Suominen Corporation’s Interim Report for January 1 – March 31, 2022: Start of the year burdened by cost inflation and customer inventory issues, outlook updated

Suominen Corporation’s Interim Report on May 4, 2022 at 9:30 a.m. (EEST)Suominen Corporation’s Interim Report for January 1 – March 31, 2022: Start of the year burdened by cost inflation and customer inventory issues, outlook updated

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KEY FIGURES 2022 2021 2021
Net sales, EUR million 110.3 115.3 443.2
Comparable EBITDA, EUR million 3.3 18.5 47.0
Comparable EBITDA, % 3.0 16.1 10.6
EBITDA, EUR million 3.3 18.5 47.0
Operating profit, EUR million -1.3 13.6 26.9
Operating profit, % -1.2 11.8 6.1
Profit for the period, EUR million -2.3 13.8 20.7
Cash flow from operations, EUR million -2.7 16.0 11.1
Cash flow from operations per share, EUR -0.05 0.28 0.19
Earnings per share, basic, EUR -0.04 0.24 0.36
Return on invested capital, rolling 12 months, %* 6.1 25.0 13.9
Gearing, % 35.0 13.3 30.4

* Restated

In this financial report, figures shown in brackets refer to the comparison period last year if not otherwise stated. January–March 2022 in brief:- Net sales decreased by 4% and amounted to EUR 110.3 million (115.3)- Comparable EBITDA declined to EUR 3.3 million (18.5)- Cash flow from operations was EUR -2.7 million (16.0)

Outlook for 2022 updated

Suominen expects that its comparable EBITDA (earnings before interest, taxes, depreciation and amortization) in 2022 will decrease clearly from 2021. The war in Ukraine has increased the already significant cost inflation in raw materials, energy and transportation. Also, while there has been progress in the normalization of the customer inventory levels in the US, it has been somewhat slower than expected. These factors will impact the full year result negatively even though we expect that the demand for our products will improve in the second half of the year. In 2021, Suominen’s comparable EBITDA was EUR 47.0 million.

Previous outlook

Suominen expects that its comparable EBITDA (earnings before interest, taxes, depreciation and amortization) in 2022 will decrease from 2021. The main reasons are inventory levels which still remain high at certain customers as well as operational issues in the entire supply chain due to the current COVID-19 situation, both of which will impact the result negatively especially in the first quarter. In 2021, Suominen’s comparable EBITDA was EUR 47.0 million.

Petri Helsky, President & CEO: “For Suominen the beginning of 2022 has been challenging as was expected. Certain key customers especially in the US continued to struggle with their inventory levels. Furthermore, in the early part of the year both our and our customers’ operations were affected by the omicron variant of the COVID-19. Both of these factors impacted our sales negatively. On the cost side we have seen further sharp increases in raw material, energy and freight costs. Due to the lag in our sales pricing mechanisms our pricing in the first quarter did not fully reflect these increases.

We condemn the Russian invasion of Ukraine and we feel deeply for all Ukrainians whose lives have been devastated by Russia’s incredulous aggression. The war has minor direct impact to Suominen’s business as we have had no suppliers in Russia, Belarus and Ukraine and only very few customers in Russia. Since the war started, we have stopped all sales to Russia. Suominen as a company is mostly affected by the indirect economic impacts of the invasion which contribute to the significant cost inflation mentioned above.

Our net sales were EUR 110.3 million (115.3) in the first quarter. Sales volumes decreased from the COVID-19 boom levels while sales prices increased clearly following the higher raw material prices. Our quarterly EBITDA was EUR 3.3 million (18.5). The main reasons for the decline were the lower volumes and the timing gap between our customer pricing and raw material, energy and freight costs which increased even more than the sales prices.

To improve our financial performance, we have launched an EBITDA improvement program to identify both new sales opportunities and cost savings initiatives. As an example of actions taken, we implemented an energy surcharge to all our products sold in Europe in mid-March. Also, as the inventory issues in the US are mainly related to a certain product group, we have been working to widen the product portfolio at the production lines especially affected by the inventory imbalance.

In line with our vision to be the frontrunner in sustainable nonwovens we are continuously developing our sustainable product offering. During the quarter, we launched our first carbon neutral product BIOLACE® Zero. Our efforts in the sustainability area were also recognized at the IDEA®22 Conference with our HYDRASPUN® Aquaflo winning the Nonwoven Product Achievement Award.

The near future continues to look challenging. The war in Ukraine has worsened the inflationary pressures in raw material, energy and freight costs and increased uncertainty overall. The inventory levels at our certain US key customers have remained elevated despite a decreasing trend supported by solid end consumer demand. However, we are more optimistic about the second half of the year. We are seeing signs of the raw material cost inflation moderating from the third quarter onwards and we also expect improved demand for our products through normalization of the US inventory levels and our portfolio widening actions mentioned above.

NET SALESIn January–March 2022, Suominen’s net sales decreased by 4% from the comparison period to EUR 110.3 million (115.3). Sales volumes decreased while sales prices increased following the higher raw material prices. Currencies impacted net sales positively by EUR 4.6 million.

Suominen has two business areas, Americas and Europe. Net sales of the Americas business area were EUR 61.7 million (71.9) and net sales of the Europe business area were EUR 48.5 million (43.4). EBITDA, OPERATING PROFIT AND RESULTEBITDA (earnings before interest, taxes, depreciation and amortization) declined to EUR 3.3 million (18.5). This was driven by lower sales volumes and the timing gap between the higher raw material, energy and freight costs and sales pricing. The positive impact from currencies on EBITDA was EUR 0.6 million.

