
Cash flow from investing activities -376    
Cash flow from financing -1,800    
Change in cash and cash equivalents -1,402    

 


NET SALES BY MARKET AREA
 

EUR 1,000 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
       
Finland 1,942 1,734 2,292
Europe, other 101,678 106,960 138,020
North and South America 185,447 168,964 224,132
Other countries 7,917 6,189 9,240
Net sales, total 296,984 283,847 373,684

 

QUARTERLY FIGURES


EUR 1,000
Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2013-
Q3/2014
Net sales 89,837 98,353 95,340 103,291 386,821
           
Operating profit before non-recurring items 4,176 6,384 5,524 8,710 24,792
% of net sales 4.6 6.5 5.8 8.4 6.4
           
Non-recurring items -482 -233 -278 -349 -1,342
Operating profit, total 3,694 6,151 5,246 8,361 23,450
% of net sales 4.1 6.3 5.5 8.1 6.1
           
Net financial expenses -1,096 -1,467 -1,276 -4,334 -8,173
Profit before income taxes 2,598 4,684 3,970 4,027 15,277


TAXES FOR THE PERIOD UNDER REVIEW

Income tax expense is calculated by country, on the basis of taxable results and income tax rates.

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, and Ahlstrom Corporation, including its subsidiaries and associated companies. The company has no associated companies. Salaries paid to the related parties amounted to EUR 1,470 thousand, obligatory pension payments EUR 113 thousand, voluntary pension payments EUR 59 thousand and share-based payments EUR 53 thousand.


Other related-party transactions
 

EUR 1,000 1-9/2014 1-9/2013 1-12/2013
Sales of goods and services 4,657 13,583 16,439
Purchases of goods and services 56,142 52,388 62,342
Trade and other receivables 865 1,587 1,396
Trade and other payables 8,552 1,383 2,073


Other related-party transactions are transactions with Ahlstrom Corporation and its subsidiaries and associated companies.


 

 

CHANGES IN BORROWINGS      
EUR 1,000 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
Total borrowings on 1 January 94,471 111,518 111,518
       
Current loans from financial institutions on 1 January 24,071 20,571 20,571
Discontinued operations -502    
Change in current loans from financial institutions -20,202 3,499 3,500
Current loans from financial institutions on 30 Sep 3,367 24,071 24,071
       
Non-current loans on 1 January 70,399 90,027 90,027
Discontinued operations -4,283    
Change in non-current loans -59,449 -14,763 -19,628
Non-current loans on 30 Sep 6,667 75,264 70,399
       
Debentures on 1 January      
Change in debentures 75,000    
Debentures on 30 Sep 75,000 0 0
       
Capital loans on 1 January    920 920
Change in capital loans   -920 -920
Capital loans on 30 Sep 0 0 0
       
Total borrowings on 30 Sep 85,034 99,335 94,471


CHANGES IN FIXED ASSETS
 

    Q1-Q3/2014   Q1-Q3/2013   Q1-Q4/2013
EUR 1,000 Tangible Intangible Tangible Intangible Tangible Intangible
Book value at the beginning of the period 98,640 12,025 118,019 12,529 118,019 12,529
Investments 2,567 1,856 1,773 673 3,662 1,004
Decreases     -18   -18  
Discontinued operations -18,484 -179 -5,365 -115 -5,365 -115
Business combinations 10,463 20        
Depreciation -10,071 -1,363 -11,298 -1,153 -15,000 -1,545
Translation differences and other changes 5,438 75 -1,757 -448 -2,658 152
Book value at the end of the period 88,553 12,434 101,355 11,486 98,640 12,025
             

 

CONTINGENT LIABILITIES
 

EUR 1,000 Q1-Q3/2014 Q1-Q3/2013 Q1-Q4/2013
For own debt      
Secured loans 85,000 95,982 91,345
       
Guarantee commitments      
Absolute guarantees 85,000    
Guarantees on other own commitments 1,593    
Guarantees on behalf of third parties 4,669 1,433  
       
Nominal values of pledges        
Real estate mortgages   27,039 27,042
Floating charges   173,201 165,761
Pledged subsidiary shares and loans   192,287 189,699
       
Other own commitments      
Operating leases, real estates 21,918 21,768 22,672
Operating leases, machinery and equipment 1,386 2,495 2,373


