Suominen Corporation’s Interim Report on April 24, 2019 at 15:00 p.m. (EEST)
Suominen Corporation’s Interim Report for 1 January – 31 March 2019:
Net sales and operating profit improved
KEY FIGURES
| 1-3 / 2019 | 1- 3 / 2018 | 1-12 / 2018 | |
| Net sales, EUR million | 109.8 | 106.6 | 431.1 |
| Comparable operating profit, EUR million | 3.0 | 1.5 | 4.6 |
| Operating profit, EUR million | 3.0 | 1.5 | 4.6 |
| Profit for the period, EUR million | 1.1 | -0.4 | -1.7 |
| Earnings per share, basic, EUR | 0.02 | -0.01 | -0.03 |
| Earnings per share, diluted, EUR | 0.02 | -0.01 | -0.03 |
| Cash flow from operations per share, EUR | -0.04 | 0.09 | 0.56 |
| Return on invested capital, rolling 12 months, % | 2.9 | 4.6 | 2.3 |
| Gearing, % | 68.3 | 68.2 | 65.9* |
*restated
In this financial report, figures shown in brackets refer to the comparison period last year if not otherwise stated.
Highlights in January–March 2019:
- Net sales increased by 3% and amounted to EUR 109.8 million (106.6). The positive impact of EUR/USD exchange rate changes on net sales was EUR 4.7 million.
- Operating profit improved to EUR 3.0 million (1.5) mainly due to improved sales prices as well as change in product and customer mix.
- Cash flow from operations declined to EUR -2.4 million (5.2) mainly due to the change in net working capital.
Outlook for 2019 unchanged
Suominen reiterates the outlook presented on January 31, 2019, in which Suominen expects that in 2019, its net sales will be at the level of 2018 (EUR 431.1 million) and comparable operating profit, excluding the positive effect of applying IFRS 16 Leases, will improve from 2018 (EUR 4.6 million).
Petri Helsky, President & CEO, comments on Suominen’s first quarter of 2019:
“Suominen’s net sales and profitability both improved in the first quarter. Our net sales increased by 3% from the comparison period and amounted EUR 109.8 (106.6) million. The improved sales prices as well as stronger USD compared to EUR improved our net sales, even though the sales volumes decreased. Our operating profit increased to EUR 3.0 (1.5) million, mainly due to improved sales prices as well as change in product and customer mix.
This is a positive start for the year, however we still have a lot to do to improve our result and performance. We need to continue to take necessary actions to improve Suominen’s profitability. We will concentrate on further improving our production performance and continue to develop our commercial capabilities.
This first quarter was the best production quarter for our new manufacturing line in Bethune, SC, USA. During the quarter we conducted Final Acceptance Certifications (FAC) and other test runs. These FAC’s and other test runs impacted negatively on the result, but the line’s contribution to company’s gross profit was however slightly positive. The other growth investment initiative at our plant in Green Bay, WI, USA proceeded as planned and we anticipate the new capabilities to be in full utilization by the end of 2019.
Our Group-wide renewal of ICT systems continued as planned as the new systems were taken into use at our Paulinia, Brazil plant on 1 April. The last remaining implementation of the new systems will take place at the Bethune, SC, plant in the US in May. I am certain that with this renewal we will increase our efficiency, productivity and transparency in the future.“
NET SALES
In January–March 2019, Suominen’s net sales increased by 3% from the comparison period to EUR 109.8 million (106.6). Sales volumes decreased, but the improved sales prices as well as stronger USD compared to EUR improved net sales. The strengthening of the USD compared to EUR increased the net sales by EUR 4.7 million.
Suominen has two business areas, Convenience and Care. Convenience business area supplies nonwovens as roll goods for a wide range of wiping applications. Care business area manufactures nonwovens for hygiene products and medical applications. Net sales of the Convenience business area were EUR 101.2 million (97.5) and net sales of the Care business area EUR 8.5 million (9.2).
The main application areas for nonwoven materials supplied by Suominen in January–March were baby wipes (accounting for 41% of the sales), home care wipes (23%), personal care wipes (18%), wipes for workplace use (9%), and hygiene and medical products (8%). All nonwovens for wiping products belong to the Convenience business area and nonwovens for hygiene and medical products to the Care business area. The proportions of nonwovens for baby wipes and home care wipes increased from the comparison period, while the share of nonwovens for personal care, and hygiene and medical decreased.
OPERATING PROFIT AND RESULT
Operating profit improved and amounted to EUR 3.0 million (1.5) mainly due to improved sales prices as well as change in product and customer mix. The effect of US dollar exchange rate fluctuation improved operating profit by EUR 0.1 million. The effect of application of IFRS 16 Leases standard on the operating profit was approximately EUR 60 thousand positive. The comparison period has not been restated.
Profit before income taxes was EUR 1.7 million (-0.3), and profit for the reporting period was EUR 1.1 million (-0.4).
FINANCING
The Group’s net interest-bearing liabilities at nominal value amounted to EUR 91.4 million (86.5) at the end of the review period. The gearing ratio was 68.3% (68.2%) and the equity ratio 39.9% (41.2%).
In January–March, net financial expenses were EUR -1.3 million (-1.9), or 1.2% (1.8%) of net sales. The effect of application of IFRS 16 increased the financial expenses by EUR 0.3 million.. Fluctuations in exchange rates decreased the financial items by EUR 0.3 million. In the comparison period the fluctuations in exchange rates increased the financial items by EUR 0.7 million.
Cash flow from operations was EUR -2.4 million (5.2), representing a cash flow per share of EUR -0.04 (0.09). The decline in the cash flow from operations was mainly due to the change in net working capital. The financial items in the cash flow from operations, in total EUR -0.9 million (-0.8), were principally impacted by the interests of the debenture bond paid during the reporting period. EUR 10.4 million was tied up in working capital (in Q1 2018: tied up EUR 0.7 million).
CAPITAL EXPENDITURE
The gross capital expenditure totaled EUR 3.8 million (2.2) and was mainly related to the growth investment initiative at the Green Bay plant, WI, USA as well as to the Group-wide renewal of ICT systems. The implementation of the ICT renewal program was continued at the Paulinia plant in Brazil in April. At the end of Q2 2019 all our plants will be running with the new ICT system. Other investments were mainly for maintenance.
Depreciation and amortization for the review period amounted to EUR 6.3 million (5.0). The majority of the increase in depreciation and amortization compared to the previous year is due to application of IFRS 16 Leases standard.
INFORMATION ON SHARES AND SHARE CAPITAL
Share capital
The number of Suominen’s registered shares was 58,259,219 shares on 31 March 2019, equaling to a share capital of EUR 11,860,056.00.
Share trading and price
The number of Suominen Corporation shares traded on Nasdaq Helsinki from 1 January to 31 March 2019 was 2,444,510 shares, accounting for 4.3% of the average number of shares (excluding treasury shares). The highest price was EUR 2.69, the lowest EUR 2.04 and the volume-weighted average price EUR 2.40. The closing price at the end of review period was EUR 2.24. The market capitalization (excluding treasury shares) was EUR 128.8 million on 31 March 2019.
Treasury shares
On 31 March 2019, Suominen Corporation held 762,970 treasury shares.
The portion of the remuneration of the members of the Board of Directors which shall be paid in shares
The Annual General Meeting held on 19 March 2019 decided that the remuneration payable to the members of the Board remains unchanged. 60% of the annual remuneration is paid in cash and 40% in Suominen Corporation’s shares.
The number of shares forming the remuneration portion which is payable in shares will be determined based on the share value in the stock exchange trading maintained by Nasdaq Helsinki Ltd, calculated as the trade volume weighted average quotation of the share during the one month period immediately following the date on which the Interim Report of January‒March 2019 of the company is published. The shares will be given out of the own shares held by the company by the decision of the Board of Directors by 31 May 2019 at the latest.