Operating profit decreased to EUR -1.3 million (13.6).Result before income taxes was EUR -2.2 million (16.9), and result for the reporting period was EUR -2.3 million (13.8). In the comparison period, the sale of Amerplast impacted the result positively by EUR 3.7 million.

FINANCINGThe Group’s net interest-bearing liabilities at nominal value amounted to EUR 53.8 million (20.2) at the end of the review period. The gearing ratio was 35.0% (13.3%) and the equity ratio 39.8% (43.9%).In January–March, net financial expenses were EUR -0.9 million (+3.3), or -0.8% (2.8%) of net sales. The net financial expenses of the comparison period include a gain of EUR 3.7 million arising from the sale of Amerplast. Fluctuations in exchange rates decreased the net financial items by EUR 0.7 million. In the comparison period the fluctuations in exchange rates decreased the net financial items by EUR 0.7 million.

Cash flow from operations was EUR -2.7 million (16.0), representing a cash flow per share of EUR -0.05 (0.28). The decline in the cash flow from operations was mainly due to the lower result. An additional EUR 4.3 million was tied up in working capital (in Q1 2021: tied up additional EUR 2.2 million). CAPITAL EXPENDITUREThe gross capital expenditure totaled EUR 1.8 million (5.2) and was mainly related to normal maintenance investments.

Depreciation and amortization for the review period amounted to EUR 4.6 million (4.9). PROGRESS IN SUSTAINABILITY

We have strong focus on safety and accident prevention, and our long-term target is to have zero lost time accidents. In the first quarter there were no LTA’s at Suominen sites.

The employee-manager performance and development discussions, conducted in February–March, covered 98% of the white-collar employees. Our target is to develop and harmonize the 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. As an example of our concrete actions to reduce greenhouse gas emissions we installed solar panels to our Alicante plant during the first quarter of the year.

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. During the first quarter of 2022 we launched our first carbon neutral product BIOLACE® Zero. 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.

Suominen reports progress in its key sustainability KPIs annually.

As part of our Annual Report 2021 published on March 2, 2022 we reported on the progress of our sustainability performance. Our sustainability reporting in 2021 was done in accordance with the Core option of the GRI Standards from the Global Reporting Initiative and it was assured by an external partner.

INFORMATION ON SHARES AND SHARE CAPITALShare capital The number of Suominen’s registered shares was 58,259,219 shares on March 31, 2022, equaling to a share capital of EUR 11,860,056.00. Share trading and priceThe number of Suominen Corporation shares traded on Nasdaq Helsinki from January 1 to March 31, 2022 was 7,195,433 shares, accounting for 12.6% of the average number of shares (excluding treasury shares). The highest price was EUR 5.27, the lowest EUR 3.02 and the volume-weighted average price EUR 3.85. The closing price at the end of review period was EUR 3.55. The market capitalization (excluding treasury shares) was EUR 204.0 million on March 31, 2022.Treasury sharesOn March 31, 2022, Suominen Corporation held 797,077 treasury shares. As a share-based payment plan vested, in total 237,584 shares were transferred to the participants of the plan in February.

The share repurchase program of Suominen commenced on November 3, 2021 and ended on January 21, 2022. Suominen acquired in total 68,677 shares in January 2022

The portion of the remuneration of the members of the Board of Directors which shall be paid in sharesThe Annual General Meeting held on March 24, 2022 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 2022 of the company is published.

Share-based incentive plans for the management and key employeesThe 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 2020–2022, 2021–2023 and 2022–2024. 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

Performance Period 2020–2022 2021–2023 2022–2024
Incentive based on Total Shareholder Return (TSR) Total Shareholder Return (TSR) Total Shareholder Return (TSR)
Potential reward payment Will be paid partly in Suominen shares and partly in cash in spring 2023 Will be paid partly in Suominen shares and partly in cash in spring 2024 Will be paid partly in Suominen shares and partly in cash in spring 2025
Participants 17 people 19 people 25 people
Maximum number of shares 748,500 456,500 401,000

The President & CEO of the company must hold 50% of the net number of shares given on the basis of the plan, as long as his or her shareholding in total corresponds to the value of his or her annual gross salary. A member of the Executive Team must hold 50% of the net number of shares given on the basis of the plan, as long as his or her shareholding in total corresponds to the value of half of his or her annual gross salary. Such number of shares must be held as long as the participant’s employment or service in a group company continues.

ANNUAL GENERAL MEETINGThe Annual General Meeting (AGM) of Suominen Corporation was held on March 24, 2022.

The AGM adopted the Financial Statements and the Consolidated Financial Statements for the financial year 2021 and discharged the members of the Board of Directors and the President & CEO from liability for the financial year 2021. The AGM approved the Remuneration Report for the governing bodies.

The AGM decided, in accordance with the proposal by the Board of Directors, that a dividend of EUR 0.20 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 70,000 and the Deputy Chair and other Board members an annual fee of EUR 33,000. 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 held as a telephone conference.

75% of the remuneration 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. The AGM decided that the number of Board members remains unchanged at six (6). Mr. Andreas Ahlström, Mr. Björn Borgman, Mr. Jaakko Eskola, Ms. Nina Linander and Ms. Laura Raitio were re-elected as members of the Board. Mr. Aaron Barsness was elected as a new member of the Board.

Mr. Jaakko Eskola was re-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.

