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Suominen Corporation
Q4 and FY2015
Nina Kopola, President & CEO
Tapio Engström, CFO
29 January 2016
Our purpose is to make nonwovens continuously better for people.
Agenda
• Highlights Q4 and FY2015
• Strategy and strategy execution
• Financial review Q4 and FY2015
• Proposal on distribution of dividend
• Outlook 2016
• Reverse share split
• Q&A
2016/1/29 2
Our purpose is to make nonwovens continuously better for people.
2015: Cash flow remained strong, development of net
sales below target
2016/1/29 3
31.2 M€ 7.0%444 M€
0.02 €27.3 M€ Q4
Our purpose is to make nonwovens continuously better for people.
Net sales grew 10.5% in FY2015, Q4 on the level of the
comparison period
2016/1/29 4
Net sales, M€ Net sales, M€
89,8
98,4 95,3103,3104,8
111,9112,9114,9
104,2
0
20
40
60
80
100
120
140
356,9373,7
401,8
444,0
0
100
200
300
400
500
2012 2013 2014 2015
- In Q4, net sales was attributable to postponing of orders by some customers until after the turn of
the year.
- In FY2015, net sales grew 10.5% due to the strengthening of the USD compared to EUR.
Suominen’s net sales grew organically and excluding the effect of exchange rates by roughly 1%.
Continuing operations Continuing operations
Our purpose is to make nonwovens continuously better for people.
Balancing the portfolio continues
2016/1/29 5
41%
21%
17%
11%
8%
2014: 401.8 M€
40%
22%
17%
11%
7%
2015: 444.0 M€
Typically products with higher added value
Baby wipes Personal care Household Workplace Medical & hygiene
47%
18%
19%
10%
6%
2012: 357.9 M€
Our purpose is to make nonwovens continuously better for people.
Operating profit for FY2015 grew by 16%, Q4 below
expectations
2016/1/29 6
6,5 % 5,8 %
5.0 %
5,9 %
6,5 %
8,8 % 8,5 %
4,1 %
0%
2%
4%
6%
8%
10%
0
2
4
6
8
10
M€ %
Operating profit excl. NRI, M€ and % Operating profit excl. NRI, M€ and %
- Operating profit in Q4 was weakened by the expenses related to development projects
in progress, among other things.
- The strengthening of the US dollar compared to EUR increased the operating profit.
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 2015
M€ %
Continuing operations
NRI=Non-recurring items.
Our purpose is to make nonwovens continuously better for people.
Strategy2015–2017
72016/1/29
Our purpose is to make nonwovens continuously better for people.
Suominen’s strategy 2015–2017
• 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
82016/1/29
Our purpose is to make nonwovens continuously better for people.
Growth investment program progressed on
three continents
Bethune, SC, US
Paulínia, Brazil
Alicante,
Spain
Nakkila, Finland
92016/1/29
Our purpose is to make nonwovens continuously better for people.
Progress of the ~60 M€ growth investment program
10
2015 2016 2017
“Retrofit”
Paulínia,
Alicante
Q4/2015
“Expand”
Nakkila
Q1/2015
Bethune
H2/2016
Projected growth investments
approx. 60 M€ until 2017
To be
confirmed
~54 M€ spending ~6 M€
2016/1/29
Our purpose is to make nonwovens continuously better for people.
Product Development function was enhanced
determinedly
11
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
2016/1/29
Our purpose is to make nonwovens continuously better for people. 12
Suominen launched six new products
Five for Care, one for Convenience business
2016/1/29
Our purpose is to make nonwovens continuously better for people.
FIBRELLA® Lite awarded by Research, Innovation &
Science for Engineered Fabrics (RISE) Conference
29.1.2016 13
Our purpose is to make nonwovens continuously better for people.