Share-based incentive plans for the management and key employees
The Group management and key employees participate to the company’s share-based incentive plan. The plans are described in detail in the Financial Statements 2018 and in the Remuneration Statement 2018 of Suominen Corporation, available on the company’s website, www.suominen.fi > Investors > Corporate Governance.
The Board of Directors of Suominen Corporation approved on 30 January 2019 a new share-based incentive plan for the Group management and Group key employees. The aim of the new 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 the long-term, to bind the participants to the company, and to offer them competitive reward plans based on earning and accumulating the company´s shares. The new plan is continuation of the share-based incentive plan, resolved by the Board of Directors in December 2017.
The new three-year earnings period of the plan includes calendar years 2019–2021. The Board of Directors decides on the plan’s performance criteria and required performance levels for each criterion at the beginning of an earnings period. The plan is directed to approximately 20 people.
The potential reward of the plan from the performance period 2019–2021 will be based on the Relative Total Shareholder Return (TSR). The rewards to be paid on the basis of the performance period 2019–2021 correspond to the value of an approximate maximum total of 729,000 Suominen Corporation shares (including also the proportion to be settled in cash). The Board of Directors will be entitled to reduce the rewards agreed in the Performance Share Plan if the limits set by the Board of Directors for the share price are reached.
The potential rewards from the performance periods 2019–2021 will be settled partly in the company’s shares and partly in cash in 2022. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the participant. As a rule, no reward will be paid, if a participant´s employment or service ends before the reward payment.
A member of the Corporate 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. 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. Such number of shares must be held as long as the participant’s employment or service in a group company continues.
ANNUAL GENERAL MEETING
The Annual General Meeting (AGM) of Suominen Corporation was held on 19 March 2019.
The AGM adopted the Financial Statements and the Consolidated Financial Statements for the financial year 2018 and discharged the members of the Board of Directors and the President & CEO from liability for the financial year 2018.
The AGM decided, in accordance with the proposal by the Board of Directors, that no dividend will be distributed and no capital will be returned from the reserve for invested unrestricted equity for the financial year 2018, and the profit shall be transferred to retained earnings.
The AGM decided that the remuneration payable to the members of the Board remains unchanged. The Chair will be paid an annual fee of EUR 60,000, Deputy Chair of the Board an annual fee of EUR 37,500 and other Board members an annual fee of EUR 28,000. Further, the members of the Board will receive a fee of EUR 500 for each meeting of the Board of Directors held in the home country of the respective member and a fee of EUR 1,000 per each meeting of the Board of Directors held elsewhere than in the home country of the respective member. 60% of the remuneration is paid in cash and 40% in Suominen Corporation’s shares. Compensation for expenses is paid in accordance with the company's valid travel policy. The decision was in accordance with the proposal by the Shareholders’ Nomination Board.
The AGM decided that the number of Board members remains unchanged at six (6). Mr. Jan Johansson was re-elected as Chair of the Board of Directors and Mr. Andreas Ahlström, Mr. Risto Anttonen, Mr. Hannu Kasurinen, Ms. Laura Raitio were re-elected as members of the Board of Directors. Ms. Sari Pajari was elected as a new member of the Board. The decisions were in accordance with the proposal by the Shareholders’ Nomination Board.
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 has announced that it will appoint Mr. Toni Halonen, Authorised Public Accountant, as the principally responsible auditor of the company. The AGM decided that the auditor's fee would be paid according to the invoice accepted by the company. The decisions were in accordance with the proposal of the Board of Directors and the recommendation by the Audit Committee.
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 decision was in accordance with the proposal by the Board of Directors. The terms and conditions of the authorization are explained later in this interim report.
Constitutive meeting and permanent committees of the Board of Directors
In its organizing meeting held after the AGM, the Board of Directors re-elected Risto Anttonen 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. Hannu Kasurinen was re-elected as the Chair of the Audit Committee and Andreas Ahlström and Laura Raitio were re-elected as members. Jan Johansson was re-elected as the Chair of the Personnel and Remuneration Committee and Risto Anttonen was re-elected as a member. Sari Pajari was elected as a new member to the Personnel and Remuneration Committee.
Authorizations of the Board of Directors
The Annual General Meeting (AGM) held on 19 March 2019 authorized the Board of Directors to decide on the repurchase a maximum of 400,000 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 30 June 2020 and it revokes all earlier authorizations to repurchase company’s own shares.
The Annual General Meeting (AGM) held on 19 March 2019 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 30 June 2020.
CHANGES IN THE CORPORATE EXECUTIVE TEAM
Petri Helsky started as the President & CEO of Suominen on 7 January 2019. Tapio Engström, Senior Vice President & CFO acted as Suominen’s interim President & CEO from 3 August 2018 until 7 January 2019.
Suominen announced on 9 January 2019, that the CFO of Suominen Corporation and member of Suominen Executive Team Tapio Engström will leave Suominen on 8 July 2019 at the latest.
NOTIFICATIONS UNDER CHAPTER 9, SECTION 5 OF THE SECURITIES MARKET ACT
During the review period Suominen received no notifications under Chapter 9, Section 5 of the Securities Market Act.
BUSINESS RISKS AND UNCERTAINTIES
Global political developments and changes in consumer preferences could have an adverse effect on Suominen. For instance, a political decision that constrains the global free trade may significantly impact the availability and price of certain raw materials, which would in turn affect Suominen’s business and profitability. Suominen’s geographical and customer-industry diversity provides partial protection against this risk.
The demand for Suominen’s products depends on the development of consumer preferences. Historically, changes in global consumer preferences have had mainly positive impact on Suominen, as they have resulted in the growing demand for products made of nonwovens. However, certain factors, including consumers’ attitude towards the use of products made even partially of oil-based raw materials, or their perception on the sustainability of disposable products in general, might rapidly change the consumers’ preferences and buying habits. Suominen monitors the consumer trends proactively and develops its product offering accordingly. The company has had biodegradable, 100% plant-based nonwovens in its portfolio for over 10 years. Suominen also interacts with policymakers regarding the so-called Single-Use Plastic Directive proposal in the European Union.
The estimate on the development of Suominen’s net sales is partially based on forecasts and delivery plans received from the company’s customers. Changes in these forecasts and plans, resulting from changes in the market conditions or in customers’ inventory levels, may affect Suominen’s net sales.
Suominen’s customer base is fairly concentrated, which adds to the customer-specific risk. This may affect Suominen’s financial result if customers’ purchasing habits become more cautious as a result of a changes in consumption, or as a result of sales losses. In 2018, the Group’s ten largest customers accounted for 65% (63%) of the Group net sales. Long-term contracts are preferred with the largest customers. In practice the customer relationships are long-term and last for several years. Customer-related credit risks are managed in accordance with a risk policy approved by the Board of Directors. Credit limits are confirmed for customers on the basis of credit ratings and customer history.
The relevance of the United States in Suominen’s business operations increases the significance of the exchange rate risk related to USD in the Group’s total exchange risk position. Suominen hedges this foreign exchange position in accordance with its hedging policy.
The risks that are characteristic to South American region, including significant changes in business environment or exchange rates, could have an impact on Suominen’s operations in Brazil.
Suominen purchases significant amounts of pulp- and oil-based raw materials annually. Raw materials are the largest cost item for operations. Rapid changes in the global market prices of raw materials have an impact on the company’s profitability. Suominen’s stocks equal to two to four weeks’ consumption and passing on the price changes of these raw materials to the prices Suominen charges its contract customers takes two to five months.
