REFORMED SUOMINEN - RESULT IMPROVED BUT STILL SHOWING LOSSES
Tampere, Finland, 2012-02-17 12:02 CET (GLOBE NEWSWIRE) --
SUOMINEN CORPORATION FINANCIAL STATEMENT RELEASE 17 FEBRUARY 2012 AT 1:00
P.M.
FINANCIAL STATEMENT RELEASE 1 JANUARY–31 DECEMBER 2011
REFORMED SUOMINEN – RESULT IMPROVED BUT STILL SHOWING LOSSES
KEY FIGURES 10-12/2011 10-12/201 1-12/2011 1-12/2010
0
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Net sales, EUR million 85.5 45.3 216.3 173.4
Operating profit, EUR million -2.4 -8.7 -4.8 -10.8
Profit/loss for the period, EUR -3.8 -10.3 -9.5 -14.4
million
Earnings/share, EUR -0.02 -0.22 -0.11 -0.34
Cash flow from operations/share, -0.02 -0.05 -0.03 -0.06
EUR
During the year under review, Suominen acquired the Home and Personal nonwovens
business, with net sales of approximately EUR 320 million, from Ahlstrom
Corporation. As a result of the acquisition, Suominen has become the global
market leader in nonwovens for wipes. The transaction was valued at
approximately EUR 170 million, around EUR 87 million of which was raised
through a share issue.
The merger entered into force as of 1 November 2011, which means the net sales
and result of the acquired business was included in Suominen’s financial
figures for two months. Suominen’s net sales in 2011 were EUR 216.3 million;
net sales in the previous year were EUR 173.4 million. Operating profit for the
year, excluding non-recurring items, were negative, and stood at EUR 1.1
million (-3.8). Non-recurring items of EUR 3.7 million (7.1 million) related to
the business acquisition and to the closure of the plant in Nastola. The low
economic cycle affected Suominen’s business such that customers’ purchasing
behaviour was cautious and price-driven. Nonwovens’ comparable sales volumes
remained at the previous year’s level, but Codi Wipes’ and Flexibles’ volumes
decreased. The result improved mostly as a result of lower operating expenses.
Earnings per share were EUR -0.11 (-0.34). Cash flow from operations was EUR
-0.03 per share (-0.06). The Board of Directors proposes that no dividend be
paid for the financial year 2011.
GROUP FINANCIAL RESULTS
Suominen generated net sales of EUR 85.5 million (45.3) in the fourth quarter.
Operating profit before non-recurring items was EUR 0.3 million
(-1.6). Profit before taxes was EUR -3.3 million (-10.3) and profit after taxes
EUR -3.8 million (-10.3). Non-recurring costs were EUR 2.7 million (EUR 2.0
million excluding write-downs of EUR 5 million).
Net sales for the whole year totalled EUR 216.3 million (173.4). Operating loss
before non-recurring items was EUR 1.1 million (3.8) and after these items EUR
4.8 million (10.8). Profit before taxes was EUR -10.0 million (-15.7) and
profit after taxes EUR -9.5 million (-14.4). Net sales grew 25% from the
previous year as a consequence of the merger. Average sales prices improved
thanks to price hikes and raw material clauses included in sales contracts,
which successfully compensated for the increasing raw material prices. The rise
in raw material prices in the first half of the year ceased in the summer and
followed a slightly downward trend towards the end of the year. Shorter review
periods for some raw material clauses included in sales contracts were
implemented. The increase in sales prices coupled with both a slowdown in
demand and stiffening competition led to a decline in delivery volumes. The
decreased operating costs were the biggest factor behind the improvement in the
comparable operating result. Tight capital control and management of cash was
continued. Operational investments were kept at a low level. In the cash flow
statement, the cash flow from operations stood at EUR 2.9 million negative,
with the working capital of the acquired businesses included in investment cash
flows.
Acquisition of Home and Personal business
On 4 August 2011, Suominen concluded an agreement with Ahlstrom Corporation on
the acquisition of the company’s Home and Personal nonwovens business at a
transaction value of EUR 170 million. The transaction was finalised on 31
October 2011. The business encompasses three nonwoven manufacturing plants in
the US and in Europe, as well as a unit in Brazil, which will be consolidated
to Suominen during 2012 after all the approvals from the authorities have been
received. Nonwovens are used in the manufacture of baby wipes, household and
personal hygiene wipes, and for industrial wiping products. The pro forma net
sales of business in 2011 was EUR 321 million and operating profit before
non-recurring costs was EUR 5.3 million, and after them EUR 2.4 million. The
number of transferred employees was 450. Along with the transaction, Suominen
became a global market leader as a manufacturer of nonwoven materials for
wipes. By expanding operations geographically and with a strong market
position, Suominen will be well-positioned to respond to customer needs by
offering comprehensive sales and product development resources, as well as a
more extensive product range worldwide.
To finance the acquisition, Suominen organised a share issue from 5 to 11
October 2011, which raised EUR 87.2 million in new capital. Suominen agreed on
a syndicated credit facility of EUR 150 million, which was used to finance the
transaction and refinance the company’s previous credit facility of EUR 44
million.
Cost-saving and operational enhancement programme
The most significant savings in Suominen’s efficiency programme were generated
by the closure of the Nastola flexible packaging plant and the rationalisation
measures that were implemented in Codi Wipes in the previous year. The Nastola
plant’s production was transferred to Tampere, in Finland, and Poland, which
will save costs and boost operations. The other efficiency measures related to
improving production yield and efficiency in the units. The positive impact of
the savings and efficiency programmes on the result for the entire year
amounted to some EUR 5 million. Similar cost-efficiency programmes have been in
use in the Home and Personal business, particularly with the goals of reducing
wastage and boosting production efficiency.
