Suominen Corporation Interim Report October 27, 2020 at 9:30 a.m. (EET)
Suominen Corporation’s Interim Report for January 1 – September 30, 2020:
Strong performance continued
KEY FIGURES
| 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | |
| 2020 | 2019 | 2020 | 2019 | 2019 | |
| Net sales, EUR million | 115.4 | 103.4 | 347.8 | 317.0 | 411.4 |
| EBITDA * | 18.1 | 7.8 | 47.4 | 26.2 | 33.7 |
| EBITDA, % | 15.7 | 7.6 | 13.6 | 8.3 | 8.2 |
| Comparable operating profit, EUR million | 12.9 | 1.1 | 31.0 | 6.7 | 8.1 |
| Comparable operating profit, % | 11.2 | 1.1 | 8.9 | 2.1 | 2.0 |
| Operating profit, EUR million | 12.9 | 1.1 | 31.0 | 6.7 | 8.1 |
| Profit for the period, EUR million | 10.9 | -0.1 | 22.8 | 1.4 | 0.2 |
| Cash flow from operations, EUR million | 20.1 | 17.4 | 39.1 | 24.2 | 29.9 |
| Cash flow from operations per share, EUR | 0.35 | 0.30 | 0.68 | 0.42 | 0.52 |
| Earnings per share, basic, EUR | 0.19 | 0.00 | 0.40 | 0.02 | 0.00 |
| Return on invested capital, rolling 12 months, % | − | − | 13.8 | 3.0 | 3.7 |
| Gearing, % | − | − | 29.9 | 52.1 | 50.7 |
*2019 EBITDA restated.
In this financial report, figures shown in brackets refer to the comparison period last year if not otherwise stated.
July–September 2020 in brief:
- Net sales increased 12% from the corresponding period of 2019 and were EUR 115.4 million (103.4)
- Operating profit increased significantly and was EUR 12.9 million (1.1)
- Cash flow from operations improved and was EUR 20.1 million (17.4)
January–September 2020 in brief:
- Net sales increased 10% from the corresponding period of 2019 and were EU 347.8 million (317.0)
- Operating profit increased significantly and was EUR 31.0 million (6.7)
- Cash flow from operations improved and was EUR 39.1 million (24.2)
Outlook for 2020 unchanged
Suominen reiterates the outlook presented on June 17, 2020, in which Suominen expects that in 2020 its comparable operating profit will improve significantly from 2019. In 2019, Suominen’s operating profit amounted to EUR 8.1 million. In financial years 2020 and 2019 Suominen had no items affecting the comparability of the operating profit.
Petri Helsky, President & CEO:
“Suominen achieved again a record high quarterly operating profit in the third quarter. Our operating profit increased to EUR 12.9 million (1.1) due to higher production and sales volumes and margin improvement through favorable raw material costs and improved efficiency. Development was positive at all sites, with also our variable cost optimization program continuing to yield results.
Our net sales increased by 12% and amounted to EUR 115.4 million (103.4). Sales volumes increased but sales prices decreased following the lower raw material prices. Demand for wipes continued on a high level driven by the COVID-19 pandemic. Currencies impacted net sales by EUR -5.6 million.
The operating environment continued to be marked by the COVID-19 pandemic. Our primary focus continues to be to safeguard the health and safety of our employees and to maintain business continuity. We also ensured our financial position and liquidity by renewing our revolving credit facility in July.
The pandemic increased sales volumes in all our markets. We expect the higher demand to continue at least in the fourth quarter and early 2021. However, our sales in December are expected to be impacted negatively by the holiday season, as usual. In the longer term the pandemic may lead to a continued increase in demand for nonwovens for cleaning and disinfection products.
In August, we announced that we will increase our spunlace capacity in Europe by upgrading and restarting one of our existing production lines in Cressa, Italy. This investment will strengthen our capabilities in Europe and it is made in line with our strategy aiming for growth.
In September, we published our new sustainability targets and KPIs. Our sustainability agenda has four themes, People and safety, Sustainable nonwovens, Low-impact manufacturing and Corporate Citizenship and now we have ambitious targets for each of them.
During the quarter, we launched two new sustainable products: BIOLACE® Pure and BIOLACE® Combo. Both of these BIOLACE® products are made of renewable raw materials and both are biodegradable and compostable. BIOLACE® Pure is designed to be used in wipes and BIOLACE® Combo in absorbent hygiene products. Our frontrunner status in nonwovens innovation was recognized also by Rockline, one of our major customers, who granted us their Supplier Innovation Award 2020, citing our novel sustainable product development.
Our financial performance continued strong in the third quarter. Going forward we continue to ensure the health of our employees, serve and support our customers, run our operations efficiently and implement our strategy.”
NET SALES
July–September 2020
In July–September 2020, Suominen’s net sales improved from the comparison period by 12% to EUR 115.4 million (103.4). Currencies impacted net sales by EUR -5.6 million.
Suominen has two business areas, Americas and Europe. Net sales of the Americas business area amounted to EUR 71.9 million (66.2) and net sales of the Europe business area EUR 43.5 million (37.2).
January–September 2020
In January–September 2020, Suominen’s net sales improved from the comparison period by 10% and amounted to EUR 347.8 million (317.0). Currencies impacted net sales by EUR -4.4 million.
Net sales of the Americas business area amounted to EUR 222.3 million (199.5) and net sales of the Europe business area to EUR 125.6 million (117.5).
OPERATING PROFIT AND RESULT
July–September 2020
Operating profit improved significantly from the comparison period and amounted to EUR 12.9 million (1.1). Currencies impacted operating profit by EUR -0.2 million.
Profit before income taxes was EUR 11.1 million (0.0), and profit for the reporting period was EUR 10.9 million (-0.1). Income taxes for the period, EUR -0.3 million (-0.1), were impacted by recognition of additional deferred tax assets from previous years’ losses as the possibility to utilize the losses has increased.
January–September 2020
Operating profit increased significantly and was EUR 31.0 million (6.7). Currencies impacted operating profit by EUR -1.5 million.
Profit before income taxes was EUR 25.4 million (2.7), and profit for the reporting period was EUR 22.8 million (1.4).
Income taxes for the period, EUR -2.6 million (-1.2), were impacted by recognition of additional deferred tax assets from previous years’ losses as the possibility to utilize the losses has increased. The corporate income taxes were also positively impacted in the first quarter by the US tax reliefs enacted as a result of the COVID-19 pandemic.
FINANCING
The Group’s net interest-bearing liabilities at nominal value amounted to EUR 43.1 million (71.3) at the end of the review period. The gearing ratio was 29.9% (52.1%) and the equity ratio 46.0% (42.4%).
In January–September, net financial expenses were EUR -5.5 million (-4.1), or -1.6% (-1.3%) of net sales. Fluctuations in exchange rates increased the net financial expenses by EUR 1.6 million (in 2019, decreased by EUR 0.5 million). The net financial expenses include a bad debt provision based on expected credit losses of loan receivables totaling EUR -0.6 million and a fair value change of assets of EUR +0.3 million.