Extended interruptions in the supply of Suominen’s main raw materials could disrupt production and have a negative impact on the Group’s overall business operations. As Suominen sources most of its raw materials from a number of major international suppliers, significant interruptions in the production of the majority of Suominen’s products are unlikely.
Suominen has numerous regional, national and international competitors in its different product groups. There is currently oversupply in some product groups in Suominen’s both principal market regions. Products based on new technologies and imports from countries of lower production costs may reduce Suominen’s competitive edge. If Suominen is not able to compete with an attractive product offering, it may lose some of its market share. Competition may lead to increased pricing pressure on the company’s products.
Suominen continuously invests in its manufacturing facilities. The deployment of the investments may delay from what was planned, the costs of the investments may increase from what has been expected or the investments may create less business benefits than anticipated. The deployment phase of investments may cause temporary interruptions in operations.
Suominen’s operations are dependent on the integrity, security and stable operation of its ICT systems and software as well as on the successful management of cyber risks. If Suominen’s ICT systems and software were to become unusable or significantly impaired for an extended period of time, or the cyber risks are realized, Suominen’s reputation as well as ability to deliver products at the appointed time, order raw materials and handle inventory could be adversely impacted.
There could be a risk of Suominen’s business operations being interrupted due to abrupt and unforeseen events, such as power outages or fire and water damage. Suominen may not be able to control these events through predictive actions, which could lead to interruptions in business. Risks of this type are insured in order to guarantee the continuity of operations. As Suominen has valid damage and business interruption insurance, it is expected that the damage would be compensated, and the financial losses caused by the interruption of business would be covered.
Suominen uses certain technologies in its production. In the management’s view, the chosen technologies are competitive and there is no need to make major investments in new technologies. However, it cannot be excluded that the company’s technology choices could prove wrong, and the development of new or substitute technologies would then require investments.
Suominen aims to protect its business against product liability risks through the use of systematic quality assurance processes and products liability insurance. Technology function of the company is responsible for ensuring the underlying safety of the group´s products during their development. Continuous quality control is designed to guarantee product quality during production. Management considers it unlikely that the Group will face significant product liability-related claims and is unaware of any such claims.
Suominen is subject to corporate income taxes in numerous jurisdictions. Significant judgment is required to determine the total amount of corporate income tax at Group level. There are many transactions and calculations that leave room for uncertainty as to the final amount of the income tax. Tax risks relate also to changes in tax rates or tax legislation or misinterpretations, and materialization of the risks could result in increased payments or sanctions by the tax authorities, which in turn could lead to financial loss. Deferred tax assets included in the statement of financial position require that the deferred tax assets can be recovered against the future taxable income.
The Group is exposed to several financial risks, such as foreign exchange, interest rate, counterparty, liquidity and credit risks. The Group’s financial risks are managed in line with a policy confirmed by the Board of Directors. The financial risks are described in the note 3 of the Financial Statements.
Suominen performs goodwill impairment testing annually. In impairment testing the recoverable amounts are determined as the value in use, which comprises of the discounted projected future cash flows. Actual cash flows can differ from the discounted projected future cash flows. Uncertainties related to the projected future cash flows include, among others, the long economic useful life of the assets and changes in the forecast sales prices of Suominen’s products, production costs as well as discount rates used in testing. Due to the uncertainty inherent in the future, it is possible that Suominen’s recoverable amounts will be insufficient to cover the carrying amounts of assets, particularly goodwill. If this happens, it will be necessary to recognize an impairment loss, which, when implemented, will weaken the result and equity. Goodwill impairment testing has been described in the consolidated financial statements.
BUSINESS ENVIRONMENT
Suominen’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 and consumer confidence 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 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.
In the euro area, the consumer confidence index increased slightly in the beginning of the year. In the United States the consumer confidence index instead declined slightly. The consumer confidence index is still strong in both geographical areas.
Suominen assesses the trend in the demand for its products on the basis of both the general market situation and, above all, on the basis of the framework agreements drawn up with its customers. There is currently overcapacity in the market, mainly in nonwovens for baby wipes and flushables.
At large, the growth in the demand in Suominen’s target markets is expected to continue in 2019, on average, at the pace of 2018.
OUTLOOK FOR 2019
Suominen repeats its estimate, disclosed on 31 January 2019, that Suominen expects that in 2019, its net sales will be at the level of 2018 and comparable operating profit, excluding the positive effect of applying IFRS 16 Leases, will improve from 2018. In 2018, Suominen’s net sales amounted to EUR 431.1 million and operating profit to EUR 4.6 million. In 2019 and 2018 Suominen had no items affecting the comparability of the operating profit. The calculation of comparable operating profit is explained in the disclosures of this release.
ANALYST AND PRESS CONFERENCE
Petri Helsky, President & CEO, and Tapio Engström, CFO, will present the Q1 financial result in Finnish at an analyst and press conference in Helsinki on Wednesday, April 24 at 3:30 pm (EEST). The conference will take place at Suominen’s Helsinki office, address Itämerentori 2. The presentation material will be available after the analyst and press conference at www.suominen.fi
NEXT FINANCIAL REPORT
Suominen Corporation will publish its Half Year Report 2019 on Wednesday, August 7, 2019 approximately at 1:00 pm (EEST).
SUOMINEN GROUP 1 JANUARY–31 MARCH 2019
The 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 2018, with the exception of the effect of the new accounting standards and interpretations which have been applied from 1 January 2019.
Below are disclosed separately those new standards, amendments and interpretations, which have been applied from 1 January 2019 and which have a material effect on Suominen. Other new or amended standards or interpretations applicable from 1 January 2019 are not material for Suominen Group. The effects of the changes in accounting principles on Suominen’s opening balances in the statement of financial position are presented in separate tables at the end of this interim report.
IFRS 16 Leases
IFRS 16 Leases is effective for the reporting periods beginning on 1 January 2019 or later. In accordance with the new standard, the lessee recognizes assets and liabilities for the rights and obligations created by leases. The new standard increased interest-bearing liabilities and property, plant and equipment (right-of-use assets) in the consolidated financial statements of Suominen. In addition, the rental expenses recognized in profit or loss have decreased and depreciation as well as interest expenses have increased. This has affected operating profit.
Suominen owns the majority of its production facilities (ie. buildings and land) as well as all of its production lines. The most significant leasing agreements Suominen has consist of the leased production facilities in Italy and Windsor Locks, USA. Other leasing agreements are mainly leasing agreements on offices and smaller machinery and equipment.
The carrying amounts of the lease liabilities and right-of-use assets depend on, among other things, the length of the leasing contracts as well as the potential options and possibilities to lengthen or shorten the lease term. The carrying amounts are especially affected with the estimates made of the lease terms and possible renewals of the lease agreements of the production facilities. Suominen has restated its statement of financial position as of 31 December 2018. The carrying amounts of lease liabilities were at the end of 2018 EUR 15.3 million and right-of-use assets arising from application of IFRS 16 were EUR 16.8 million. In addition, Suominen has recognized provisions related to the leased property.
Suominen has applied the modified retrospective approach in application of IFRS 16. With this approach the comparative information is not restated and the lease liabilities at transition date equaled the present value of remaining lease payments. In addition, IFRS 16 was not applied to leases ending within 12 months from the transition date of 1 January 2019 nor to low value leases. At transition, IFRS 16 has also been applied only to contracts which have been previously identified as leases. The discount rates used in calculation of the lease liabilities were the discount rates at transition date.
After transition Suominen has applied the recognition exemptions allowed by IFRS 16. This means that low value leases or leases, where the lease term is initially 12 months or less, are recognized as rental expenses in the statement of profit or loss. In addition, the lease and non-lease components are not separated for all asset classes.