Financing
To finance the Home and Personal business transaction, Suominen executed a
share issue in October which raised EUR 87.2 million in new capital and, at the
same time, Suominen’s capital loan was converted into shares in the amount of
EUR 2.2 million. The increase in shareholders’ equity, after the deduction of
EUR 2.0 million in costs relating to the share issues, was EUR 87.3 million.
The Group’s interest-bearing net liabilities totalled EUR 120.8 million (57.9).
Cash and bank receivables included the share of the Brazilian transaction,
which totalled EUR 25 million and is being held in an escrow account.
Repayments of non-current loans totalled EUR 52.7 million, including a loan
conversion of EUR 44 million. Net financial expenses were EUR 5.2 million (4.8)
or 2.4% (2.8) of net sales. Net financial expenses included exchange rate gains
of EUR 2.1 million. The increased cost of financing was due to the higher loan
amount and the rise in the average interest rate on the loans. The amount of
working capital grew by EUR 25.2 million compared to 1 January 2011, including
the working capital of the acquired business, which was EUR 22.4 million. A
total of EUR 1.9 million was released in working capital (EUR 1.1 million tied
up). Funds used for the acquired businesses totalled EUR 139.8 million. Trade
receivables amounting to EUR 10.9 million (14.0) were sold to the bank. The
equity ratio was 32.2 (27.9) and the net gearing 111.0% (174.0). Cash flow from
operations was EUR -2.9 million (-2.5) and EUR -0.03 per share (-0.06).
Investments
The company’s gross investments in production totalled EUR 4.0 million (6.2).
Planned depreciation amounted to EUR 9.8 million (9.3). Nonwovens accounted for
EUR 1.5 million (1.7), Codi Wipes for EUR 0.4 million (0.6) and Flexibles for
EUR 1.9 million (3.8) of total investments. The Group’s investments were in
efficiency enhancement and maintenance.
SEGMENT RESULTS
The net sales of Wiping totalled EUR 152.3 million (108.2). The increase in net
sales is attributed to the inclusion of the two-month net sales figure, EUR
42.9 million, of the acquired Home and Personal business in the segment’s
figures. The comparable change in net sales was -2%. The segment’s operating
loss was EUR 3.1 million (3.7), of which the two-month share of the merged
businesses was EUR 0.7 million. The non-recurring items related to the transfer
of the assets at the business combination were EUR 0.9 million locally.
Net sales of Nonwovens totalled EUR 102.1 million (59.1). Nonwovens’ comparable
12-month net sales increased 9% to EUR 375 million, but delivery volumes
remained at the same level as in 2010. The sales (pro forma) of the acquired
plants that manufacture nonwovens are also included in the comparison figures.
The application areas for nonwoven materials are distributed as follows: baby
wipes accounted for 55% of sales, household wipes for 17%, personal care wipes
for 16% and industrial and other wipes for 12%. Among the application areas,
the strongest growth was seen in personal care wipes, with growth of
approximately one fifth on the previous year. Use of nonwovens for household
wipes and industrial wipes increased by around one tenth, whereas baby wipes’
delivery volumes recorded no change from the previous year.
Regionally, the North American markets accounted for around half of sales, and
growth there was 7% compared to 2010. Europe’s share amounted to just under
half of total sales, but growth was slightly brisker, at 11%. Sales to South
American markets were on a par with the previous year.
The development of sales in the last two months of 2011 declined compared to
the preceding months. This was due to the stiffening competition in the
European markets, and the interruption of one production line due to fire
damage. Among the cost factors affecting Nonwovens, oil- and pulp-based raw
material prices increased in the first half of the year, but the price trend
took a downward path during the autumn. The increased competition in the
European markets negatively influenced sales volumes, particularly towards the
end of the year. With respect to volumes, production expenses remained high and
synergy benefits from the business merger could not yet be capitalised on
during the last two months of the year. One production line in Italy was
interrupted, but the insurance compensation covered the resulting direct costs.
The integration of the businesses was started in the fourth quarter of 2011,
after obtaining the relevant permits from the competition authorities. The
integration work was started in a number of working groups. Nonwovens’ sales
and product development organisations were combined, as were purchasing and
supply chain operations. Analysis and exploitation of the synergy benefits of
the merger were also started.
Net sales of Codi Wipes, at EUR 55.6 million (56.4), declined by one per cent
on the previous year due to decrease in sales of moist toilet wipes. Sales of
baby wipes and personal care wipes remained at the same level as in the
corresponding period in 2010. Also average sales prices were on par with the
previous year. The unit’s operating expenses decreased as a result of the
rationalisation measures and personnel reductions early in the year.
Net sales of Flexibles totalled EUR 64.8 million (66.1) and operating loss was
EUR 0.1 million (1.9). Sales volumes decreased 10% compared to 2010, primarily
as a result of reduced sales in the food packaging sector. Sales of hygiene
packaging and security and system packaging remained on the same level as in
the previous year. Retail sector sales decreased slightly on the year 2010.
Sales prices were raised on the basis of raw material clauses and through
general price increases. The active pricing policy, however, led to some losses
of clients. The rising prices for plastic-based raw materials levelled out
during the summer and declined slightly towards the end of the year.
The operating loss includes non-recurring items of EUR 0.8 million from the
closure of the Nastola plant (1.2). The operating result excluding
non-recurring items improved slightly over the previous year. Flexibles’
operating expenses decreased from last year as a result of the rationalisation
measures carried out. The Nastola plant was closed during the year under review
and the production machines were transferred to the plants in Poland and
Tampere, in Finland. As a consequence of the measure, the net reduction of
personnel was more than 50 employees. The operations of the Swedish sales
office were discontinued and local warehousing services were outsourced. The
loss of customer led to a reduction of some 20 employees at the plant in Poland
in the fourth quarter.
