Results Q2 2015

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Suominen Corporation Q2 2015 Nina Kopola, President & CEO Tapio Engström, CFO 17 July 2015

Transcript of Results Q2 2015

Suominen Corporation Q2 2015 Nina Kopola, President & CEO Tapio Engström, CFO 17 July 2015

Agenda

• Highlights Q2 • Strategy and its implementation • Financial review Q2 and outlook • Q & A

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 2

Q2 2015: Record-strong quarter for Suominen

9.9 M€ 8.8%

19%

14% 112.9 M€

28.2% 17.1%

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 3

Q2: Net sales increased by 19%

Net sales, M€

Net sales, M€

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 4

93.1 93.5 89.8

98.4 95.3 103.3 104.8

111.9 112.9

0

20

40

60

80

100

120

55.7 98.3

356.9 373.7 401.8

050

100150200250300350400450

2010 2011 2012 2013 2014

- Net sales grew by 19% in Q2. The strengthening of the USD and improved demand in the European market (compared to Q2 2014) had a positive impact on net sales.

Continuing operations. Continuing operations.

40%

17%

12%

22%

8% 1%

No significant changes in the portfolio

H1 2014: 193.7 M€

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 5

40%

16% 11%

23%

8% 2%

Baby wipes Household wipes Industrial wipes Personal care wipes Hygiene and medical products Others

H1 2015: 224.9 M€

Typically higher value-add products

Convenience 92%, Care 8% Convenience 92%, Care 8%

Q2: Operating profit improved to record-high level

Operating profit excl. NRI, M€ and %

Operating profit excl. NRI, M€ and %

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- Growth in net sales and further strengthened gross profit improved operating profit. - Strengthening of the USD compared to euro increased the operating profit by

nearly 14%.

5.0 % 6.2 %

5,0 %

6.5 % 5.8 %

8.4 %

5.9 % 6.5 %

8.8 %

0%

2%

4%

6%

8%

10%

0

2

4

6

8

10

12

M€ %

-6.5 % -4.4 %

4.2 %

5.2 %

6.7 %

-8%-6%-4%-2%0%2%4%6%8%

-10-505

1015202530

2010 2011 2012 2013 2014

M€ %Continuing operations. Continuing operations.

Strategy for 2015–2017

Suominen’s strategy 2015–2017

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• Deliver superior value in thoughtfully selected market applications.

• Drive proactive key account management for mutual value creation.

• Execute demand driven supply chain.

• Evolve culture and capabilities to build strong product company.

Market Driven Product Leader

Our purpose is to make nonwovens continuously better for people.

• Organic net sales growth at a rate that exceeds the industry average (approx. 3%)

• A return on investment of more than 12% • A gearing ratio between 40% and 80%

Purpose – why?

Vision – where?

Strategy – how?

Financial targets

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications.

We target growth, market-driven way of operating and product leadership

Organic growth exceeding industry average

Market-driven way of

operating

Product leadership

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 9

Understanding the end user remains in the heart of our strategy

Fiber producer

Nonwovens manufacturer

Brand owner

Converter

Retailer

Primary production

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 10

We have a focused plan to implement growth strategy

Extend geographical

reach Acquisitions

Not in focus in the strategy period 2015–2017

Sustain & improve Retrofit Expand

Projected growth investments 30–50 ME until 2017

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications.

Approx. 1–2% of net sales

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Growth investment program is proceeding as planned

Paulínia, Brazil

Bethune, SC, USA

Nakkila, Finland

Alicante, Spain

12 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 7/17/2015

Mid-term financial targets

• Increase net sales organically at a rate that exceeds the average

growth rate of the industry. (In 2014, Suominen’s net sales grew organically 3.5%, slightly faster than the industry average.)

• Have a solid capital structure with a gearing ratio principally between 40% and 80%. (Q2/2015: 28.2%).

• Clearly improve relative profitability. The target level of the company’s return on investment (ROI) is above 12%. (Q2/2015, rolling 12 months, continuing operations: 17.1%).

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 13

Financial review Q2

Q2: Profit for the reporting period reached a new level

Profit for the reporting period, M€

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 15

Profit for the reporting period, M€

Continuing operations. Continuing operations.

1.0

2.6

0.6

2.6 2.2

0.6

4.8

3.5

6.2

0

1

2

3

4

5

6

7

-12.0 -11.8

-2.8

5.7

10.2

-15

-10

-5

0

5

10

15

2010 2011 2012 2013 2014

Statement of profit or loss

Healthy cost structure

Net sales grew

Effective tax rate on Q2: 33.5%; on H1: 35.4%

EUR thousand Q2 2015 Q2 2014 FY 2014 Net sales 112,944 95,340 401,762

Cost of goods sold -97,160 -84,399 -352,091 Gross profit 15,784 10,941 49,671 Other operating income 903 539 2,655

Sales and marketing expenses -1,756 -1,712 -6,278 Research and development -736 -784 -2,877 Administration expenses -4,179 -3,440 -14,144 Other operating expenses -83 -20 -2,177 Operating profit excluding non-recurring items 9,932 5,524 26,851 Non-recurring items 530 -278 -954 Operating profit 10,462 5,246 25,897 Net financial expenses -1,076 -1,276 -8,075

