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2024-05-07 08:30:00 CEST 2024-05-07 08:30:08 CEST REGULATED INFORMATION Suominen Oyj - Interim report (Q1 and Q3)Suominen Corporation's Interim Report for January 1 - March 31, 2024: Gradual improvement in profitabilitySuominen Corporation’s Interim Report on May 7, 2024, at 9:30 a.m. (EEST)
In this financial report, figures shown in brackets refer to the comparison period last year if not otherwise stated.
Outlook for 2024 Suominen expects that its comparable EBITDA (earnings before interest, taxes, depreciation and amortization) in 2024 will increase from 2023. In 2023, Suominen’s comparable EBITDA was EUR 15.8 million. Tommi Björnman, President & CEO: “The year 2024 has started with positive signs of demand recovery. Although the business environment has remained challenging, we were able to improve our quarterly comparable EBITDA to EUR 4.5 million (2.6), supported by increased sales volumes, especially in EMEA, and better sales margins. We have been able to improve our profitability by systematically focusing on our commercial and operational excellence, and we are expecting gradual improvements, especially in production performance and line efficiencies going forward. Our net sales were EUR 113.6 million (116.8) in the first quarter. Sales prices decreased, and sales volumes increased from comparison period. Our ability to innovate and meet market needs is reflected in the share of net sales from new products launched in the last three years, which continued on a very good level and exceeded 35% in the first quarter. In the beginning of April, we announced an investment project to further improve our capabilities in sustainable products by enhancing and upgrading one of our production lines in Bethune, South Carolina, USA. With this investment we strengthen our position as the leader in sustainable nonwovens in Americas market. The investment is made in line with our strategy, and it supports our vision to be the frontrunner in nonwovens innovation and sustainability. Building on our strong sustainability expertise, we arranged a Sustainability & Innovative Fibers Seminar in Windsor Locks at the end of February 2024. In that occasion, we offered our customers interesting presentations from the top experts, and a possibility to exchange ideas with around fifty nonwovens professionals. The seminar received very positive feedback. Generally, Suominen’s market is showing resilience in uncertain global economic environment with some local market variance. In short term we do not see any major changes.” NET SALES In January–March 2024, Suominen’s net sales decreased by 3% from the comparison period to EUR 113.6 million (116.8). Sales volumes increased from comparison period and sales prices decreased following lower raw material prices. Currencies impacted net sales negatively by EUR 0.6 million. Suominen has two business areas, Americas and EMEA. Net sales of the Americas business area were EUR 70.0 million (75.0) and net sales of the EMEA business area were EUR 43.5 million (41.8).
Comparable EBITDA (earnings before interest, taxes, depreciation and amortization) improved to EUR 4.5 million (2.6). The main drivers for EBITDA improvement were increased sales volumes, especially in EMEA, and better sales margins. The positive impact from currencies on EBITDA was EUR 0.1 million. Items affecting comparability were EUR +0.2 million and were related to the closure of the Mozzate plant in Italy. There were no items affecting the comparability of EBITDA in Q1 2023. EBITDA was EUR 4.7 million (2.6). Comparable operating profit increased to EUR -0.1 million (-2.0). Operating profit was EUR 0.1 million (-2.1). Items affecting comparability were EUR +0.2 million (-0.1) and were related to the closure of the Mozzate plant in Italy. Result before income taxes was EUR -0.7 million (-3.6), and result for the reporting period was EUR FINANCING The Group’s net interest-bearing liabilities at nominal value amounted to EUR 49.2 million (54.8) at the end of the review period. The gearing ratio was 39.0% (39.1%) and the equity ratio 39.6% (42.5%). Cash flow from operations was EUR -2.2 million (3.3), representing a cash flow per share of EUR -0.04 (0.06). The decrease in the cash flow from operations was mainly due to the change in net in working capital, as EUR -5.8 million was tied from the working capital (in Q1 2023: released EUR 3.1 million). Suominen signed in July 2020 a syndicated revolving credit facility agreement of EUR 100 million with maturity of three years with initially two one-year extension options, which both have been used. On March 28, Suominen agreed on extending the maturity of the facility with an additional year to July 2026. The gross capital expenditure totaled to EUR 2.0 million (1.5) and was mainly related to normal maintenance investments as well as to the upgrading of one of the production lines in Nakkila, Finland. Depreciation, amortization for the review period amounted to EUR 4.6 million (4.6) and impairment losses to EUR 0.0 million (0.1).