The AGM authorized the Board of Directors to decide on the repurchase of the company’s own shares and to resolve on the issuance of shares and granting of options and the issuance of special rights entitling to shares. The terms and conditions of the authorization are explained later in this interim report.

Suominen published a stock exchange release on March 24, 2022 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 7, 2022 Suominen paid out dividends in total of EUR 11.5 million for 2021, corresponding to EUR 0.20 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.The Board of Directors elected from among its members the members for the Audit Committee and Personnel and Remuneration Committee. Nina Linander was re-elected as the Chair of the Audit Committee and Andreas Ahlström and Laura Raitio were re-elected as members. Jaakko Eskola was re-elected as the Chair of the Personnel and Remuneration Committee and Björn Borgman was re-elected as member, and Aaron Barsness was elected as new member.

Authorizations of the Board of DirectorsThe Annual General Meeting (AGM) held on March 24, 2022 authorized the Board of Directors to decide on the repurchase a maximum of 1,000,000 of the 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 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 shall be valid until June 30, 2023 and it revokes all earlier authorizations to repurchase company’s own shares.

The Annual General Meeting (AGM) held on March 24, 2022 authorized the Board of Directors to decide on issuing new shares and/or conveying the company’s own shares held by the company and/or granting options and other special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act. New shares may be issued, and the company’s own shares may be conveyed to the company’s shareholders in proportion to their current shareholdings in the company; or by waiving the shareholder’s pre-emption right, through a directed share issue if the company has a weighty financial reason to do so, such as, for example, using the shares as consideration in possible acquisitions or other arrangements related to the company’s business, as financing for investments, using shares as part of the company’s incentive program or using the shares for disbursing the portion of the Board members’ remuneration that is to be paid in shares. The new shares may also be issued without payment to the company itself. 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 5,000,000 shares in aggregate.

The Board of Directors may grant options and other special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act, which carry the right to receive against payment new shares or own shares held by the company. The right may also be granted to the company’s creditor in such a manner that the right is granted on condition that the creditor’s receivable is used to set off the subscription price (“Convertible Bond”). However, options and other special rights referred to in Chapter 10, Section 1 of the Companies Act cannot be granted as part of the company’s remuneration plan. 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 5,000,000 shares in total which number is included in the maximum number stated above.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 shall be valid until June 30, 2023.

NOTIFICATIONS UNDER CHAPTER 9, SECTION 5 OF THE SECURITIES MARKET ACT

March 8, 2022: The shareholding of Etola Group Oy, controlled by Mr. Erkki Etola, in Suominen Corporation crossed the 10% flagging threshold. At the same time the total holding of Erkki Etola and companies controlled by him in Suominen Corporation crossed the 20% flagging threshold.

February 25, 2022: The shareholding of Etola Group Oy, controlled by Mr. Erkki Etola, in Suominen Corporation crossed the 5% flagging threshold.

January 20, 2022: The shareholding of Ilmarinen Mutual Pension Insurance Company in Suominen Corporation fell below the threshold of 5%.SHORT TERM RISKS AND UNCERTAINTIES

The raw material, energy and logistics markets relevant for Suominen continue to experience significant volatility and cost inflation. This can impact Suominen’s financial performance depending on how the markets develop.

Regarding the war in Ukraine, the direct impact to Suominen’s business is minor as we have very few customers and no suppliers in Russia, Belarus and Ukraine. Suominen as a company is mostly affected by the indirect economic impacts of the war which contribute to the cost inflation mentioned above. Also the COVID-19 pandemic can still cause uncertainty in Suominen’s business environment. The key risks related to the virus concern the health and safety of Suominen personnel and customers, possible shortages of raw materials and issues linked to logistics, as well as potential closures of customers’ or our own plants due to virus infections. Our customers have generally performed well financially even during the pandemic and thus our customer credit risks have not materially increased. Suominen’s other risks and uncertainties include but are not limited to: risks related to manufacturing, competition, raw material prices and availability and customer specific volumes and credits, changes in legislation, political environment or economic conditions and investments, and financial risks.

A more detailed description of risks is available in Suominen’s Annual Report 2021 at suominen.fi/investors.

BUSINESS ENVIRONMENTSuominen’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. The market expectation is that in the long run the end user demand for wipes will remain above pre-COVID levels. However, the pandemic-caused demand spike followed by moderation of said demand has led to an inventory imbalance in the whole supply chain especially in the US which still partially persists.

The war in Ukraine has worsened the inflationary pressures in raw material, energy and freight costs and increased uncertainty overall. However, we are seeing signs of the raw material cost inflation moderating from the third quarter onwards and we also expect normalization of the US inventory levels going forward.OUTLOOK FOR 2022Suominen expects that its comparable EBITDA (earnings before interest, taxes, depreciation and amortization) in 2022 will decrease clearly from 2021. The war in Ukraine has increased the already significant cost inflation in raw materials, energy and transportation. Also, while there has been progress in the normalization of the customer inventory levels in the US, it has been somewhat slower than expected. These factors will impact the full year result negatively even though we expect that the demand for our products will improve in the second half of the year. In 2021, Suominen’s comparable EBITDA was EUR 47.0 million.CORPORATE GOVERNANCE STATEMENT AND REMUNERATION REPORT

Suominen has prepared a separate Corporate Governance Statement and a Remuneration Report for2021, which comply with the recommendations of the Finnish Corporate Governance Code for listedcompanies. The statements also cover other central areas of corporate governance. The statements have been published on Suominen's website, separately from the Report of the Board of Directors, at www.suominen.fi

AUDIOCAST AND CONFERENCE CALL Petri Helsky, President & CEO, and Toni Tamminen, CFO, will present the result in English in an audiocast and a conference call for analyst, investors and media on May 4, 2022 at 11:00 a.m. (EEST). The audiocast can be followed at https://suominen.videosync.fi/2022-q1-results. The recording of the audiocast and the presentation material will be available after the event at www.suominen.fi.

