suominen corporation results presentation q2 2016

Suominen CorporationQ2 2016 financial results

Nina Kopola, President & CEOTapio Engström, CFO9 August 2016

Our purpose is to make nonwovens continuously better for people.

Agenda

• Highlights Q2 2016 • Strategy execution• Financial review Q2 and outlook• Summary

• Q&A

9.8.2016 2


Q2: Several successes, but also certain adversities

9.8.2016 3

Comparableoperating profit, chg

-13%Cash flow*, chg

+93%Net sales, chg

-4% / +5%

ROI13.5 %

EPSEUR 0.10

Gearing24.5 %

* Cash flow from operations


Net sales declined from comparison period but developed into the right direction

Net sales, EUR million Net sales, EUR million

95,3103,3104,8111,9112,9114,9

104,2 103,9 108,8

0

20

40

60

80

100

120

140

356,9 373,7401,8

444,0

0

100

200

300

400

500

2012 2013 2014 2015

• The demand improved from the dip experienced in the first quarter. • Net sales decreased from comparison period to EUR 108.8 million.• Net sales was affected mainly by lower sales prices as well as EUR/USD fluctuations.

Continuing operations Continuing operations

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5,8 %

8,4 %

5.0 %6,5 %

8,8 % 8,5 %

4,1 %

5,3 %

8,0 %

0%

2%

4%

6%

8%

10%

0

2

4

6

8

10

Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16

EUR million %

Operating profit down from comparison period, but clearly improving from previous two quarters

Comparable operating profit Comparable operating profit

• Comparable operating profit was EUR 8.7 million. In addition, relative profitability (operating profit margin) reached healthy level.

• Decrease of net sales and gross profit from the comparison period affected operating profit. Changes in USD exchange rate had no material impact on operating profit.

Continuing operations

4,2 %5,2 %

6,7 % 7,0 %

0%1%2%3%4%5%6%7%8%

0

5

10

15

20

25

30

35

2012 2013 2014 2015EUR million %

Continuing operations

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Strategyexecution

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Strategy 2015–2017

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Growth investment program: Customer deliveries planned to start from Bethune in Q1 2017

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Bethune, USA

Paulínia, Brazil

Alicante, Spain

Nakkila, Finland

• New production line to be built at Bethune plant will improve our capability to serve the markets for products with higher added value.

• Installations will be completed in 2016.

• According to our plan, customer deliveries from the new line will commence in Q1 2017.

• Our earlier estimates of the total value of the project and the entire growth investment program are anticipated to be exceeded due to an unexpectedly rapid increase in labor costs, among other things.

Initiatives in the growth investment program


suominen@work product line

• Nonwovens for wipes used in fast food restaurants, hospitals and industrial environments.

• Our investments in Alicante and Bethune improve our capability to serve this growing (even 7% p.a.) market.

• Strengthening this product segment supports our strategy that aims at increasing the share of products with higher added value in the net sales.

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Nonwovens for the demanding workplace.


Products with higher value added increased their share in net sales, in line with the strategy

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40%

23%

16%

11%8%

38%

24%

18%

11%8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Baby wipes Personal care wipes Household wipes Workplace wipes Hygiene & medicalproducts

H1 2015 H1 2016 Typically higher value-added products


5,0 %

12,4 %

15,7 % 15,9 %13,5 %

0%

5%

10%

15%

20%

2012 2013 2014 2015 Q2/2016

ROI, %

6,9 %

3,5 %

0,8 %

0%

2%

4%

6%

8%

10%

12%

2013 2014 2015

Organic net sales growth, %

101,0 % 96,2 %

34,7 %25,9 % 24,5 %

0%

20%

40%

60%

80%

100%

120%

2012 2013 2014 2015 Q2/2016

Gearing ratio, %

Progress with the mid-term financial targets

• Organic growth of net sales , excluding currency effect, compared to previous year. Indicator is reviewed only annually, not quarterly.

• Target level marked with dashed line.

• Historical figures include continuing operations.

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Financial review Q29.8.2016 12


Profit for the period declined fromcomparison period

Profit for the period, EUR million Profit for the period, EUR million

2,2

0,6

4,8

3,5

6,25,4

1,9

3,4

5,2

0

1

2

3

4

5

6

7

-2,8

5,7

10,2

17,0

-5

0

5

10

15

20

Continuing operations Continuing operations

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2012 2013 2014 2015


Consolidated statement of profit or loss

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Gross profit fell slightly short of comparison period’s level

Healthy cost structure maintained

EUR thousand 4-6/2016 4-6/2015 1-12/2015Net sales 108,832 112,944 444,042Cost of goods sold -93,830 -96,630 -386,042Gross profit 15,002 16,314 58,000Other operating income 470 902 2,637Sales and marketing expenses -1,818 -1,755 -7,760Research and development -994 -736 -3,527Administration expenses -3,931 -4,179 -16,709Other operating expenses -67 -84 -862Operating profit 8,661 10,462 31,778Net financial expenses -967 -1,076 -5,302Profit before income taxes 7,694 9,386 26,476Income taxes -2,475 -3,142 -9,456Profit for the period 5,219 6,244 17,020

Earnings per share, EURBasic 0.10 0.12 0.32Diluted 0.09 0.11 0.29


Consolidated statement of financial position, assets

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Elevated cash.Payments in our growth investment program will push cash closer to normal level.

