Suominen Corporation as an investment
30 June 2016
Tapio Engström, CFOAnu Heinonen, VP, Corporate Communications & IR
Our purpose is to make nonwovens continuously better for people.
Contents
• Suominen at a glance• Nonwovens markets• Strategy for 2015 – 2017 and its implementation
- Progress on mid-term financial targets
• Key elements of profitability
26/30/2016
Our purpose is to make nonwovens continuously better for people.
Suominenat a glance
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Our purpose is to make nonwovens continuously better for people.
Indicative customers
Our operations, customers and end users
4
Suominen End use applications
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Recent history: Determined progress towards growth
5
2012 – 2014Putting the house
in order
2015 – 2017:Heading to
organic growth
2018 Future Suominen
Cost cuttingRestructuringReorganizingRefinancing
Net sales 356.9 M€Gearing 101.0%
Growth strategyInvestment programFocus on products withhigher value addedStronger R&D
Net sales 444.0 M€Gearing 25.9%
Net sales at theend of 2017: ~500 M€
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Eight nonwovens plants in three continents serving both business areas
Two business areas – Convenience and Care
6
93% of Suominen’s net sales 7% of Suominen’s net sales
• Main end use areas:- Hygiene products (femcare,
incontinence, diapers)- Medical nonwovens (e.g. swabs,
undercast pads, surgical drapes and masks)
• Net sales of the business area (2015) 32.4 M€
• Main end use areas:- Wiping (baby, household,
personal care , industrial wipes
- Travel & catering applications
• Net sales of the business area (2015): 411.5 M€
Convenience Care
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Our purpose is to make nonwovens continuously better for people.
Locations in three continents close to customers
Green Bay, WI, USA
Windsor Locks, CT, US
Bethune, SC, US
Paulínia, Brazil
Alicante, Spain
Mozzate, Italy
Nakkila, Finland
Cressa, Italy
Helsinki, Finland (Head office)
Sales representatives present in several locations in Asia Pacific
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Our purpose is to make nonwovens continuously better for people.
Nonwovensmarkets
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Our purpose is to make nonwovens continuously better for people.
Historically, growth in demand for nonwovens has exceeded the growth of the GDP
USA Europe
-4%
-2%
0%
2%
4%
6%
8%
10%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Nonwoven demand
In Europe, GDP growth is for euro area.
For nonwovens demand, the graphs illustrate the change in the value (USD) of nonwoven demand.
-10%
-5%
0%
5%
10%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Nonwoven demand
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Our purpose is to make nonwovens continuously better for people.
We are the global leader in nonwovens for wipes
Suominen #1Wiping ~2.1 billion euros
Other key producers• Kimberly-Clark• Jacob Holm• Sandler• Berry Plastics (ex-
AVINTIV)
Suominen ~20%
Global nonwovens market totaling ~26 billion euros
Other key producers• Kimberly-Clark• Berry Plastics (ex-AVINTIV)• Fiberweb• First Quality Nonwovens• Pegas Nonwovens
Other key producers• Kimberly-Clark• Ahlstrom• Freudenberg• DuPont• First Quality Nonwovens
Upholstery10%
Other 27%
Building/roofing7%
Filtration9%
Floor coverings6%
Automotive5%
Wiping8%
Medical3%
Hygiene25%
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Our purpose is to make nonwovens continuously better for people.
Demand for Suominen nonwovens is expected to grow globally, driven by several megatrends
+2%
+7%
+2–6%
+7%+8%
Global growth rate ~5%Growth rate for Suominen regions ~3%
Aging populationEveryday convenienceHealth and well-being trends
Growing population and middle class
Growing population and middle class
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Our purpose is to make nonwovens continuously better for people.
GDP per capita
Demand for Suominen’s products is growing both in emerging and developed markets
12
Household wipes
Incontinence products
Baby wipes
Disposable diapers
Feminine care products
USD 14 000+
USD 7 000+
USD 10 000+
USD 4 000+
USD 1 000+
6/30/2016
Our purpose is to make nonwovens continuously better for people.
We hold the leading market position in Convenience,still a challenger Care
13
TOP10 #1 Challenger
in nonwovens for medical & hygiene products(Care business area)
Global market leaderin nonwovens for wipes(Conveniencebusiness area)
Ninth-largestof all nonwovens suppliers globally
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Our purpose is to make nonwovens continuously better for people.
Strategy for 2015-2017
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Our purpose is to make nonwovens continuously better for people.
Suominen’s strategy 2015–2017
15
Market Driven Product LeaderVision
Business strategy
1. Deliver superior value in thoughtfully selected market applications.
2. Drive proactive key account management. 3. Execute demand driven supply chain. 4. Evolve culture and capabilities to build strong product
company.