Conference call participants are requested to dial on:Sweden: +46 856642651 United Kingdom: +44 3333000804 United States: +1 6319131422 The confirmation code for joining the conference call is 26630687#

NEXT FINANCIAL REPORTSuominen Corporation will publish its Half Year Report 2022 on August 9, 2022 approximately at 9:30 a.m. (EEST).

SUOMINEN GROUP 1.1–31.3.2022The 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 2021, with the exception of the effect of the new accounting standards and interpretations which have been applied from January 1, 2022.

The new or amended standards or interpretations applicable from January 1, 2022 are not material for Suominen Group.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

       
EUR thousand 31.3.2022 31.3.2021 31.12.2021
Assets      
Non-current assets      
Goodwill 15,496 15,496 15,496
Intangible assets 12,503 15,925 13,176
Property, plant and equipment 116,643 110,050 115,478
Right-of-use assets 15,465 17,405 15,741
Equity instruments 421 421 421
Other non-current receivables 101 69 96
Deferred tax assets 1,665 2,044 1,668
Total non-current assets 162,295 161,410 162,077
       
Current assets      
Inventories 49,005 39,732 49,763
Trade receivables 66,740 55,432 65,495
Other current receivables 9,007 6,256 5,403
Assets for current tax 2,439 2,168 2,564
Cash and cash equivalents 97,046 81,999 101,357
Total current assets 224,237 185,587 224,583
       
Total assets 386,532 346,997 386,660
       
Equity and liabilities      
Equity      
Share capital 11,860 11,860 11,860
Share premium account 24,681 24,681 24,681
Reserve for invested unrestricted equity 75,692 75,602 75,692
Fair value and other reserves 80 -7 -7
Exchange differences -680 -10,100 -5,577
Retained earnings 41,871 50,192 56,549
Total equity attributable to owners of the parent 153,504 152,227 163,199
       
Liabilities      
Non-current liabilities      
Deferred tax liabilities 13,421 13,884 13,931
Liabilities from defined benefit plans 596 752 638
Non-current provisions 1,948 1,833 1,916
Non-current lease liabilities 12,917 14,642 13,167
Other non-current liabilities 1 17 3
Debentures 49,181 83,155 49,144
Total non-current liabilities 78,064 114,283 78,799
       
Current liabilities      
Current provisions 270
Current lease liabilities 2,882 2,584 2,761
Debenture bonds 84,368 84,062
Liabilities for current tax 729 3,403 669
Trade payables and other current liabilities 66,985 74,230 57,170
Total current liabilities 154,964 80,487 144,662
       
Total liabilities 233,028 194,770 223,461
       
Total equity and liabilities 386,532 346,997 386,660

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

EUR thousand 1-3/2022 1-3/2021 1-12/2021
Net sales 110,269 115,333 443,219
Cost of goods sold -103,687 -95,125 -392,390
Gross profit 6,582 20,208 50,828
Other operating income 315 845 4,434
Sales, marketing and administration expenses -7,255 -6,622 -26,238
Research and development expenses -795 -600 -2,678
Other operating expenses -116 -238 595
Operating profit -1,268 13,592 26,941
Net financial expenses -930 3,266 -390
Profit before income taxes -2,198 16,858 26,551
Income taxes -138 -3,085 -5,816
Profit for the period -2,336 13,774 20,734
       
Earnings per share, EUR      
Basic -0.04 0.24 0.36
Diluted -0.04 0.24 0.36

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

EUR thousand 1-3/2022 1-3/2021 1-12/2021
       
Profit for the period -2,336 13,774 20,734
       
Other comprehensive income:      
Other comprehensive income that will be subsequently reclassified to profit or loss      
Exchange differences 5,103 4,268 9,137
Income taxes related to other comprehensive income -206 -436 -781
Total 4,897 3,832 8,356
Other comprehensive income that will not be subsequently reclassified to profit or loss      
Remeasurements of defined benefit plans 26
Income taxes related to other comprehensive income -7
Total 19
       