We have strong focus on safety and accident prevention, and our long-term target is to have zero lost time accidents (LTA). In the first quarter one LTA occurred at Suominen sites. The employee-manager performance and development discussions, conducted in February–March, covered 100% of the white-collar employees. We continue implementing a globally harmonized performance and development process for our blue-collar employees globally. We are committed to continuously improving our production efficiency and the efficient utilization of natural resources. In the first quarter we continued our active measures towards our targets to reduce energy consumption, greenhouse gas emissions, water consumption and waste to landfill by 20% per ton of product by 2025 compared to the base year of 2019. We offer a comprehensive portfolio of sustainable nonwovens to our customers and we are continuously developing new and innovative solutions with a reduced environmental impact. Our target is a 50% increase in sales of sustainable nonwovens by 2025 compared to 2019, and to have over 10 sustainable product launches per year. As part of our Annual Report 2023 published on March 12, 2024 we reported on the progress of our sustainability performance. Our sustainability reporting in 2023 was done in accordance with the GRI standards and it was assured by an external partner. INFORMATION ON SHARES AND SHARE CAPITAL The number of Suominen’s registered shares was 58,259,219 shares on March 31, 2024, equaling to a share capital of EUR 11,860,056.00. The number of Suominen Corporation shares traded on Nasdaq Helsinki from January 1 to March 31, 2024, was 233,128 shares, accounting for 0.4% of the average number of shares (excluding treasury shares). The highest price was EUR 2.92, the lowest EUR 2.60 and the volume-weighted average price EUR 2.73. The closing price at the end of review period was EUR 2.80. The market capitalization (excluding treasury shares) was EUR 161.5 million on March 31, 2024. On March 31, 2024, Suominen Corporation held 566,760 treasury shares. The portion of the remuneration of the members of the Board of Directors which shall be paid in shares The Annual General Meeting held on April 4, 2024, decided that 75% of the annual remuneration of the members of the Board of Directors is paid in cash and 25% in Suominen Corporation’s shares. The shares will be transferred out of the own shares held by the company by the decision of the Board of Directors within two weeks from the date on which the interim report of January–March 2024 of the company is published.
The Group management and key employees participate in the company’s share-based long-term incentive plans. The plans are described in more detail in the Financial Statements and in the Remuneration Report, available on the company’s website www.suominen.fi. Company's Performance Share Plan currently includes three 3-year performance periods, calendar years 2022–2024, 2023–2025 and 2024–2026. The aim of the Performance Share Plan is to combine the objectives of the shareholders and the persons participating in the plan in order to increase the value of the company in long-term, to build loyalty to the company and to offer them competitive reward plans based on earning and accumulating the company’s shares. Performance Share Plan: Ongoing performance periods
The President & CEO’s share-based incentive plan The aim of the plan is to align the objectives of the shareholders and the President & CEO in order to increase the value of Suominen in the long-term, to retain the President & CEO at the company, and to offer him a competitive reward plan that is based on acquiring, receiving and accumulating the company's shares. Under the plan the President & CEO is expected to own or acquire up to 30,000 shares of Suominen Corporation at a price formed in public trading on Nasdaq Helsinki. Suominen will match the share investment by way of the President & CEO receiving, without consideration, up to 60,000 matching shares (gross, including also the proportion to be paid in cash). The plan includes three vesting periods, June 1, 2023–June 1, 2024, June 1, 2023–June 1, 2025, and June 1, 2023–June 1, 2026. The potential reward will be paid partly in shares and partly in cash in three equal installments after each vesting period, provided that the President & CEO’s service in the company is in force at the time of the reward payment. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the President & CEO. NOTIFICATIONS UNDER CHAPTER 9, SECTION 5 OF THE SECURITIES MARKET ACT During the review period Suominen received no notifications under Chapter 9, Section 5 of the Securities Market Act.