IFRIC Interpretation 23: Uncertainty over Income Tax Treatments
IFRIC 23 Interpretation clarifies the accounting of uncertainty in accounting for income taxes. Under IFRIC 23 the key test is whether it is probable that the tax authority will accept the company's chosen tax treatment. If it is probable that the tax authority accepts the company's chosen tax treatment in the tax return, there is no uncertainty which would have to be recognized in the financial statements. If it is not probable, then the uncertainty is reflected in the measurement of current or deferred tax. The uncertainty is reflected in the measurement by using either the most likely amount or the expected value, which ever predicts the outcome better.
The judgements and estimates applied in estimating the uncertainty over an income tax treatment are reassessed if facts and circumstances change.
In accordance with the interpretation, the company has to determine, whether to consider each tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty in tax treatments has to be followed.
Suominen has applied the interpretation from 1 January 2019 without restating comparative information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Restated | |||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 |
| Assets | |||
| Non-current assets | |||
| Goodwill | 15,496 | 15,496 | 15,496 |
| Intangible assets | 21,478 | 18,346 | 21,231 |
| Property, plant and equipment | 129,366 | 129,907 | 129,391 |
| Right-of-use assets | 16,257 | − | 16,797 |
| Loan receivables | 3,348 | 3,072 | 3,348 |
| Equity instruments | 777 | 777 | 777 |
| Other non-current receivables | 1,040 | 1,618 | 1,393 |
| Deferred tax assets | 2,298 | 5,479 | 2,540 |
| Total non-current assets | 190,060 | 174,694 | 190,972 |
| Current assets | |||
| Inventories | 50,699 | 42,999 | 51,583 |
| Trade receivables | 63,255 | 58,065 | 58,097 |
| Loan receivables | 4,017 | 4,337 | 4,017 |
| Other current receivables | 4,184 | 3,190 | 4,118 |
| Assets for current tax | 1,038 | 7,496 | 974 |
| Cash and cash equivalents | 21,881 | 17,047 | 27,757 |
| Total current assets | 145,074 | 133,134 | 146,545 |
| Total assets | 335,135 | 307,828 | 337,517 |
| 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 | 81,185 | 81,101 | 81,185 |
| Treasury shares | -44 | -44 | -44 |
| Fair value and other reserves | 264 | 264 | 264 |
| Exchange differences | 1,377 | -6,235 | -669 |
| Retained earnings | 14,453 | 15,239 | 13,237 |
| Total equity attributable to owners of the parent | 133,776 | 126,866 | 130,513 |
| Liabilities | |||
| Non-current liabilities | |||
| Deferred tax liabilities | 12,495 | 14,147 | 12,373 |
| Liabilities from defined benefit plans | 841 | 914 | 847 |
| Provisions | 1,539 | − | 1,511 |
| Non-current lease liabilities | 12,109 | 131 | 12,706 |
| Other non-current liabilities | 17 | 17 | 17 |
| Debentures | 80,883 | 95,463 | 80,615 |
| Total non-current liabilities | 107,883 | 110,671 | 108,067 |
| Current liabilities | |||
| Debentures | 15,701 | − | 15,687 |
| Current lease liabilities | 2,791 | 120 | 2,742 |
| Other current interest-bearing liabilities | 5,000 | 10,000 | 5,000 |
| Liabilities for current tax | 196 | 78 | 121 |
| Trade payables and other current liabilities | 69,788 | 60,092 | 75,386 |
| Total current liabilities | 93,476 | 70,290 | 98,936 |
| Total liabilities | 201,359 | 180,962 | 207,003 |
| Total equity and liabilities | 335,135 | 307,828 | 337,517 |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
| EUR thousand | 1-3/2019 | 1-3/2018 | 1-12/2018 |
| Net sales | 109,766 | 106,616 | 431,109 |
| Cost of goods sold | -100,822 | -98,769 | -399,826 |
| Gross profit | 8,944 | 7,847 | 31,283 |
| Other operating income | 919 | 624 | 2,528 |
| Sales and marketing expenses | -1,777 | -1,780 | -7,048 |
| Research and development | -809 | -808 | -3,515 |
| Administration expenses | -4,205 | -4,337 | -17,599 |
| Other operating expenses | -111 | 2 | -1,055 |
| Operating profit | 2,961 | 1,548 | 4,594 |
| Net financial expenses | -1,297 | -1,876 | -5,557 |
| Profit before income taxes | 1,665 | -328 | -963 |
| Income taxes | -539 | -44 | -757 |
| Profit / loss for the period | 1,126 | -372 | -1,720 |
| Earnings per share, EUR | |||
| Basic | 0.02 | -0.01 | -0.03 |
| Diluted | 0.02 | -0.01 | -0.03 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| EUR thousand | 1-3/2019 | 1-3/2018 | 1-12/2018 |
| Profit for the period | 1,126 | -372 | -1,720 |
| Other comprehensive income: | |||
| Other comprehensive income that will be subsequently reclassified to profit or loss | |||
| Exchange differences | 2,238 | -3,339 | 2,936 |
| Income taxes related to other comprehensive income | -192 | 255 | -454 |
| Total | 2,046 | -3,084 | 2,482 |
| Other comprehensive income that will not be subsequently reclassified to profit or loss | |||
| Remeasurements of defined benefit plans | − | − | -41 |
| Income taxes related to other comprehensive income | − | − | 11 |
| Total | − | − | -29 |
| Total other comprehensive income | 2,046 | -3,084 | 2,452 |
| Total comprehensive income for the period | 3,172 | -3,457 | 732 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| EUR thousand | Share capital | Share premium account | Reserve for invested unrestricted equity | Treasury shares |
| Equity 1 January 2019 | 11,860 | 24,681 | 81,185 | -44 |
| Profit / loss for the period | − | − | − | − |
| Other comprehensive income | − | − | − | − |
| Total comprehensive income | − | − | − | − |
| Share-based payments | − | − | − | − |
| Equity 31 March 2019 | 11,860 | 24,681 | 81,185 | -44 |
| EUR thousand | Exchange differences | Fair value and other reserves | Retained earnings | Total equity attributable to owners of the parent |
| Equity 1 January 2019 | -669 | 264 | 13,237 | 130,513 |
| Profit / loss for the period | − | − | 1,126 | 1,126 |
| Other comprehensive income | 2,046 | − | − | 2,046 |
| Total comprehensive income | 2,046 | − | 1,126 | 3,172 |
| Share-based payments | − | − | 91 | 91 |
| Equity 31 March 2019 | 1,377 | 264 | 14,453 | 133,776 |
| EUR thousand | Share capital | Share premium account | Reserve for invested unrestricted equity | Treasury shares |
| Equity 1 January 2018 | 11,860 | 24,681 | 87,423 | -44 |
| Profit / loss for the period | − | − | − | − |
| Other comprehensive income | − | − | − | − |
| Total comprehensive income | − | − | − | − |
| Share-based payments | − | − | − | − |
| Return of capital | − | − | -6,322 | − |
| Conveyance of treasury shares | − | − | − | − |
| Equity 31 March 2018 | 11,860 | 24,681 | 81,101 | -44 |
| EUR thousand | Exchange differences | Fair value and other reserves | Retained earnings | Total equity attributable to owners of the parent |
| Equity 1 January 2018 | -3,151 | 264 | 15,761 | 136,794 |
| Profit / loss for the period | − | − | -372 | -372 |
| Other comprehensive income | -3,084 | − | − | -3,084 |
| Total comprehensive income | -3,084 | − | -372 | -3,457 |
| Share-based payments | − | − | -149 | -149 |
| Return of capital | − | − | − | -6,322 |
| Conveyance of treasury shares | − | − | − | − |
| Equity 31 March 2018 | -6,235 | 264 | 15,239 | 126,866 |
| EUR thousand | Share capital | Share premium account | Reserve for invested unrestricted equity | Treasury shares |
| Equity 1 January 2018 | 11,860 | 24,681 | 87,423 | -44 |
| Profit / loss for the period | − | − | − | − |
