Suominen at Mid Small Cap Forum with Lond Capital

Suominen Corporation
as an investment
30 June 2016
Tapio Engström, CFO
Anu Heinonen, VP, Corporate Communications & IR

Our purpose is to make nonwovens continuously better for people.
Contents
• Suominen at a glance
• Nonwovens markets
• Strategy for 2015 – 2017 and its implementation
- Progress on mid-term financial targets
• Key elements of profitability
26/30/2016

Suominen
at a glance
36/30/2016

Indicative customers
Our operations, customers and end users
4
Suominen End use applications
6/30/2016

Recent history: Determined progress towards growth
5
2012 – 2014
Putting the house
in order
2015 – 2017:
Heading to
organic growth
2018 
Future Suominen
Cost cutting
Restructuring
Reorganizing
Refinancing
Net sales 356.9 M€
Gearing 101.0%
Growth strategy
Investment program
Focus on products with
higher value added
Stronger R&D
Net sales 444.0 M€
Gearing 25.9%
Net sales at the
end of 2017:
~500 M€
6/30/2016

Eight nonwovens plants in three continents serving both business areas
Two business areas – Convenience and Care
6
93% of Suominen’s net sales 7% of Suominen’s net sales
• Main end use areas:
- Hygiene products (femcare,
incontinence, diapers)
- Medical nonwovens (e.g. swabs,
undercast pads, surgical drapes
and masks)
• Net sales of the business area (2015)
32.4 M€
• Main end use areas:
- Wiping (baby, household,
personal care ,
industrial wipes
- Travel & catering applications
• Net sales of the business area
(2015): 411.5 M€
Convenience Care
6/30/2016

Locations in three continents close to customers
Green Bay, WI, USA
Windsor Locks, CT, US
Bethune, SC, US
Paulínia, Brazil
Alicante, Spain
Mozzate, Italy
Nakkila, Finland
Cressa, Italy
Helsinki, Finland
(Head office)
Sales
representatives
present in
several
locations in
Asia Pacific
76/30/2016

Nonwovens
markets
86/30/2016

Historically, growth in demand for nonwovens has
exceeded the growth of the GDP
USA Europe
-4%
-2%
0%
2%
4%
6%
8%
10%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Nonwoven demand
In Europe, GDP growth is for euro area.
For nonwovens demand, the graphs illustrate the change in the value (USD) of nonwoven demand.
-10%
-5%
0%
5%
10%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Nonwoven demand
96/30/2016

We are the global leader in nonwovens for wipes
Suominen #1
Wiping ~2.1 billion euros
Other key producers
• Kimberly-Clark
• Jacob Holm
• Sandler
• Berry Plastics (ex-
AVINTIV)
Suominen ~20%
Global nonwovens market totaling
~26 billion euros
Other key producers
• Kimberly-Clark
• Berry Plastics (ex-AVINTIV)
• Fiberweb
• First Quality Nonwovens
• Pegas Nonwovens
Other key producers
• Kimberly-Clark
• Ahlstrom
• Freudenberg
• DuPont
• First Quality Nonwovens
Upholstery
10%
Other
27%
Building/roofing
7%
Filtration
9%
Floor coverings
6%
Automotive
5%
Wiping
8%
Medical
3%
Hygiene
25%
106/30/2016

Demand for Suominen nonwovens is expected
to grow globally, driven by several megatrends
+2%
+7%
+2–6%
+7%
+8%
Global growth rate ~5%
Growth rate for Suominen regions ~3%
Aging population
Everyday convenience
Health and well-being
trends
Growing
population and
middle class
Growing
population and
middle class
116/30/2016

GDP per capita
Demand for Suominen’s products is growing both in
emerging and developed markets
12
Household wipes
Incontinence products
Baby wipes
Disposable diapers
Feminine care products
USD 14 000+
USD 7 000+
USD 10 000+
USD 4 000+
USD 1 000+
6/30/2016

We hold the leading market position in Convenience,
still a challenger Care
13
TOP1
0
#1 Challenger
in nonwovens for
medical & hygiene
products
(Care business area)
Global market leader
in nonwovens
for wipes
(Convenience
business area)
Ninth-largest
of all nonwovens
suppliers globally
6/30/2016

Strategy for
2015-2017
146/30/2016

Suominen’s strategy 2015–2017
15
Market Driven Product Leader
Vision
Business strategy
1. Deliver superior value in thoughtfully selected market
applications.
2. Drive proactive key account management.
3. Execute demand driven supply chain.
4. Evolve culture and capabilities to build strong product
company.
Our purpose is to make nonwovens continuously better for people
Purpose
156/30/2016

