SUOMINEN CAPITAL MARKETS DAY

SUOMINEN CAPITAL MARKETS DAYSeptember 2, 2020

Capital Markets Day Agenda

13:00–14:30 Opening of Suominen’s CMD 2020

Emilia Peltola, VP, Communications & IR

Suominen going forward

Petri Helsky, President and CEO

Europe business area update

Markku Koivisto, SVP Europe and CTO

Americas business area update

Lynda Kelly, SVP Business Development and

Americas (interim)

14:30–14:40 Break

14:40–16:00 Innovative Suominen


Reaching the financial targets

Toni Tamminen, CFO

Concluding remarks


Q&A

Closing of the event

September 2, 20202

Petri Helsky

President and CEO

Lynda A. Kelly

Business development

& Americas

Toni Tamminen

CFO

Markku Koivisto

Technology &

Europe

Mimoun Saïm

Global OperationsKlaus Korhonen

HR and Legal Affairs

3

Executive team

September 2, 2020

SUOMINEN GOING FORWARD


Capital Markets Day

September 2, 2020

Agenda

• Overview of Suominen

• Recent market trends

• COVID-19 update

• Strategy

• Sustainability agenda

September 2, 20205

Business areasSuominen• Nonwovens as roll goods

for wipes and other

applications

• Global market leader in

nonwovens for wipes

• Europe 36% of net sales

• Americas 64% of net sales

Global presence• 8 production plants on

three continents

• Finland, Italy (2), Spain,

USA (3), Brazil

• Nearly 700 employees

Net sales EUR

411.4 million

in 2019

• The frontrunner in

nonwovens innovations

and sustainability

• Focusing on sustainability

and customization

• 16 R&D professionals

Strong R&D

Suominen in brief

September 2, 20206

Overview of Suominen: Key figures 2014-2019

September 2, 2020 * Continuing operations in 2014

* *

- Suominen net sales have been relatively flat around EUR 400+ million over the past few years

- Profitability declined until 2018 due to competitive pressure, raw material inflation, and issues with the Bethune investment

- Cash flow from operations steady despite the profitability challenges

- Turnaround started in 2019

*

7

Comparable operating profit, EUR million Cash flow from operations, EUR millionNet sales, EUR million

2020: Very strong H1

September 2, 2020

Net sales

EUR 232.4 million

Comparable operating profit

EUR 18.1 million

EBITDA

EUR 29.3 million

EBITDA %

12.6

Employees1

695

1) At the end of June 2020

8

MARKET TRENDS

We are the leaders in the spunlace

nonwovens market with largest global

asset base. The market is growing in all

regions.

We are the inventors of the wetlaid

spunlace category for flushable

nonwovens and demand in this area

will continue to grow in all regions.

Legislation and consumer behavior are driving for

more sustainable products and we have excellent

opportunities to meet this growing demand.

The demand for nonwovens is growing

The COVID-19 pandemic has

increased sales volumes in all our

markets and the higher demand is

expected to continue in the near

future.

September 2, 202010

COVID-19 update

• The COVID-19 pandemic increased sales volumes in all our markets and the higher

demand is expected to continue for the coming months

• In the longer term the COVID-19 pandemic is expected to lead to continued increased

demand for nonwovens for cleaning and disinfection products

• Helped by our proactive mitigation measures regarding e.g. raw material sourcing and

strict safety procedures at our plants, so far we have been able to run our operations

with limited impacts

• The main risks posed by the pandemic for Suominen are possible shortages of raw

materials, potential closures of customers’ or our own plants due to virus infections or

authority decisions, and issues linked to logistics

September 2, 202011

STRATEGY 2020-2025

Progress in strategy implementation

Growth

• Increasing capacity by upgrading and restarting existing production line in Italy

• Strengthening capabilities for sustainable nonwovens by investing in enhancing one production lines in Italy

• Multi-year supply agreement signed with Ahlstrom-Munksjö

Innovations

• The share of new products on a level above 25% of net sales

• HYDRASPUN® Royal nonwoven received the first Fine to Flush certificate granted for nonwovens manufacturer

• FIBRELLA® Shield nonwoven developed for face mask applications

People

• Strong safety culture, for example COVID-19 procedures

• Global employee engagement survey in September

September 2, 202014

SUSTAINABILITY AGENDA 2020-2025

SustainabilityAgenda

September 2, 202016

Overuse of natural resources

Climate change

Plastic pollution

Equality

Fair and transparent

business practices

Loss of biodiversity

Efficient use of natural resources

Climate change

Quality of life and wellbeing

Overexploitation of non-renewable resources

Increased hygiene requirements

Safe products

Universal human rights

We invest

in increasing

employee engagement.