The direct impact to Suominen’s business due to the continuing war in Ukraine is minor as we have no customers nor suppliers in Russia, Belarus or Ukraine. Suominen as a company is mostly affected by the indirect economic impacts of the war. The conflict in the Red Sea has at least temporarily increased sea freight costs. A more detailed description of risks is available in Suominen’s Annual Report 2023 at suominen.fi/investors. BUSINESS ENVIRONMENT Suominen’s nonwovens are, for the most part, used in daily consumer goods such as wet wipes as well as in hygiene and medical products. In these target markets of Suominen the general economic situation determines the development of consumer demand even though the demand for consumer goods is not very cyclical in nature. North America and Europe are the largest market areas for Suominen. In addition, the company operates in the South American markets. The growth in the demand for nonwovens has typically exceeded the growth of gross domestic product by a couple of percentage points. We see some positive signals from the market and customers, but the overall global economic uncertainty and fierce competition continue to make the longer-term visibility challenging. It remains to be seen how the current economic climate impacts the end consumer demand and consumer preferences regarding wipes. Historically, the wipes market has been rather steady despite the general economic situation. Instabilities in Israel and in the Red Sea area, and the war in Ukraine continue to generate uncertainty globally. Possible impacts to Suominen are expected to be mainly indirect and we continue to monitor the situations. OUTLOOK FOR 2024 Suominen expects that its comparable EBITDA (earnings before interest, taxes, depreciation and amortization) in 2024 will increase from 2023. In 2023, Suominen’s comparable EBITDA was EUR 15.8 million. EVENTS AFTER THE REPORTING PERIOD Annual General Meeting (April 4, 2024) The AGM resolved to approve the Remuneration Report for the Company’s governing bodies for 2023. The resolution made is advisory. The AGM resolved to support the Remuneration Policy for the Company’s governing bodies. The resolution made is advisory. The AGM approved the Board of Directors' proposals concerning the authorization for the Board to decide on repurchasing of the company's shares as well as issuance of shares and granting of options and other special rights entitling to shares. The AGM decided, in accordance with the proposal by the Board of Directors, that a dividend of EUR 0.10 per share will be paid. The AGM confirmed the remuneration of the Board of Directors. The Chair will be paid an annual fee of EUR 74,000, the Deputy Chair an annual fee of EUR 45,000 and other Board members an annual fee of EUR 35,000. Chair of the Audit Committee will be paid an additional fee of EUR 10,000. Further, the members of the Board will receive a fee for each Board and Committee meeting as follows: EUR 500 for each meeting held in the home country of the respective member, EUR 1,000 for each meeting held elsewhere than in the home country of the respective member and EUR 500 for each meeting attended by telephone or other electronic means. 75% of the annual fee is paid in cash and 25% in Suominen Corporation’s shares. Compensation for expenses is paid in accordance with the company's valid travel policy. Mr. Charles Héaulmé was elected as the Chair of the Board of Directors. Ernst & Young Oy, Authorised Public Accountant firm, was re-elected as the auditor of the company for the next term of office in accordance with the Articles of Association. Ernst & Young Oy appointed Mr. Toni Halonen, Authorised Public Accountant, as the principally responsible auditor of the company. Suominen published a stock exchange release on April 4, 2024 concerning the resolutions of the Annual General Meeting and the organizing meeting of the Board of Directors. The stock exchange release and an introduction of the new Board member can be viewed on Suominen’s website at www.suominen.fi. In compliance with the resolution of the Annual General Meeting, on April 15, 2024, Suominen paid out dividends in total of EUR 5.8 million for 2023, corresponding to EUR 0.10 per share. Organizing meeting and permanent committees of the Board of Directors In its organizing meeting held after the AGM, the Board of Directors elected Andreas Ahlström as Deputy Chair of the Board. Authorizations of the Board of Directors The AGM authorized the Board of Directors to decide on repurchasing a maximum of 1,000,000 company’s own shares. The company’s own shares shall be repurchased otherwise than in proportion to the holdings of the shareholders by using the non-restricted equity through trading on regulated market organized by Nasdaq Helsinki Ltd at the market price prevailing at the time of acquisition. The shares shall be repurchased and paid in accordance with the rules of Nasdaq Helsinki Ltd and Euroclear Finland Ltd. The shares shall be repurchased to be used in the company’s share-based incentive programs, in order to disburse the remuneration of the members of the Board of Directors, for use as consideration in acquisitions related to the company’s business, or to be held by the company, to be conveyed by other means or to be cancelled. The Board of Directors shall decide on other terms and conditions related to the repurchase of the company’s own shares. The repurchase authorization is valid until June 30, 2025, and it revokes all earlier authorizations to repurchase company’s own shares. The AGM authorized the Board of Directors to decide on the share issue, conveying the company’s own shares held by the company and/or granting of options and other special rights referred to in Chapter 10, Section 1 of the Companies Act. By virtue of the proposed authorization, the Board of Directors may, by one or several resolutions, issue a maximum of 5,000,000 shares. The share issue and shares granted by virtue of options and other special rights are included in the aforementioned maximum number. Option and other special rights may not be granted as a part of the company’s remuneration system. The share issue can be made either against payment or without payment and can also be directed to the company itself. The authorization entitles the Board of Directors to issue the shares also otherwise than in proportion to the shareholdings of the shareholders (directed share issue). The authorization can be used to carry out acquisitions or other arrangements related to the company's business, to finance investments, to improve the company’s financial structure, as part of the company’s remuneration system or to pay the share proportion of the remuneration of the members of the Board of Directors or for other purposes decided by the Board of Directors. The authorizations shall revoke all earlier authorizations regarding share issue and issuance of special rights entitling to shares. The Board of Directors shall decide on all other terms and conditions related to the authorizations. The authorizations are valid until June 30, 2025. CORPORATE GOVERNANCE STATEMENT AND REMUNERATION REPORT Suominen has prepared a separate Corporate Governance Statement and a Remuneration Report for 2023, which comply with the recommendations of the Finnish Corporate Governance Code for listed companies. The statements have been published on Suominen's website at www.suominen.fi AUDIOCAST AND CONFERENCE CALL Conference call participants can access the teleconference by registering at https://palvelu.flik.fi/teleconference/?id=50048412. The phone numbers and a conference ID to access the conference will be provided after the registration. NEXT FINANCIAL REPORT SUOMINEN GROUP 1.1–31.3.2024 The figures in these interim financial statements are mainly presented in EUR thousands. As a result of rounding differences, the figures presented in the tables do not necessarily add up to total. This interim report has not been audited. This interim report has been prepared in accordance with 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 consolidated financial statements for 2023, with the exception of the effect of the new accounting standards and interpretations which have been applied from January 1, 2024. The new or amended standards or interpretations applicable from January 1, 2024, are not material for Suominen Group. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
KEY RATIOS
* Compared with the corresponding period in the previous year.