Cash flow from operations in July–September was EUR 20.1 million (17.4) and in January–September EUR 39.1 million (24.2), representing a cash flow per share of EUR 0.68 (0.42). The improvement in the cash flow from operations for January–September was mainly driven by better result.
In the third quarter the change in net working capital was positive by EUR 6.4 million (+10.4).
The change in net working capital was EUR -2.3 million negative in January–September 2020 when in the corresponding period last year the change in net working capital was EUR 0.6 million positive.
On July 13, 2020 Suominen announced that it had entered into a new single-currency syndicated revolving credit facility agreement of EUR 100 million with a maturity of three years with two one-year extension options. The lenders for the facility are Danske Bank A/S, Finland Branch and Nordea. The new credit facility includes leverage ratio and gearing as financial covenants. The margin of the facility will increase or decrease dependent on Suominen meeting two sustainability key performance indicators (“KPI”), namely:
- Increase in the sales of sustainable products
- Reduction of greenhouse gas emissions
The new credit facility replaced the EUR 100 million syndicated revolving credit facility agreement provided by Nordea and Svenska Handelsbanken AB (publ), Branch Operation in Finland as the lenders.
CAPITAL EXPENDITURE
Suominen announced in August that it increases its spunlace capacity in Europe by upgrading and restarting one of its existing production lines in Cressa, Italy. The investment will strengthen Suominen’s capabilities in Europe and it is made in line with the strategy aiming for growth. The total value of the investment is approx. EUR 8 million and it will be finalized during the second half of 2021.
In January-September, the gross capital expenditure totaled EUR 4.9 million (8.6) and the largest items were related to the growth investment initiatives in Italy. Other investments were mainly for maintenance. Depreciation and amortization for the review period amounted to EUR 16.4 million (19.5).
IMPACTS OF THE COVID-19 PANDEMIC ON SUOMINEN
The health and safety of Suominen’s employees is a key priority. Suominen has secured the health and safety of its employees by various measures and is closely monitoring the COVID-19 situation. Thanks to our proactive approach, there has been a limited impact on our ability to serve our customers and run our operations so far.
As a nonwovens manufacturer Suominen is an integral part of the supply chain making disinfecting and cleaning products, facemasks and protective clothing available to everyone around the world. The authorities have classified our nonwovens production as essential in fighting the pandemic in the jurisdictions where other business activities were shut down.
The pandemic has increased demand for our products in all our markets and the higher demand is expected to continue at least in the fourth quarter and early 2021. In the longer term the COVID-19 pandemic may lead to a continued increase in demand for nonwovens for cleaning and disinfection products.
Both Suominen’s financial position and cash flow have remained strong throughout the pandemic.
Risks related to COVID-19 are described in the short-term risk and uncertainties section.
PROGRESS IN SUSTAINABILITY
We published our concrete sustainability targets and KPIs in September 2020.
We have strong focus on safety and accident prevention, and our long-term target is to have zero lost-time accidents. There were no lost-time accidents (LTA) in the third quarter (2 in Q3/2019), in January-September 2020 one lost-time accident occurred at Suominen sites (4 in Q1-Q3/2019). Increasing employee engagement is another of our key people-related targets. Our global employee engagement survey was launched in early October and the results will be used to create concrete action plans in order to systematically develop our employee engagement and performance in the future.
We are committed to continuously improving our production efficiency and the efficient utilization of natural resources. Our target for 2025 is to reduce our energy consumption, greenhouse gas emissions, water consumption and waste to landfill by 20% per ton of product compared to the base year of 2019. We have now defined concrete action plans and timelines to reach these targets.
Regarding sustainable products, our target is to increase their sales by 50% by 2025 and to have over 10 sustainable product launches per year. During the quarter, we launched two new sustainable products: BIOLACE® Pure and BIOLACE® Combo. Both of these BIOLACE® products are made of renewable raw materials and both are biodegradable and compostable. BIOLACE® Pure is designed to be used in wipes and BIOLACE® Combo in absorbent hygiene products.
In the Corporate citizenship area, we have renewed our Code of Conduct during the autumn and will publish it later this year. A new mandatory Code of Conduct training program for all employees will be launched in 2021.
INFORMATION ON SHARES AND SHARE CAPITAL
Share capital
The number of Suominen’s registered shares was 58,259,219 shares on September 30, 2020, 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 January 1 to September 30, 2020 was 6,483,441 shares, accounting for 11.3% of the average number of shares (excluding treasury shares). The highest price was EUR 5.36, the lowest EUR 2.00 and the volume-weighted average price EUR 3.66. The closing price at the end of review period was EUR 4.95. The market capitalization (excluding treasury shares) was EUR 285.0 million on September 30, 2020.
Treasury shares
On September 30, 2020, Suominen Corporation held 690,878 treasury shares.
In accordance with the resolution by the Annual General Meeting, in total 29,121 shares were transferred to the members of the Board of Directors as their remuneration payable in shares in May.
In accordance with the matching share-based payment program, 9,352 shares were transferred to the participants of the program in September.
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 March 19, 2020 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 was 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 2020 of the company is published. The shares were given out of the treasury shares held by the company by the decision of the Board of Directors on May 28, 2020.
Share-based incentive plans for the management and key employees
The Group management and key employees participate in the company’s share-based incentive plan. The earlier plans are described in detail in the Financial Statements 2019 and in the Remuneration Statement 2019 of Suominen Corporation, available on the company’s website www.suominen.fi.
On December 11, 2017 the Board of Directors approved a share-based incentive plan for the Group management and key employees. The aim of the 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 long-term, to build loyalty to the company and to offer them competitive reward plans based on earning and accumulating the Company’s shares. The plan includes three 3-year performance periods, calendar years 2018-2020, 2019-2021 and 2020-2022.
Performance Share Plan performance periods
| Period | 2018-2020 | 2019-2021 | 2020-2022 |
| Incentive based on | Total Shareholder Return (TSR) and EBIT % | Total Shareholder Return (TSR) | Total Shareholder Return (TSR) |
| Potential reward payment | Will be paid partly in Suominen shares and partly in cash in spring 2021 | Will be paid partly in Suominen shares and partly in cash in spring 2022 | Will be paid partly in Suominen shares and partly in cash in spring 2023 |
| Participants | Approx. 20 people | Approx. 20 people | Approx. 20 people |
| Maximum number of shares | 502,000 | 729,000 | 893,000 |
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. A member of the 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. Such number of shares must be held as long as the participant’s employment or service in a group company continues.
Matching Restricted Share Plan 2019-2021
The Board of Directors of Suominen Corporation approved on June 4, 2019 a Matching Restricted Share Plan for selected key employees in the Suominen Group. The prerequisite for receiving a reward from the plan is that a participant acquires the company’s shares, amounting to the number resolved by the Board.
If the prerequisites set for a participant have been fulfilled and his or her employment or service in a company belonging to the Suominen Group is in force at the time of the reward payment, he or she will receive matching shares as a reward.
The plan includes vesting periods, the duration of which is resolved by the Board. The potential reward will be paid partly in shares and partly in cash after a vesting period. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the plan participants.
The prerequisite for reward payment is that a participant’s employment or service is in force upon reward payment. The plan rewards to be allocated in 2019–2021 will amount to a maximum total of 200,000 Suominen Corporation shares including also the proportion to be paid in cash.