Total other comprehensive income 4,897 3,832 8,375
       
Total comprehensive income for the period 2,561 17,606 29,109

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

EUR thousand Share capital Share premium account Reserve for invested unrestricted equity Exchange differences
Equity 1.1.2022 11,860 24,681 75,692 -5,577
Profit for the period
Other comprehensive income 4,897
Total comprehensive income 4,897
Distribution of dividend
Share-based payments
Acquisition of treasury shares
Transfers
Equity 31.3.2022 11,860 24,681 75,692 -680
EUR thousand Fair value and other reserves Retained earnings Total equity attributable to owners of the parent
Equity 1.1.2022 -7 56,549 163,199
Profit for the period -2,336 -2,336
Other comprehensive income 4,897
Total comprehensive income -2,336 2,561
Distribution of dividend -11,492 -11,492
Share-based payments -412 -412
Acquisition of treasury shares -352 -352
Transfers 87 -87
Equity 31.3.2022 80 41,871 153,504
EUR thousand Share capital Share premium account Reserve for invested unrestricted equity Treasury shares
Equity 1.1.2021 11,860 24,681 81,361 -44
Profit for the period
Other comprehensive income
Total comprehensive income
Share-based payments
Conveyance of treasury shares 44
Dividends and return of capital -5,759
Equity 31.3.2021 11,860 24,681 75,602
EUR thousand Exchange differences Fair value and other reserves Retained earnings Total equity attributable to owners of the parent
Equity 1.1.2021 -13,933 -7 41,962 145,882
Profit for the period 13,774 13,774
Other comprehensive income 3,832 3,832
Total comprehensive income 3,832 13,774 17,606
Share-based payments 259 259
Conveyance of treasury shares -44
Dividends and return of capital -5,759 -11,519
Equity 31.3.2021 -10,100 -7 50,192 152,227
EUR thousand Share capital Share premium account Reserve for invested unrestricted equity Treasury shares
Equity 1.1.2021 11,860 24,681 81,361 -44
Profit for the period
Other comprehensive income
Total comprehensive income
Distribution of dividend and return of capital -5,759
Share-based payments
Acquisition of treasury shares
Conveyance of treasury shares 90 44
Equity 31.12.2021 11,860 24,681 75,692
EUR thousand Exchange differences Fair value and other reserves Retained earnings Total equity attributable to owners of the parent
Equity 1.1.2021 -13,933 -7 41,962 145,882
Profit for the period 20,734 20,734
Other comprehensive income 8,356 19 8,375
Total comprehensive income 8,356 20,754 29,109
Distribution of dividend and return of capital -5,759 -11,519
Share-based payments 1,276 1,276
Acquisition of treasury shares -1,640 -1,640
Conveyance of treasury shares -44 90
Equity 31.12.2021 -5,577 -7 56,549 163,199

CONSOLIDATED STATEMENT OF CASH FLOWS

EUR thousand 1-3/2022 1-3/2021 1-12/2021
       
Cash flow from operations      
Profit for the period -2,336 13,774 20,734
Total adjustments to profit for the period 5,276 5,121 27,585
Cash flow before changes in net working capital 2,941 18,895 48,319
Change in net working capital -4,313 -2,157 -25,242
Financial items -466 -283 -5,258
Income taxes -840 -501 -6,731
Cash flow from operations -2,679 15,954 11,088
       
Cash flow from investments      
Investments in property, plant and equipment and intangible assets -2,235 -4,255 -17,628
Sales proceeds from property, plant and equipment and intangible assets 4
Sales proceeds from sale of equity investments 2,123 2,170
Cash flow from investments -2,235 -2,132 -15,454
       
Cash flow from financing      
Drawdown of non-current interest-bearing liabilities 50,000
Issuance costs of the bonds -939
Repayment of current interest-bearing liabilities -709 -638 -2,757
Repayment of loan receivables 9,301 9,301
Acquisition of treasury shares -379 -1,612
Dividends and return of capital paid -11,520
Cash flow from financing -1,088 8,663 42,473
       
Change in cash and cash equivalents -6,002 22,485 38,106
       
Cash and cash equivalents at the beginning of the period 101,357 57,877 57,877
Effect of changes in exchange rates 1,691 1,637 5,374
Change in cash and cash equivalents -6,002 22,485 38,106
Cash and cash equivalents at the end of the period 97,046 81,999 101,357

KEY RATIOS

  1-3/2022 1-3/2021 1-12/2021
Change in net sales, % * -4.4 1.7 -3.4
Gross profit, as percentage of net sales, % 6.0 17.5 11.5
Comparable EBITDA, as percentage of net sales, % 3.0 16.1 10.6
Operating profit, as percentage of net sales, % -1.2 11.8 6.1
Net financial items, as percentage of net sales, % -0.8 2.8 -0.1
Profit before income taxes, as percentage of net sales, % -2.0 14.6 6.0
Profit for the period, as percentage of net sales, % -2.1 11.9 4.7
Gross capital expenditure, EUR thousand 1,768 5,226 17,771
Depreciation and amortization, EUR thousand 4,566 4,942 20,092
Return on equity, rolling 12 months, % 2.9 28.1 13.3
Return on invested capital, rolling 12 months, % ** 6.1 25.0 13.9
Equity ratio, % 39.8 43.9 42.2
Gearing, % 35.0 13.3 30.4
Average number of personnel (FTE - full time equivalent) 710 703 709
Earnings per share, EUR, basic -0.04 0.24 0.36
Earnings per share, EUR, diluted -0.04 0.24 0.36
Cash flow from operations per share, EUR -0.05 0.28 0.19
Equity per share, EUR 2.67 2.64 2.85
Number of shares, end of period, excluding treasury shares 57,462,142 57,599,164 57,293,235
Share price, end of period, EUR 3.55 5.74 5.18
Share price, period low, EUR 3.02 5.00 4.25
Share price, period high, EUR 5.27 6.24 6.41
Volume weighted average price during the period, EUR 3.85 5.60 5.48
Market capitalization, EUR million 204.0 330.6 296.8
Number of traded shares during the period 7,195,433 7,004,147 17,714,203
Number of traded shares during the period, % of average number of shares 12.6 12.2 30.8
       
* Compared with the corresponding period in the previous year.    
** Restated      
  31.3.2022 31.3.2021 31.12.2021
Interest-bearing net debt, EUR thousands      
Non-current interest-bearing liabilities, nominal value 62,917 99,642 63,167
Current interest-bearing liabilities, nominal value 87,882 2,584 87,761
Interest-bearing receivables and cash and cash equivalents -97,046 -81,999 -101,357
Interest-bearing net debt 53,753 20,227 49,570

CALCULATION OF KEY RATIOS AND ALTERNATIVE PERFORMANCE MEASURESKey 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 2021. The link between the components of the alternative performance measures and the consolidated financial statements is presented in Suominen’s Annual Report for 2021.