We continue to build a high

performance culture.

We continue to strengthen

our safety culture.

We are

the frontrunner

in sustainable

nonwovens.

We continuously strive to

decrease environmental

impacts of our

operations

We promote responsible

business practices in our

operations and supply chain.

We communicate

openly and transparently

about our operations.

Safe and fair workplace

Our sustainability targets

September 2, 202017

• Zero LTA (lost time accidents)

• Engagement index (target to

be set when index ready)

Reduction targets are set per ton

of product

• 20% reduction of energy consumption

• 20% reduction of process waste to

landfill

• 20% reduction of water intake

• 20% reduction of emitted

greenhouse gas emissions

• Renewed Code of Conduct

coverage: 100% of existing

employees and new hires

• Raw material suppliers audited

against supplier code (based on

risk assessment)

• Over 10 sustainable product

launches per year

• Sustainable products: 50%

increase of sales by 2025

(baseline being 2019)

We invest

in increasing

employee engagement.

We continue to build a high

performance culture.

We continue to strengthen

our safety culture.

We are

the frontrunner

in sustainable

nonwovens.

We continuously strive to

decrease environmental

impacts of our

operations

We promote responsible

business practices in our

operations and supply chain.

We communicate

openly and transparently

about our operations.

EUROPE BUSINESS AREA

Capital Markets Day


September 2, 2020

Wipes market Europe | 2019

September 2, 202020

EUROPE WIPES

• 3.852 mln USD Retail value

mln

US

D

Wipes retail value | 2019

19 %

6 %

5 %

4 %

4 %

2 %2 %

1 %1 %29 %

27 %

EUROPE WIPES MARKET BY BRAND OWNERS | 2019

Western Europe | Eastern Europe Total Europe | 3.852 mln USD

3.852

mln USD

Source: Euromonitor

Suominen Europe at a glance

September 2, 202021

Highlights 2020

• Demand for nonwovens growing in

Europe

• Customers looking for security of supply

and improved sustainability performance

• Investments in Cressa ongoing, adding

capacity and further strengthening our

sustainability leadership

• Agreement with Ahlstrom-Munksjö

secures wetlaid capacity and knowhow

for several years

Plants:

Nakkila (FI), Alicante (ES),

Mozzate (IT), Cressa (IT)

Technologies:

Spunlace, composites, wetlaid

Main raw materials:

Viscose, pulp, polyester

Revenue development Suominen Europe (kEUR)

Trends and drivers - Europe

Trends

• Demand up in all segments and all

production platforms

• Growing amount of opportunities around

household cleaning

• Security of supply high on the agenda

with all customers

• Regulations (European directives, country

specific standards) and consumer

behavior are supporting growth of

sustainable products

Drivers

• Healthy CAGR boosted by COVID-19*

• Attitude towards sanitizing and

household cleaning has changes in

Europe

• Concerns about complex supply chains

in all industries

• Clarity on Single Use Plastic (manmade

natural fibers), UK Fine to Flush

• Sustainability being the fastest growing

sales argument*

September 2, 202022 * Management estimate

Strengths - Europe

September 2, 202023

- Leading wipes market share (>15%) with widest production footprint in Europe*

- Security of supply, four production plants able to produce spunlace products

- Unique asset base including pulp feeding and composite technology capabilities

- Strong global presence (networking between plants, best practices, procurement leverage)

- Long term relationships with major customers

- Leading innovator of sustainable nonwovens

* Management estimate

Well positioned to deliver results in Europe

September 2, 202024

• Maximize production volumes and take full

advantage of specialty lines

• Finalize investment projects in Cressa and

utilize the increasing spunlace capacity

• Support our key customers in their growth,

improve systematically key account

management and commercial skills

• Continue to grow our sustainability

leadership with unique next generation

products:

- BIOLACE® Pure, the most sustainable

Card-Pulp-Card (CPC) product

- New innovation in flushable technology that combines

good strength with toilet tissue like dispersion

AMERICAS BUSINESS AREA

Capital Markets Day

Lynda Kelly, SVP Business Development and Americas

September 2, 2020

Suominen Americas at a glance

September 2, 202027

Highlights 2020

• Demand for nonwovens growing in

Americas

• New Bethune line and Green Bay

upgraded line running well

• Launched Bio GENESIS®, a breakthrough

plastic free home care wipe

• New innovation in flushable technology,

combines good strength with toilet tissue

like dispersion

Plants: Bethune (SC), Green Bay (WI),

Windsor Locks (CT), Paulina (BR)

Technologies: Spunlace, wetlaid,

chemical bond, thermal bond and

cotton entangled

Raw materials: Pulp, viscose, polyester,

polypropylene and cotton

Certifications:

Net Sales (EUR)

Americas market dynamics

Manufacturers of disinfectant wipes,

sprays and cleaners cannot manufacture

products fast enough to keep up with

soaring demand

September 2, 202028

Wipes market North America | 2019

September 2, 202029

NORTH AMERICA WIPES

• 5.425 mln USD Retail value

mln

US

D


21 %

14 %

9 %

4 %3 %2 %2 %1 %1 %

26 %

17 %

NORTH AMERICA WIPES MARKET BY BRAND OWNERS | 2019

USA| CanadaTotal North America | 5.425 mln USD

5.425ml

n USD

Source: Euromonitor

36 %

23 %

6 %

5 %

5 %

3 %

3 %

3 %

2 %

3 %

11 %

BRAZIL WIPES MARKET BY BRAND OWNERS | 2019

Brazil | 281 mln USDTotal LATAM | 1.050 mln USD

Wipes market Brazil | 2019

September 2, 202030

BRAZIL WIPES

• 281 mln USD Retail value

281 mln

USD

mln

US

D


Source: Euromonitor

Why Suominen?

September 2, 202031

• Innovation leader with our successful

HYDRASPUN® and GENESIS®

nonwovens

• Largest supply base of spunlace and

wetlaid nonwovens for wipes in the

regions

• Experienced people

• Security of supply

• Suominen has brand “trust”

Management estimates

Drivers for our growth and profitability in the Americas

September 2, 202032

• Growing wipes market

• Maximize utilization of our production

lines

• Leverage our new sustainable

innovations - Bio GENESIS® and next

generation moist toilet paper

nonwovens

• Expand our long term customer

relationships

INNOVATIVE SUOMINEN

Capital Markets Day


September 2, 2020

Suominen’s Technology team

• Team of 16 professionals, of which 4 PhDs

• Diverse and international

• Spanish, Italian, US, Finnish and Indian

backgrounds

• Mix of operative and academic talent

• Centralized to Nakkila, Finland and

Windsor Locks, CT, US

• Responsible for project portfolio

management, technology development

and IPR

• Follow a robust project management

process

• Sales of new products deliver above 25% of

revenue

September 2, 202035

Lab and pilot line capabilities

• Pilot lines and labs in Nakkila, Finland and Windsor Locks, USA

• Carded spunlace and composites (Nakkila)

• Carding, calendering, hydroembossing, unwinding, slitting, etc.

• Wetlaid and wetlaid composites (Windsor Locks)

• Wetlaid, hydroembossing, chemical application, unwinding, slitting, etc.

• Major advantage in prototyping

• Very high correlation between pilot trial performance and commercial runs

• Building partnerships with suppliers – attractive option to try out first

iterations on smaller scale

• Possibility to run representative customer samples on new fiber

developments

• Ability to customize our offering

September 2, 202036

September 2, 2020

Sustainability

Patterning

Dispersibility

Value proposition

Technology themes

37

Sustainability

September 2, 202038

Sustainability

• Less is more

• Recycled content

• Non plastic

• Biodegradable

• Dispersible

• CO2 footprint

Suominen unique capability

• Same properties with less material– example FIBRELLA® Combo

• Recycled PET containing products

• Unique airlaid assets

• BIOLACE® (Pulp-Viscose)

• BIOLACE® Pure (Viscose-Pulp-Viscose)

• Knowhow leadership in wetlaid products

• Bio GENESIS® (superior strength needed & no-plastic)

• New innovation in flushable technology (good strength combined

with toilet tissue like dispersion)

