Net sales of Suominen Nonwovens up by 13%

02 Sep '08

6 min read

Suominen Corporation's net sales for the second quarter totalled EUR 55.2 million (51.2). Operating profit was EUR 0.6 million (0.5), profit before taxes EUR -0.6 million (-0.4) and profit after taxes EUR -0.4 million (-0.3).

Net sales for the first two quarters totalled EUR 109.6 million (105.5). Operating profit was EUR 0.5 million (1.7), profit before taxes EUR -1.8 million (-0.1) and profit after taxes EUR -1.3 million (-0.1).

Raw material prices levelled off temporarily during the spring, however, quoted prices for supplies for the summer period are back to higher levels.

The rise in raw material prices, the delay in transferring these increases over to sales prices, and price reductions based on contracts reduced the value added margin by some EUR 2 million.

Energy and payroll costs increased by some EUR 1.5 million compared to six months of 2007. The Company's cost-saving programme has generated some EUR 2.5 million since the previous year.

Suominen´s Stairs to Top programme extending over a number of years under way covers both operational development and continuous improvement, as well an updated customer offering.

During the period under review, the programme brought a total of EUR 2.5 million in cost savings through improved efficiency.

In addition, progress was made in sales and product offering programmes. Efficiency-enhancement measures continued to focus on cost savings.

Interest-bearing liabilities totalled EUR 97.6 million including capital loans of EUR 10 million. Net repayments of liabilities were EUR 2.0 million.

Net financial expenses were EUR 2.3 million (1.8) or 2.1 per cent (1.7) of net sales. A total of EUR 1.2 million was tied up in working capital due to increase in inventories for the summer period.

The equity ratio was 27.6 per cent (31.6). When the capital loans are included in shareholders' equity, the equity ratio was 33.5 per cent (33.9) and the ratio of liabilities to shareholders' equity 152.7 per cent (143.2). Cash flow from operations was EUR 0.13 per share (0.10).

The Company's gross investments in production totaled EUR 2.0 million (5.1). Planned depreciation amounted to EUR 6.5 million (7.1).

Wet Wipes accounted for EUR 0.3 million (1.6), Nonwovens EUR 0.6 million (0.8) and Flexible Packaging EUR 1.1 million (2.7) of total investments. Investments were replacement and maintenance investments.

During the period under review, net sales of the Wipes and Nonwovens business area totalled EUR 72.0 million, an increase of 8 per cent on the corresponding period in 2007. The business area's operating profit totalled EUR 0.2 million (-0.1).

Net sales of Wet Wipes totalled EUR 35.9 million, an increase of 7 per cent on the previous year. Delivery volumes grew, and strong growth was seen in personal care wipes in particular. Average sales prices fell as expected, mainly due to long-term contracts.

Development in sales to new customers and sales of Suominen's own product applications was slow. The revision of production recipes launched in the business unit at the beginning of the second quarter enabled a shift to less expensive raw materials for some products, which has slightly improved the margins for sales.

The stock of finished products was increased for the summer period. The positive development of operational efficiency and cost-saving measures continued, the impact on performance being mainly attributable to cost-savings.

The demand structure for products did not allow any increase in the use of automatic lines in production, and yield increased slower than expected.

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