| Other comprehensive income | − | − | − | − |
| Total comprehensive income | − | − | − | − |
| Share-based payments | − | − | − | − |
| Return of capital | − | − | -6,322 | − |
| Unpaid return of capital, booking back to equity | − | − | 0 | − |
| Conveyance of treasury shares | − | − | 84 | − |
| Equity 31 December 2018 | 11,860 | 24,681 | 81,185 | -44 |
| EUR thousand | Exchange differences | Fair value and other reserves | Retained earnings | Total equity attributable to owners of the parent |
| Equity 1 January 2018 | -3,151 | 264 | 15,761 | 136,794 |
| Profit / loss for the period | − | − | -1,720 | -1,720 |
| Other comprehensive income | 2,482 | − | -29 | 2,452 |
| Total comprehensive income | 2,482 | − | -1,749 | 732 |
| Share-based payments | − | − | -775 | -775 |
| Return of capital | − | − | − | -6,322 |
| Unpaid return of capital, booking back to equity | − | − | − | 0 |
| Conveyance of treasury shares | − | − | − | 84 |
| Equity 31 December 2018 | -669 | 264 | 13,237 | 130,513 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| EUR thousand | 1-3/2019 | 1-3/2018 | 1-12/2018 |
| Cash flow from operations | |||
| Profit for the period | 1,126 | -372 | -1,720 |
| Total adjustments to profit the period | 8,467 | 7,237 | 27,210 |
| Cash flow before changes in net working capital | 9,592 | 6,865 | 25,490 |
| Change in net working capital | -10,443 | -732 | 5,621 |
| Financial items | -944 | -769 | -4,677 |
| Income taxes | -557 | -192 | 5,715 |
| Cash flow from operations | -2,352 | 5,172 | 32,148 |
| Cash flow from investments | |||
| Investments in property, plant and equipment and intangible assets | -3,160 | -3,622 | -15,039 |
| Cash flow from disposed businesses | − | − | 198 |
| Sales proceeds from property, plant and equipment and intangible assets | 0 | − | 4 |
| Cash flow from investments | -3,160 | -3,622 | -14,837 |
| Cash flow from financing | |||
| Drawdown of current interest-bearing liabilities | − | − | 5,000 |
| Repayment of current interest-bearing liabilities | -715 | -5,029 | -15,118 |
| Return of capital | − | -6,322 | -6,322 |
| Cash flow from financing | -715 | -11,351 | -16,440 |
| Change in cash and cash equivalents | -6,226 | -9,801 | 871 |
| Cash and cash equivalents at the beginning of the period | 27,757 | 27,240 | 27,240 |
| Effect of changes in exchange rates | 351 | -392 | -355 |
| Change in cash and cash equivalents | -6,226 | -9,801 | 871 |
| Cash and cash equivalents at the end of the period | 21,881 | 17,047 | 27,757 |
KEY RATIOS
| Restated | |||
| 1-3/2019 | 1-3/2018 | 1-12/2018 | |
| Change in net sales, % * | 3.0 | -5.6 | 1.2 |
| Gross profit, as percentage of net sales, % | 8.1 | 7.4 | 7.3 |
| Comparable gross profit, as percentage of net sales, % | 8.1 | 7.4 | 7.3 |
| Operating profit, as percentage of net sales, % | 2.7 | 1.5 | 1.1 |
| Comparable operating profit, as percentage of net sales, % | 2.7 | 1.5 | 1.1 |
| Net financial items, as percentage of net sales, % | -1.2 | -1.8 | -1.3 |
| Profit before income taxes, as percentage of net sales, % | 1.5 | -0.3 | -0.2 |
| Profit for the period, as percentage of net sales, % | 1.0 | -0.3 | -0.4 |
| Gross capital expenditure, EUR thousand | 3,794 | 2,236 | 13,580 |
| Depreciation and amortization, EUR thousand | 6,347 | 4,999 | 21,018 |
| Return on equity, rolling 12 months, % | -0.2 | 7.4 | -1.3 |
| Return on invested capital, rolling 12 months, % | 2.9 | 4.6 | 2.3 |
| Equity ratio, % | 39.9 | 41.2 | 38.7 |
| Gearing, % | 68.3 | 68.2 | 65.9 |
| Average number of personnel | 690 | 664 | 676 |
| Earnings per share, EUR, basic | 0.02 | -0.01 | -0.03 |
| Earnings per share, EUR, diluted | 0.02 | -0.01 | -0.03 |
| Cash flow from operations per share, EUR | -0.04 | 0.09 | 0.56 |
| Equity per share, EUR | 2.33 | 2.21 | 2.27 |
| Number of shares, end of period, excluding treasury shares | 57,496,249 | 57,472,507 | 57,496,249 |
| Share price, end of period, EUR | 2.24 | 3.74 | 2.05 |
| Share price, period low, EUR | 2.04 | 3.66 | 1.80 |
| Share price, period high, EUR | 2.69 | 4.60 | 4.60 |
| Volume weighted average price during the period, EUR | 2.40 | 4.16 | 3.10 |
| Market capitalization, EUR million | 128.8 | 214.9 | 117.9 |
| Number of traded shares during the period | 2,444,510 | 793,480 | 3,643,880 |
| Number of traded shares during the period, % of average number of shares | 4.3 | 1.4 | 6.3 |
| * Compared with the corresponding period in the previous year. | |||
| 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Interest-bearing net debt, EUR thousands | |||
| Non-current interest-bearing liabilities, nominal value | 97,109 | 100,861 | 97,706 |
| Current interest-bearing liabilities, nominal value | 23,521 | 10,120 | 23,472 |
| Interest-bearing receivables and cash and cash equivalents | -29,247 | -24,457 | -35,122 |
| Interest-bearing net debt | 91,383 | 86,525 | 86,056 |
CALCULATION OF KEY RATIOS AND ALTERNATIVE PERFORMANCE MEASURES
Key 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 2018. The link between the components of the alternative performance measures and the consolidated financial statements is presented in Suominen’s Annual Report for 2018.
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 | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Profit for the period | 1,126 | -372 | -1,720 | |
| Average share-issue adjusted number of shares | 57,496,249 | 57,401,848 | 57,468,939 | |
| Average diluted share-issue adjusted number of shares excluding treasury shares | 57,518,997 | 57,442,076 | 57,508,720 | |
| Earnings per share | ||||
| EUR | ||||
| Basic | 0.02 | -0.01 | -0.03 | |
| Diluted | 0.02 | -0.01 | -0.03 |
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 | |
| 31.3.2019 | 31.3.2018 | 31.12.2018 | ||
| Cash flow from operations, EUR thousand | -2,351 | 5,172 | 32,148 | |
| Share-issue adjusted number of shares excluding treasury shares, end of reporting period | 57,496,249 | 57,472,507 | 57,496,249 | |
| Cash flow from operations per share, EUR | -0.04 | 0.09 | 0.56 |
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 | |
| 31.3.2019 | 31.3.2018 | 31.12.2018 | ||
| Total equity attributable to owners of the parent, EUR thousand | 133,776 | 126,866 | 130,513 | |
| Share-issue adjusted number of shares excluding treasury shares, end of reporting period | 57,496,249 | 57,472,507 | 57,496,249 | |
| Equity per share, EUR | 2.33 | 2.21 | 2.27 |
Market capitalization
| Market capitalization | = | Number of shares at the end of reporting period excluding treasury shares x share price at the end of period |
| 31.3.2019 | 31.3.2018 | 31.12.2018 | ||
| Number of shares at the end of reporting period excluding treasury shares | 57,496,249 | 57,472,507 | 57,496,249 | |
| Share price at end of the period, EUR | 2.24 | 3.74 | 2.05 | |
| Market capitalization, EUR million | 128.8 | 214.9 | 117.9 | |
Share turnover
| Share turnover | = | The proportion of number of shares traded during the period to weighted average number of shares excluding treasury shares |
| 31.3.2019 | 31.3.2018 | 31.12.2018 | ||
| Number of shares traded during the period | 2,444,510 | 793,480 | 3 643 880 | |
| Average number of shares excluding treasury shares | 57 496 249 | 57,401,848 | 57,468,939 | |
| Share turnover, % | 4.3 | 1.4 | 6.3 | |
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 2019 or 2018.