Our purpose is to make nonwovens continuously better for peoplePurpose
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Our purpose is to make nonwovens continuously better for people.
In this strategy period, we aim at growth and clear shift in product portfolio
40%
17%
11%
22%
7%
2015 (Total net sales 444.0 M€)
Baby wipingHousehold wipingWorkplace wipingPersonal care wipingMedical and hygiene products
2017 (approx. 500 M€)
Illustrative.
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Our purpose is to make nonwovens continuously better for people.
Understanding the end user needs isat the heart of our strategy
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Our purpose is to make nonwovens continuously better for people.
Strategy implementation
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Our purpose is to make nonwovens continuously better for people.
Suominen’s strategy 2015–2017
19
Market Driven Product LeaderVision
Business strategy
1. Deliver superior value in thoughtfully selected market applications.
2. Drive proactive key account management. 3. Execute demand driven supply chain. 4. Evolve culture and capabilities to build strong product
company.
Our purpose is to make nonwovens continuously better for peoplePurpose
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Our purpose is to make nonwovens continuously better for people.
Deliver superior value in selected market applications
Key activities in delivering superior value
20
~60 M€ growth investment program, initiatives on three continents
Product development process enhanced
Six new products launched
1
6/30/2016
Our purpose is to make nonwovens continuously better for people.
The growth investment program now focusing onthe Bethune investment
Plant Estimatedvalue
Installed during
Bethune approx. EUR50 million H2/2016
Alicanteapprox. EUR
4 million 2015Nakkila
Paulínia
To be confirmed
approx. EUR 6 million
21
Bethune, SC, USA
Paulínia, Brazil
Alicante, Spain
Nakkila, Finland
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Product Development function enhanced determinedly
22
Enhancing capabilities
• Innovation process,“Suominen Innovation Machine”- Front End Innovation- Creating a prioritized
project portfolio - Introduction of formal
gate process for running projects
Enhancing capacity
• Creating critical mass- R&D expenditure to
increase to above 1% of net sales (0.8% in 2015)
- Four new people employed in 2015, two of them PhDs
- Centralizing resources
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Our purpose is to make nonwovens continuously better for people. 23
Six new products launched in 2015Five for Care, one for Convenience business
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Our purpose is to make nonwovens continuously better for people.
Drive proactive key account management for mutual value creation
Key activities by focus area
24
Creating value together with customer by, for example, organizing events
Listening to the customer: Utilizing the Customer Perception Survey results
2
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Execute demand driven supply chain
Key activities by focus area
25
Defining and implementing standardized global processes
3
Comprehensive ICT systems renewal –aim at an efficient, global supply chain
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Evolve culture and capabilities to build strong product company
Key activities by focus area
26
4
Pivotal recruitments building new and enhanced capabilities in several areas
Strategic sustainability initiatives in progress, e.g., blind recruiting
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Progress in strategic sustainability initiatives
Implementation of the Supplier Code of
Conduct
Product sustainabilityreview
Non-Discrimination and Equal
Opportunities Program: Blind hiring
and salary study
Material and resource efficiency: Among other things, water
and energy efficiency improved
Achievingproduct leadership
Fostering responsibilitythroughout the value chain
Operating sustainablythroughout the organization
4
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Our purpose is to make nonwovens continuously better for people.
5,0 %
12,4 %
15,7 % 15,9 %14,7 %
0%
5%
10%
15%
20%
2012 2013 2014 2015 Q1/2016
ROI, %
6,9 %
3,5 %
0,8 %
0%
2%
4%
6%
8%
10%
12%
2013 2014 2015
Organic net sales growth, %
101 % 96,2 %
34,7 %25,9 %
28,6 %
0%
20%
40%
60%
80%
100%
120%
2012 2013 2014 2015 Q1/2016
Gearing, %
Progress on mid-term financial targets
• Net sales growth compared to previous year.
• Target level marked with dashed line.
• Figures are of continuing operations.
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Our purpose is to make nonwovens continuously better for people.
Key elements of profitability
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Our purpose is to make nonwovens continuously better for people.
Portfolio change drives top line growth
40%
17%
11%
22%
7%
2015 (444.0 M€) 2017 (~500 M€)
Illustrative.
• Portfolio change is increasing the share of higher value added products in our portfolio
• Envisioned healthy volume growth supports the profitability development
47%
19%
10%
18%
6%
2012 (357.9 M€)
Baby wipes Household wipes Workplace wipes Personal care wipes Hygiene and medical products Others
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Our purpose is to make nonwovens continuously better for people.