GENERAL MEETINGS OF SHAREHOLDERS AND INFORMATION ON SHARES
Share capital
On 1 January 2011, the registered number of Suominen’s issued shares totalled
47,395,014 shares. During the year under review, the share amount crew by
198,539,108 shares due to share issue. On 31 December 2011, the number of
shares totalled 245,934,122 shares. The fully paid share capital amounted to
EUR 11,860,056.
General Meetings
Suominen Corporation’s Annual General Meeting of Shareholders was held on 30
March 2011. The General Meeting decided that no dividend be paid for the
financial year 2010.
The General Meeting approved the financial statements of the parent company and
the Group for the financial year 2010 and released the members of the Board of
Directors and the President and CEO from liability for the period. Heikki
Bergholm, Kai Hannus, Suvi Hintsanen, Juhani Lassila, Mikko Maijala, and Heikki
Mairinoja were elected to the Board of Directors. At its organising meeting,
the Board elected Mikko Maijala as Chairman and Heikki Mairinoja as Deputy
Chairman. PricewaterhouseCoopers Oy, Authorised Public Accountants, with Heikki
Lassila, APA, as the principal auditor, were elected as auditors of Suominen
Corporation.
An Extraordinary General Meeting of Shareholders was held on 12 September 2011.
The General Meeting authorised the Board of Directors to decide on the issue of
a maximum of 280,000,000 new shares in one or more share issues against
payment.
The Extraordinary General Meeting elected Risto Anttonen, Jorma Eloranta, Suvi
Hintsanen, Mikko Maijala and Heikki Mairinoja as the new members of the Board
of Directors. The elections were conditional and only came into effect on 21
October 2011 upon completion of the transaction between the company and
Ahlstrom Corporation.
The Extraordinary General Meeting resolved to establish a Nomination Committee
comprising shareholders or representatives of shareholders to prepare proposals
for the following Annual General Meeting concerning the election and
remuneration of the members of the Board of Directors. The resolution of the
Extraordinary General Meeting regarding the establishment of the Nomination
Committee was conditional and only came into effect on 21 October 2011. The
Nomination Committee comprises the three largest shareholders or
representatives of such shareholders; in addition the Chairman of the Board of
Directors serves an expert member.
Changes of the Articles of Association
The Extraordinary General Meeting held on 12 September 2011, resolved to amend
section 11 of the Articles of Association of the company concerning notice of
the General Meeting of Shareholders, to delete the second paragraph of section
12 with regard to voting restrictions, and to delete section 14 regarding the
redemption obligations. The amendments of the Articles of Association were
conditional and came into effect on 21 October 2011.
Share issue
On 3 October 2011, the Board of Directors of Suominen Corporation decided to
execute a share issue to the public and on a conversion share issue to the
holders of Suominen’s capital loan of 2008, in order to finance the acquisition
of the Home and Personal business area from Ahlstrom Corporation. A minimum of
188,888,889 and a maximum of 266,666,667 new shares were offered at the
subscription price of EUR 0.45 per share, and a maximum of 8,888,889 new shares
in the conversion share issue at the subscription price of EUR 0.45 per share.
The subscription period for the share issue and the conversion share issue
ended on 11 October 2011.
The Board of Directors approved the subscriptions of 193,739,111 new shares,
which correspond to a total of EUR 87.2 million, and the subscriptions of
4,799,997 new shares in the conversion share issue. The outstanding capital
loan of EUR 4 million was converted to shares by a total of EUR 2.2 million.
The shares subscribed for in the share issue and in the conversion share issue
correspond together to 418.9% of all the company’s shares and voting rights
related to them prior to the share issues and 80.7% of shares and voting rights
related to them following the share issue and the conversion share issue. The
shares subscribed for in the share issue and the conversion share issue were
entered in the Trade Register on 21 October 2011. Trading in the new shares
commenced on 24 October 2011. As a result of the share issues, the number of
Suominen’s shares increased by 198,539,108 shares to 245,934,122 shares. The
total subscriptions of the share issue and the conversion share issue were EUR
89.3 million. The cost of the share issue was EUR 2,016 thousand, which reduced
the net amount of EUR 87,346 thousand credited to the invested non-restricted
equity fund.
Share trading and price
The number of Suominen Corporation shares traded on NASDAQ OMX Helsinki before
the share issue, from 1 January to 21 October 2011, was 3,387,036 shares. The
trading price varied between EUR 0.36 and EUR 0.64. On 21 October 2011, the
final trading price was EUR 0.45.
The number of Suominen Corporation shares traded on NASDAQ OMX Helsinki after
the share issue from 24 October to 31 December 2011 was 543,305 shares. The
trading price varied between EUR 0.39 and EUR 0.46. The final trading price was
EUR 0.39, giving the company a market capitalisation of EUR 95.9 million on 31
December 2011.
Own shares
On 1 January 2011, the company held 168,805 of its own shares, accounting for
0.36% of the share capital and votes.
The Annual General Meeting of Shareholders held in 2010 authorised the Board of
Directors to decide on the acquisition of a maximum of 200,000 of the company’s
own shares and on the conveyance of a maximum of 200,682 of the company’s own
shares. The authorisations were valid for 18 months after the end of the
General Meeting, which was until 23 September 2011. The acquisition
authorisation was exercised during 2010 to acquire 123,595 shares, which means
that on 1 January 2011 the remaining authorisation was for 76,405 shares. This
authorisation was not exercised during 2011. Within the authorisation granted
to the Board of Directors, 108,507 of the company’s own shares were conveyed as
emoluments to the members of Suominen Corporation’s Board of Directors.