Calculation of key ratios per share

Earnings per share                                                                

Basic earnings per share (EPS)   Profit for the period. net of tax
= Share-issue adjusted average number of shares excluding treasury shares
 
       
       
Diluted earnings per share (EPS)   Profit for the period
= Average diluted share-issue adjusted number of shares excluding treasury shares
 
EUR thousand   31.3.2022 31.3.2021 31.12.2021
Profit for the period   -2,336 13,774 20,734
         
         
Average share-issue adjusted number of shares   57,323,494 57,581,245 57,579,440
Average diluted share-issue adjusted number of shares excluding treasury shares   57,419,946 57,912,920 58,023,347
         
Earnings per share        
         
EUR        
Basic   -0.04 0.24 0.36
Diluted   -0.04 0.24 0.36

Cash flow from operations per share        

Cash flow from operations per share   Cash flow from operations
= Share-issue adjusted number of shares excluding treasury shares. end of reporting period
 
    31.3.2022 31.3.2021 31.12.2021
Cash flow from operations, EUR thousand   -2,679 15,954 11,088
Share-issue adjusted number of shares excluding treasury shares, end of reporting period   57,462,142 57,599,164 57,293,235
Cash flow from operations per share, EUR   -0.05 0.28 0.19

        Equity per share

Equity per share   Total equity attributable to owners of the parent
= Share-issue adjusted number of shares excluding treasury shares. end of reporting period
 

                                                            

    31.3.2022 31.3.2021 31.12.2021
Total equity attributable to owners of the parent, EUR thousand   153,504 152,227 163,199
Share-issue adjusted number of shares excluding treasury shares, end of reporting period   57,462,142 57,599,164 57,293,235
Equity per share, EUR   2.67 2.64 2.85

Market capitalization

Market capitalization = Number of shares at the end of reporting period excluding treasury shares x share price at the end of period
    31.3.2022 31.3.2021 31.12.2021
Number of shares at the end of reporting period excluding treasury shares   57,462,142 57,599,164 57,293,235
Share price at end of the period, EUR 3.55 5.74 5.18
Market capitalization, EUR million   204.0 330.6 296.8

Share turnover

Share turnover = The proportion of number of shares traded during the period to weighted average number of shares excluding treasury shares
    31.3.2022 31.3.2021 31.12.2021
Number of shares traded during the period   7,195,433 7,004,147 17 714 203
Average number of shares excluding treasury shares 57,323,494 57,581,245 57,579,440
Share turnover, %   12.6 12.2 30.8

Calculation of key ratios and alternative performance measures

Operating profit and comparable operating profit

Operating profit (EBIT) = Profit before income taxes + net financial expenses
         
Comparable operating profit (EBIT) = Profit before income taxes + net financial expenses. adjusted with items affecting comparability

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. Suominen did not have any items affecting comparability in 2022 or 2021.

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

EUR thousand   31.3.2022 31.3.2021 31.12.2021
Operating profit   -1,268 13,592 26,941
+ Depreciation, amortization and impairment losses 4,566 4,942 20,092
EBITDA   3,298 18,534 47,033

Gross capital expenditure

EUR thousand   31.3.2022 31.3.2021 31.12.2021
Increases in intangible assets   261 19 162
Increases in property, plant and equipment 1,508 5,207 17,609
Gross capital expenditure   1,768 5,226 17,771

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.

Interest-bearing net debt = Interest-bearing liabilities at nominal value - interest-bearing receivables - cash and cash equivalents
EUR thousand   31.3.2022 31.3.2021 31.12.2021
Interest-bearing liabilities   149,348 100,381 149,134
Tender and issuance costs of the debentures   1,451 1,845 1,794
Cash and cash equivalents -97,046 -81,999 -101,357
Interest-bearing net debt   53,753 20,227 49,570
         
Interest-bearing liabilities   149,348 100,381 149,134
Tender and issuance costs of the debentures   1,451 1,845 1,794
Nominal value of interest-bearing liabilities   150,799 102,226 150,927

Return on equity (ROE), %

Return on equity (ROE), % = Profit for the reporting period (rolling 12 months) x 100
    Total equity attributable to owners of the parent (quarterly average)
EUR thousand   31.3.2022 31.3.2021 31.12.2021
Profit for the reporting period (rolling 12 months)   4,625 40,344 20,734
         
Total equity attributable to owners of the parent 31.3.2021 / 31.3.2020 / 31.12.2020   152,227 135,868 145,882
Total equity attributable to owners of the parent 30.6.2021 / 30.6.2020 / 31.3.2021   159,386 138,551 152,227
Total equity attributable to owners of the parent 30.9.2021 / 30.9.2020 / 30.6.2021   159,682 144,074 159,386
Total equity attributable to owners of the parent 31.12.2021 / 31.12.2020 / 30.9.2021   163,199 145,882 159,682
Total equity attributable to owners of the parent 31.3.2022 / 31.3.2021 / 31.12.2021   153,504 152,227 163,199
Average   157,600 143,320 156,075
         
Return on equity (ROE), %   2.9 28.1 13.3

Invested capital

Invested capital = Total equity + interest-bearing liabilities – cash and cash equivalents

The calculation formula for invested capital has been changed. Previous years’ figures have been restated.

