Suominen Corporation results presentation Q3 2016

Suominen CorporationQ3 2016 financial results

Nina Kopola, President & CEOTapio Engström, CFO27 October 2016

Our purpose is to make nonwovens continuously better for people.

Agenda

• Highlights Q3 2016 • Strategy execution• Financial review Q3 and outlook• Summary

• Q&A

10/27/2016 2


Q3: Net sales and operating profit fell short of the comparison period, cash flow continued strong

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Operating profit*EUR 7.9 million

Net sales-10%

Cash flow**EUR 8.3 million

EPSEUR 0.09

Share of products w/ higher added value

63%

* Comparable operating profit** Cash flow from operations


Net sales fell short of the comparison period

Net sales, EUR million Net sales, EUR million

103.3104.8111.9112.9114.9

104.2103.9108.8

103.8

0

20

40

60

80

100

120

356.9 373.7401.8

444,0

0

100

200

300

400

500

2012 2013 2014 2015

• Customer deliveries fell short of our expectations in Q3.• Net sales decreased from comparison period to EUR 103.8 million.• Net sales was primarily impacted by the decline in sales volumes from the comparison period.

Continuing operations Continuing operations

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8.4 %

5.9 %5.0 %

8.8 %8.5 %

4.1 %5.3 %

8.0 %7.6 %

0%

2%

4%

6%

8%

10%

0

2

4

6

8

10

Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16

EUR million %

Positive development in product portfolio, operating profit at 7.6%

Comparable operating profit Comparable operating profit

• The decline in net sales was reflected in the operating profit, which was EUR 7.9 million.• A bad debt provision of approx. EUR 0.3 million relating to customers having operations in

Venezuela was recognized during Q3.

Continuing operations

4.2 %5.2 %

6.7 % 7.0 %

0%1%2%3%4%5%6%7%8%

0

5

10

15

20

25

30

35

2012 2013 2014 2015EUR million %

Continuing operations

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Strategyexecution

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Strategy 2015–2017

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Portfolio developed in accordance with the strategy –Share of higher value-added products increased

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40%

24%

17%

11%

7%

37%

26%

18%

10%7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Baby wipes Personal care wipes Household wipes Workplace wipes Hygiene & medicalproducts

Q1–Q3 2015 Q1–Q3 2016 Typically higher value-added products


Growth investment program: Construction work of the Bethune investment progressing full speed

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• The new production line in Bethune will improve our ability to serve higher value-added product markets.

• We plan to begin customer deliveries from the new production line in Q1/2017.


Deployment of global processes supported with organizational change

• Global Operations function will be formed, with Mimoun Saïm in charge.- Previous divide in EMEA / Americas will cease to exist.

• New, global Operational Excellence function will be established, with Larry L. Kinn in charge.

• The change allows production plants to focus even stronger on Manufacturing and Supply on global basis.

• Operational Excellence concentrates on enhancing our Process Technology and Health, Safety, Environment and Quality.

• The change will be effective as of 1 April 2017.

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Sustainability is on the rise also on customers’ agenda

SupplierCode of Conduct

implemented

Sustainable product portfolio: Suominen

joins the sustainability

network of a global consumer goods

company

Non-Discrimination

Program:Blind hiring as a

default recruitment process

Reachingproduct leadership

Fostering responsibilitythrough the value chain

Operating sustainablyacross the company

1110/27/2016


5.0%

12.4%

15.7% 15.9%12.3%

0%

5%

10%

15%

20%

2012 2013 2014 2015 Q3/2016

ROI, %

6.9%

3.5%

0.8%

0%

2%

4%

6%

8%

10%

12%

2013 2014 2015

Organic net sales growth, %

101,0 % 96.2%

34.7%25.9% 28.0%

0%

20%

40%

60%

80%

100%

120%

2012 2013 2014 2015 Q3/2016

Gearing ratio, %

Progress with the mid-term financial targets

• Organic growth of net sales , excluding currency effect, compared to previous year. Indicator is reviewed only annually, not quarterly.