9,0%10,7%
12,4% 13,1%
0%
3%
6%
9%
12%
15%
2012 2013 2014 2015
Gross profit, % of net sales
Positive development in gross profit, SGA costsand operating profit
31
6,6%6,0% 5,8% 5,7%
0%
2%
4%
6%
8%
2012 2013 2014 2015
SGA, % of net sales
*Excluding non-recurring items
4,2%5,2%
6,7% 7,0%
0%
2%
4%
6%
8%
2012 2013 2014 2015
Operating profit*, % of net sales
6/30/2016
Our purpose is to make nonwovens continuously better for people.
Raw materials – The logic
• Roughly 60–70% of costs are raw materials.
• As one of the largest nonwovens producers in the world, we maintain long relationships with key suppliers.
• Contracts covering ca. 50% of our net sales include a pass-through clause.
• Between raw materials for fibers and the final fiber, there are intermediate steps and in that value chain market dynamics are in play.
• Raw materials are not hedged as correlations are not predictable.
32
30%
23%23%
21%
3%
Viscose Pulp Polypropene* Polyester Other* Including sourced PP Spunbond.
6/30/2016
Our purpose is to make nonwovens continuously better for people.
EUR/USD – A factor to pay attention to
• We have estimated that 10% change in EUR/USD exchange rate should have, based on the current business structure, on a full year basis, approximately 2.5 MEUR effect on operating profit.
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Our purpose is to make nonwovens continuously better for people.
Financial reviewQ1 2016
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Our purpose is to make nonwovens continuously better for people.
Net sales declined by 7.2%
Net sales, EUR million Net sales, EUR million
98,4 95,3103,3104,8111,9112,9114,9 104,2 103,9
0
20
40
60
80
100
120
140
356,9 373,7401,8
444,0,0
0
100
200
300
400
500
2012 2013 2014 2015
• Net sales decreased from the comparison period to EUR 103.9 million. Demand was not at the same level as in the comparison period. This also affected the competitive situation.
• Net sales were affected by both decreased sales volumes and lower sales prices in approximately equal proportions.
• We saw signs of improvement in demand already towards the end of the review period.
Continuing operations. Continuing operations.
356/30/2016
Our purpose is to make nonwovens continuously better for people.
Proportion of sales of products withhigher added value grew
41%
22%
15%12%
8%
38%
25%
18%
10% 8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16
Typically higher value-added products
Baby wipes Personal care wipes Household Workplace Hygiene and medical products
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Our purpose is to make nonwovens continuously better for people.
6,5 % 5,8 %
5.0 %
5,9 %
6,5 %
8,8 % 8,5 %
4,1 %5,3 %
0%
2%
4%
6%
8%
10%
0
2
4
6
8
10
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
EUR million %
Operating profit decreasedfrom the comparison period
Operating profit excl. NRI, EUR million and % Operating profit excl. NRI, EUR million and %
• Operating profit decreased by 24.0% and amounted to EUR 5.5 million.• Lower sales volumes and decrease in gross profit affected operating profit. There was no material
effect of US dollar exchange rate fluctuation on operating profit during the first quarter.
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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Our purpose is to make nonwovens continuously better for people.
Profit for the reporting periodremained more or less unchanged
Profit for the reporting period, EUR million Profit for the reporting period, EUR million
2,62,2
0,6
4,8
3,5
6,2
5,4
1,9
3,4
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.
2012 2013 2014 2015
• Profit for the reporting period was strengthened mainly by lower financial expenses.
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Our purpose is to make nonwovens continuously better for people.
Statement of profit or loss
EUR thousands 1-3/2016 1-3/2015 1-12/2015Net sales 103,869 111,934 444,042Cost of goods sold -92,077 -97,547 -386,042Gross profit 11,792 14,387 58,000Other operating income 629 950 2,637Sales and marketing expenses -1,758 -1,902 -7,760Research and development -837 -851 -3,527Administration expenses -4,339 -4,681 -16,709Other operating expenses 55 -611 -862Operating profit 5,543 7,292 31,778Net financial expenses -244 -1,621 -5,302Profit before income taxes 5,299 5,671 26,476Income taxes -1,858 -2,188 -9,456Profit for the period 3,441 3,482 17,020
Gross profit didnot reach the levelof the comparisonperiod
Cost structurecontinues on ahealthy level
Fluctuations in exchange rates decreased the financial items markedly below the level of the comparison period
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Our purpose is to make nonwovens continuously better for people.
Statement of financial positions, assets
EUR thousands 31.3.2016 31.3.2015 31.12.2015Non-current assetsGoodwill 15,496 15,496 15,496Intangible assets 13,411 12,598 13,275Property, plant and equipment 94,173 92,197 97,931Loan receivables 7,793 8,202 7,793Available-for-sale assets 777 1,113 777Held-to-maturity investments − 433 −Other non-current receivables 2,442 2,518 2,402Deferred tax assets 4,529 5,276 4,491Total non-current assets 138,621 137,833 142,165
Current assetsInventories 31,816 30,914 32,557Trade receivables 52,151 60,599 51,547Loan receivables 1,000 600 1,000Other current receivables 5,183 4,108 7,038
Assets for current tax1,892 1,381 1,874
Cash and cash equivalents 53,065 38,036 55,570Total current assets 145,107 135,639 149,585
Total assets 283,728 273,472 291,750
Elevated cash.Payments in our growth investment program will bring cash level closer to normal
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Our purpose is to make nonwovens continuously better for people.
