Suominen Corporation's Interim Report for January 1 - September 30, 2013: Net sales and operating profit from continuing operations better than in the comparison period

Highlights in July – September 2013:

-Net sales from the continuing operations declined by 2% and amounted to EUR 108.6 million (110.5)

-Operating profit excluding non-recurring items from the continuing operations decreased by 15% to EUR 5.3 million (6.7)

-The divestment of Codi Wipes business unit was closed on 15 July 2013. In this interim report, Codi Wipes is reported in discontinued operations.

- Suominen decided to renew its corporate structure, organization and management system as of 1 January 2014.

- Suominen repeats its previous estimate, announced on 17 July 2013, according to which Suominen expects its net sales of the continuing operations for the full year 2013 to remain at or slightly exceed the level of 2012. Operating profit excluding non-recurring items is expected to improve from year 2012. In 2012, Suominen’s net sales from continuing operations were EUR 410.4 million. Group operating profit excluding non-recurring items, as reported in the Financial Statements of 2012, was EUR 13.7 million

Nina Kopola, President and CEO, commenting on Suominen’s third quarter:

“According to the Consumer Confidence Index, consumers’ confidence in their personal finances continued to strengthen in Europe during the third quarter. The sustained increase in the Consumer Confidence Index seen in the U.S. in the first half of the year leveled off, and the index began to show a slight decline towards the end of the third quarter.

Although both net sales and operating profit fell short of the strong level of the comparison period in the third quarter, Suominen’s business development for the January-September reporting period on the whole has been positive and in line with our plans.

Net sales from the Group’s continuing operations were EUR 108.6 million in the third quarter, and operating profit excluding non-recurring items amounted to EUR 5.3 million. In the Wiping segment, net sales from continuing operations declined 4% from the strong level of the comparison period and were EUR 93.5 million (97.9).

The segment’s operating profit, excluding non-recurring items, was EUR 3.7 million (8.1), which corresponded to 4.0% of net sales. Exceptional costs, which were recognized during the third quarter, arising from challenges related to customer deliveries, as well as from adjustments to Group charges, weakened the operating profit of the Wiping segment. Operating profit of the comparison period was also boosted by an exceptionally favorable product mix.

Net sales of the Flexibles segment grew 19%, despite a tough competitive environment, and totaled EUR 15.1 million. The segment’s operating profit excluding non-recurring items weakened, however, from the comparison period, and remained negative. We are looking into the possibilities of intensifying the business recovery program of the Flexibles segment.

We continued with our steadfast work to implement our In the Lead strategy. The divestment of the Codi Wipes unit was closed in July. The transaction reinforced our position as the leading nonwovens manufacturer in the wiping products value chain, and we can now, in keeping with our strategy, focus on strengthening this position with even greater intensity.

With the renewal of our corporate structure, our organization, our management system, and our operating model from 1 January 2014, we will be creating new prerequisites for quicker execution of our strategy than before. With these renewals, Suominen will become an even more focused and agile company. Our ability to create new business and develop products with increased added value will also be strengthened. In this way, we will accelerate both our own and our customers’ business and can improve Suominen’s profitability.

Suominen’s current Nonwovens business unit will be divided into two new business areas as of 1 January 2014. The Convenience business area will focus on serving customers that manufacture wiping products and travel and catering products.

"The Care business area will serve customers that manufacture healthcare and hygiene products. The strategy of the Flexibles has also been sharpened and its operations have been reorganized in order to improve and bolster customer service. In the future, Flexibles will concentrate on four businesses: bread packaging, tissue wrapping, retail carrier bags and special products.

The strategic development programs in the nonwovens business which were started earlier this year continued in the third quarter as planned. The objectives of the programs are to harmonize and boost the efficiency of our supply chain processes and to further improve our product development.”