• Creation of Suominen Sustainability Index based on CO2-footprint

• Carbon footprint is an automatic outcome of every R&D-project

supporting our customers’ sustainability targetsLower

carbon

footprint

Summary

September 2, 2020

• Innovation and development are in the

core of Suominen’s strategy

• Suominen’s Technology team is industry

leading and well resourced to meet the

market need

• Robust structure and processes deliver

results both short term and mid term

• Suominen is seen as the leader in

sustainable nonwovens

39

REACHING THE FINANCIAL TARGETS

Toni Tamminen, CFO

September 2, 2020

Net sales H1/2020

• Sales in H1 were strong, with an increase of 18% in Q2/2020 vs Q2/2019. Sales volumes have increased considerably but sales

prices have decreased following the lower raw material prices

• The main driver for the volume growth has been the higher demand of wipes due to the COVID-19 pandemic

• The share of new products has grown to a level above 25% of net sales

• Currency impact on sales turned negative in Q2

Net sales, EUR million Net sales, EUR million

110.0104.8

109.8 109.8103.8 103.4

94.5

110.2

122.2 444.0416.9 426.0 431.1

411.4

232.4

September 2, 202042

Operating profit H1/2020

• In H1 operating profit increased significantly, with Q2 EBIT on all time high level

• The profitability increase has been driven especially by the higher production and sales volumes. Also margins have increased as

the lower sales prices have been compensated by lower direct product costs and improved production efficiency

• At the same time fixed costs have been kept well under control

September 2, 2020

2.9

0.5 -0.4

3,0 2,7

1.1 1,4

5.7

12.4

Operating profit Operating profit

31.2

25.6

15.0

4.6

8.1

18.1

43

Cash flow from operations H1/2020

10.8

7.78.5

-2.4

9.1

17.4

5.7

9.4 9.6

27.3 28.5

22.2

32.129.9

19.0

September 2, 2020

Cash flow from operations, EUR million Cash flow from operations, EUR million

• Cash flow from operations has remained strong in H1/2020

• In Q2/2020 the positive cash flow impact from the improved result was moderated by the increase in net working capital due

to higher receivables

44

Outlook for 2020

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.

45 September 2, 2020

Financial targets

September 2, 2020

How to get there?

• Growth

• Sustainable products growing above the market

• Innovation to capture the market growth

• Targeted investments to meet the growing

demand

• Profitability

• Effective utilization of production lines

• Margin improvement through new products as

well as production and raw material efficiency

• Continued fixed cost control

• Gearing

• Balanced investment plan to keep CAPEX spend

under control

• Maintain healthy cash flow from operations

46 September 2, 2020

Investments & M&A

September 2, 2020

• Sustain & improvement CAPEX is expected to be 1–2% of net sales during the strategy

period

• Growth CAPEX can vary significantly from year to year during the strategy period but the

maximum yearly growth CAPEX is not expected to exceed 10% of net sales while on

average the annual growth CAPEX should be below 5% of net sales

• Regarding M&A we follow the market and evaluate opportunities continuously

47

Dividend policy

September 2, 2020

No changes have been made to Suominen’s

dividend policy published on April 26, 2017:

Suominen aims to distribute at least 30% of

its profit for the period in annual dividends.

In assessing its proposal for the payment of

dividends, the company’s Board of Directors

will also consider Suominen’s future

investment needs and the solidity of its

financial position.

48

CLOSING REMARKS: INVESTMENT HIGHLIGHTSPetri Helsky, President and CEO

September 2, 2020

Investment highlights

Nonwovens markets are growing

in all regions

Healthy profitability,

balance sheet and cash flow

Legislation and consumer

behavior are driving the need for

more sustainable products and

we are very well placed to

respond to this growing demand

The new organization and

strategy give us an excellent basis

to continue to develop the

company further

51

Q&A

Investor relations’ contact details

If you have any questions, we are happy to help!

CMD presentation material also available at https://www.suominen.fi/en/media/calendar/cmd/

Emilia Peltola

VP, Communications, IR and Sustainability

+358 50 540 9747

[email protected]

Julia Koivulanaho

Communications Specialist

+358 50 562 7411

[email protected]

September 2, 202053

https://www.suominen.fi/en/media/calendar/cmd/

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SUOMINEN CAPITAL MARKETS DAY