In this strategy period, we aim at growth and clear
shift in product portfolio
40%
17%
11%
22%
7%
2015 (Total net sales 444.0 M€)
Baby wiping
Household wiping
Workplace wiping
Personal care wiping
Medical and hygiene products
2017 (approx. 500 M€)
Illustrative.
16166/30/2016

Understanding the end user needs is
at the heart of our strategy
176/30/2016

Strategy
implementation
186/30/2016

Suominen’s strategy 2015–2017
19
Market Driven Product Leader
Vision
Business strategy
1. Deliver superior value in thoughtfully selected market
applications.
2. Drive proactive key account management.
3. Execute demand driven supply chain.
4. Evolve culture and capabilities to build strong product
company.
Our purpose is to make nonwovens continuously better for people
Purpose
196/30/2016

Deliver superior value
in selected market
applications
Key activities in delivering superior value
20
~60 M€ growth investment program,
initiatives on three continents
Product development process
enhanced
Six new products launched
1
6/30/2016

The growth investment program now focusing on
the Bethune investment
Plant Estimated
value
Installed
during
Bethune
approx. EUR
50 million
H2/2016
Alicante
approx. EUR
4 million
2015Nakkila
Paulínia
To be
confirmed
approx. EUR
6 million
21
Bethune, SC,
USA
Paulínia,
Brazil
Alicante,
Spain
Nakkila,
Finland
6/30/2016

Product Development function enhanced
determinedly
22
Enhancing capabilities
• Innovation process,
“Suominen Innovation
Machine”
- Front End Innovation
- Creating a prioritized
project portfolio
- Introduction of formal
gate process for running
projects
Enhancing capacity
• Creating critical mass
- R&D expenditure to
increase to above 1% of
net sales (0.8% in 2015)
- Four new people
employed in 2015, two of
them PhDs
- Centralizing resources
6/30/2016

Our purpose is to make nonwovens continuously better for people. 23
Six new products launched in 2015
Five for Care, one for Convenience business
6/30/2016

Drive proactive key
account management for
mutual value creation
Key activities by focus area
24
Creating value together with customer
by, for example, organizing events
Listening to the customer: Utilizing the
Customer Perception Survey results
2
6/30/2016

Execute demand
driven supply chain
25
Defining and implementing
standardized global processes
3
Comprehensive ICT systems renewal –
aim at an efficient, global supply chain
6/30/2016

Evolve culture and
capabilities to build strong
product company
26
4
Pivotal recruitments building new and
enhanced capabilities in several areas
Strategic sustainability initiatives in
progress, e.g., blind recruiting
6/30/2016

Progress in strategic sustainability initiatives
Implementation of
the Supplier Code of
Conduct
Product sustainability
review
Non-Discrimination
and Equal
Opportunities
Program: Blind hiring
and salary study
Material and resource
efficiency: Among
other things, water
and energy efficiency
improved
Achieving
product leadership
Fostering responsibility
throughout the value chain
Operating sustainably
throughout the organization
4
276/30/2016

5,0 %
12,4 %
15,7 % 15,9 %
14,7 %
0%
5%
10%
15%
20%
2012 2013 2014 2015 Q1/2016
ROI, %
6,9 %
3,5 %
0,8 %
0%
2%
4%
6%
8%
10%
12%
2013 2014 2015
Organic net sales growth, %
101 % 96,2 %
34,7 %
25,9 %
28,6 %
0%
20%
40%
60%
80%
100%
120%
2012 2013 2014 2015 Q1/2016
Gearing, %
Progress on mid-term financial targets
• Net sales growth compared to
previous year.
• Target level marked with dashed
line.
• Figures are of continuing
operations.
286/30/2016

Key elements
of profitability
296/30/2016

Portfolio change drives top line growth
40%
17%
11%
22%
7%
2015 (444.0 M€) 2017 (~500 M€)
Illustrative.
• Portfolio change is increasing the share of higher value added products in our
portfolio
• Envisioned healthy volume growth supports the profitability development
47%
19%
10%
18%
6%
2012 (357.9 M€)
Baby wipes Household wipes Workplace wipes Personal care wipes Hygiene and medical products Others
306/30/2016

9,0%
10,7%
12,4% 13,1%
0%
3%
6%
9%
12%
15%
2012 2013 2014 2015
Gross profit, % of net sales
Positive development in gross profit, SGA costs
and operating profit
31
6,6%
6,0% 5,8% 5,7%
0%
2%
4%
6%
8%
2012 2013 2014 2015
SGA, % of net sales
*Excluding non-recurring items
4,2%
5,2%
6,7% 7,0%
0%
2%
4%
6%
8%
2012 2013 2014 2015
Operating profit*, % of net sales
6/30/2016