CALCULATION OF KEY RATIOS AND ALTERNATIVE PERFORMANCE MEASURES Key ratios per share are either IFRS key ratios (earnings per share) or required by Ordinance of the Ministry of Finance in Finland or alternative performance measures (cash flow from operations per share). Some of the other key ratios Suominen publishes are alternative performance measures. An alternative performance measure is a key ratio which has not been defined in IFRS standards. Suominen believes that the use of alternative performance measures provides useful information for example to investors regarding the Group's financial and operating performance and makes it easier to make comparisons between the reporting periods. The link between the components of the key ratios per share and the consolidated financial statements is presented in the consolidated financial statements of 2023. The link between the components of the alternative performance measures and the consolidated financial statements is presented in Suominen’s Annual Report for 2023. Calculation of key ratios per share Earnings per share
Cash flow from operations per share
Equity per share
Market capitalization
Share turnover
Calculation of key ratios and alternative performance measures Operating profit and comparable operating profit
In order to improve the comparability of result between reporting periods. Suominen presents comparable operating profit as an alternative performance measure. Operating profit is adjusted with material items that are considered to affect comparability between reporting periods. These items include, among others, impairment losses or reversals of impairment losses, gains or losses from the sales of property, plant and equipment or intangible assets or other assets and restructuring costs. Comparable EBIT
EBITDA and comparable EBITDA EBITDA is an important measure that focuses on the operating performance excluding the effect of depreciation and amortization, financial items and income taxes, in other words what is the margin on net sales after deducting operating expenses. EBITDA = EBIT + depreciation, amortization and impairment losses Comparable EBITDA = EBIT + depreciation, amortization and impairment losses, adjusted with items affecting comparability
Gross capital expenditure
Interest-bearing net debt It is the opinion of Suominen that presenting interest-bearing liabilities not only at amortized cost but also at nominal value gives relevant additional information to the investors.
Return on equity (ROE), %
Invested capital
Return on invested capital (ROI), %
Equity ratio, %
Gearing, %
NET SALES BY GEOGRAPHICAL MARKET AREA
QUARTERLY SALES BY BUSINESS AREA
QUARTERLY DEVELOPMENT
RELATED PARTY INFORMATION In its transactions with related parties Suominen follows the same commercial terms as in transactions with third parties. CHANGES IN PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS
Goodwill is not included in intangible assets.
FINANCIAL ASSETS BY CATEGORY
Principles in estimating fair value of financial assets for 2024 are the same as those used for preparing the consolidated financial statements for 2023. FINANCIAL LIABILITIES
Principles in estimating fair value for financial liabilities for 2024 are the same as those used for preparing the consolidated financial statements for 2023. FAIR VALUE MEASUREMENT HIERARCHY
Principles in estimating fair value of financial assets and their hierarchies for 2024 are the same as those used for preparing the consolidated financial statements for 2023. There were no transfers in the fair value measurement hierarchy levels during the reporting period. SUOMINEN CORPORATION
Suominen manufactures nonwovens as roll goods for wipes and other applications. Our vision is to be the frontrunner for nonwovens innovation and sustainability. The end products made of Suominen’s nonwovens are present in people’s daily life worldwide. Suominen’s net sales in 2023 were EUR 450.9 million and we have nearly 700 professionals working in Europe and in the Americas. Suominen’s shares are listed on Nasdaq Helsinki. Read more at www.suominen.fi. Distribution:
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