The first vesting period of the matching restricted share plan ended in September and in total 9,352 shares were transferred to the participants.
ANNUAL GENERAL MEETING
The Annual General Meeting (AGM) of Suominen Corporation was held on March 19, 2020.
The AGM adopted the Financial Statements and the Consolidated Financial Statements for the financial year 2019 and discharged the members of the Board of Directors and the President & CEO from liability for the financial year 2019. The AGM approved the Remuneration Policy for the governing bodies.
The AGM decided, in accordance with the proposal by the Board of Directors, that a dividend of EUR 0.05 per share will be paid.
The AGM confirmed the remuneration of the Board of Directors. The Chair will be paid an annual fee of EUR 66,000 and the Deputy Chair and other Board members an annual fee of EUR 31,000. Chair of the Audit Committee will be paid an additional fee of EUR 10,000. Further, the members of the Board will receive a fee for each Board and Committee meeting as follows: EUR 500 for each meeting held in the home country of the respective member, EUR 1,000 for each meeting held elsewhere than in the home country of the respective member and EUR 250 for each meeting held as telephone conference.
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 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, Ms. Sari Pajari and Ms. Laura Raitio were re-elected as members of the Board. Mr. Björn Borgman and Ms. Nina Linander were elected as new members of the 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 appointed Mr. Toni Halonen, Authorised Public Accountant, as the principally responsible auditor of the company.
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 terms and conditions of the authorization are explained later in this interim report.
Suominen published a stock exchange release on March 19, 2020 concerning the resolutions of the Annual General Meeting and the organizing meeting of the Board of Directors. The stock exchange release and the meeting materials can be viewed on Suominen’s website at www.suominen.fi.
In compliance with the resolution of the Annual General Meeting, on April 3, 2020 Suominen paid out dividends of EUR 2.9 million for 2019, corresponding to EUR 0.05 per share.
Organizing meeting and permanent committees of the Board of Directors
In its organizing meeting held after the AGM, the Board of Directors elected Andreas Ahlström 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. Nina Linander was 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 Sari Pajari was re-elected as a member. Björn Borgman 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 March 19, 2020 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 June 30, 2021 and it revokes all earlier authorizations to repurchase company’s own shares.
The Annual General Meeting (AGM) held on March 19, 2020 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 June 30, 2021.
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.
NOMINATION BOARD
Suominen’s three largest registered shareholders AC Invest Two B.V., Oy Etra Invest Ab and Varma Mutual Pension Insurance Company have nominated the following members to the Shareholders’ Nomination Board:
- Lasse Heinonen, President & CEO of Ahlström Capital Oy, as a member appointed by AC Invest Two B.V.;
- Erik Malmberg, Investment Advisory Professional, Triton Advisers AB, as a member appointed by Oy Etra Invest Ab;
- Hanna Kaskela, Director of Responsible Investments, Varma Mutual Pension Insurance Company
Jan Johansson, Chair of Suominen’s Board of Directors, serves as the fourth member of the Nomination Board. The shareholders entitled to appoint members to the Nomination Board were determined on the basis of the registered holdings in the company’s shareholders' register on September 1, 2020.
SHORT TERM RISKS AND UNCERTAINTIES
Currently the COVID-19 pandemic is causing uncertainty. The key risks related to the virus have concerned the health and safety of Suominen personnel and customers, possible shortages of raw materials as well as potential closures of customers’ or our own plants due to virus infections or authority decisions and issues linked to logistics. These risks remain valid in the last quarter of the year as unfortunately the coronavirus situation seems to be deteriorating in many countries.
We have implemented extensive precautions to protect the health and safety of our employees and to ensure business continuity and progress of our strategic projects during the pandemic. We continuously monitor the raw material situation closely and we have identified risk mitigation measures such as utilization of supplementary raw material sources.
The vast majority of our customers have also experienced increased demand for their products and thus our customer credit risks have not materially increased. The COVID-19 pandemic has not increased Suominen’s risk of impairment losses on non-current assets.
Suominen’s other risks and uncertainties include, but are not limited to: risks related to manufacturing, competition, raw material prices and availability and customer specific volumes and credits, changes in legislation, political environment or economic conditions and investments, and financial risks.
A more detailed description of risks is available in Suominen’s Annual Report and Q1/2020 Interim report at suominen.fi/investors.
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 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.
The demand for nonwovens has increased due to COVID-19 pandemic. In the short term, the higher demand is expected to continue. In the longer term, the COVID-19 pandemic may lead to a continued increase in demand for nonwovens for cleaning and disinfection products.
OUTLOOK FOR 2020
Suominen reiterates the outlook presented on June 17, 2020, in which Suominen expects that in 2020 its comparable operating profit will improve significantly from 2019. In 2019, Suominen’s operating profit amounted to EUR 8.1 million. In financial years 2020 and 2019 Suominen had no items affecting the comparability of the operating profit.
CORPORATE GOVERNANCE AND REMUNERATION STATEMENTS
Suominen has prepared a separate Corporate Governance Statement and a Remuneration Statement for
2019, which comply with the recommendations of the Finnish Corporate Governance Code for listed
companies. The statements also cover other central areas of corporate governance. The statements have been published on Suominen's website, separately from the Report of the Board of Directors, at www.suominen.fi.
AUDIOCAST AND CONFERENCE CALL
Petri Helsky, President & CEO, and Toni Tamminen, CFO, will present the result in English in an audiocast for analyst, investors and media on October 27 at 11:00 a.m. (EET). The audiocast can be followed at https://suominen.videosync.fi/2020-q3-results. The recording of the audiocast and the presentation material will be available after the event at www.suominen.fi.
Conference call participants are requested to dial on:
SE: +46 856 642 651
UK: +44 333 300 0804
US: +1 631 913 1422
The confirmation code for joining the conference call is 30794525#.
NEXT FINANCIAL REPORT
Suominen Corporation will publish its Financial Statements Release 2020 on February 4, 2021 approximately at 9:30 a.m. (EET).
SUOMINEN GROUP 1 JANUARY–30 SEPTEMBER 2020
The figures in this interim report 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 2019, with the exception of the effect of the new accounting standards and interpretations which have been applied from 1.1.2020.