FINANCIAL ASSETS BY CATEGORY

a. Financial assets at fair value through profit or loss
b. Held-to-maturity investments
c. Loans and receivables
d. Available-for-sale financial assets
e. Book value
f. Fair value

 

  Classes by instruments’ nature
EUR 1,000 a. b. c. d. e. f.  
Available-for-sale financial assets       942 942 942  
Held-to-maturity investments   449     449 449  
Other non-current receivables 980       980 980  
Loan receivables     8,591   8,591 8,591  
Trade receivables     50,639   50,639 50,639  
Other current receivables     300   300 300  
Cash and cash equivalents     31,778   31,778 31,778  
Total at 30 Sep 2014 980 449 91,307 942 93,678 93,678  

 

  Classes by instruments’ nature
EUR 1,000 a. b. c. d. e. f.
Available-for-sale financial assets       939 939 939
Held-to-maturity investments   451     451 451
Other non-current receivables 511       511 511
Loan receivables     131   131 131
Trade receivables     46,908   46,908 46,908
Other current receivables 58   371   429 429
Cash and cash equivalents     18,585   18,585 18,585
Total at 31 Dec 2013 569 451 65,996 939 67,954 67,954

Principles in estimating fair value for financial assets for 2014 are the same as those used for preparing the financial statements for 2013.


FINANCIAL LIABILITIES
 

  30 Sep 2014 31 Dec 2013
EUR 1,000 Book
value
Fair
value
Book
value
Fair
value
Non-current        
   Loans from financial institutions 6,667 6,667 69,828 69,144
   Pension loans     571 577
   Debentures 75,000 74,993    
   Other non-current liablities 710 710    
Total 82,377 82,369 70,399 69,721
         
Current *)        
Repayment of non-current liabilities        
   Loans from financial institutions 3,333 3,333 23,414 23,412
   Pension loans     571 594
Financial leasing 34 34 86 86
Derivatives not held for hedge accounting     94 94
Derivatives held for hedge accounting 83 83 1,354 1,354
Other current liabilities 386 386    
Trade payables 43,465 43,465 45,016 45,016
Total 47,301 47,301 70,535 70,556
         
Total 129,678 129,670 140,934 140,277


*) In the balance sheet under current liabilities.

Principles in estimating fair value for financial liabilities for 2014 are the same as those used for preparing the financial statements for 2013.

FAIR VALUE MEASUREMENT HIERARCHY

 

EUR 1,000 Level 1 Level 2 Level 3
Assets measured at fair value      
Assets held for sale     942
Total     942
       
Derivatives measured at fair value      
Currency forward deals   -717  
Electricity derivatives   -83  
Total   -800  


Interest rate swaps were reversed at the refinancing arrangements.

Principles in estimating fair value for financial assets and their hierarchies for 2014 are the same as those used for preparing the financial statements for 2013.


 

ANALYST AND PRESS CONFERENCE

Nina Kopola, President & CEO, and Tapio Engström, CFO, will present Suominen’s January-September 2014 financial result in Finnish at an analyst and press conference in Helsinki today, on Friday 24 October 2014 at 10:00am (EEST). The conference will take place at Event House Bank, Unioninkatu 20, Helsinki. The presentation material will be available after the event at www.suominen.fi.

NEXT INTERIM REPORT

Suominen Corporation will publish its Financial Statement Release for 2014 on Friday, 30 January 2015.


Helsinki, 24 October 2014

SUOMINEN CORPORATION
Board of Directors


For additional information, please contact:
Nina Kopola, President & CEO, tel. +358 (0)10 214 300
Tapio Engström, Senior Vice President and CFO, tel. +358 (0)10 214 300


Distribution:
NASDAQ OMX Helsinki Ltd
Key media

www.suominen.fi


Suominen in brief

Suominen manufactures nonwovens as roll goods for wipes as well as for medical and hygiene products. The end products made of Suominen’s nonwovens – wet wipes, feminine care products and swabs, for instance - bring added value to the daily life of consumers worldwide. Suominen is the global market leader in nonwovens for wipes and employs approximately 600 people in Europe and in the Americas. Suominen’s net sales in 2013 amounted to MEUR 373.7 and operating profit excluding non-recurring items to MEUR 19.4 (continuing operations). The Suominen share (SUY1V) is listed in NASDAQ OMX Helsinki Stock Exchange. Read more at www.suominen.fi.

Suominen Corporation Interim Report Q3 2014 FINAL.pdf

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