EUR thousand   31.3.2022 31.3.2021 31.12.2021
Total equity attributable to owners of the parent   153,504 152,227 163,199
Interest-bearing liabilities   149,348 100,381 149,134
Cash and cash equivalents -97,046 -81,999 -101,357
Invested capital   205,806 170,609 210,975

Return on invested capital (ROI), %

Return on invested capital (ROI), % = Operating profit (rolling 12 months) x 100
    Invested capital, quarterly average

The calculation formula for ROI has been changed. Previous years’ figures have been restated.

EUR thousand   31.3.2022 31.3.2021 31.12.2021
Operating profit (rolling 12 months)   12,081 47,420 26,941
         
Invested capital 31.3.2021 / 31.3.2020 / 31.12.2020   170,609 199,571 188,298
Invested capital 30.6.2021 / 30.6.2020 / 31.3.2021   192,651 199,529 170,609
Invested capital 30.9.2021 / 30.9.2020 / 30.6.2021   205,786 191,626 192,651
Invested capital 31.12.2021 / 31.12.2020 / 30.9.2021   210,975 188,298 205,786
Invested capital 31.3.2022 / 31.3.2021 / 31.12.2021   205,806 170,609 210,975
Average   197,165 189,927 193,664
         
Return on invested capital (ROI), %   6.1 25.0 13.9

Equity ratio. %

Equity ratio. % = Total equity attributable to owners of the parent x 100  
    Total assets - advances received  
EUR thousand   31.3.2022 31.3.2021 31.12.2021
Total equity attributable to owners of the parent   153,504 152,227 163,199
         
Total assets   386,532 346,997 386,660
Advances received   -788 -60 -75
    385,744 346,937 386,584
         
Equity ratio, %   39.8 43.9 42.2

Gearing. %

Gearing. % = Interest-bearing net debt x 100  
    Total equity attributable to owners of the parent
EUR thousand   31.3.2022 31.3.2021 31.12.2021
Interest-bearing net debt   53,753 20,227 49,570
Total equity attributable to owners of the parent   153,504 152,227 163,199
Gearing, %   35.0 13.3 30.4

NET SALES BY GEOGRAPHICAL MARKET AREA

EUR thousand 1-3/2022 1-3/2021 1-12/2021
Finland 787 780 2,707
Rest of Europe 45,709 41,472 168,841
North and South America 62,922 72,370 269,247
Rest of the world 851 711 2,424
Total 110,269 115,333 443,219

QUARTERLY SALES BY BUSINESS AREA

           
  2022 2021
EUR thousand 1-3 10-12 7-9 4-6 1-3
Americas 61,726 68,858 57,048 67,402 71,904
Europe 48,530 46,747 41,634 46,251 43,432
Unallocated exchange differences and eliminations 12 -20 -28 -6 -2
Total 110,269 115,585 98,654 113,647 115,333

QUARTERLY DEVELOPMENT

  2022 2021
EUR thousand 1-3 10-12 7-9 4-6 1-3
Net sales 110,269 115,585 98,654 113,647 115,333
Comparable EBITDA 3,298 8,983 4,240 15,277 18,534
as % of net sales 3.0 7.8 4.3 13.4 16.1
EBITDA 3,298 8,983 4,240 15,277 18,534
as % of net sales 3.0 7.8 4.3 13.4 16.1
Items affecting comparability
Operating profit -1,268 3,874 -842 10,317 13,592
as % of net sales -1.2 3.4 -0.9 9.1 11.8
Net financial items -930 -1,074 -969 -1,613 3,266
Profit before income taxes -2,198 2,800 -1,811 8,704 16,858
as % of net sales -2.0 2.4 -1.8 7.7 14.6

RELATED PARTY INFORMATIONThe related parties of Suominen include the members of the Board of Directors, President & CEO and the members of the Executive Team as well as their family members and their controlled companies. In addition, shareholders who have a significant influence in Suominen through share ownership are included in related parties. Suominen has no associated companies. In its transactions with related parties Suominen follows the same commercial terms as in transactions with third parties.

One of Suominen’s share-based plans vested and shares were transferred to the participants of the plan in February. The President & CEO received 60,739 shares, and the value of the shares and portion settled in cash totaled EUR 463 thousand. The number of the shares transferred to other members of the Executive Team was 116,755 shares. The value of the shares and the portion settled in cash was EUR 817 thousand.

CHANGES IN PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS

  31.3.2022 31.3.2021 31.12.2021
EUR thousand Property, plant and equipment Intangible assets Property, plant and equipment Intangible assets Property, plant and equipment Intangible assets
Carrying amount at the beginning of the period 115,478 13,176 104,666 16,748 104,666 16,748
Capital expenditure and increases 1,508 261 5,207 19 17,609 162
Depreciation, amortization and impairment losses -2,767 -955 -3,284 -861 -13,061 -3,801
Exchange differences and other changes 2,425 22 3,461 19 6,264 68
Carrying amount at the end of the period 116,643 12,503 110,050 15,925 115,478 13,176

Goodwill is not included in intangible assets.

