HELSINKI - Nonwovens manufacturer Suominen has attributed its 4% dip in sales and subsequent loss for its first quarter to high inventory levels at certain customers as well as operational issues in the entire supply chain due to the current Covid-19 situation.
The loss for the period was -€2.3 million compared to a profit of €13.8 million in the first quarter while EBITDA (earnings before interest, taxes, depreciation and amortization) declined to €3.3 million from €18.5 in the same period last year.
“For Suominen the beginning of 2022 has been challenging as was expected," said Petri Helsky, President & CEO. "Certain key customers especially in the US continued to struggle with their inventory levels. Furthermore, in the early part of the year both our and our customers’ operations were affected by the omicron variant of the COVID-19. Both of these factors impacted our sales negatively. On the cost side we have seen further sharp increases in raw material, energy and freight costs. Due to the lag in our sales pricing mechanisms our pricing in the first quarter did not fully reflect these increases."
Net sales were €110.3 million, down from €115.3 in the first quarter. Sales volumes decreased from the COVID-19 boom levels while sales prices increased clearly following the higher raw material prices. "The main reasons for the decline were the lower volumes and the timing gap between our customer pricing and raw material, energy and freight costs which increased even more than the sales prices," Helsky said.
Looking forward, Suominen now expects that its comparable EBITDA in 2022 will decrease clearly from 2021. The war in Ukraine has increased the already significant cost inflation in raw materials, energy and transportation. Also, while there has been progress in the normalization of the customer inventory levels in the US, it has been somewhat slower than expected. These factors will impact the full year result negatively even though the company expects that the demand for its products will improve in the second half of the year.
"To improve our financial performance, we have launched an EBITDA improvement program to identify both new sales opportunities and cost savings initiatives," Helsky added. "As an example of actions taken, we implemented an energy surcharge to all our products sold in Europe in mid-March. Also, as the inventory issues in the US are mainly related to a certain product group, we have been working to widen the product portfolio at the production lines especially affected by the inventory imbalance.
"In line with our vision to be the frontrunner in sustainable nonwovens we are continuously developing our sustainable product offering. During the quarter, we launched our first carbon neutral product Biolace Zero. Our efforts in the sustainability area were also recognized at the IDEA 22 Conference with our Hydraspun Aquaflo winning the Nonwoven Product Achievement Award."