• Target level marked with dashed line.

• Historical figures include continuing operations.

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Financial review Q310/27/2016 13


Profit for the period declined from the comparison period

Profit for the period, EUR million Profit for the period, EUR million

0.6

4.8

3.5

6.25.4

1.9

3.4

5.2 4.9

0

1

2

3

4

5

6

7

-2.8

5.7

10.2

17.0

-5

0

5

10

15

20

Continuing operations Continuing operations

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2012 2013 2014 2015

• Decrease in financial expenses and income taxes improved the profit for the period.


Consolidated statement of profit or loss

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EUR thousands 7-9/20167-9/

20151-9/

20161-9/

20151-12/2015

Net sales 103,796 114,919 316,497 339,798 444,042

Cost of goods sold -89,316 -98,892 -275,223-

293,069-

386,042Gross profit 14,480 16,027 41,274 46,728 58,000Other operating income 485 782 1,584 2,634 2,637Sales and marketing expenses -1,625 -1,692 -5,202 -5,350 -7,760Research and development -1,136 -1,015 -2,968 -2,603 -3,527Administration expenses -3,983 -3,887 -12,253 -12,746 -16,709Other operating expenses -342 -452 -354 -1,146 -862Operating profit 7,878 9,763 22,082 27,517 31,778Net financial expenses -830 -1,247 -2,041 -3,944 -5,302Profit before income taxes 7,048 8,517 20,041 23,573 26,476Income taxes -2,108 -3,142 -6,441 -8,472 -9,456

Profit for the period 4,941 5,374 13,601 15,101 17,020

Earnings per share, EURBasic 0.09 0.10 0.26 0.29 0.32Diluted 0.08 0.09 0.23 0.26 0.29

Q3 gross profit on a healthy level (14%)

Fixed costs to net sales ratio remained onthe level of 2015

Effective tax ratehas stabilized


Consolidated statement of financial position, assets

EUR thousands 30.9.2016 30.9.2015 31.12.2015

Non-current assetsGoodwill 15,496 15,496 15,496Intangible assets 13,912 12,462 13,275Property, plant and equipment 109,785 91,743 97,931Loan receivables 7,093 7,752 7,793Available-for-sale assets 777 777 777Other non-current receivables 2,298 2,206 2,402Deferred tax assets 4,909 4,715 4,491Total non-current assets 154,270 135,150 142,165

Current assetsInventories 34,316 32,078 32,557Trade receivables 53,200 60,360 51,547Loan receivables 1,250 800 1,000Other current receivables 6,830 5,036 7,038Assets for current tax 2,495 1,807 1,874Cash and cash equivalents 47,214 36,454 55,570Total current assets 145,306 136,535 149,585

Total assets 299,575 271,685 291,750

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Growth investmentprogram visible


Consolidated statement of financial position, equity and liabilities

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Equity and liabilities 30.9.2016 30.9.2015 31.12.2015Share capital 11,860 11,860 11,860Share premium account 24,681 24,681 24,681Reserve for invested unrestricted equity 69,732 69,652 69,652Treasury shares -44 -44 -44Fair value and other reserves 297 42 -118Exchange differences 5,759 1,644 5,097Other equity 5,164 -4,593 -3,076Total equity attributable to owners of the parent 117,449 103,242 108,052Hybrid bond 17,737 17,118 17,664Total equity 135,186 120,360 125,716LiabilitiesNon-current liabilitiesDeferred tax liabilities 10,697 9,864 10,890Liabilities from defined benefit plans 1,061 1,151 1,105Other non-current liabilities 387 538 651Debentures 75,000 75,000 75,000Other non-current interest-bearing liabilities 12,857 3,333 18,498Total non-current liabilities 100,003 89,887 106,144Current liabilitiesCurrent interest-bearing liabilities 5,605 3,333 3,363Liabilities for current tax 3,066 2,720 47Trade payables and other current liabilities 55,716 55,385 56,479Total current liabilities 64,386 61,438 59,889Total liabilities 164,389 151,325 166,034Total equity and liabilities 299,575 271,685 291,750