  31.3.2022 31.3.2021 31.12.2021
EUR thousand Right-of-use assets Right-of-use assets Right-of-use assets
Carrying amount at the beginning of the period 15,741 17,784 17,784
Increases 419 91 719
Disposals and decreases -2 -11 -103
Depreciation, amortization and impairment losses -843 -797 -3,230
Exchange differences and other changes 150 338 571
Carrying amount at the end of the period 15,465 17,405 15,741

CHANGES IN INTEREST-BEARING LIABILITIES

EUR thousand 1-3/2022 1-3/2021 1-12/2021
Total interest-bearing liabilities at the beginning of the period 149,134 100,293 100,293
Current liabilities at the beginning of the period 86,823 2,539 2,539
Repayment of current liabilities, cash flow items -709 -638 -2,757
Increases in current liabilities, non-cash flow items 115 29 309
Decreases of current liabilities, non-cash flow items -2 -13 -67
Reclassification from non-current liabilities 680 622 86,610
Periodization of debentures to amortized cost, non-cash flow items 306 105
Exchange rate difference, non-cash flow item 37 44 84
Current liabilities at the end of the period 87,250 2,584 86,823
       
Non-current liabilities at the beginning of the period 13,167 14,892 14,892
Increases in non-current liabilities, non-cash flow items 304 68 418
Decreases of non-current liabilities, non-cash flow items -4 -47
Reclassification to current liabilities -680 -622 -2,653
Exchange rate difference, non-cash flow item 127 308 557
Non-current liabilities at the end of the period 12,917 14,642 13,167
       
Non-current debentures at the beginning of the period 49,144 82,862 82,862
Increases in debentures 50,000
Periodization of debentures to amortized cost, non-cash flow items 37 293 1,178
Tender and issuance costs of the debentures, cash flow items -939
Reclassification to current liabilities -83,957
Non-current debentures at the end of the period 49,181 83,155 49,144
Total interest-bearing liabilities at the end of the period 149,348 100,381 149,134

CONTINGENT LIABILITIES

         
EUR thousand 31.3.2022   31.3.2021 31.12.2021
         
Other commitments        
Rental obligations 83   124 85
Contractual commitments to acquire property, plant and equipment 1,117   4,442 713
Commitments to leases not yet commenced 332   117 458
         
Guarantees        
On own behalf 3,558   3,922 3,495
Other own commitments 23,466   31,304 24,713
Total 27,025   35,226 28,208

NOMINAL AND FAIR VALUES OF DERIVATIVE INSTRUMENTS

  31.3.2021 31.3.2021 31.12.2021
EUR thousand Nominal value Fair value Nominalvalue Fairvalue Nominalvalue Fair value
Currency forward contracts            
Hedge accounting not applied 2,675 -17 2,729 -66 1,960 -14

FINANCIAL ASSETS BY CATEGORY

a. Fair value through profit or loss
b. Financial assets at amortized cost
c. Financial assets at fair value through other comprehensive income
d. Carrying amounte. Fair value
 
EUR thousand a. b. c. d. e.
Equity instruments 421 421 421
Trade receivables 66,740 66,740 66,740
Interest and other financial receivables 233 233 233
Cash and cash equivalents 97,046 97,046 97,046
Total 31.3.2022 164,019 421 164,440 164,440
  Classification
EUR thousand a. b. c. d. e.
Equity instruments 421 421 421
Trade receivables 65,495 65,495 65,495
Derivative receivables 2 2 2
Interest and other financial receivables 259 259 259
Cash and cash equivalents 101,357 101,357 101,357
Total 31.12.2021 2 167,111 421 167,534 167,534

Principles in estimating fair value of financial assets for 2022 are the same as those used for preparing the consolidated financial statements for 2021.

FINANCIAL LIABILITIES

  31.3.2022 31.12.2021
EUR thousand Carrying amount Fair value Nominal value Carrying amount Fair value Nominal value
Non-current financial liabilities            
             
Debentures 49,181 45,765 50,000 49,144 49,125 50,000
Lease liabilities 12,917 12,917 12,917 13,167 13,167 13,167
Total non-current financial liabilities 62,098 58,682 62,917 62,311 62,292 63,167
             
Current financial liabilities            
             
Debentures 84,368 85,927 85,000 84,062 86,496 85,000
Lease liabilities 2,882 2,882 2,882 2,761 2,761 2,761
Interest accruals 1,661 1,661 1,661 936 936 936
Derivative liabilities 17 17 17 15 15 15
Other current liabilities 1,017 1,017 1,017 379 379 379
Trade payables 40,295 40,295 40,295 45,661 45,661 45,661
Total current financial liabilities 130,241 131,799 130,873 133,814 136,248 134,752
             
Total 192,339 190,482 193,790 196,125 198,540 197,919

Principles in estimating fair value for financial liabilities for 2022 are the same as those used for preparing the consolidated financial statements for 2021.

FAIR VALUE MEASUREMENT HIERARCHY

EUR thousands Level 1 Level 2 Level 3
Equity instruments 421
Total 421
       
Derivatives at fair value      
Currency derivatives, liabilities -17
Total -17

Principles in estimating fair value of financial assets and their hierarchies for 2022 are the same as those used for preparing the consolidated financial statements for 2021.

There were no transfers in the fair value measurement hierarchy levels during the reporting period.   

SUOMINEN CORPORATION Board of DirectorsFor additional information, please contact:Petri Helsky, President & CEO, tel. +358 10 214 3080Toni Tamminen, CFO, tel. +358 10 214 3051

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 2021 were EUR 443.2 million and we have over 700 professionals working in Europe and in the Americas. Suominen’s shares are listed on Nasdaq Helsinki. Read more at www.suominen.fi.Distribution:Nasdaq HelsinkiMain mediawww.suominen.fi

Attachment

  • Suominen Corporation Interim report Q1 2022
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