The new or amended standards or interpretations applicable from 1.1.2020 are not material for Suominen Group.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 |
| Assets | |||
| Non-current assets | |||
| Goodwill | 15,496 | 15,496 | 15,496 |
| Intangible assets | 17,613 | 20,780 | 20,020 |
| Property, plant and equipment | 106,082 | 126,352 | 121,584 |
| Right-of-use assets | 14,309 | 15,384 | 14,319 |
| Loan receivables | 3,650 | 3,348 | 3,650 |
| Equity instruments | 777 | 777 | 777 |
| Other non-current receivables | 69 | 43 | 70 |
| Deferred tax assets | 2,647 | 2,097 | 2,091 |
| Total non-current assets | 160,642 | 184,277 | 178,007 |
| Current assets | |||
| Inventories | 37,977 | 41,561 | 39,257 |
| Trade receivables | 53,671 | 52,905 | 46,728 |
| Loan receivables | 3,256 | 4,017 | 3,845 |
| Other current receivables | 5,693 | 4,747 | 3,820 |
| Assets for current tax | 3,652 | 996 | 701 |
| Cash and cash equivalents | 48,742 | 34,717 | 37,741 |
| Total current assets | 152,991 | 138,943 | 132,093 |
| Total assets | 313,633 | 323,220 | 310,100 |
| 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 | 81,361 | 81,269 | 81,269 |
| Treasury shares | -44 | -44 | -44 |
| Fair value and other reserves | 2 | 264 | 264 |
| Exchange differences | -8,131 | 3,944 | 707 |
| Retained earnings | 34,344 | 14,897 | 13,715 |
| Total equity attributable to owners of the parent | 144,074 | 136,871 | 132,452 |
|
Liabilities |
|||
| Non-current liabilities | |||
| Deferred tax liabilities | 13,444 | 12,928 | 12,786 |
| Liabilities from defined benefit plans | 769 | 769 | 788 |
| Provisions | 1,665 | 1,595 | 1,608 |
| Non-current lease liabilities | 10,914 | 11,371 | 10,464 |
| Other non-current liabilities | 17 | 17 | 17 |
| Debentures | 82,563 | 81,428 | 81,714 |
| Total non-current liabilities | 109,372 | 108,107 | 107,375 |
| Current liabilities | |||
| Current lease liabilities | 2,817 | 2,990 | 2,986 |
| Other current interest-bearing liabilities | − | 14,000 | 14,000 |
| Liabilities for current tax | 787 | 362 | 5 |
| Trade payables and other current liabilities | 56,584 | 60,890 | 53,282 |
| Total current liabilities | 60,188 | 78,242 | 70,273 |
| Total liabilities | 169,559 | 186,349 | 177,648 |
| Total equity and liabilities | 313,633 | 323,220 | 310,100 |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
| Restated | Restated | Restated | |||
| EUR thousand | 7-9/2020 | 7-9/2019 | 1-9/2020 | 1-9/2019 | 1-12/2019 |
| Net sales | 115,435 | 103,363 | 347,808 | 316,953 | 411,412 |
| Cost of goods sold | -95,751 | -95,071 | -295,320 | -288,560 | -374,501 |
| Gross profit | 19,684 | 8,292 | 52,488 | 28,393 | 36,911 |
| Other operating income | 694 | 694 | 2,031 | 2,297 | 2,903 |
| Sales, marketing and administration expenses | -6,450 | -6,888 | -20,740 | -20,750 | -27,268 |
| Research and development expenses | -807 | -860 | -2,131 | -2,582 | -3,376 |
| Other operating expenses | -215 | -130 | -685 | -633 | -1,041 |
| Operating profit | 12,907 | 1,108 | 30,962 | 6,724 | 8,129 |
| Net financial expenses | -1,761 | -1,080 | -5,518 | -4,072 | -5,998 |
| Profit before income taxes | 11,146 | 28 | 25,444 | 2,652 | 2,132 |
| Income taxes | -270 | -108 | -2,622 | -1,232 | -1,907 |
| Profit for the period | 10,877 | -80 | 22,822 | 1,420 | 225 |
| Earnings per share, EUR | |||||
| Basic | 0.19 | 0.00 | 0.40 | 0.02 | 0.00 |
| Diluted | 0.19 | 0.00 | 0.40 | 0.02 | 0.00 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| EUR thousand | 7-9/2020 | 7-9/2019 | 1-9/2020 | 1-9/2019 | 1-12/2019 |
| Profit for the period | 10,877 | -80 | 22,822 | 1,420 | 225 |
| Other comprehensive income: | |||||
| Other comprehensive income that will be subsequently reclassified to profit or loss | |||||
| Exchange differences | -5,976 | 4,116 | -9,252 | 5,130 | 1,570 |
| Reclassified to profit or loss | − | − | -327 | − | − |
| Income taxes related to other comprehensive income | 447 | -455 | 479 | -517 | -193 |
| Total | -5,529 | 3,661 | -9,100 | 4,614 | 1,377 |
| Other comprehensive income that will not be subsequently reclassified to profit or loss | |||||
| Remeasurements of defined benefit plans | − | − | − | − | 75 |
| Income taxes related to other comprehensive income | − | − | − | − | -21 |
| Total | − | − | − | − | 54 |
| Total other comprehensive income | -5,529 | 3,661 | -9,100 | 4,614 | 1,431 |
| Total comprehensive income for the period | 5,347 | 3,581 | 13,722 | 6,034 | 1,656 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| EUR thousand | Share capital | Share premium account | Reserve for invested unrestricted equity | Treasury shares |
| Equity 1.1.2020 | 11,860 | 24,681 | 81,269 | -44 |
| Profit for the period | − | − | − | − |
| Other comprehensive income | − | − | − | − |
| Total comprehensive income | − | − | − | − |
| Share-based payments | − | − | − | − |
| Conveyance of treasury shares | − | − | 92 | − |
| Dividends paid | − | − | − | − |
| Equity 30.9.2020 | 11,860 | 24,681 | 81,361 | -44 |
| EUR thousand | Exchange differences | Fair value and other reserves | Retained earnings | Total equity attributable to owners of the parent |
| Equity 1.1.2020 | 707 | 264 | 13,715 | 132,452 |
| Profit for the period | − | − | 22,822 | 22,822 |
| Other comprehensive income | -8,838 | -262 | − | -9,100 |
| Total comprehensive income | -8,838 | -262 | 36,537 | 13,722 |
| Share-based payments | − | − | 684 | 684 |
| Conveyance of treasury shares | − | − | − | 92 |
| Dividends paid | − | − | -2,876 | -2,876 |
| Equity 30.9.2020 | -8,131 | 2 | 34,344 | 144,074 |
| EUR thousand | Share capital | Share premium account | Reserve for invested unrestricted equity | Treasury shares |
| Equity 1.1.2019 | 11,860 | 24,681 | 81,185 | -44 |
| Profit / loss for the period | − | − | − | − |
| Other comprehensive income | − | − | − | − |
| Total comprehensive income | − | − | − | − |
| Share-based payments | − | − | − | − |
| Conveyance of treasury shares | − | − | 84 | − |
| Equity 30.9.2019 | 11,860 | 24,681 | 81,269 | -44 |