Equity ratio45.1%


Cash flow from operations improved from the comparison period

Cash flow from operations, EUR million Cash flow from operations, EUR million16.9

9.3

4.5 3.9

7.9

11.09.1

7.6 8.3

02468

1012141618

24.921.3

37.1

27.3

05

10152025303540

2012 2013 2014 2015

- Cash flow from the operations has been very stable and on a healthy level for all three quarters of 2016; already near the level of full-year 2015.

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Statement of cash flows (1/2)

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EUR thousands 1-9/2016 1-9/2015

1-12/2015

Cash flow from operationsProfit / loss for the period 13,601 15,101 17,020

Total adjustments to profit / loss for the period 22,957 25,238 32,870

Cash flow before changes in net working capital 36,558 40,339 49,890

Change in net working capital -3,857 -12,019 -7,921Financial items -3,907 -6,672 -6,425Income taxes -3,837 -5,371 -8,269Cash flow from operations 24,957 16,277 27,274

Cash flow from investmentsInvestments in property, plant and equipment and intangible assets -24,293 -14,052 -22,369

Cash flow from disposed businesses 313 167 167Adjustments of purchase consideration 161 − −Sales proceeds from property, plant and equipment and intangible assets 6 10 10

Cash flow from investments -23,814 -13,876 -22,192

We succeeded inmanaging networking capital


Statement of cash flows (2/2)

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Cash flow from financing 1-9/2016 1-9/2015

1-12/2015

Drawdown of other non-current interest-bearing liabilities − − 15,000

Repayment of other non-current interest-bearing liabilities -3,280 -3,333 -3,333

Changes in current interest-bearing liabilities -52 -14 -14Changes in loan receivables 450 250 600Share issue − 340 340Paid interest on hybrid bond -624 − −Dividend distribution / distribution of funds -5,030 -2,504 -2,504Cash flow from financing -8,536 -5,261 10,089

Change in cash and cash equivalents -7,392 -2,859 15,171

Cash and cash equivalents at the beginning of the period 55,570 38,430 38,430

Effect of changes in exchange rates -963 883 1,968Change in cash and cash equivalents -7,392 -2,859 15,171Cash and cash equivalents at the end of the period 47,214 36,454 55,570

Investmentpayments depressedcash and cash equivalents


Outlook for full year 2016 updated on 20 September

• On 20 September 2016, Suominen revised its outlook and announced that it expects that for the full year 2016, its net sales and comparable operating profit will not reach the level of year 2015.

• In 2015, Suominen’s net sales amounted to EUR 444.0 million and comparable operating profit to EUR 31.2 million.

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Our purpose is to make nonwovens continuously better for people.10/27/2016 22

Summary

• The development of net sales and operating profit did not meet our expectations. However, our portfolio developed in the right direction and the share of products with higher value-added increased.

€ £ $ • Cash flow remained strong.

• Investment in a new production line in Bethune is progressing. Customer deliveries from the new production line estimated to commence in Q1/2017.

Thank you!

We are ready to answer your questions.

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Appendix

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Hybrid bond

• In February 2014, Suominen issued a convertible hybrid bond of EUR 17.5 million.

• The holders of the bond notes are entitled to convert the notes and the potential accrued capitalized interest related to the notes into Suominen shares. The conversion period started on 11 February 2014 and will end on 10 February 2018.

• No conversions were executed during the review period. • The number of shares in Suominen may increase in total by

maximum of 7,600,320 shares on the basis of the conversion of the remaining bond notes and the potential capitalized interest, if the conversion is carried out by issuing new shares in Suominen.

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Investor Relations

Suominen Corporation results presentation Q3 2016