Statement of financial positions, equity and liabilitiesEUR thousands 31.3.2016 31.3.2015 31.12.2015Share capital 11,860 11,860 11,860Share premium account 24,681 24,681 24,681Reserve for invested unrestricted equity 69,652 69,572 69,652Treasury shares -44 -44 -44Fair value and other reserves 500 14 -118Exchange differences 1,660 8,216 5,097Other equity -4,775 -15,901 -3,076Total equity attributable to owners of the parent 103,534 98,398 108,052
Hybrid bond 17,272 16,653 17,664Total equity 120,806 115,051 125,716LiabilitiesNon-current liabilitiesDeferred tax liabilities 10,411 9,832 10,890Liabilities from defined benefit plans 1,105 1,151 1,105Other non-current liabilities 258 1,303 651Debentures 75,000 75,000 75,000Other non-current interest-bearing liabilities 18,058 6,667 18,498Total non-current liabilities 104,831 93,953 106,144Current liabilitiesCurrent interest-bearing liabilities 3,318 3,333 3,363Liabilities for current tax 764 941 47Trade payables and other current liabilities 54,010 60,194 56,479Total current liabilities 58,092 64,468 59,889Total liabilities 162,923 158,421 166,034Total equity and liabilities 283,728 273,472 291,750
Payment of dividend the only notable transaction
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Our purpose is to make nonwovens continuously better for people.
Cash flow from operations doubledfrom the comparison period
Cash flow from operations, EUR million Cash flow from operation, EUR million
-0,4
11,3
16,9
9,3
4,5 3,9
7,9
11,09,1
-202468
1012141618
24,921,3
37,1
27,3
0
5
10
15
20
25
30
35
40
2012 2013 2014 2015
• Cash flow from operations was mainly improved due to a decrease in paid financial items as well as positive change in working capital
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Our purpose is to make nonwovens continuously better for people.
Statement of cash flows (1/2)
EUR thousands 1-3/2016 1-3/2015 1-12/2015
Cash flow from operationsProfit / loss for the period 3,441 3,482 17,020Total adjustments to profit / loss for the period 6,852 8,319 32,870Cash flow before changes in net working capital 10,292 11,802 49,890Change in net working capital 1,368 -107 -7,921Financial items -1,828 -5,317 -6,425Income taxes -714 -1,886 -8,269Cash flow from operations 9,118 4,493 27,274
Cash flow from investments
Investments in property, plant and equipment and intangible assets -3,849 -1,664 -22,369
Cash flow from disposed businesses − − 167
Sales proceeds from property, plant and equipment and intangible assets − 10 10
Cash flow from investments -3,849 -1,654 -22,192
Improved cash flow from operations attributable toall components
Investmentscontinued
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Our purpose is to make nonwovens continuously better for people.
Statement of cash flows (2/2)
EUR thousands 1-3/2016 1-3/2015 1-12/2015
Cash 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 − -14 -14Changes in loan receivables − − 600Share issue − 340 340Paid interest on hybrid bond -624 − −Dividend distribution / distribution of funds -5,030 -2,504 -2,504Cash flow from financing -5,654 -2,177 10,089
Change in cash and cash equivalents -385 662 15,171
Cash and cash equivalents at the beginning of the period 55,570 38,430 38,430
Effect of changes in exchange rates -2,120 -1,056 1,968Change in cash and cash equivalents -385 662 15,171Cash and cash equivalents at the end of the period 53,065 38,036 55,570
Strong cash flow covered both the investments and the payment of dividend
446/30/2016
Our purpose is to make nonwovens continuously better for people.
Outlook for 2016 remains unchanged
• Suominen expects that for the full year 2016, its net sales and operating profit excluding non-recurring items will improve from year 2015.
• In 2015, Suominen’s net sales amounted to EUR 444.0 million and operating profit excluding non-recurring items to EUR 31.2 million.
456/30/2016
Our purpose is to make nonwovens continuously better for people.
Summary: Suominen as an investment
Promising track record, solid financial position
Ambitious growth scenario –net sales to 500 M€ in 2017
Growth investment program: Financial position secures the execution
Dividends form an important elementin the creation of shareholder value
46
~30%Payout ratio
~60M€
500M€
28.6%Gearing
6/30/2016
Thank you!
476/30/2016
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