On 31 December 2011, Suominen Corporation held a total of 60,298 of its own
shares, accounting for 0.0% of the share capital and votes.
Stock options
Suominen’s stock option plan 2009 is currently in effect. From the previous
2006 and 2007 stock option plans, the last 2006C and 2007B stock options
expired on 30 October 2011.
A total of 300,000 2009A stock options have been granted at the subscription
price of EUR 0.95. A total of 50,000 of these have been returned to the
company, i.e. the option right holders still have 250,000 shares. The
subscription period for the 2009A stock options is from 2 May 2011 to 30
October 2012.
A total of 300,000 2009B stock options have been granted at the subscription
price of EUR 0.96. The number of shares that can be subscribed under the stock
option is 300,000. The subscription period for the 2009B stock options is from
2 May 2012 to 30 October 2013.
As the registered number of Suominen’s issued shares totals 245,934,122, the
number of shares may rise to a maximum of 246,484,122 after stock option
subscriptions.
Other authorisations granted to the Board of Directors
The Board of Directors still has authorisation to issue 300,000 more stock
options in accordance with the 2009 stock option plan, which would entitle
holders to subscribe for 300,000 Suominen shares. According to the
authorisation granted by the Extraordinary General Meeting held on 12 September
2011, the Board of Directors has authorisation to issue a further 81,460,892
new shares. The Board of Directors has no other authorisations to issue special
rights entitling to shares, option rights and/or convertible bonds
MANAGEMENT
The Board of Directors that was elected at Suominen’s Extraordinary General
Meeting took up its tasks and convened on 21 October 2011, electing Jorma
Eloranta as Chairman of the Board and Mikko Maijala as Deputy Chairman from
amongst its members.
On 17 November 2011, the following representatives of the three largest
shareholders were elected to the Nomination Committee: Jan Lång, President &
CEO, Ahlstrom Corporation, Timo Ritakallio, Deputy CEO, Ilmarinen Mutual
Pension Insurance Company, and Risto Murto, Deputy CEO, Varma Mutual Pension
Insurance Company. Jorma Eloranta, Chairman of Suominen Corporation’s Board of
Directors, serves as the Nomination Committee’s expert member.
Technology Licentiate Nina Kopola was named President and CEO of Suominen Group
as of 1 December 2011, at which time Petri Rolig transferred to the post of
Deputy CEO.
Jean-Marie Becker was appointed Executive Vice President and General Manager of
the Nonwovens business unit and a member of the Corporate Executive Team as of
1 November 2011.
BUSINESS RISKS AND UNCERTAINTIES
Developments and changes in consumer demand in Europe and the USA govern the
demand for Suominen’s products. Changes in the economic situation also play a
role in affecting consumer behaviour, and there is a risk that consumers will
alter their purchasing habits. The deterioration in the general economic
situation has in fact affected purchasing habits in that consumers are
increasingly buying more affordable products and the private label goods of
retail chains.
Suominen’s customer base is concentrated, which adds to the customer-specific
risk. This may affect Suominen’s result if customers’ purchasing habits become
more cautious as a result of a general fall in consumption, or if net sales are
negative. The Group’s ten largest customers currently account for 54% of its
net sales (64), long-term contracts being preferred in the case of the largest
customers. 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. Suominen also
uses export credit guarantees and insures against customer risks to a limited
extent.
Plastic-based products are not considered an environmentally friendly solution
in all application areas, which may increase the risk of a decline in their
demand. However, it is difficult to find alternatives for the products in
Suominen’s range. New-technology products and imports from low-cost countries
may reduce the competitiveness of Suominen’s products. These risks are
mitigated, however, by the quality requirements expected of many products,
which existing cheaper offerings are incapable of meeting, and by the
challenges associated with transport and distribution.
Suominen has no competitors with a completely similar product offering.
However, the company has numerous regional, national or international
competitors in its different product groups. There is currently oversupply in
several product groups and additional production capacity is planned for Europe
in, for example, nonwovens. If Suominen is not able to compete with an
attractive product offering, it may lose some of its market share, and the
competition may lead to increased pricing pressure on the company’s products.
Suominen uses certain technologies in its production. In the company
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.
Extended interruptions in supplies of Suominen’s main raw materials could
disrupt production and have a negative impact on the Group’s overall business
operations. As Suominen sources its raw materials from a number of major
international suppliers, significant interruptions are unlikely. Suominen’s
units purchase a significant amount of oil- and pulp-based raw materials. Rapid
changes in the global market prices of raw materials affect the company’s
profitability. Changes of raw material prices have a rapid effect on Suominen’s
financial performance, as stocks equal two to four weeks consumption. Passing
on price changes in these materials to the prices Suominen charges its contract
customers takes between two to five months.
Suominen’s efficiency programmes include measures to improve production
efficiency, for example through better yields, higher machine speeds and
shorter set-up times. The full impact of the efficiency measures will be seen
as soon as production volumes grow. Substantial synergy benefits are expected
to be realised in the business acquisition. Postponed or failed efficiency
measures and synergy exploitation will have a negative impact on the company’s
profit.
Suominen aims to protect its business against product liability risks through
the use of systematic quality assurance processes and product liability
insurance. R&D is responsible for ensuring the underlying safety of the Group’s
products during their development. Ongoing 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.
