Results Q3 2015

Suominen Corporation

Q3 2015

Nina Kopola, President & CEO

Tapio Engström, CFO

26 October 2015

Our purpose is to make nonwovens continuously better for people.

Agenda

• Highlights Q3

• Strategy and its implementation

• Financial review Q3 and outlook

• Q & A

10/26/2015 2


Q3 2015: Positive financial development continued

9.8 M€ 5.4 M€ 114.9 M€

~60 M€ 0.06 €

10/26/2015 3


Q3: Net sales increased by 11%

Net sales, M€

Net sales, M€

93.5 89.8 98.4 95.3

103.3 104.8 111.9 112.9 114.9

0

20

40

60

80

100

120

140

55.7

98.3

356.9 373.7

401.8

0

50

100

150

200

250

300

350

400

450

2010 2011 2012 2013 2014

- Net sales grew by 11.3% in Q3 from the comparison period, mostly due to the

strengthening of the USD compared to euro.

Continuing operations Continuing operations

10/26/2015 4


Balancing our portfolio continues

40%

22%

17%

12%

8%

Q1–Q3 2014: 297.0 M€

40%

24%

17%

11%

7%

Q1–Q3 2015: 339.8 M€

Typically higher value-added products

10/26/2015 5

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

47%

17%

19%

10%

6%

Q1–Q3 2012: 273.0 M€


4.9%

5.0% 5.0 %

4.6%

6.5% 5.8%

8.4%

5.9% 6.5%

8.8% 8.5%

0%

2%

4%

6%

8%

10%

0

2

4

6

8

10

12

M€ %

Operating profit excl. NRI, M€ and % Operating profit excl. NRI, M€ and %

- Operating profit grew from the comparison period as USD strengthened.

Continuing operations

-6.5% -4.4%

4.2%

5.2%

6.7%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

-10

-5

0

5

10

15

20

25

30

2010 2011 2012 2013 2014

M€ %

Continuing operations

10/26/2015 6

Q3: Operating profit continued at healthy level


Strategy 2015–2017 10/26/2015 7


Suominen’s strategy 2015–2017

10/26/2015 8

• 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


• 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


We extended our growth investment program to

approximately EUR 60 million

10/26/2015 11

Extend

geographical

reach

Acquisitions

Not in focus in the strategy

period 2015–2017

Sustain &

improve Retrofit Expand

Projected growth investments

appr. 60 M€ until 2017

Approx. 1–2%

of net sales


Growth investment project progressing on

three continents

Paulínia, Brazil

Bethune, SC, US

Nakkila, Finland

Alicante, Spain

10/26/2015 12


A new production line at Bethune plant

• The total value of the project will be close to EUR 50 million.

• Andritz was selected as the main supplier and integrator of

the project.

• The investment will take the wetlaid technology to a totally

new level in the industry.

• At first, the new production line will supply nonwovens for

household and industrial wiping as well as for flushable

applications.

• The new line will be tailor-made, based on our unique

nonwovens technology expertise.

• The line is anticipated to be installed during the second half of

2016.

10/26/2015 13


Investment projects at Alicante ja Paulínia plants

• Both investments will expand the product offering of the

plants.

• At Alicante, the product offering will expand to nonwovens for

industrial wipes and medical applications.

• After the investment is completed, Paulínia plant will supply

nonwovens for medical applications in addition to wiping

applications.

• The investment projects will be completed during 2015.

• The total value of the investment projects is approximately

EUR 4 milllion.

10/26/2015 14


Reaching the

product leadership

Innovation

Development of

sustainable products

Sustainability program 2015–2017 in implementation

Fostering

responsibility

through the value

chain

Long-term relations

with customers &

suppliers

Our purpose is to make nonwovens continuously better

for people.

Operating

sustainably accross

the company

Competence

development

Non-discrimination

Material & resource

efficiency

10/26/2015 15


New kind of competence in the

Corporate Executive Team

• Ernesto Levy joined Suominen

as Senior Vice President,

Convenience business area, on

20 October 2015.

• Levy has an impressive track

record in consumer brand

organizations and especially in

North American and South

American markets.

• Levy’s capabilities bring

complementary competencies

to Suominen’s leadership team.

10/26/2015 16


4.7 %

7.5 %

14.4 %

0%

5%

10%

15%

20%

2012 2013 2014 Q3/15

Net sales growth, %

101.0 96.2

34.7 30.5

0

20

40

60

80

100

120

2012 2013 2014 Q3/15

Gearing, %

Progress on mid-term financial targets

12.4 %

15.7 % 17.4 %

0%

5%

10%

15%

20%

2012 2013 2014 Q3/15

ROI, %

- Net sales growth compared with

previous year or the Q3 of previous

year.

- Target level marked with dashed line.

- Figures are of continuing operations.

