Suominen reports Q4 net loss of €11.2M, compared with year-ago loss of €3.8M; net sales at €109M, compared with year-ago sales of €84.8M
February 15, 2013
– Nina Kopola, President and CEO:
“I am satisfied with Suominen’s development during 2012. The impacts of the acquisition of Ahlstrom’s Home and Personal business at the end of 2011 are now visible for the first time in our annual result, of which the Nonwovens business unit generates a significant share.
Consumer confidence remained more stable in North America than in Europe during 2012, which also resulted in variations in demand for our products in those market areas. In the comparable pro forma assessment, our net sales for the whole year fell from the previous year. Group’s net sales increased significantly in comparison with 2011.
Over the course of 2012, we developed the operations of the new Suominen according to plan and carried out several profitability improvement projects as part of our comprehensive Summit program. One of the key measures of the program in the fourth quarter of 2012 was the discontinuation of the production of polypropylene staple fibers at the Nakkila plant in Finland.
We were successful in carrying out the Summit program, achieving structural cost savings of around EUR 10 million during 2012. This, in fact, slightly exceeds our original target, which was approximately two per cent of our net sales.
However, impairment losses and other non-recurring items recognized during the year decreased the operating profit, which amounted to EUR 0.9 million. Operating profit before non-recurring items was EUR 13.7 million.
At the end of 2012, we sharpened Suominen’s strategy, and the Board of Directors set new financial targets for the company. The renewed strategy focuses on a common operating culture, improving profitability, growing the share of products with higher value added, and a market leadership. Our goal is a clear improvement in relative profitability, with a return on investments (ROI) of more than 10%; a solid capital structure with a gearing ratio between 40% and 80%; and organic net sales growth that exceeds the average growth rate in the industry.”
GROUP FINANCIAL RESULTS
In the fourth quarter, Suominen’s net sales were EUR 109.0 million (84.8). Operating profit before non-recurring items was EUR 1.9 million (0.3) and after them EUR -8.2 million (-2.4). Profit before taxes was EUR -10.4 million (-3.3) and profit after taxes EUR -11.2 million (-3.8).
Net sales for the full year 2012 totaled EUR 454.9 million (213.4). Operating profit before non-recurring items was EUR 13.7 million (-1.1) and after them EUR 0.9 million (-4.8), profit before taxes EUR -9.5 million (-10.0) and profit after taxes EUR -11.9 million (-9.5).
Net sales decreased by 5% compared to the EUR 479 million pro forma net sales in 2011 due to a decline in sales volumes and reduced sales prices in Europe. The most significant factor affecting the European volumes was the burning down of a production line in Italy in the autumn of 2011. The production of the burnt spunlace line was discontinued for the first five months of 2012. Regionally, demand was stronger in the US markets than in Europe.
Non-recurring items, equaling altogether EUR 12.8 million in net value, comprised impairment losses and the restructuring costs in the Nonwovens and Codi Wipes business units as well as profits from sales of assets in the Flexibles business unit.
As part of the restructuring of the Nonwovens business unit’s operations at the Nakkila plant in Finland, the production capacity was cut down, resulting to terminations of in total 69 permanent and 4 temporary employment contracts. The restructurings led to non-recurring costs totaling EUR 5.9 million, comprising of costs of the termination period (EUR 0.4 million) and an impairment loss recognized to non-current assets (EUR 5.5 million). The impairment loss had no cash flow effect.
During the fourth quarter of 2012, Suominen performed goodwill impairment testing on its Codi Wipes business unit and recognized an impairment loss of goodwill of EUR 7.3 million. The recognition had no cash flow effect.
In the Flexibles business unit, temporary layoffs were implemented to reduce costs. Flexibles’ former production plant in Nastola, Finland, was sold during the period under review, resulting in a non-recurring gain of EUR 0.5 million.
Though the impairment losses decreased Suominen’s operating profit, the benefits of the integration of Suominen and Ahlstrom’s Home and Personal business were clearly visible in the improving operational profitability. The reduction of the Group’s operating costs continued according to plan as specified in the Summit program. The program includes the integration of Ahlstrom’s Home and Personal business with Suominen and covers the realization of synergy benefits in sales, sourcing, optimization of production lines and logistics solutions. The aim of efficiency measures was to create cost savings representing about two per cent of net sales. At the closing date, the amount of cost savings totaled approximately EUR 10 million (some 2% of net sales). The Summit project will end in the first quarter of 2013.
The prices of raw materials, representing the biggest part of costs, fluctuated during the course of the year, but the fluctuations had no significant impacts in the full-year financial result.
Cash flow from operations in the fourth quarter was EUR 11.7 million (-4.7), and for the whole year EUR 24.9 million (-2.9). EUR 5.0 million in working capital has been released in 2012, representing 1.1% of the net sales. Capital expenditure was kept at a low level.
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