EBITDA
| EBITDA | = | EBIT + depreciation, amortization and impairment losses |
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Operating profit | 2,961 | 1,548 | 4,594 | |
| + Depreciation, amortization and impairment losses | 6,347 | 4,999 | 21,018 | |
| EBITDA | 9,309 | 6,546 | 25,613 | |
Gross capital expenditure
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Increases in intangible assets | 1,000 | 1,375 | 6,157 | |
| Increases in property, plant and equipment | 2,794 | 862 | 7,423 | |
| Gross capital expenditure | 3,794 | 2,236 | 13,580 | |
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 |
| Restated | ||||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Interest-bearing liabilities | 116,483 | 105,714 | 116,749 | |
| Tender and issuance costs of the debentures | 4,146 | 5,267 | 4,429 | |
| Interest bearing receivables | -7,365 | -7,409 | -7,365 | |
| Cash and cash equivalents | -21 881 | -17,047 | -27,757 | |
| Interest-bearing net debt | 91,383 | 86,525 | 86,056 | |
| Interest-bearing liabilities | 116,483 | 105,714 | 116,749 | |
| Tender and issuance costs of the debentures | 4,429 | 5,267 | 4,429 | |
| Nominal value of interest-bearing liabilities | 120,912 | 110,981 | 121,178 | |
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 | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Profit for the reporting period (rolling 12 months) | -222 | 9,866 | -1,720 | |
| Total equity attributable to owners of the parent 31 March 2018 / 31 March 2017 / 31 December 2017 | 126,866 | 139,902 | 136,794 | |
| Total equity attributable to owners of the parent 30 June 2018 / 30 June 2017 / 31 March 2018 | 132,631 | 134,074 | 126,866 | |
| Total equity attributable to owners of the parent 30 September 2018 / 30 September 2017 / 30 June 2018 | 130,981 | 132,564 | 132,631 | |
| Total equity attributable to owners of the parent 31 December 2018 / 31 December 2017 / 30 September 2018 | 130,513 | 136,794 | 130,981 | |
| Total equity attributable to owners of the parent 31 March 2019 / 31 March 2018 / 31 December 2018 | 133,776 | 126,866 | 130,513 | |
| Average | 130,954 | 134,040 | 131,557 | |
| Return on equity (ROE), % | -0.2 | 7.4 | -1.3 |
Invested capital
| Invested capital | = | Total equity + interest-bearing liabilities |
| Restated | ||||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Total equity attributable to owners of the parent | 133,776 | 126,866 | 130,513 | |
| Interest-bearing liabilities | 116,483 | 105,714 | 116,749 | |
| Invested capital | 250,259 | 232,580 | 247,263 |
Return on invested capital (ROI), %
| Return on invested capital (ROI), % | = | Operating profit + financial income (rolling 12 months) x 100 |
| Invested capital, quarterly average |
| Restated | ||||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Operating profit (rolling 12 months) | 6,008 | 10,289 | 4,594 | |
| Financial income (rolling 12 months) | 827 | 745 | 801 | |
| Total | 6,834 | 11,034 | 5,395 | |
| Invested capital 31 March 2018 / 31 March 2017 / 31 December 2017 | 232,580 | 244,103 | 247,266 | |
| Invested capital 30 June 2018 / 30 June 2017 / 31 March 2018 | 238,589 | 234,892 | 232,580 | |
| Invested capital 30 September 2018 / 30 September 2017 / 30 June 2018 | 227,186 | 229,735 | 238,589 | |
| Invested capital 31 December 2018 / 31 December 2017 / 30 September 2018 | 247,263 | 247,266 | 227,186 | |
| Invested capital 31 March 2019 / 31 March 2018 / 31 December 2018 | 250,259 | 232,580 | 247,263 | |
| Average | 239,175 | 237,715 | 238,577 | |
| Return on invested capital (ROI), % | 2.9 | 4.6 | 2.3 |
Equity ratio, %
| Equity ratio, % | = | Total equity attributable to owners of the parent x 100 | |
| Total assets - advances received |
| Restated | ||||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Total equity attributable to owners of the parent | 133,776 | 126,866 | 130,513 | |
| Total assets | 335,135 | 307,828 | 337,517 | |
| Advances received | -48 | -33 | -27 | |
| 335,087 | 307,795 | 337,490 | ||
| Equity ratio, % | 39.9 | 41.2 | 38.7 |
Gearing, %
| Gearing, % | = | Interest-bearing net debt x 100 | |
| Total equity attributable to owners of the parent | |||
| Restated | ||||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Interest-bearing net debt | 91,383 | 86,525 | 86,056 | |
| Total equity attributable to owners of the parent | 133,776 | 126,866 | 130,513 | |
| Gearing, % | 68.3 | 68.2 | 65.9 |
NET SALES BY GEOGRAPHICAL MARKET AREA
| EUR thousand | 1-12/2018 | 1-3/2018 | 1-12/2018 |
| Finland | 671 | 719 | 2,415 |
| Rest of Europe | 39,064 | 41,331 | 153,133 |
| North and South America | 69,037 | 62,578 | 268,188 |
| Rest of the world | 994 | 1,988 | 7,372 |
| Total | 109,766 | 106,616 | 431,109 |
NET SALES BY BUSINESS AREA
| 2018 | |||||
| EUR thousand | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 |
| Convenience | 101,229 | 102,915 | 95,634 | 99,947 | 97,481 |
| Care | 8,545 | 6,848 | 9,145 | 9,962 | 9,152 |
| Unallocated exchange differences | -7 | 2 | -12 | 52 | -17 |
| Total | 109,766 | 109,764 | 104,768 | 109,961 | 106,616 |
QUARTERLY DEVELOPMENT
| 2019 | 2018 | ||||
| EUR thousand | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 |
| Net sales | 109,766 | 109,764 | 104,768 | 109,961 | 106,616 |
| Comparable operating profit | 2,961 | -361 | 488 | 2,919 | 1,548 |
| as % of net sales | 2.7 | -0.3 | 0.5 | 2.7 | 1.5 |
| Items affecting comparability | − | − | − | − | − |
| Operating profit | 2,961 | -361 | 488 | 2,919 | 1,548 |
| as % of net sales | 2.7 | -0.3 | 0.5 | 2.7 | 1.5 |
| Net financial items | -1,297 | -1,547 | -1,626 | -507 | -1,876 |
| Profit before income taxes | 1,665 | -1,908 | -1,138 | 2,411 | -328 |
| as % of net sales | 1.5 | -1.7 | -1.1 | 2.2 | -0.3 |
RELATED PARTY INFORMATION
The related parties of Suominen include the members of the Board of Directors, President & CEO and the members of the Corporate 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.