n/a

10/26/2015 17

n/a


Financial review Q3

10/26/2015 18


Q3: Profit for the reporting period continued

at the strong Q2 level

Profit for the reporting period, M€

Profit for the reporting period, M€

2.6

0.6

2.6 2.2

0.6

4.8

3.5

6.2

5.4

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

Continuing operations Continuing operations

10/26/2015 19


Statement of profit or loss

EUR thousand 7-9/2015 7-9/2014 2014

Net sales 114,919 103,291 401,762

Cost of goods sold -98,892 -88,071 -352,091

Gross profit 16,027 15,220 49,671

Other operating income 782 659 2,655

Sales and marketing expenses -1,692 -1,427 -6,278

Research and development -1,015 -665 -2,877

Administration expenses -3,887 -3,777 -15,418

Other operating expenses -452 -1,648 -1,857

Operating profit 9,763 8,361 25,897

Net financial expenses -1,247 -4,334 -8,075

Profit before income taxes 8,517 4,027 17,822

Income taxes -3,142 -3,378 -7,645

Profit for the period from continuing operations 5,374 649 10,177

10/26/2015 20

Healthy cost structure

Solid gross profit

Net financial expences

of the comparison

period include

refinancing costs


Statement of financial position, assets

10/26/2015 21

EUR thousand 30 Sep 2015 30 Sep 2014 31 Dec 2014

Non-current assets

Goodwill 15,496 15,496 15,496

Intangible assets 12,462 12,434 12,510

Property, plant and equipment 91,743 88,553 88,721

Loan receivables 7,752 8,531 8,202

Available-for-sale assets 777 942 1,124

Held-to-maturity investments − 449 450

Other non-current receivables 2,206 980 2,614

Deferred tax assets 4,715 5,004 5,516

Total non-current assets 135,150 132,389 134,633

Current assets

Inventories 32,078 29,623 32,380

Trade receivables 60,360 50,639 52,269

Loan receivables 800 59 600

Other current receivables 5,036 5,971 4,618

Assets for current tax 1,807 697 1,682

Cash and cash equivalents 36,454 31,778 38,430

Total current assets 136,535 118,767 129,979

Total assets 271,685 251,156 264,611

Our purpose is to make nonwovens continuously better for people. 10/26/2015

Statement of financial position, equity and liabilities

22

EUR thousand 30 Sep 2015 30 Sep 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 42 -52 96

Exchange differences 1,644 2,650 3,419

Other equity -4,593 -51,386 -46,890

Total equity attributable to owners of the parent

103,242 84,901 90,313

Hybrid bond 17,118 18,162 18,424

Total equity 120,360 103,063 108,737

Liabilities

Non-current liabilities

Deferred tax liabilities 9,864 7,413 8,789

Liabilities from defined benefit plans 1,151 1,025 1,151

Other non-current liabilities 538 841 578

Debentures 75,000 75,000 75,000

Other non-current interest-bearing liabilities

3,333 6,667 6,667

Total non-current liabilities 89,887 90,946 92,185

Current liabilities

Current interest-bearing liabilities 3,333 3,367 3,347

Liabilities for current tax 2,720 1,688 246

Trade payables and other current liabilities

55,385 52,092 60,096

Total current liabilities 61,438 57,147 63,689

Total liabilities 151,325 148,093 155,874

Total equity and liabilities 271,685 251,156 264,611


Q3: Cash flow weakened from the comparison period

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

4.3

16.3

-0.4

11.3

16.9

9.3

4.5 3.9

7.9

-2

0

2

4

6

8

10

12

14

16

18

-2.5 -2.9

24.9 21.3

37.1

-5

0

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014

- In FY2015, cash flow accumulation between quarters has been steadier than before.

10/26/2015 23


Statement of cash flows (1/2)

10/26/2015 24

EUR thousand 1-9/2015 1-9/2014 1-12/2014

Cash flow from operations

Profit / loss for the period 15,101 212 4,973

Total adjustments to profit / loss for the period

25,238 34,406 39,953

Cash flow before changes in net working capital

40,339 34,618 44,927

Change in net working capital -12,019 3,985 6,140

Financial items -6,672 -5,982 -6,514

Income taxes -5,371 -4,839 -7,434

Cash flow from operations 16,277 27,783 37,119

Cash flow from investments

Investments in property, plant and equipment and intangible assets

-14,052 -5,291 -7,740

Investments in acquired businesses − -19,261 -19,261

Cash flow from disposed businesses 167 4,736 4,736

Sales proceeds from property, plant and equipment and intangible assets

10 31 59

Cash flow from investments -13,876 -19,785 -22,206

Change in working

capital decreased

cash flow from

operations

Growth investment

initiatives visible in

cash flow from

investments

Cash flow in 2014 includes also discontinued operations.


Statement of cash flows (2/2)

10/26/2015 25

EUR thousand 1-9/2015 1-9/2014 1-12/2014

Cash flow from financing

Drawdown of hybrid bond − 17,500 17,500

Drawdown of debenture bond − 75,000 75,000

Drawdown of other non-current interest-bearing liabilities

− 10,000 10,000

Repayment of other non-current interest-bearing liabilities

-3,333 -78,213 -78,220

Changes in current interest-bearing liabilities -14 -18,318 -18,324

Changes in loan receivables 250 − −

Share issue 340 − −

Distribution of funds -2,504 − −

Cash flow from financing -5,261 5,969 5,956

Change in cash and cash equivalents -2,859 13,967 20,869

Cash and cash equivalents at the beginning of the period

38,430 18,585 18,585

Effect of changes in exchange rates 883 -775 -1,025

Change in cash and cash equivalents -2,859 13,967 20,869

Cash and cash equivalents at the end of the period

36,454 31,778 38,430

Cash flow in 2014 includes also discontinued operations.


Outlook for FY2015

• Suominen specifies its guidance regarding operating profit

for 2015. The company expects that for the full year 2015,

operating profit from continuing operations excluding non-

recurring items will improve markedly from year 2014 (EUR

26.9 million).

• Previously, Suominen estimated that for the full year 2015,

its operating profit excluding non-recurring items from

continuing operations would improve from year 2014.

• For net sales, Suominen repeats its previous estimate,

disclosed on 17 July 2015, that for the full year 2015 the

company expects its net sales for continuing operations to

improve from year 2014 (EUR 401.8 million).

10/26/2015 26


Summary Q3 2015

Positive financial

development

continued,

guidance revised

Growth

investment

program

extended

to ~60 M€

The largest

initiative in the

program

kicked off

in the US

10/26/2015 27

Thank you!

We are ready to answer your

questions.

10/26/2015 28

Investor Relations

Results Q3 2015