| EUR thousand | Exchange differences | Fair value and other reserves | Retained earnings | Total equity attributable to owners of the parent |
| Equity 1.1.2019 | -669 | 264 | 13,237 | 130,513 |
| Profit / loss for the period | − | − | 1,420 | 1,420 |
| Other comprehensive income | 4,614 | − | − | 4,614 |
| Total comprehensive income | 4,614 | − | 1,420 | 6,034 |
| Share-based payments | − | − | 240 | 240 |
| Conveyance of treasury shares | − | − | − | 84 |
| Equity 30.9.2019 | 3,944 | 264 | 14,897 | 136,871 |
| EUR thousand | Share capital | Share premium account | Reserve for invested unrestricted equity | Treasury shares |
| Equity 1.1.2019 | 11,860 | 24,681 | 81,185 | -44 |
| Profit for the period | − | − | − | − |
| Other comprehensive income | − | − | − | − |
| Total comprehensive income | − | − | − | − |
| Share-based payments | − | − | − | − |
| Conveyance of treasury shares | − | − | 84 | − |
| Equity 31.12.2019 | 11,860 | 24,681 | 81,269 | -44 |
| EUR thousand | Exchange differences | Fair value and other reserves | Retained earnings | Total equity attributable to owners of the parent |
| Equity 1.1.2019 | -669 | 264 | 13,237 | 130,513 |
| Profit for the period | − | − | 225 | 225 |
| Other comprehensive income | 1,377 | − | 54 | 1,431 |
| Total comprehensive income | 1,377 | − | 279 | 1,656 |
| Share-based payments | − | − | 198 | 198 |
| Conveyance of treasury shares | − | − | − | 84 |
| Equity 31.12.2019 | 707 | 264 | 13,715 | 132,452 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| EUR thousand | 1-9/2020 | 1-9/2019 | 1-12/2019 |
| Cash flow from operations | |||
| Profit for the period | 22,822 | 1,420 | 225 |
| Total adjustments to profit for the period | 25,672 | 25,861 | 34,585 |
| Cash flow before changes in net working capital | 48,494 | 27,281 | 34,810 |
| Change in net working capital | -2,251 | 611 | 1,631 |
| Financial items | -3,224 | -2,613 | -5,222 |
| Income taxes | -3,882 | -1,120 | -1,324 |
| Cash flow from operations | 39,137 | 24,160 | 29,895 |
| Cash flow from investments | |||
| Investments in property, plant and equipment and intangible assets | -6,474 | -9,410 | -10,520 |
| Sales proceeds from property, plant and equipment and intangible assets | − | 0 | 73 |
| Cash flow from investments | -6,474 | -9,410 | -10,447 |
| Cash flow from financing | |||
| Drawdown of current interest-bearing liabilities | 15,000 | 24,000 | 38,000 |
| Repayment of current interest-bearing liabilities | -31,316 | -32,876 | -47,572 |
| Dividends paid | -2,876 | − | − |
| Cash flow from financing | -19,192 | -8,876 | -9,572 |
| Change in cash and cash equivalents | 13,471 | 5,874 | 9,875 |
| Cash and cash equivalents at the beginning of the period | 37,741 | 27,757 | 27,757 |
| Effect of changes in exchange rates | -2,470 | 1,086 | 109 |
| Change in cash and cash equivalents | 13,471 | 5,874 | 9,875 |
| Cash and cash equivalents at the end of the period | 48,742 | 34,717 | 37,741 |
KEY RATIOS
| Restated | Restated | |||||||||||
| 7-9/ 2020 |
7-9/ 2019 |
1-9/ 2020 |
1-9/ 2019 |
1-12/ 2019 |
||||||||
| Change in net sales, % * | 11.7 | -1.3 | 9.7 | -1.4 | -4.6 | |||||||
| Gross profit, as percentage of net sales, % | 17.1 | 8.0 | 15.1 | 9.0 | 9.0 | |||||||
| EBITDA, as percentage of net sales, % | 15.7 | 7.6 | 13.6 | 8.3 | 8.2 | |||||||
| Operating profit, as percentage of net sales, % | 11.2 | 1.1 | 8.9 | 2.1 | 2.0 | |||||||
| Comparable operating profit, as percentage of net sales, % | 11.2 | 1.1 | 8.9 | 2.1 | 2.0 | |||||||
| Net financial items, as percentage of net sales, % | -1.5 | -1.0 | -1.6 | -1.3 | -1.5 | |||||||
| Profit before income taxes, as percentage of net sales, % | 9.7 | 0.0 | 7.3 | 0.8 | 0.5 | |||||||
| Profit for the period, as percentage of net sales, % | 9.4 | -0.1 | 6.6 | 0.4 | 0.1 | |||||||
| Gross capital expenditure, EUR thousand | 2,411 | 2,277 | 4,867 | 8,566 | 11,198 | |||||||
| Depreciation and amortization, EUR thousand | 5,200 | 6,726 | 16,416 | 19,507 | 25,539 | |||||||
| Return on equity, rolling 12 months, % | − | − | 15.7 | -0.4 | 0.2 | |||||||
| Return on invested capital, rolling 12 months, % | − | − | 13.8 | 3.0 | 3.7 | |||||||
| Equity ratio, % | − | − | 46.0 | 42.4 | 42.7 | |||||||
| Gearing, % | − | − | 29.9 | 52.1 | 50.7 | |||||||
| Average number of personnel | − | − | 687 | 689 | 685 | |||||||
| Earnings per share, EUR, basic | 0.19 | 0.00 | 0.40 | 0.02 | 0.00 | |||||||
| Earnings per share, EUR, diluted | 0.19 | 0.00 | 0.40 | 0.20 | 0.00 | |||||||
| Cash flow from operations per share, EUR | 0.35 | 0.30 | 0.68 | 0.42 | 0.52 | |||||||
| Equity per share, EUR | − | − | 2.50 | 2.38 | 2.30 | |||||||
| Number of shares, end of period, excluding treasury shares | − | − | 57,568,341 | 57,529,868 | 57,529,868 | |||||||
| Share price, end of period, EUR | − | − | 4.95 | 2.44 | 2.31 | |||||||
| Share price, period low, EUR | − | − | 2.00 | 2.04 | 2.04 | |||||||
| Share price, period high, EUR | − | − | 5.36 | 2.70 | 2.70 | |||||||
| Volume weighted average price during the period, EUR | − | − | 3.66 | 2.41 | 2.38 | |||||||
| Market capitalization, EUR million | − | − | 285.0 | 140.4 | 132.9 | |||||||
| Number of traded shares during the period | − | − | 6,483,441 | 2,992,411 | 4,655,863 | |||||||
| Number of traded shares during the period, % of average number of shares | − | − | 11.3 | 5.2 | 8.1 | |||||||
* Compared with the corresponding period in the previous year.
| 30.9.2020 | 30.9.2019 | 31.12.2019 | |||
| Interest-bearing net debt, EUR thousands | |||||
| Non-current interest-bearing liabilities, nominal value | 95,914 | 96,371 | 95,464 | ||
| Current interest-bearing liabilities, nominal value | 2,817 | 16,990 | 16,986 | ||
| Interest-bearing receivables and cash and cash equivalents | -55,648 | -42,083 | -45,236 | ||
| Interest-bearing net debt | 43,084 | 71,279 | 67,213 |
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 2019. The link between the components of the alternative performance measures and the consolidated financial statements is presented in Suominen’s Annual Report for 2019.