Profit before income taxes 9,386 3,970 17,822 Income taxes -3,142 -1,786 -7,645

Profit for the period from continuing operations 6,244 2,184 10,177

Positive gross profit development

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 16

Statement of financial position, assets

EUR thousand 30 June 2015 30 June 2014 31 Dec 2014 Non-current assets Goodwill 15,496 15,496 15,496 Intangible assets 12,601 12,508 12,510 Property, plant and equipment 88,297 87,467 88,721 Loan receivables 8,202 − 8,202 Available-for-sale assets 806 922 1,124 Held-to-maturity investments 465 455 450 Other non-current receivables 2,389 − 2,614 Deferred tax assets 5,189 5,634 5,516 Total non-current assets 133,445 122,482 134,633

Current assets Inventories 32,322 28,878 32,380 Trade receivables 60,193 48,657 52,269 Loan receivables 350 59 600 Other current receivables 4,222 6,480 4,618 Assets for current tax 1,601 695 1,682 Cash and cash equivalents 42,778 17,331 38,430 Total current assets 141,465 102,100 129,979

Assets held for sale − 32,243 −

Total assets 274,910 256,825 264,611

Cash at elevated level

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 17

Statement of financial position, equity and liabilities

Decrease in the nominal value of the hybrid bond due to the conversions made

EUR thousand 30 Jun 2015 30 Jun 2014 31 Dec 2014 Share capital 11,860 11,860 11,860 Share premium account 24,681 24,681 24,681 Reserve for invested unrestricted equity 69,652 97,192 97,192 Treasury shares -44 -44 -44 Fair value and other reserves 107 -884 96 Exchange differences 6,011 -821 3,419 Other equity -9,824 -50,410 -46,890 Total equity attributable to owners of the parent 102,444 81,574 90,313

Hybrid bond 16,884 17,899 18,424 Total equity 119,328 99,473 108,737 Liabilities Non-current liabilities Deferred tax liabilities 9,886 6,841 8,789 Other non-current liabilities 1,610 1,872 1,729 Debentures 75,000 − 75,000 Other non-current interest-bearing liabilities 6,667 62,104 6,667

Total non-current liabilities 93,163 70,817 92,185 Current liabilities Current interest-bearing liabilities 3,333 22,940 3,347 Liabilities for current tax 1,519 376 246 Trade payables and other current liabilities 57,567 49,666 60,096

Total current liabilities 62,420 72,982 63,689 Total liabilities 155,583 143,799 155,874 Liabilities related to assets held for sale − 13,553 − Total equity and liabilities 274,910 256,825 264,611

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications. 18

Cash flow weakened from the comparison period, cumulatively close to comparison period level

Cash flow from operations, M€ Cash flow from operations, M€

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2.9 4.3

16.3

-0.4

11.3

16.9

9.3

4.5 3.9

-202468

1012141618

-2.5 -2.9

24.9 21.3

37.1

-505

10152025303540

2010 2011 2012 2013 2014

Statement of cash flows (1/2)

The financial items were impacted by currency forward contracts hedging equity and the interests of the debenture bond paid

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications.

EUR thousand H1 2015 H1 2014 FY 2014

Cash flow from operations Profit / loss for the period 9,726 1,062 4,973 Total adjustments to profit / loss for the period 16,378 20,485 39,953 Cash flow before changes in net working capital 26,105 21,547 44,927 Change in net working capital -9,263 -4,845 6,140 Financial items -4,966 -2,792 -6,514 Income taxes -3,468 -3,065 -7,434 Cash flow from operations 8,407 10,845 37,119

Cash flow from investments Investments in property, plant and equipment and intangible assets -4,009 -4,016 -7,740

Investments in acquired businesses − -19,261 -19,261 Cash flow from disposed businesses − − 4,736 Sales proceeds from property, plant and equipment and intangible assets 10 31 59

Cash flow from investments -4,000 -23,246 -22,206

Cash flow in 2014 includes also discontinued operations.

Net working capital slightly elevated

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Statement of cash flows (2/2)

7/17/2015 Suominen is a globally leading supplier of nonwovens for wiping, hygiene and medical applications.

EUR thousand H1 2015 H1 2014 FY 2014 Cash flow from financing Drawdown of hybrid bond − 17,500 17,500 Drawdown of debenture bond − − 75,000 Drawdown of other non-current interest-bearing liabilities − − 10,000

Repayment of other non-current interest-bearing liabilities − -4,304 -78,220

Changes in current interest-bearing liabilities -14 -632 -18,324

Changes in loan receivables 417 − − Share issue 340 − − Distribution of funds -2,504 − − Cash flow from financing -1,761 12,564 5,956

Change in cash and cash equivalents 2,647 163 20,869

Cash and cash equivalents at the beginning of the period 38,430 18,585 18,585

Effect of changes in exchange rates 1,701 -103 -1,025 Change in cash and cash equivalents 2,647 163 20,869 Cash and cash equivalents at the end of the period 42,778 18,646 38,430

Assets held for sale, cash and cash equivalents − -1,315 −

Cash and cash equivalents at the end of the period, continuing operations 42,778 17,331 38,430

Cash flow in 2014 includes also discontinued operations.

Earn-out payment and repayments of loan receivables related to the divestment of Flexibles

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Outlook for 2015

Suominen repeats its estimate, announced on 27 April 2015, according to which Suominen expects that for the full year 2015, its net sales and operating profit excluding non-recurring items from continuing operations will improve from year 2014. Suominen’s net sales of the continuing operations in 2014 amounted to EUR 401.8 million and operating profit excluding non-recurring items was EUR 26.9 million.

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Summary Q2 2015

9.9 M€ 8.8%

19%

14% 112.9 M€

28.2% 17.1%

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Thank you! We’re now ready to answer your questions.