EUR thousand 30.6.2016 30.6.2015 31.12.2015

Non-current assetsGoodwill 15,496 15,496 15,496Intangible assets 13,385 12,601 13,275Property, plant and equipment 100,499 88,297 97,931Loan receivables 7,093 8,202 7,793Available-for-sale assets 777 806 777Held-to-maturity investments − 465 −Other non-current receivables 2,327 2,389 2,402Deferred tax assets 4,330 5,189 4,491Total non-current assets 143,907 133,445 142,165

Current assetsInventories 32,739 32,322 32,557Trade receivables 57,888 60,193 51,547Loan receivables 1,250 350 1,000Other current receivables 5,583 4,222 7,038

Assets for current tax 2,156 1,601 1,874

Cash and cash equivalents 56,545 42,778 55,570Total current assets 156,161 141,465 149,585

Total assets 300,069 274,910 291,750

No material changes in statement of financial position


Consolidated statement of financial position, equity and liabilities

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EUR thousand 30.6.2016 30.6.2015 31.12.2015EquityShare capital 11,860 11,860 11,860Share premium account 24,681 24,681 24,681Reserve for invested unrestricted equity 69,732 69,652 69,652Treasury shares -44 -44 -44Fair value and other reserves 205 107 -118Exchange differences 6,440 6,011 5,097Other equity 334 -9,824 -3,076Total equity attributable to owners of the parent 113,209 102,444 108,052

Hybrid bond 17,503 16,884 17,664Total equity 130,712 119,328 125,716LiabilitiesNon-current liabilitiesDeferred tax liabilities 10,811 9,886 10,890Liabilities from defined benefit plans 1,070 1,151 1,105Other non-current liabilities 329 459 651Debentures 75,000 75,000 75,000Other non-current interest-bearing liabilities 16,250 6,667 18,498Total non-current liabilities 103,460 93,163 106,144Current liabilitiesCurrent interest-bearing liabilities 5,632 3,333 3,363

Liabilities for current tax 2,625 1,519 47Trade payables and other current liabilities 57,639 57,567 56,479Total current liabilities 65,897 62,420 59,889Total liabilities 169,357 155,583 166,034Total equity and liabilities 300,069 274,910 291,750

No material changes in statement of financial position


Cash flow from operations nearly doubled from comparison period

Cash flow from operations, EUR million Cash flow from operations, EUR million

11,3

16,9

9,3

4,5 3,9

7,9

11,09,1

7,6

02468

1012141618

24,921,3

37,1

27,3

05

10152025303540

2012 2013 2014 2015

- The improvement in the cash flow from operations was mainly due to the decrease in paid financial items and income taxes. Also less working capital was tied up during the reporting period.

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Statement of cash flows (1/2)

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EUR thousand 1-6/2016 1-6/2015 1-12/2015Cash flow from operationsProfit / loss for the period 8,660 9,726 17,020Total adjustments to profit / loss for the period 14,455 16,378 32,870Cash flow before changes in net working capital 23,115 26,105 49,890

Change in net working capital -3,238 -9,263 -7,921Financial items -1,932 -4,966 -6,425Income taxes -1,264 -3,468 -8,269Cash flow from operations 16,682 8,407 27,274

Cash flow from investmentsInvestments in property, plant and equipment and intangible assets -10,662 -4,009 -22,369

Cash flow from disposed businesses 313 − 167Adjustments of purchase consideration 161 − −Sales proceeds from property, plant and equipment and intangible assets − 10 9.7

Cash flow from investments -10,188 -4,000 -22,192

All components played a role in the improvement of the cash flow from operations

Investmentscontinuedas planned


Statement of cash flows (2/2)

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EUR thousand 1-6/2016 1-6/2015 1-12/2015Cash flow from financingDrawdown of other non-current interest-bearing liabilities − − 15,000

Repayment of other non-current interest-bearing liabilities − − -3,333

Changes in current interest-bearing liabilities -26 -14 -14Changes in loan receivables 450 417 600Share issue − 340 340Paid interest on hybrid bond -624 − −Dividend distribution / distribution of funds -5,030 -2,504 -2,504Cash flow from financing -5,230 -1,761 10,089

Change in cash and cash equivalents 1,263 2,647 15,171

Cash and cash equivalents at the beginning of the period 55,570 38,430 38,430

Effect of changes in exchange rates -287 1,701 1,968Change in cash and cash equivalents 1,263 2,647 15,171Cash and cash equivalents at the end of the period 56,545 42,778 55,570

Strong cash flow covered both the investments and the payment of dividend


Outlook for full year 2016 remains unchanged

• Suominen expects its full year 2016 net sales and comparable operating profit to improve from year 2015.

• In 2015, Suominen’s net sales amounted to EUR 444.0 million and comparable operating profit to EUR 31.2 million.

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Our purpose is to make nonwovens continuously better for people.9.8.2016 21

• After the dip experienced in previous two quarters, net sales and profitability developed again into the right direction.

Q2: Summary

• Cash flow from operations remained strong and nearly doubled from comparison period.

• Investment in the new production line in Bethune proceeds. The original estimates of both the value of the Bethune project and the entire growth investment program are anticipated to be exceeded.

€ £ $

Thank you!

We’re ready to answer yourquestions.

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Appendix

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Hybrid bond

• In February 2014, Suominen issued a convertible hybrid bond of EUR 17.5 million.

• The holders of the bond notes are entitled to convert the notes and the potential accrued capitalized interest related to the notes into Suominen shares. The conversion period started on 11 February 2014 and will end on 10 February 2018.

• No conversions were executed during the review period. • The number of shares in Suominen may increase in total by

maximum of 7,600,320 shares on the basis of the conversion of the remaining bond notes and the potential capitalized interest, if the conversion is carried out by issuing new shares in Suominen.

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suominen corporation results presentation q2 2016

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