Raw materials – The logic
• Roughly 60–70% of costs are raw
materials.
• As one of the largest nonwovens
producers in the world, we
maintain long relationships with
key suppliers.
• Contracts covering ca. 50% of our
net sales include a pass-through
clause.
• Between raw materials for fibers
and the final fiber, there are
intermediate steps and in that value
chain market dynamics are in play.
• Raw materials are not hedged as
correlations are not predictable.
32
30%
23%
23%
21%
3%
Viscose Pulp Polypropene* Polyester Other
* Including sourced PP Spunbond.
6/30/2016

EUR/USD – A factor to pay attention to
• We have estimated that 10% change in EUR/USD exchange
rate should have, based on the current business structure, on
a full year basis, approximately 2.5 MEUR effect on operating
profit.
336/30/2016

Financial review
Q1 2016
346/30/2016

Net sales declined by 7.2%
Net sales, EUR million Net sales, EUR million
98,4 95,3
103,3104,8
111,9112,9114,9 104,2 103,9
0
20
40
60
80
100
120
140
356,9
373,7
401,8
444,0,0
0
100
200
300
400
500
2012 2013 2014 2015
• Net sales decreased from the comparison period to EUR 103.9 million. Demand was not at the same level as
in the comparison period. This also affected the competitive situation.
• Net sales were affected by both decreased sales volumes and lower sales prices in approximately equal
proportions.
• We saw signs of improvement in demand already towards the end of the review period.
Continuing operations. Continuing operations.
356/30/2016

Proportion of sales of products with
higher added value grew
41%
22%
15%
12%
8%
38%
25%
18%
10% 8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16 Q1/15 Q1/16
Typically higher value-added products
Baby wipes Personal care wipes Household Workplace Hygiene and medical products
366/30/2016

6,5 % 5,8 %
5.0 %
5,9 %
6,5 %
8,8 % 8,5 %
4,1 %
5,3 %
0%
2%
4%
6%
8%
10%
0
2
4
6
8
10
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
EUR million %
Operating profit decreased
from the comparison period
Operating profit excl. NRI, EUR million and % Operating profit excl. NRI, EUR million and %
• Operating profit decreased by 24.0% and amounted to EUR 5.5 million.
• Lower sales volumes and decrease in gross profit affected operating profit. There was no material
effect of US dollar exchange rate fluctuation on operating profit during the first quarter.
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 2015
EUR million %
Continuing operations.
376/30/2016

Profit for the reporting period
remained more or less unchanged
Profit for the reporting period, EUR million Profit for the reporting period, EUR million
2,6
2,2
0,6
4,8
3,5
6,2
5,4
1,9
3,4
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.
2012 2013 2014 2015
• Profit for the reporting period was strengthened mainly by lower financial expenses.
386/30/2016

Statement of profit or loss
EUR thousands 1-3/2016 1-3/2015 1-12/2015
Net sales 103,869 111,934 444,042
Cost of goods sold -92,077 -97,547 -386,042
Gross profit 11,792 14,387 58,000
Other operating income 629 950 2,637
Sales and marketing expenses -1,758 -1,902 -7,760
Research and development -837 -851 -3,527
Administration expenses -4,339 -4,681 -16,709
Other operating expenses 55 -611 -862
Operating profit 5,543 7,292 31,778
Net financial expenses -244 -1,621 -5,302
Profit before income taxes 5,299 5,671 26,476
Income taxes -1,858 -2,188 -9,456
Profit for the period 3,441 3,482 17,020
Gross profit did
not reach the level
of the comparison
period
Cost structure
continues on a
healthy level
Fluctuations in
exchange rates
decreased the
financial items
markedly below the
level of the
comparison period
396/30/2016

Statement of financial positions, assets
EUR thousands 31.3.2016 31.3.2015 31.12.2015
Non-current assets
Goodwill 15,496 15,496 15,496
Intangible assets 13,411 12,598 13,275
Property, plant and equipment 94,173 92,197 97,931
Loan receivables 7,793 8,202 7,793
Available-for-sale assets 777 1,113 777
Held-to-maturity investments − 433 −
Other non-current receivables 2,442 2,518 2,402
Deferred tax assets 4,529 5,276 4,491
Total non-current assets 138,621 137,833 142,165
Current assets
Inventories 31,816 30,914 32,557
Trade receivables 52,151 60,599 51,547
Loan receivables 1,000 600 1,000
Other current receivables 5,183 4,108 7,038
Assets for current tax
1,892 1,381 1,874
Cash and cash equivalents 53,065 38,036 55,570
Total current assets 145,107 135,639 149,585
Total assets 283,728 273,472 291,750
Elevated cash.
Payments in our
growth
investment
program will bring
cash level closer
to normal
406/30/2016