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. Managing damage risk
forms part of the operational management of the Group’s units. Risks of this
type are insured in order to guarantee the continuity of operations. On 21
September 2011, a fire broke out at the Mozzate plant in Italy, causing damage
to one of the production lines. As Suominen has valid damage and business
interruption insurance, it is expected that the damage will be compensated and
the financial losses caused by the interruption of business will be covered.
The incident, however, bears greater risks than usual in terms of restoring the
situation to how it was before the fire.
Suominen is subject to income taxes in numerous jurisdictions. Significant
judgement is required to determine the total amount of income tax at Group
level. There are many transactions and calculations that leave room for
uncertainty as to the final amount of tax. Taxation risks also relate to
changes in tax rates or tax legislation, or misinterpretations, and
materialisation of the risk 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 balance sheet require that the deferred tax assets can
be recovered in future taxable income.
The Group’s financial risks are managed in accordance with a policy approved by
the Board of Directors. Financial risks relate to the adequacy of funding,
credit risks, and the market risks associated with financial instruments,
divided into currency, interest rate, and commodity risks. Suominen’s credit
arrangements include covenants that the company must meet. The financial
covenants included in the credit agreement of EUR 150 million concluded in
October 2011 are the net-debt-to-EBITDA ratio and debt/equity ratio. At
year-end 2012, Suominen’s net debts cannot be greater than 3.2 times the
EBITDA, and the company’s debt/equity ratio must be less than 100%. These key
figures in the 2011 Financial Statements were 3.9 and 111%. Should Suominen
default on its obligations, the banks have the right to declare the loans due
and payable and to renegotiate the terms. According to Suominen’s estimates,
this would lead at least to increased financing costs resulting from the banks’
upfront fees and higher interest rate margins.
Goodwill is tested annually to determine whether there is any impairment. The
test calculations require forecasts and actual cash flows may deviate from the
forecast future discounted cash flows, as the long economic life-time of our
non-current assets, changes in the estimated product prices, production costs,
and in interest rates used in discounting may result in significant
write-downs. Impairment test calculations are based on present estimates of
future developments. The value in use of Codi Wipes exceeds the carrying amount
by EUR 2.9 million.
The Home and Personal acquisition in Brazil is delayed, as Suominen must
receive approval from the authorities on the purchase of the business situated
in Brazil. Approval is expected during the first quarter of 2012, but there is
no guarantee of this.
OUTLOOK
Suominen’s products are used in daily consumer goods, such as wet wipes and
plastic packaging. The general economic situation determines the development of
consumer demand, even though the demand for consumer goods is not very cyclical
in nature. Consumers’ cautious purchasing behaviour is expected to continue
hand in hand with muted economic growth. Supply exceeds demand for many of
Suominen’s products, especially in Europe, and new production capacity is even
being built in some product groups.
The company estimates the trend in 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 clients. Suominen estimates that demand for its
products will remain at the level of 2011 in the mature markets of Europe and
North America. In South America and Eastern Europe, the growth in demand will
be greater. There will be no significant change in the comparable sales volumes
compared to the previous year.
Suominen’s most substantial cost factor – the price development of oil- and
pulp-based raw material – was in decline at the end of 2011. Chiefly on the
basis of the price trend in oil raw materials, it is estimated that the decline
in Suominen’s raw material prices will cease and possibly rise yet again.
Suominen will continue to streamline its operating costs and the company has
launched a separate project to ensure the realisation of synergy benefits
related to the acquisition of the Home and Personal business. Suominen will
focus on developing its core business.
The acquisition of the Brazilian unit of the Home and Personal business
transaction is expected to be realised once approval from the Brazilian
authorities has been obtained in the first quarter of 2012.
Suominen’s net sales will increase considerably as the Home and Personal
business’s figures are included in the Group’s net sales. It is estimated that
the result after taxes for the year will improve over that of 2011.
PROPOSAL BY THE BOARD OF DIRECTORS
The parent company’s distributable assets as of the end of 2011 totalled EUR
87,750,657.81 of which the loss for the year was EUR 7,612,205.36.
The Board of Directors will propose at the Annual General Meeting to be held on
4 April 2012 that these funds be distributed as follows:
No dividend be paid for the financial year, EUR 0.00
Leaving on the retained earnings account, EUR 87,750,657.81
SUOMINEN CORPORATION CONSOLIDATED 1 JANUARY – 31 DECEMBER 2011
This financial statement has been prepared in compliance with IAS 34 Interim
Financial Reporting. Changes to published accounting standards and
interpretations, together with the new accounting standards that came into
force on 1 January 2011, are presented in the financial statements for 2010.
All calculations in this financial statement have been prepared in compliance
with the revised IAS 1 standard, ‘Presentation of Financial Statements’. This
standard is aimed at improving users’ ability to analyse and compare the
information given in financial statements by separating changes in equity of an
entity arising from transactions with owners from other changes in equity.
Non-owner changes in equity will be presented in the statement of comprehensive
income.
In its principles for preparing the financial statements, Suominen has not
applied any changes allowed by the published new standards and interpretations
prior to their official introduction. The accounting principles are consistent
in other respects with those of the annual financial statements for 2010.
The figures in this financial statement have not been audited.