Calculation of key ratios per share
Earnings per share
| Basic earnings per share (EPS) | Profit for the period adjusted with interest on hybrid bond, 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 | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Profit for the period | 22,822 | 1,420 | 225 | |
| Average share-issue adjusted number of shares | 57,543,631 | 57,511,273 | 57,515,960 | |
| Average diluted share-issue adjusted number of shares excluding treasury shares | 57,727,013 | 57,576,963 | 57,601,340 | |
| Earnings per share | ||||
| EUR | ||||
| Basic | 0.40 | 0.02 | 0.00 | |
| Diluted | 0.40 | 0.02 | 0.00 |
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 | |
| 30.9.2020 | 30.9.2019 | 31.12.2019 | ||
| Cash flow from operations, EUR thousand | 39,137 | 24,160 | 29,894 | |
| Share-issue adjusted number of shares excluding treasury shares, end of reporting period | 57,568,341 | 57,529,868 | 57,529,868 | |
| Cash flow from operations per share, EUR | 0.68 | 0.42 | 0.52 |
Equity per share
| Equity per share | Total equity | |
| = | Share-issue adjusted number of shares excluding treasury shares, end of reporting period | |
| 30.9.2020 | 30.9.2019 | 31.12.2019 | ||
| Total equity attributable to owners of the parent, EUR thousand | 144,074 | 136,871 | 132,452 | |
| Share-issue adjusted number of shares excluding treasury shares, end of reporting period | 57,568,341 | 57,529,868 | 57,529,868 | |
| Equity per share, EUR | 2.50 | 2.38 | 2.30 |
Market capitalization
| Market capitalization | = | Number of shares at the end of reporting period excluding treasury shares x share price at the end of period |
| 30.9.2020 | 30.9.2019 | 31.12.2019 | ||
| Number of shares at the end of reporting period excluding treasury shares | 57,568,341 | 57,529,868 | 57,529,868 | |
| Share price at end of the period, EUR | 4.95 | 2.44 | 2.31 | |
| Market capitalization, EUR million | 285.0 | 140.4 | 132.9 | |
Share turnover
| Share turnover | = | The proportion of number of shares traded during the period to weighted average number of shares excluding treasury shares |
| 30.9.2020 | 30.9.2019 | 31.12.2019 | ||
| Number of shares traded during the period | 6,483,441 | 2,992,411 | 4,655,863 | |
| Average number of shares excluding treasury shares | 57,543,631 | 57,511,273 | 57,515,960 | |
| Share turnover, % | 11.3 | 5.2 | 8.1 | |
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 2020 or 2019
EBITDA
| EBITDA | = | EBIT + depreciation, amortization and impairment losses |
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Operating profit | 30,962 | 6,724 | 8,129 | |
| + Depreciation, amortization and impairment losses | 16,416 | 19,507 | 25,539 | |
| EBITDA | 47,378 | 26,231 | 33,668 | |
Gross capital expenditure
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Increases in intangible assets | 283 | 2,003 | 2,224 | |
| Increases in property, plant and equipment | 4,583 | 6,563 | 8,974 | |
| Gross capital expenditure | 4,867 | 8,566 | 11,198 | |
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 |
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Interest-bearing liabilities | 96,295 | 109,789 | 109,163 | |
| Tender and issuance costs of the debentures | 2,437 | 3,572 | 3,286 | |
| Interest bearing receivables | -6,905 | -7,365 | -7,495 | |
| Cash and cash equivalents | -48 742 | -34,717 | -37,741 | |
| Interest-bearing net debt | 43,084 | 71,279 | 67,213 | |
| Interest-bearing liabilities | 96,295 | 109,789 | 109,163 | |
| Tender and issuance costs of the debentures | 2,437 | 3,572 | 3,286 | |
| Nominal value of interest-bearing liabilities | 98,731 | 113,361 | 112,450 | |
Return on equity (ROE), %
| Return on equity (ROE), % | = | Profit for the reporting period (rolling 12 months) x 100 |
| Total equity (quarterly average) |
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Profit for the reporting period (rolling 12 months) | 21,627 | -595 | 225 | |
| Total equity attributable to owners of the parent 30.9.2019 / 30.9.2018 / 31.12.2018 | 136,871 | 130,981 | 130,513 | |
| Total equity attributable to owners of the parent 31.12.2019 / 31.12.2018 / 31.3.2019 | 132,452 | 130,513 | 133,776 | |
| Total equity attributable to owners of the parent 31.3.2020 / 31.3.2019 / 30.6.2019 | 135,868 | 133,776 | 133,178 | |
| Total equity attributable to owners of the parent 30.6.2020 / 30.6.2019 / 30.9.2019 | 138,551 | 133,178 | 136,871 | |
| Total equity attributable to owners of the parent 30.9.2020 / 30.9.2019 / 31.12.2019 | 144,074 | 136,871 | 132,452 | |
| Average | 137,563 | 133,064 | 133,358 | |
| Return on equity (ROE), % | 15.7 | -0.4 | 0.2 |
Invested capital
| Invested capital | = | Total equity + interest-bearing liabilities |
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Total equity attributable to owners of the parent | 144,074 | 136,871 | 132,452 | |
| Interest-bearing liabilities | 96,295 | 109,789 | 109,163 | |
| Invested capital | 240,368 | 246,660 | 241,615 |
Return on invested capital (ROI), %
| Return on invested capital (ROI), % | = | Operating profit + financial income (rolling 12 months) x 100 |
| Invested capital, quarterly average |
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Operating profit (rolling 12 months) | 32,367 | 6,363 | 8,129 | |
| Financial income (rolling 12 months) | 942 | 884 | 981 | |
| Total | 33,310 | 7,247 | 9,110 | |
| Invested capital 30.9.2019 / 30.9.2018 / 31.12.2018 | 246,660 | 227,186 | 231,977 | |
| Invested capital 31.12.2019 / 31.12.2018 / 31.3.2019 | 241,615 | 247,263 | 250,259 | |
| Invested capital 31.3.2020 / 31.3.2019 / 30.6.2019 | 240,761 | 250,259 | 249,752 | |
| Invested capital 30.6.2020 / 30.6.2019 / 30.9.2019 | 238,195 | 249,752 | 246,660 | |
| Invested capital 30.9.2020 / 30.9.2019 / 31.12.2019 | 240,368 | 246,660 | 241,615 | |
| Average | 241,520 | 244,224 | 244,053 | |
| Return on invested capital (ROI), % | 13.8 | 3.0 | 3.7 | |
Financial income does not include fair value changes of assets at fair value through profit or loss.