Statement of financial positions, equity and liabilities
EUR thousands 31.3.2016 31.3.2015 31.12.2015
Share capital 11,860 11,860 11,860
Share premium account 24,681 24,681 24,681
Reserve for invested unrestricted equity 69,652 69,572 69,652
Treasury shares -44 -44 -44
Fair value and other reserves 500 14 -118
Exchange differences 1,660 8,216 5,097
Other equity -4,775 -15,901 -3,076
Total equity attributable to owners of the
parent
103,534 98,398 108,052
Hybrid bond 17,272 16,653 17,664
Total equity 120,806 115,051 125,716
Liabilities
Non-current liabilities
Deferred tax liabilities 10,411 9,832 10,890
Liabilities from defined benefit plans 1,105 1,151 1,105
Other non-current liabilities 258 1,303 651
Debentures 75,000 75,000 75,000
Other non-current interest-bearing liabilities 18,058 6,667 18,498
Total non-current liabilities 104,831 93,953 106,144
Current liabilities
Current interest-bearing liabilities 3,318 3,333 3,363
Liabilities for current tax 764 941 47
Trade payables and other current liabilities 54,010 60,194 56,479
Total current liabilities 58,092 64,468 59,889
Total liabilities 162,923 158,421 166,034
Total equity and liabilities 283,728 273,472 291,750
Payment of
dividend the only
notable
transaction
416/30/2016

Cash flow from operations doubled
from the comparison period
Cash flow from operations, EUR million Cash flow from operation, EUR million
-0,4
11,3
16,9
9,3
4,5 3,9
7,9
11,0
9,1
-2
0
2
4
6
8
10
12
14
16
18
24,9
21,3
37,1
27,3
0
5
10
15
20
25
30
35
40
2012 2013 2014 2015
• Cash flow from operations was mainly improved due to a decrease in paid
financial items as well as positive change in working capital
426/30/2016

Statement of cash flows (1/2)
EUR thousands 1-3/2016 1-3/2015 1-12/2015
Cash flow from operations
Profit / loss for the period 3,441 3,482 17,020
Total adjustments to profit / loss for the period 6,852 8,319 32,870
Cash flow before changes in net working capital 10,292 11,802 49,890
Change in net working capital 1,368 -107 -7,921
Financial items -1,828 -5,317 -6,425
Income taxes -714 -1,886 -8,269
Cash flow from operations 9,118 4,493 27,274
Cash flow from investments
Investments in property, plant and equipment and
intangible assets
-3,849 -1,664 -22,369
Cash flow from disposed businesses − − 167
Sales proceeds from property, plant and
equipment and intangible assets
− 10 10
Cash flow from investments -3,849 -1,654 -22,192
Improved cash
flow from
operations
attributable to
all components
Investments
continued
436/30/2016

Statement of cash flows (2/2)
EUR thousands 1-3/2016 1-3/2015 1-12/2015
Cash flow from financing
Drawdown of other non-current interest-bearing
liabilities
− − 15,000
Repayment of other non-current interest-bearing
liabilities
− − -3,333
Changes in current interest-bearing liabilities − -14 -14
Changes in loan receivables − − 600
Share issue − 340 340
Paid interest on hybrid bond -624 − −
Dividend distribution / distribution of funds -5,030 -2,504 -2,504
Cash flow from financing -5,654 -2,177 10,089
Change in cash and cash equivalents -385 662 15,171
Cash and cash equivalents at the beginning of the
period
55,570 38,430 38,430
Effect of changes in exchange rates -2,120 -1,056 1,968
Change in cash and cash equivalents -385 662 15,171
Cash and cash equivalents at the end of the
period
53,065 38,036 55,570
Strong cash flow
covered both the
investments and
the payment of
dividend
446/30/2016

Outlook for 2016 remains unchanged
• Suominen expects that for the full year 2016, its net sales
and operating profit excluding non-recurring items will
improve from year 2015.
• In 2015, Suominen’s net sales amounted to EUR 444.0
million and operating profit excluding non-recurring items
to EUR 31.2 million.
456/30/2016

Summary: Suominen as an investment
Promising track record,
solid financial position
Ambitious growth scenario –
net sales to 500 M€ in 2017
Growth investment program:
Financial position secures the execution
Dividends form an important element
in the creation of shareholder value
46
~30%
Payout ratio
~60M€
500M€
28.6%
Gearing
6/30/2016

Suominen at Mid Small Cap Forum with Lond Capital

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