Suominen Corporation, the supplier of nonwovens and flexible packaging for use in consumer goods, has reported a decline in net sales from the continuing operations by 2% over the third quarter 2013. Operating profit excluding non-recurring items from continuing operations also decreased by 15% to EUR 5.3 million.

The company still predicts revenues to reach the estimate previously announced in July, as it reports positive business development for the January-September reporting period. Suominen is also about to go through the corporate structural reorganisation, due to take effect on 1 January 2014.

Net sales and financial result                                                             

In the third quarter of 2013, Suominen’s net sales from continuing operations amounted to EUR 108.6 million. Operating profit before non-recurring items from continuing operations was EUR 5.3 million.

In January-September, Suominen’s net sales from continuing operations grew by 5% to EUR 328 million from the same period last year. Operating profit before non-recurring items from continuing operations increased to EUR 14.6 million. Profit before taxes from continuing operations was EUR 8.8 million, showing a little growth, and profit after taxes declined slightly to EUR 3.4 million.

Nonwovens business unit of the company will be divided into two business areas, Convenience and Care. Convenience business area will focus on serving customers in wiping, travel and catering businesses. Care business area will focus on customers in medical and hygiene businesses.

The strategic development programmes in the nonwovens business started earlier this year and continued in the third quarter as planned. The objectives of the programmes are to harmonise and boost the efficiency of the supply chain processes and to further improve the product development.

Wiping segment

The Wiping segment of Suominen consists of Nonwovens business unit. It supplies nonwovens as roll goods for wiping products and medical applications. The net sales of the Wiping segment from continuing operations decreased by 4% and totalled EUR 93.5 million in July -September 2013.

The Wiping segment generated 86% of the Group net sales, with the operating profit from the continuing operations before non-recurring items of EUR 3.7 million.

Demand for nonwovens materials continued favorable in North American market. The continued competition put pressure on the sales prices in Europe. Exceptional cost items, arising from challenges related to customer deliveries, as well as from adjustments to Group charges, weakened the operating profit of the Wiping segment, the company reports.

The net sales of the Wiping segment from continuing operations grew by 4% to EUR 283.9 million in January-September 2013.

The main application areas for nonwoven materials were distributed to baby wipes (accounting for 41% of the sales), personal care wipes (22%), household wipes (18%), and industrial wipes (12%). The share of baby wipes declined, while the share of wipes for personal care increased from the corresponding period.

Flexibles segment

The Flexibles segment produces printed plastic film materials for consumer packaging for industry and trade, as well as security and system packaging.

The net sales of the Flexibles segment increased by nearly a fifth in July–September 2013, totalling EUR 15.1 million, a 19% increase from the previous year. However, the operating profit remained negative also in the third quarter.

The Flexibles segment generated 14% of the Group net sales. The segment’s operating profit was EUR -0.9 million excluding non-recurring items.

In January–September 2013, net sales of the Flexibles segment totalled EUR 44.1 million, showing an increase of 12% from the previous year. The share of hygiene and food packaging increased to 73% of the segment’s net sales, while the sales of retail packaging and security and system packaging declined from the comparison period.

Changes in the group management

The structural changes in Suominen’s corporate structure, announced on 30 September 2013, are expected to have an impact on Suominen’s management model and to the composition of the Corporate Executive Team of Suominen Corporation (CET), whose primary task is to support the President and CEO in her responsibilities.

A new body in the Suominen management model is the Corporate Leadership Team (CLT), which will act as an extended management team supporting President and CEO in the execution of strategic programmes and creating functional expertise.

Business environment

Suominen’s products are used in daily consumer goods, such as wet wipes and plastic packaging, and are mainly aimed at European and North American market regions.

In the European markets, the consumer confidence index continued to improve slightly in the euro area. In North America, the increase seen in the consumer confidence index during the first half of the year turned into a slight decline in the end of the third quarter.

The development prospects of the general economic situation remain uncertain, especially in Europe. Suominen estimates that in 2013 demand for its products will remain at the level of 2012.

Outlook for 2013

Suominen expects its net sales of the continuing operations for the full year 2013 to remain at or slightly exceed the level of 2012, which amounted to EUR 410.4 million.

Operating profit excluding non-recurring items is expected to improve from year 2012, when it was reported to be EUR 13.7 million.

www.suominen.fi