101,0 96,2
34,7
25,9
0
20
40
60
80
100
120
2012 2013 2014 2015
Gearing, %
6,9 %
3,5 %
0,8 %
0%
2%
4%
6%
8%
10%
12%
2012 2013 2014 2015
n/a
Organic net sales growth, %
Progress on mid-term financial targets
2016/1/29 14
5,0 %
12,4 %
15,7 % 15,9 %
0%
5%
10%
15%
20%
2012 2013 2014 2015
ROI, %
• Organic net sales growth, excluding
the effect of exchange rates,
compared with previous year.
• Target level marked with dashed line.
• Figures are for continuing
operations.
Our purpose is to make nonwovens continuously better for people.
Financial review Q4 and FY20152016/1/29 15
Our purpose is to make nonwovens continuously better for people.
Profit for the period grew by 67% despite the low
level of Q4
Profit for the period, M€ Profit for the period, M€
2,62,2
0,6
4,8
3,5
6,2
5,4
1,9
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
16
2012 2013 2014 2015
2016/1/29
Our purpose is to make nonwovens continuously better for people.
Statement of profit or loss
2016/1/29 17
EUR thousands Q4/2015 Q4/2014 2015 2014
Net sales 104,244 104,778 444,042 401,762
Cost of goods sold -92,972 -92,582 -386,042 -352,091
Gross profit 11,272 12,196 58,000 49,671
Other operating income 3 689 2,637 2,655
Sales and marketing expenses -2,410 -1,692 -7,760 -6,278
Research and development -925 -815 -3,527 -2,877
Administration expenses -3,963 -4,011 -16,709 -15,418
Other operating expenses 284 -228 -862 -1,857
Operating profit 4,262 6,139 31,778 25,897
Net financial expenses -1,358 -998 -5,302 -8,075
Profit before income taxes 2,903 5,141 26,476 17,822
Income taxes -984 -381 -9,456 -7,645
Profit for the period from
continuing operations 1,919 4,761 17,020 10,177
Gross profit improved
from previous year
Healthy cost structure
also in 2015
Effective tax rate
35.7%
Our purpose is to make nonwovens continuously better for people.
Statement of financial position, assets
2016/1/29 18
EUR thousands 31 Dec 2015 31 Dec 2014
Non-current assets
Goodwill 15,496 15,496
Intangible assets 13,275 12,510
Property, plant and equipment 97,931 88,721
Loan receivables 7,793 8,202
Available-for-sale assets 777 1124
Held-to-maturity investments − 450
Other non-current receivables 2,402 2614
Deferred tax assets 4,491 5,516
Total non-current assets 142,165 134,633
Current assets
Inventories 32,557 32,380
Trade receivables 51,547 52,269
Loan receivables 1,000 600
Other current receivables 7,038 4,618
Assets for current tax 1,874 1,682
Cash and cash equivalents 55,570 38,430
Total current assets 149,585 129,979
Total assets 291,750 264,611
Investment program
visible in assets
Strong cash enables the
execution of the
investment program
Our purpose is to make nonwovens continuously better for people.
Statement of financial position, equity and liabilities
2016/1/29 19
EUR thousands 31 Dec 2015 31 Dec 2014
Share capital 11,860 11,860
Share premium account 24,681 24,681
Reserve for invested unrestricted equity 69,652 97,192
Treasury shares -44 -44
Fair value and other reserves -118 96
Exchange differences 5,097 3,419
Other equity -3,076 -46,890
Total equity attributable to owners of the parent 108,052 90,313
Hybrid bond 17,664 18,424
Total equity 125,716 108,737
Liabilities
Non-current liabilities
Deferred tax liabilities 10,890 8,789
Liabilities from defined benefit plans 1,105 1,151
Other non-current liabilities 651 578
Debentures 75,000 75,000
Other non-current interest-bearing liabilities 18,498 6,667
Total non-current liabilities 106,144 92,185
Current liabilities
Current interest-bearing liabilities 3,363 3,347
Liabilities for current tax 47 246
Trade payables and other current liabilities 56,479 60,096
Total current liabilities 59,889 63,689
Total liabilities 166,034 155,874
Total equity and liabilities 291,750 264,611
Loan withdrawal to
secure the financing
of the investment
program
Our purpose is to make nonwovens continuously better for people.