BALANCE SHEET
EUR 1 000 12/2011 12/2010
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Assets
Non-current assets
Goodwill 34 298 18 498
Intangible assets 13 146 776
Tangible non-current assets 139 886 53 873
Available-for-sale financial assets 212 212
Held-to-maturity investments 445 354
Deferred tax assets 2 756 1 339
---------------------------------------------------------------------
Non-current assets, total 190 743 75 052
Current assets
Inventories 45 972 24 373
Trade receivables 41 798 10 817
Other current receivables 17 480 5 666
Income tax receivables 1 205 200
Restricted financial assets 25 000
Cash at bank and in hand 15 887 3 253
---------------------------------------------------------------------
Current assets, total 147 342 44 309
Assets, total 338 085 119 361
Shareholders' equity and liabilities
Equity attributable to owners of the parent company
Share capital 11 860 11 860
Share premium account 24 681 24 681
Invested non-restricted equity fund 97 054 9 708
Fair value and other reserves -484 665
Translation differences -637 515
Other shareholders' equity -23 737 -14 143
---------------------------------------------------------------------
Shareholders’ equity, total 108 737 33 286
Liabilities
Non-current liabilities
Deferred tax liabilities 3 661 2 930
Provisions 280 280
Capital loans 920 4 000
Other non-current liabilities 1 234
Interest-bearing liabilities 139 961 35 823
---------------------------------------------------------------------
---------------------------------------------------------------------
Non-current liabilities, total 146 056 43 033
Current liabilities
Interest-bearing liabilities 19 929 19 459
Capital loans 920 2 000
Income tax liabilities 724
Trade payables and other current liabilities 61 720 21 583
---------------------------------------------------------------------
Current liabilities, total 83 292 43 042
Liabilities, total 229 248 86 075
Shareholders' equity and liabilities, total 338 085 119 361
STATEMENT OF INCOME
EUR 1 000 10-12/2011 10-12/201 1-12/2011 1-12/2010
0
--------------------------------------------------------------------------------
Net sales 85 488 45 315 216 289 173 438
Cost of goods sold -81 011 -43 399 -205 650 -165 277
--------------------------------------------------------------------------------
Gross profit 4 477 1 916 10 638 8 161
Other operating income 1 621 147 2 109 859
Sales and marketing expenses -1 402 -1 120 -4 050 -3 927
Research and development -577 -567 -1 866 -1 951
Administration expenses -3 435 -1 721 - 8 492 -6 333
Other operating expenses -3 043 -2 244 -3 168 -2 564
--------------------------------------------------------------------------------
Operating profit before impairment -2 359 -3 589 -4 829 -5 755
losses
Impairment losses -5 069 -5 069
--------------------------------------------------------------------------------
Operating profit -2 359 -8 658 -4 829 -10 824
Financial income and expenses -938 -1 686 -5 197 -4 840
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit before income taxes -3 297 -10 344 -10 026 -15 664
Income taxes -535 8 494 1 302
--------------------------------------------------------------------------------
Profit/loss for the period -3 832 -10 336 -9 531 -14 362
Earnings/share, EUR -0.02 -0.22 -0.11 -0.34
STATEMENT OF COMPREHENSIVE INCOME
EUR 1 000 10-12/201 10-12/201 1-12/201 1-12/201
1 0 1 0
--------------------------------------------------------------------------------
Profit/loss for the period -3 832 -10 336 -9 531 -14 362
Other comprehensive income
Currency translation differences on 1 355 -1 595 854
foreign
operations
Fair value changes of cash flow hedges -508 912 -1 731 1 661
Other reclassifications -20 -5 -20 -2
Income tax on other comprehensive 173 -330 906 -654
income
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive income, total -354 932 -2 440 1 859
Total comprehensive income for the -4 186 -9 404 -11 972 -12 503
period
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
EUR 1 Share Share Invested Own Transla Fair Retaine Total
000 capita premium non-restri shares tion value d
l account cted differe reserv earning
equity nces es s
fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total 11 860 24 681 9 708 -163 515 828 -14 143 33 286
equity
at
1 Jan.
2011
Profit/l -9 531 -9 531
oss for
the
period
Other -1 152 -1 268 -20 -2 440
compreh
ensive
income
Share-ba 26 26
sed
payment
s
Share 87 346 87 346
issue
Conveyan 120 -69 51
ce of
own
shares
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total 11 860 24 681 97 054 -43 -637 -440 -23 738 108 737
equity
at
31 Dec.
2011
EUR 1 Share Share Invested Own Transla Fair Retaine Total
000 capita premium non-restri shares tion value d
l account cted differe reserv earning
equity nces es s
fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total 11 860 24 681 -1 -117 -401 667 36 689
equity
at
1 Jan.
2010
Profit/l -14 362 -14 362
oss for
the
period
Other 632 1 229 -2 1 859
compreh
ensive
income
Share-ba 29 29
sed
payment
s
Share 9 708 9 708
issue
Dividend -474 -474
Repurcha -213 -213
se of
own
shares
Conveyan 51 -1 50
ce of
own
shares
--------------------------------------------------------------------------------
Total 11 860 24 681 9 708 -163 515 828 -14 143 33 286
equity
at
31 Dec.
2010
CASH FLOW STATEMENT
EUR 1 000 1-12/2011 1-12/2010
-------------------------------------------------------------------
Operations
Operating profit -4 829 -10 824
Total adjustments 14 161 14 076
-------------------------------------------------------------------
Cash flow before change in working capital 4 630 3 252
Change in working capital 1 907 -1 054
Financial items -9 833 -4 626
Taxes paid 397 -31
-------------------------------------------------------------------
Cash flow from operations -2 898 -2 459
Investment payments
Investments in tangible and intangible assets -4 231 -5 966
Investments in acquired business operations -139 810
Proceeds from disposal of fixed assets 1 628 751
and other proceeds
-------------------------------------------------------------------
Cash flow from investing activities -142 414 -5 215
Financing
Non-current loans drawn 148 250 8 000
Repayments of non-current loans -48 563 -23 731
Change in commercial papers 988
Repayments of capital loans -4 160 -2 000
Current loans drawn 17 000
Dividends paid -474
Repurchase and conveyance of own shares 51 -163
Share issue 87 346 9 708
-------------------------------------------------------------------
Cash flow from financing 182 924 9 328
Change in cash and cash equivalents * 37 613 1 654
* Includes also the change in restricted financial assets.