Equity ratio, %
| Equity ratio, % | = | Total equity x 100 | |
| Total assets - advances received |
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Total equity attributable to owners of the parent | 144,074 | 136,871 | 132,452 | |
| Total assets | 313,633 | 323,220 | 310,100 | |
| Advances received | -248 | -113 | -58 | |
| 313,385 | 323,107 | 310,042 | ||
| Equity ratio, % | 46.0 | 42.4 | 42.7 |
Gearing, %
| Gearing, % | = | Interest-bearing net debt x 100 | |
| Total equity | |||
| EUR thousand | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Interest-bearing net debt | 43,084 | 71,279 | 67,213 | |
| Total equity attributable to owners of the parent | 144,074 | 136,871 | 132,452 | |
| Gearing, % | 29.9 | 52.1 | 50.7 |
NET SALES BY GEOGRAPHICAL MARKET AREA
| EUR thousand | 1-9/2020 | 1-9/2019 | 1-12/2019 |
| Finland | 2,473 | 1,977 | 2,527 |
| Rest of Europe | 115,215 | 113,322 | 145,055 |
| North and South America | 227,180 | 198,355 | 259,560 |
| Rest of the world | 2,941 | 3,299 | 4,270 |
| Total | 347,808 | 316,953 | 411,412 |
QUARTERLY SALES DEVELOPMENT BY BUSINESS AREA
| 2020 | 2019 | ||||||
| EUR thousand | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 |
| Americas | 71,947 | 77,162 | 73,170 | 62,180 | 66,161 | 65,011 | 68,326 |
| Europe | 43,542 | 45,047 | 37,054 | 32,294 | 37,233 | 38,798 | 41,466 |
| Unallocated exchange differences and eliminations | -54 | -38 | -21 | -15 | -30 | 14 | -25 |
| Total | 115,435 | 122,170 | 110,203 | 94,459 | 103,363 | 103,824 | 109,766 |
QUARTERLY DEVELOPMENT
| 2020 | 2019 | ||||||
| EUR thousand | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 |
| Net sales | 115,435 | 122,170 | 110,203 | 94,459 | 103,363 | 103,824 | 109,766 |
| EBITDA | 18,107 | 17,989 | 11,282 | 7,437 | 7,834 | 9,089 | 9,309 |
| as % of net sales | 15.7 | 14.7 | 10.2 | 7.9 | 7.6 | 8.8 | 8.5 |
| Comparable operating profit | 12,907 | 12,391 | 5,664 | 1,405 | 1,108 | 2,655 | 2,961 |
| as % of net sales | 11.2 | 10.1 | 5.1 | 1.5 | 1.1 | 2.6 | 2.7 |
| Items affecting comparability | − | − | − | − | − | − | − |
| Operating profit | 12,907 | 12,391 | 5,664 | 1,405 | 1,108 | 2,655 | 2,961 |
| as % of net sales | 11.2 | 10.1 | 5.1 | 1.5 | 1.1 | 2.6 | 2.7 |
| Net financial items | -1,761 | -1,813 | -1,945 | -1,926 | -1,080 | -1,695 | -1,297 |
| Profit before income taxes | 11,146 | 10,579 | 3,719 | -521 | 28 | 960 | 1,665 |
| as % of net sales | 9.7 | 8.7 | 3.4 | -0.6 | 0.0 | 0.9 | 1.5 |
RELATED PARTY INFORMATION
The related parties of Suominen include the members of the Board of Directors, President & CEO and the members of the 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.
The Annual General Meeting held on March 19, 2020 resolved that 40% of the annual remuneration for the Board of Directors is paid in Suominen Corporation’s shares. The number of shares transferred to the members of the Board of Directors as their remuneration payable in shares for 2020 was 29,121 shares. The shares were transferred on May 28, 2020 and the value of the transferred shares totaled EUR 92,400, or approximately EUR 3.17 per share.
In accordance with the terms and conditions of the matching restricted share plan 2019, Suominen Corporation transferred a total of 9,352 shares without consideration to the participants of the plan’s vesting period 2019-2020. Of the total number of transferred shares, 4,676 shares were transferred to President & CEO Petri Helsky and 4,676 shares to another member of the Executive Team.
CHANGES IN PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS
| 30.9.2020 | 30.9.2019 | 31.12.2019 | ||||
| EUR thousand | Property, plant and equip. | Intang. assets | Property, plant and equip. | Intang. assets | Property, plant and equip. | Intang. assets |
| Carrying amount at the beginning of the period | 121,584 | 20,020 | 129,391 | 21,231 | 129,391 | 21,231 |
| Application of IFRS 16 | − | − | -149 | − | -149 | − |
| Capital expenditure and increases | 4,583 | 283 | 6,563 | 2,003 | 8,974 | 2,224 |
| Disposals and decreases | 0 | − | -1 | 0 | -1 | − |
| Depreciation, amortization and impairment losses | -11,077 | -2,675 | -14,281 | -2,477 | -18,608 | -3,448 |
| Exchange differences and other changes | -9,008 | -15 | 4,829 | 23 | 1,977 | 12 |
| Carrying amount at the end of the period | 106,082 | 17,613 | 126,352 | 20,780 | 121,584 | 20,020 |
Goodwill is not included in intangible assets.
| 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| EUR thousand | Right-of-use assets | Right-of-use assets | Right-of-use assets |
| Carrying amount at the beginning of the period | 14,319 | 16,946 | 16,946 |
| Increases | 2,852 | 868 | 946 |
| Disposals and decreases | -9 | -112 | -215 |
| Depreciation, amortization and impairment losses | -2,664 | -2,749 | -3,483 |
| Exchange differences and other changes | -190 | 432 | 125 |
| Carrying amount at the end of the period | 14,309 | 15,384 | 14,319 |
CHANGES IN INTEREST-BEARING LIABILITIES
| EUR thousand | 1-9/2020 | 1-9/2019 | 1-12/2019 |
| Total interest-bearing liabilities at the beginning of the period | 109,163 | 101,463 | 101,463 |
| Current liabilities at the beginning of the period | 16,986 | 20,765 | 20,765 |
| Application of IFRS 16 | − | 2,664 | 2,664 |
| Repayment of current liabilities, cash flow items | -31,316 | -32,876 | -47,572 |
| Drawdown of current liabilities, cash flow items | 15,000 | 24,000 | 38,000 |
| Increases in current liabilities, non-cash flow items | 201 | 189 | 218 |
| Decreases of current liabilities, non-cash flow items | -291 | -94 | -99 |
| Reclassification from non-current liabilities | 2,309 | 2,231 | 2,942 |
| Periodization of debenture to amortized cost, non-cash flow items | − | 43 | 43 |
| Exchange rate difference, non-cash flow item | -72 | 68 | 25 |
| Current liabilities at the end of the period | 2,817 | 16,990 | 16,986 |
| Non-current liabilities at the beginning of the period | 10,464 | 84 | 84 |
| Application of IFRS 16 | − | 12,622 | 12,622 |
| Increases in non-current liabilities, non-cash flow items | 2,929 | 680 | 733 |
| Decreases of non-current liabilities, non-cash flow items | 0 | -19 | -121 |
| Reclassification to current liabilities | -2,309 | -2,231 | -2,942 |
| Exchange rate difference, non-cash flow item | -169 | 236 | 88 |
| Non-current liabilities at the end of the period | 10,914 | 11,371 | 10,464 |
| Non-current debentures at the beginning of the period | 81,714 | 80,615 | 80,615 |
| Periodization of debenture to amortized cost, non-cash flow items | 850 | 813 | 1,099 |
| Non-current debentures at the end of the period | 82,563 | 81,428 | 81,714 |
| Total interest-bearing liabilities at the end of the period | 96,294 | 109,789 | 109,163 |
CONTINGENT LIABILITIES
| EUR thousands | 30.9.2020 | 30.9.2019 | 31.12.2019 | |
| Other commitments | ||||
| Leasing commitments | 135 | 233 | 179 | |
| Contractual commitments to acquire property, plant and equipment | 4,872 | 774 | − | |
| Commitments to leases not yet commenced | − | − | 33 | |
| Guarantees | ||||
| On own behalf | 8,083 | 10,683 | 9,906 | |
| Other own commitments | 28,055 | 2,371 | 2,203 | |
| 36,137 | 13,054 | 12,108 |
NOMINAL AND FAIR VALUES OF DERIVATIVE INSTRUMENTS
| 30.9.2020 | 30.9.2019 | 31.12.2019 | ||||
| EUR thousand | Nominal value | Fair value |
Nominal value |
Fair value |
Nominal value |
Fair value |
| Currency forward contracts | ||||||
| Hedge accounting not applied | 3,965 | -12 | 2,783 | -19 | − | − |
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. Carrying amount |
| e. Fair value |
| Classification | |||||
| EUR thousand | a. | b. | c. | d. | e. |
| Equity instruments | 347 | − | 429 | 777 | 777 |
| Loan receivables | 3,256 | 3,650 | − | 6,905 | 6,905 |
| Trade receivables | − | 53,671 | − | 53,671 | 53,671 |
| Derivative receivables | 6 | − | − | 6 | 6 |
| Interest and other financial receivables | − | 940 | − | 940 | 940 |
| Cash and cash equivalents | − | 48,742 | − | 48,742 | 48,742 |
| Total 30.9.2020 | 3,609 | 107,003 | 429 | 111,042 | 111,042 |
| EUR thousand | a. | b. | c. | d. | e. |
| Equity instruments | 347 | − | 429 | 777 | 777 |
| Loan receivables | 3,845 | 3,650 | − | 7,495 | 7,495 |
| Trade receivables | − | 46,728 | − | 46,728 | 46,728 |
| Interest and other financial receivables | − | 313 | − | 313 | 313 |
| Cash and cash equivalents | − | 37,741 | − | 37,741 | 37,741 |
| Total 31.12.2019 | 4,193 | 88,432 | 429 | 93,054 | 93,054 |
Principles in estimating fair value of financial assets for 2020 are the same as those used for preparing the consolidated financial statements for 2019.