Salaries paid to the related parties during the first quarter of 2019 amounted to EUR 487 thousand, obligatory pension payments EUR 87 thousand, voluntary pension payments EUR 20 thousand and accruals based on the share-based incentive plans EUR 40 thousand.
CHANGES IN PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS
| 31.3.2019 | 31.3.2018 | 31.12.2018 | |||||
| EUR thousand | Property, plant and equipment | Intang. assets | Property, plant and equipment | Intang. assets | Property, plant and equipment | Intang. assets | |
| Carrying amount at the beginning of the period | 129,391 | 21,231 | 136,649 | 17,470 | 136,649 | 17,470 | |
| Capital expenditure | 2,794 | 1,000 | 862 | 1,375 | 7,423 | 6,157 | |
| Disposals | -1 | − | − | − | 0 | − | |
| Depreciation and amortization | -4,728 | -762 | -4,516 | -483 | -18,648 | -2,371 | |
| Exchange differences and other changes | 1,910 | 10 | -3,088 | -16 | 3,967 | -25 | |
| Carrying amount at the end of the period | 129,366 | 21,478 | 129,907 | 18,346 | 129,391 | 21,231 | |
Goodwill is not included in intangible assets.
| 31.3.2019 | 31.12.2018 | |
| EUR thousand | Right-of-use assets | Right-of-use assets |
| Carrying amount at the beginning of the period | 16,797 | − |
| Increases | 114 | − |
| Application of IFRS 16 | − | 16,797 |
| Decreases | -60 | − |
| Depreciation | -857 | − |
| Exchange differences and other changes | 264 | − |
| Carrying amount at the end of the period | 16,257 | 16,797 |
CHANGES IN INTEREST-BEARING LIABILITIES
| Restated | |||
| EUR thousand | 1-3/2019 | 1-3/2018 | 1-12/2018 |
| Total interest-bearing liabilities at the beginning of the period | 116,749 | 110,472 | 110,472 |
| Current liabilities at the beginning of the period | 23,429 | 15,118 | 15,118 |
| Repayment of current liabilities, cash flow items | -715 | -5,029 | -15,118 |
| Drawdown of current liabilities, cash flow items | − | − | 5,000 |
| Increases in current liabilities, non-cash flow items (* | 29 | − | 2,664 |
| Decreases of current liabilities, non-cash flow items | -1 | − | − |
| Reclassification from non-current liabilities | 710 | 31 | 15,749 |
| Periodization of debenture to amortized cost, non-cash flow items | 14 | − | 16 |
| Exchange rate difference, non-cash flow item | 25 | − | − |
| Current liabilities at the end of the period | 23,492 | 10,120 | 23,429 |
| Non-current liabilities at the beginning of the period | 12,706 | 162 | 162 |
| Increases in non-current liabilities, non-cash flow items (* | 84 | − | 12,622 |
| Decreases of non-current liabilities, non-cash flow items | -59 | − | − |
| Reclassification to current liabilities | -710 | -31 | -78 |
| Exchange rate difference, non-cash flow item | 88 | − | − |
| Current liabilities at the end of the period | 12,109 | 131 | 12,706 |
| Non-current debentures at the beginning of the period | 80,615 | 95,192 | 95,192 |
| Periodization of debenture to amortized cost, non-cash flow items | 268 | 270 | 1,093 |
| Reclassification to current liabilities | − | − | -15,671 |
| Non-current debentures at the end of the period | 80,883 | 95,462 | 80,615 |
| Total interest-bearing liabilities at the end of the period | 116,483 | 105,714 | 116,749 |
(* 2018 recognition of lease liabilities to statement of financial position in IFRS 16 application.
CONTINGENT LIABILITIES
| Restated | ||||
| EUR thousand | 31.3.2019 | 31.3.2018 | 31.12.2018 | |
| Other commitments | ||||
| Leasing commitments | 901 | 16,380 | 525 | |
| Contractual commitments to acquire property, plant and equipment | 886 | 2,438 | 1,128 | |
| Guarantees | ||||
| On own behalf | 10,584 | 10,588 | 10,516 | |
| Other own commitments | 2,701 | 3,332 | 2,863 |
Total 13,285 13,920 13,378
The decrease in leasing commitments is due to the application of IFRS 16.
NOMINAL AND FAIR VALUES OF DERIVATIVE INSTRUMENTS
| 31.3.2019 | 31.3.2018 | 31.12.2018 | ||||
| EUR thousand | Nominal value | Fair value | Nominal value | Fair value | Nominal value | Fair value |
| Currency forward contracts | ||||||
| Hedge accounting not applied | 2,777 | -24 | 1,907 | 1 | 1,397 | 9 |
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. Derivatives, hedge accounting applied |
| e. Carrying amount |
| f. Fair value |
| Classification | |||||
| EUR thousand | a. | b. | c. | d. | e. |
| Equity instruments | 347 | − | 429 | 777 | 777 |
| Loan receivables | 4,017 | 3,348 | − | 7,365 | 7,365 |
| Trade receivables | − | 63,255 | − | 63,255 | 63,255 |
| Interest and other financial receivables | − | 606 | − | 606 | 606 |
| Cash and cash equivalents | − | 21,881 | − | 21,881 | 21,881 |
| Total 31 March 2019 | 4,364 | 89,091 | 429 | 93,884 | 93,884 |
| EUR thousand | a. | b. | c. | d. | e. |
| Equity instruments | 347 | − | 429 | 777 | 777 |
| Loan receivables | 4,017 | 3,348 | − | 7,365 | 7,365 |
| Trade receivables | − | 58,097 | − | 58,097 | 58,097 |
| Derivatives | 9 | − | − | 9 | 9 |
| Interest and other financial receivables | − | 491 | − | 491 | 491 |
| Cash and cash equivalents | − | 27,757 | − | 27,757 | 27,757 |
| Total 31 December 2018 | 4,373 | 89,693 | 429 | 94,496 | 94,496 |
Principles in estimating fair value of financial assets for 2019 are the same as those used for preparing the consolidated financial statements for 2018.
FINANCIAL LIABILITIES
| 31.3.2019 | 31.12.2018 | |||||
| Restated | ||||||
| EUR thousand | Carrying amount | Fair value | Nominal value | Carrying amount | Fair value | Nominal value |
| Non-current financial liabilities | ||||||
| Debentures | 80,883 | 82,025 | 85,000 | 80,615 | 80,750 | 85,000 |
| Lease liabilities | 12,109 | 12,109 | 12,109 | 12,706 | 12,706 | 12,706 |
| Total non-current financial liabilities | 92,991 | 94,134 | 97,109 | 93,320 | 93,456 | 97,706 |
| Current financial liabilities | ||||||
| Debentures | 15,701 | 16,026 | 15,730 | 15,687 | 16,156 | 15,730 |
| Current part of non-current loans from financial institutions and current loans from financial institutions | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 |
| Lease liabilities | 2,791 | 2,791 | 2,791 | 2,742 | 2,742 | 2,742 |
| Derivatives, hedge accounting not applied | 24 | 24 | 24 | − | − | − |
| Interest accruals | 1,107 | 1,107 | 1,107 | 725 | 725 | 725 |
| Other current liabilities | 364 | 364 | 364 | 308 | 308 | 308 |
| Trade payables | 59,970 | 59,970 | 59,970 | 66,677 | 66,677 | 66,677 |
| Total current financial liabilities | 84,958 | 85,283 | 84,987 | 91,139 | 91,609 | 91,182 |
| Total | 177,949 | 179,416 | 182,096 | 184,459 | 185,064 | 188,888 |
Principles in estimating fair value for financial liabilities for 2019 are the same as those used for preparing the consolidated financial statements for 2018.