Cash flow strong as expected in FY2015, also in Q4
Cash flow from operations, M€ Cash flow from operations, M€
24,9
21,3
37,1
27,3
0
5
10
15
20
25
30
35
40
2012 2013 2014 2015
2016/1/29 20
- In FY2015, cash flow accumulation between quarters was more even than
before.
-0,4
11,3
16,9
9,3
4,5 3,9
7,9
11,0
-2
0
2
4
6
8
10
12
14
16
18
Our purpose is to make nonwovens continuously better for people.
Statement of cash flows (1/2)
21
Cash flow in 2014 includes also discontinued operations.
2016/1/29
EUR thousands 1-12/2015 1-12/2014
Cash flow from operations
Profit / loss for the period 17,020 4,973
Total adjustments to profit / loss for the period 32,870 39,953
Cash flow before changes in net working capital 49,890 44,927
Change in net working capital -7,921 6,140
Financial items -6,425 -6,514
Income taxes -8,269 -7,434
Cash flow from operations 27,274 37,119
Cash flow from investments
Investments in property, plant and equipment and
intangible assets-22,369 -7,740
Investments in acquired businesses − -19,261
Cash flow from disposed businesses 167 4,736
Sales proceeds from property, plant and equipment and
intangible assets10 59
Cash flow from investments -22,192 -22,206
Change in working
capital burdened
cash flow from
operations
Growth investments
getting visible
Our purpose is to make nonwovens continuously better for people. 22
Statement of cash flows (2/2)
Cash flow in 2014 includes also discontinued operations.
2016/1/29
EUR thousands 1-12/2015 1-12/2014
Cash flow from financing
Drawdown of hybrid bond − 17,500
Drawdown of debenture bond − 75,000
Drawdown of other non-current interest-bearing liabilities 15,000 10,000
Repayment of other non-current interest-bearing
liabilities-3,333 -78,220
Changes in current interest-bearing liabilities -14 -18,324
Changes in loan receivables 600 −
Share issue 340 −
Distribution of funds -2,504 −
Cash flow from financing 10,089 5,956
Change in cash and cash equivalents 15,171 20,869
Cash and cash equivalents at the beginning of the period 38,430 18,585
Effect of changes in exchange rates 1,968 -1,025
Change in cash and cash equivalents 15,171 20,869
Cash and cash equivalents at the end of the period 55,570 38,430
Our purpose is to make nonwovens continuously better for people.
Proposal on distribution of dividend
23
• The Board of Directors
proposes to the Annual General
Meeting EUR 0.02 per share
dividend from 2015.
• On 29 Jan 2016 the company
had 251,511,730 issued shares,
excluding treasury shares. With
this number of shares, the total
amount of dividends to be
distributed would be EUR
5,030,234.60.
• The proposal is in line with the
dividend policy.
-2,8
5,7
10,2
17,0
-5
0
5
10
15
20
2012 2013 2014 2015
Profit for the period, M€
-0,01
0,02
0,04
0,06
0,01
0,02
-0,02
0
0,02
0,04
0,06
0,08
2012 2013 2014 2015
EPS DPS
EPS and DPS*, €
2016/1/29
*In 2015, proposal for the AGM. In 2014, distribution of funds.
Our purpose is to make nonwovens continuously better for people.
Outlook for 2016
• 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.
242016/1/29
Our purpose is to make nonwovens continuously better for people.
Reverse share split
• Suominen plans to carry out a reverse share split with a 5:1
ratio.
• The target for the reverse split is to make the share more
attractive to investors, to enhance share trading conditions
and to add flexibility to the decision making regarding
potential future payments of dividend.
• The arrangement is subject to the resolution of the Annual
General Meeting.
• The plan is to combine the shares on 21 March 2016 after the
close of trading in Nasdaq Helsinki.
2016/1/29 25
Our purpose is to make nonwovens continuously better for people.
Summary 2015
31.2 M€ 7.0%444 M€
0.02 €27.3 M€
26
Q4
2016/1/29
Thank you!
29.1.2016 27