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26th April 2018, Helsinki

Profits squeezed at Suominen in Q1

Nina Kopola, President and CEO. © SuominenSuominen, a market leader in nonwovens for wipes, has reported a decline in operating profit for the 1 January – 31 March period of 75% to EUR 1.5 million, compared to EUR 6.3 million in the same period last year. Profit for the reporting period was EUR -0.4 million, compared to EUR 4.2 million in 2017.

“Consumer confidence remained strong in the beginning of 2018 both in the US, as well as in the euro zone. North America and Europe are Suominen’s main market areas,” commented Nina Kopola, President and CEO.

“Consumers’ optimism in the first quarter was also reflected in the demand of nonwoven products. Our volumes sold increased to a level that represents one of the highest in Suominen’s history. However, despite of achieving volume growth for the fifth consecutive quarter, Suominen’s financial development in the first quarter was a disappointment.”

“The unacceptable level of profitability was mainly attributable to the downward pressure on sales prices that has continued since mid-2017. As raw material prices have in general increased, this has therefore strongly affected our profitability. Unfortunately, we also experienced certain issues with delivery efficiency, including unplanned production downtime due to disruptions in power supply and technical difficulties at the new line at the Bethune plant. In spite of very challenging market situation, we were able to slightly increase our average sales prices in the first quarter.”

Net sales

In January–March 2018, Suominen’s net sales decreased by 6% from the comparison period to EUR 106.6 million. Sales volumes increased, but the weakening of USD compared to EUR and the pressure on sales prices affected net sales by EUR 9 million.

Suominen has two business areas, Convenience and Care. Net sales of the Convenience business area were EUR 97.5 million, compared to EUR 101.9 million in 2017, and net sales of the Care business area EUR 9.2 million, compared to EUR 11.1 million last year. The main application areas for nonwoven materials supplied by Suominen in January–March were baby wipes (accounting for 39% of the sales), personal care wipes (23%), home care wipes (20%), hygiene and medical products (9%), and wipes for workplace use (9%).

Optimisation and new technology

“We continued to optimise the output from the new manufacturing line at Bethune, SC, USA. The customer deliveries continued to develop positively, even though the progress was still slower than anticipated. We did not see the anticipated turn to positive gross profit during the first quarter from the new manufacturing line,” continued Ms Kopola.

“To correct the course of the profitability development, we initiated already in the end of 2017 an improvement programme called 3P. It focuses on improving the profitability through Pricing, Performance and Planning. On top of those, we carry on our determined work with the product portfolio transformation.”

“The Group-wide renewal of ICT systems continued in the first quarter as the new systems were taken into use at our Green Bay, WI, USA plant. To further enhance our capability to supply high added value nonwovens, we decided to invest in new carding machinery representing the latest technology at our plant in Green Bay. The investment is valued at approximately EUR 6 million and it is again one step forward in the implementation of our strategy.”

Outlook for 2018

Suominen expects that in 2018, its net sales and comparable operating profit will improve from 2017. In 2017, Suominen’s net sales amounted to EUR 426 million and operating profit to EUR 15 million. At large, the growth in the demand in Suominen’s target markets is expected to continue in 2018, on average, at the pace of 2017.

“Another important milestone for Suominen was the launch of the Sustainability Agenda in the beginning of 2018,” said Ms Kopola. “The agenda spans until 2021 and defines Suominen's stance on sustainability through its three focus areas, connecting our activities to the Changemaker strategy and to the United Nations’ Sustainable Development Goals. Moreover, the agenda includes concrete longer-term goals related to environmental and social responsibility.”

www.suominen.fi

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