Suominen monitors constantly the open balances of the customers and takes action if payments are delayed. The COVID-19 pandemic has increased the credit risk of certain customers depending on the markets in which they operate, but as a whole, also the customers have experienced increased demand of their products and thus their credit risks and Suominen’s expected credit losses arising from trade receivables have not materially increased.
FINANCIAL LIABILITIES
| 30.9.2020 | 31.12.2019 | |||||
| EUR thousand | Carrying amount | Fair value | Nominal value | Carrying amount | Fair value | Nominal value |
| Non-current financial liabilities | ||||||
| Debentures | 82,563 | 86,488 | 85,000 | 81,714 | 86,063 | 85,000 |
| Lease liabilities | 10,914 | 10,914 | 10,914 | 10,464 | 10,464 | 10,464 |
| Total non-current financial liabilities | 93,477 | 97,402 | 95,914 | 92,177 | 96,526 | 95,464 |
| Current financial liabilities | ||||||
| Current loans from financial institutions | − | − | − | 14,000 | 14,000 | 14,000 |
| Lease liabilities | 2,817 | 2,817 | 2,817 | 2,986 | 2,986 | 2,986 |
| Interest accruals | 2,151 | 2,151 | 2,151 | 551 | 551 | 551 |
| Derivative liabilities | 18 | 18 | 18 | − | − | − |
| Other current liabilities | 736 | 736 | 736 | 440 | 440 | 440 |
| Trade payables | 42,499 | 42,499 | 42,499 | 44,495 | 44,495 | 44,495 |
| Total current financial liabilities | 48,222 | 48,222 | 48,222 | 62,473 | 62,473 | 62,473 |
| Total | 141,699 | 145,624 | 144,136 | 154,650 | 158,999 | 157,936 |
Principles in estimating fair value for financial liabilities for 2020 are the same as those used for preparing the consolidated financial statements for 2019.
FAIR VALUE MEASUREMENT HIERARCHY
| EUR thousands | Level 1 | Level 2 | Level 3 |
| Financial assets and liabilities at fair value | |||
| Currency forward contracts, receivables | − | 6 | − |
| Loan receivables | − | − | 3,256 |
| Equity instruments | − | − | 777 |
| Total | − | 6 | 4,033 |
| Derivatives at fair value | |||
| Currency forward contracts, liabilities | − | -18 | − |
| Total | − | -18 | − |
Principles in estimating fair value of financial assets and their hierarchies for 2020 are the same as those used for preparing the consolidated financial statements for 2019.
There were no transfers in the fair value measurement hierarchy levels during the reporting period.
RESTATEMENT OF PREVIOUSLY PUBLISHED FIGURES
Suominen has reclassified some overhead expenses from cost of goods sold to sales, marketing and administration expenses.
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS | |||
| Published | Restatement | Restated | |
| EUR thousand | 1-9/2019 | 1-9/2019 | 1-9/2019 |
| Net sales | 316,953 | − | 316,953 |
| Cost of goods sold | -290,597 | 2,037 | -288,560 |
| Gross profit | 26,356 | 2,037 | 28,393 |
| Other operating income | 2,297 | − | 2,297 |
| Sales, marketing and administration expenses | -18,713 | -2,037 | -20,750 |
| Research and development | -2,582 | − | -2,582 |
| Other operating expenses | -633 | − | -633 |
| Operating profit | 6,724 | − | 6,724 |
| Net financial expenses | -4,072 | − | -4,072 |
| Profit before income taxes | 2,652 | − | 2,652 |
| Income taxes | -1,232 | − | -1,232 |
| Profit / loss for the period | 1,420 | − | 1,420 |
| Published | Restatement | Restated | |
| EUR thousand | 1-12/2019 | 1-12/2019 | 1-12/2019 |
| Net sales | 411,412 | − | 411,412 |
| Cost of goods sold | -377,255 | 2,754 | -374,501 |
| Gross profit | 34,157 | 2,754 | 36,911 |
| Other operating income | 2,903 | − | 2,903 |
| Sales, marketing and administration expenses | -24,513 | -2,754 | -27,267 |
| Research and development | -3,376 | − | -3,376 |
| Other operating expenses | -1,041 | − | -1,041 |
| Operating profit | 8,129 | − | 8,129 |
| Net financial expenses | -5,998 | − | -5,998 |
| Profit before income taxes | 2,132 | − | 2,132 |
| Income taxes | -1,907 | − | -1,907 |
| Profit / loss for the period | 225 | − | 225 |
SUOMINEN CORPORATION
Board of Directors
For additional information, please contact:
Petri Helsky, President & CEO, tel. +358 (0)10 214 3080
Toni Tamminen, CFO, tel. +358 (0)10 214 3051
Suominen manufactures nonwovens as roll goods for wipes and other applications. Our vision is to be the frontrunner for nonwovens innovation and sustainability. The end products made of Suominen’s nonwovens, such as wet wipes, feminine care products and swabs, are present in people’s daily life worldwide. Suominen’s net sales in 2019 were EUR 411.4 million and we have nearly 700 professionals working in Europe and in the Americas. Suominen’s shares are listed on Nasdaq Helsinki. Read more at www.suominen.fi.
Distribution:
Nasdaq Helsinki
Main media
www.suominen.fi
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Suominen Corporation's Interim Report for January 1 – September 30, 2020: Strong performance continued - GlobeNewswire
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