KEY FIGURES 10-12/2011 10-12/201 1-12/2011 1-12/2010
0
--------------------------------------------------------------------------------
Net sales, change, % * 88.7 1.0 24.7 -3.3
Gross profit, % ** 5.2 4.2 4.9 4.7
Operating profit, % ** -2.8 -19.1 -2.2 -6.2
Financial income and expenses, % ** -1.1 -3.7 -2.4 -2.8
Profit before income taxes, % ** -3.9 -22.8 -4.6 -9.0
Profit for the period, % ** -4.5 -22.8 -4.4 -8.3
Earnings/share, EUR -0.02 -0.22 -0.11 -0.34
Equity/share, EUR 0.44 0.70
Cash flow from operations/share, -0.03 -0.06
EUR
Return on equity (ROE), % -20.9 -37.3
Return on invested capital (ROI), % -3.7 -10.6
Equity ratio, % 32.2 27.9
Gearing, % 111.0 174.0
Gross investments, EUR 1 000 3 964 6 190
Depreciation, EUR 1 000 9 835 9 322
Impairment losses, EUR 1 000 5 069
* Compared with the corresponding period of the previous year.
** As of net sales.
BUSINESS COMBINATIONS
Suominen acquired Ahlstrom’s Home and Personal nonwovens business in October
2011. The production units involved in the transaction are situated in the
United States, Italy, Spain and Brazil. The Home and Personal nonwovens
business transferred to Suominen Corporation on 31 October 2011, with the
exception of the Brazilian operations. Approval from the Brazilian authorities
is expected in the first quarter of 2012.
As a result of the transaction, Suominen will grow substantially and become a
global market leader in nonwovens for wipes. The acquired business covers
notably wider geographical markets than Suominen’s Wiping segment and broadens
the product offering for nonwoven materials used in household and industrial
wiping products. The transaction was realised primarily by purchasing the
business assets and liabilities of the companies established in various
countries. The acquisition created goodwill locally in various countries, but
it will be tax-deductible. It also created goodwill for the group, which will
not be amortised.
Consideration, EUR 1 000 Fair values
--------------------------------------------------------------
------------
Cash 101 158
Equity instruments, 66,666,666 ordinary shares 0.45 euro each 30 000
--------------------------------------------------------------------------
Total consideration transferred 131 158
Recognised amounts of identifiable assets acquired and liabilities assumed
according to the initial calculations:
EUR 1 000 Fair values
---------------------------------------------
Property, plant and equipment 89 124
Intangible assets 12 584
Other non-current assets 18
Inventories 26 795
Trade and other receivables 6 171
Cash 1 030
---------------------------------------------
Total assets 135 722
Personnel benefits 872
Borrowings 9 784
Other liabilities and provisions 9 708
---------------------------------------------
Total liabilities 20 364
---------------------------------------------
Total identifiable net assets 115 358
Goodwill 15 800
Total 131 158
---------------------------------------------
Goodwill on business combination
Consideration 131 158
Total identifiable net assets -115 358
Goodwill 15 800
---------------------------------------------
The fair value of the 66.7 million ordinary shares issued as part of the
consideration paid, EUR 30 million by Ahlstrom Corporation, was based on the
published share price EUR 0.45 on the date of realisation.
In the business combination, the equipment and real estate related to
production have been recognised at fair value. The fair value of sales
receivables and other receivables is EUR 6.2 million. Customer relations and
technology have been recognized as intangible assets at their fair value of EUR
12.6 million. The fair value of intangible assets is determined on the basis of
their estimated economic useful life and discounted cash flow.
Goodwill includes intangible rights (i.e. synergy benefits and employee
know-how) that do not fulfil all of the conditions of IFRS 3 for being
recognised as separate assets.
The fair value of the debts and liabilities is EUR 20.4 million. The fair value
of personnel benefits is based on actuarial estimates. Costs related to the
business combination, totalling EUR 2.9 million, are included in other
operating expenses.
As of 1 November 2011, the acquired business has generated net sales of EUR
42.9 million; the result after taxes is EUR -1.1 million. The Group’s net sales
would have been EUR 491.7 million and operating profit EUR 1,0 million, if the
transaction had been realised at the start of 2011, and costs of acquisiton at
the end of 2010.