FAIR VALUE MEASUREMENT HIERARCHY
| EUR thousands | Level 1 | Level 2 | Level 3 |
| Financial assets and liabilities at fair value | |||
| Loan receivables | − | − | 4,017 |
| Equity instruments | − | − | 777 |
| Total | − | − | 4,794 |
| Derivatives at fair value | |||
| Currency forward contracts, liabilities | − | -24 | − |
| Total | − | -24 | − |
Principles in estimating fair value of financial assets and their hierarchies for 2019 are the same as those used for preparing the consolidated financial statements for 2018.
RESTATEMENT OF PREVIOUSLY PUBLISHED FIGURES
Consolidated statement of financial position
| 31 December 2018 | ||||
| EUR thousand | Published | Restatement | Restated | |
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 15,496 | − | 15,496 | |
| Intangible assets | 21,231 | − | 21,231 | |
| Property, plant and equipment | 129,391 | − | 129,391 | |
| Right-of-use assets | IFRS 16 | − | 16,797 | 16,797 |
| Loan receivables | 3,348 | − | 3,348 | |
| Equity instruments | 777 | − | 777 | |
| Other non-current receivables | 1,393 | − | 1,393 | |
| Deferred tax assets | 2,540 | − | 2,540 | |
| Total non-current assets | 174,175 | 16,797 | 190,972 | |
| Current assets | ||||
| Inventories | 51,583 | − | 51,583 | |
| Trade receivables | 58,097 | − | 58,097 | |
| Loan receivables | 4,017 | − | 4,017 | |
| Other current receivables | 4,118 | − | 4,118 | |
| Assets for current tax | 974 | − | 974 | |
| Cash and cash equivalents | 27,757 | − | 27,757 | |
| Total current assets | 146,545 | − | 146,545 | |
| Total assets | 320,720 | 16,797 | 337,517 | |
| Equity and liabilities | ||||
| Equity | ||||
| Share capital | 11,860 | − | 11,860 | |
| Share premium account | 24,681 | − | 24,681 | |
| Reserve for invested unrestricted equity | 81,185 | − | 81,185 | |
| Treasury shares | -44 | − | -44 | |
| Fair value and other reserves | 264 | − | 264 | |
| Exchange differences | -669 | − | -669 | |
| Retained earnings | 13,237 | − | 13,237 | |
| Total equity attributable to owners of the parent | 130,513 | − | 130,513 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred tax liabilities | 12,373 | − | 12,373 | |
| Liabilities from defined benefit plans | 847 | − | 847 | |
| Provisions | IFRS 16 | − | 1,511 | 1,511 |
| Non-current lease liabilities | IFRS 16 | 84 | 12,622 | 12,706 |
| Other non-current liabilities | 17 | − | 17 | |
| Debentures | 80,615 | − | 80,615 | |
| Total non-current liabilities | 93,935 | 14,132 | 108,067 | |
| Current liabilities | ||||
| Debentures | 15,687 | − | 15,687 | |
| Current lease liabilities | IFRS 16 | 78 | 2,664 | 2,742 |
| Other current interest-bearing liabilities | 5,000 | − | 5,000 | |
| Liabilities for current tax | 121 | − | 121 | |
| Trade payables and other current liabilities | 75,386 | − | 75,386 | |
| Total current liabilities | 96,272 | 2,664 | 98,936 | |
| Total liabilities | 190,207 | 16,796 | 207,003 | |
| Total equity and liabilities | 320,720 | 16,796 | 337,517 | |
| Financial liabilities | |||
| 31 December 2018 | |||
| EUR thousand | Published | Restatement | Restated |
| Non-current financial liabilities | |||
| Debentures | 80,615 | − | 80,615 |
| Lease liabilities | 84 | 12,622 | 12,706 |
| Total non-current financial liabilities | 80,698 | 12,622 | 93,320 |
| Current financial liabilities | |||
| Debentures | 15,687 | − | 15,687 |
| Current part of non-current loans from financial institutions and current loans from financial institutions | 5,000 | − | 5,000 |
| Lease liabilities | 78 | 2,664 | 2,742 |
| Interest accruals | 725 | − | 725 |
| Other current liabilities | 308 | − | 308 |
| Trade payables | 66,677 | − | 66,677 |
| Total current financial liabilities | 88,475 | 2,664 | 91,139 |
| Total | 169,173 | 15,286 | 184,459 |
Alternative performance measures
Interest-bearing net debt
| Published | Restated | ||
| EUR thousand | 31 December 2018 | 31 December 2018 | |
| Interest-bearing liabilities | 101,463 | 116,749 | |
| Tender and issuance costs of the debentures | 4,429 | 4,429 | |
| Interest bearing receivables | -7,365 | -7,365 | |
| Cash and cash equivalents | -27 757 | -27,757 | |
| Interest-bearing net debt | 70,770 | 86,056 | |
| Interest-bearing liabilities | 101,463 | 116,749 | |
| Tender and issuance costs of the debentures | 4,429 | 4,429 | |
| Nominal value of interest-bearing liabilities | 105,892 | 116,749 | |
Invested capital
| Published | Restated | ||
| EUR thousand | 31 December 2018 | 31 December 2018 | |
| Total equity attributable to owners of the parent | 130,513 | 130,513 | |
| Interest-bearing liabilities | 101,463 | 116,749 | |
| Invested capital | 231,977 | 247,263 |
Return on invested capital (ROI), %
| Published | Restated | ||
| EUR thousand | 31 December 2018 | 31 December 2018 | |
| Operating profit (rolling 12 months) | 4,594 | 4,594 | |
| Financial income (rolling 12 months) | 801 | 801 | |
| Total | 5,395 | 5,395 | |
| Invested capital 31 December 2017 | 247,266 | 247,266 | |
| Invested capital 31 March 2018 | 232,580 | 232,580 | |
| Invested capital 30 June 2018 | 238,589 | 238,589 | |
| Invested capital 30 September 2018 | 227,186 | 227,186 | |
| Invested capital 31 December 2018 | 231,977 | 247,263 | |
| Average | 235,520 | 238,577 | |
| Return on invested capital (ROI), % | 2.3 | 2.3 |
Equity ratio, %
| Published | Restated | ||
| EUR thousand | 31 December 2018 | 31 December 2018 | |
| Total equity attributable to owners of the parent | 130,513 | 130,513 | |
| Total assets | 320,720 | 337,517 | |
| Advances received | -27 | -27 | |
| 320,694 | 337,490 | ||
| Equity ratio, % | 40.7 | 38.7 |
Gearing, %
| Published | Restated | ||
| EUR thousand | 31 December 2018 | 31 December 2018 | |
| Interest-bearing net debt | 70,770 | 86,056 | |
| Total equity attributable to owners of the parent | 130,513 | 130,513 | |
| Gearing, % | 54.2 | 65.9 |
SUOMINEN CORPORATION
Board of Directors
For additional information, please contact:
Petri Helsky, President & CEO, tel. +358 (0)10 214 3080
Tapio Engström, Senior Vice President and CFO, tel. +358 (0)10 214 300
Suominen in brief
Suominen manufactures nonwovens as roll goods for wipes as well as for medical and hygiene products. The end products made of Suominen’s nonwovens – wet wipes, feminine care products and swabs, for instance – bring added value to the daily life of consumers worldwide. Suominen is the global market leader in nonwovens for wipes and employs nearly 700 people in Europe and in the Americas. Suominen’s net sales in 2018 amounted to EUR 431.1 million. The Suominen share (SUY1V) is listed in Nasdaq Helsinki Stock Exchange (Mid Cap). Read more at www.suominen.fi.
Distribution:
Nasdaq Helsinki
Main media
www.suominen.fi
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