SEGMENT REPORTING
Wiping
EUR 1 000 1-12/2011 1-12/2010 Change %
-------------------------------------------------------------------------
Net sales
- Codi Wipes 55 623 56 371 -1.3
- Nonwovens 102 121 59 084 72.8
- eliminations -5 431 -7 296 -25.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total 152 313 108 159 40.8
Operating profit before impairment losses -3 072 -3 699
% of net sales -2.0 -3.4
Impairment losses -4 906
Operating profit -3 072 -8 605
Assets 309 180 67 650
Liabilities 49 616 11 620
Net assets 259 564 56 030
Investments 1 910 2 278
Depreciation 6 524 6 117
Impairment losses 4 906
Average personnel 418 369
Flexibles
EUR 1 000 1-12/2011 1-12/2010 Change %
-------------------------------------------------
Net sales 64 848 66 140 -2.0
Operating profit -69 -1 941
% of net sales -0.1 -2.9
Assets 44 372 45 950
Liabilities 11 175 10 048
Net assets 33 197 35 902
Investments 1 851 3 788
Depreciation 3 049 3 181
Impairment losses 163
Average personnel 479 521
Non-allocated items
EUR 1 000 1-12/2011 1-12/2010
---------------------------------------
Net sales -873 -861
Operating profit -1 688 -115
Assets -15 466 5 760
Liabilities 168 557 64 406
Investments 203 124
Depreciation 262 24
Average personnel 10 11
NET SALES BY MARKET AREA
EUR 1 000 1-12/2011 1-12/2010
---------------------------------------------
---------------------------------------------
Finland 27 547 27 053
Europe, other 144 561 129 387
North and South America 41 665 10 530
Other countries 2 515 6 468
---------------------------------------------
---------------------------------------------
Net sales, total 216 289 173 438
QUARTERLY FIGURES
EUR 1 000 I/2011 II/2011 III/2011 IV/2011 I/2011-
IV/2011
--------------------------------------------------------------------------------
Net sales
Wiping
- Codi Wipes 13 985 13 586 14 936 13 116 55 623
- Nonwovens 15 091 14 985 12 971 59 074 102 121
- eliminations -1 131 -1 911 -778 -1 611 -5 431
--------------------------------------------------------------------------------
Total 27 946 26 660 27 129 70 578 152 313
Flexibles 16 561 17 019 16 210 15 059 64 848
Non-allocated items -203 -294 -227 -149 -873
--------------------------------------------------------------------------------
Net sales, total 44 303 43 386 43 112 85 488 216 289
Operating profit
Wiping -298 60 -1 674 -260 -2 172
% of net sales -1.1 0.2 -6.2 -0.4 -1.4
Flexibles -62 512 340 -69 721
% of net sales -0.4 3.0 2.1 -0.5 1.1
Non-allocated items -57 -230 -72 672 313
--------------------------------------------------------------------------------
Operating profit before -417 342 -1 406 344 -1 138
non-recurring costs
% of net sales -0.9 0.8 -3.3 -0.4 -0.5
Non-recurring items -195 -302 -492 -2 702 -3 691
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit, total -612 40 -1 899 -2 359 -4 829
% of net sales -1.4 0.1 -4.4 -2.8 -2.2
Net financial expenses -1 547 -1 457 -1 255 -938 -5 197
--------------------------------------------------------------------------------
Profit before income taxes -2 159 -1 417 -3 153 -3 297 -10 026
TAXES FOR THE PERIOD UNDER REVIEW
Income tax expense is recognised based on the estimated average income tax rate
for the full financial year. Tax receivables for the result of the financial
year have not been recognised in full amount.
INFORMATION ON RELATED PARTIES
Suominen has related party relationships with the members of the Board of
Directors, and the members of the Corporate Executive Team, and Ahlstrom
Corporation. The company has no investments in associated companies. Salaries
paid to the related parties amounted to EUR 1 406 thousand, share-based
payments EUR 26 thousand, unsecured loans EUR 200 thousand, and interest
payments EUR 76 thousand.
Other related-party transactions
EUR 1000 2011 2010
--------------------------------------------
Sales of goods and services 1 402
Purchases of goods and services 1 517
Trade and other receivables 5 337
Trade and other payables 2 370
Other related-party transactions are transactions with Ahlstrom.
MOVEMENTS IN BORROWINGS
EUR 1 000 1-12/2011 1-12/2010
------------------------------------------------------------------------------
Total borrowings on 1 January 61 282 60 861
Current loans from financial institutions on 1 January 17 000
Change in current loans from financial institutions 2 929 17 000
------------------------------------------------------------------------------
Current loans from financial institutions on 31 December 19 929 17 000
Commercial papers on 1 January 988
Change in commercial papers -988 988
------------------------------------------------------------------------------
Commercial papers on 31 December 0 988
Non-current loans on 1 January 37 284 52 861
Change in non-current loans 102 667 -15 577
------------------------------------------------------------------------------
Non-current loans on 31 December 139 961 37 284
Capital loans on 1 January 6 000 8 000
Change in capital loans -4 160 -2 000
------------------------------------------------------------------------------
Capital loans on 31 December 1 840 6 000
Total borrowings on 31 December 161 730 61 282
CHANGES IN FIXED ASSETS
1-12/2011 1-12/2010
EUR 1 000 Tangible Intangible Tangible Intangibl
e
--------------------------------------------------------------------------------
Book value at the beginning of the 53 873 776 57 044 795
period
Business combinations 89 124 12 584
Investments 3 678 220 5 884 177
Decreases -1 226 -466 -1
Depreciation -9 399 -436 -9 127 -195
Translation differences and other 3 836 1 538
changes
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Book value at the end of the period 139 886 13 146 53 873 776
CONTINGENT LIABILITIES
EUR 1 000 12/2011 12/2010
-----------------------------------------------------------
For own debt
Secured loans 158 264 49 607
Nominal values of pledges
Real estate mortgages 22 914 24 045
Floating charges 211 515 60 069
Pledged subsidiary shares and loans 213 554 82 982
Other own commitments
Operating leases, real estates 29 505 13 403
Operating leases, machinery and equipment 3 462 2 685
Guarantee commitments 1 432 1 995
NOMINAL AND FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS
EUR 1 000 12/2011 12/2010
-------------------------------------------
Currency derivatives
Nominal value 8 501 5 172
Fair value 11 -138
Interest rate derivatives
Nominal value 76 492 13 833
Fair value -216 -143
Electricity derivatives
Nominal value 2 860 2 638
Fair value -458 1 249
Helsinki, 17 February 2012
SUOMINEN CORPORATION
Board of Directors
For additional information, please contact:
Mrs Nina Kopola, President and CEO, tel. +358 (0)10 214 300
Mr. Arto Kiiskinen, Vice President and CFO, tel. +358 (0)10 214 300