This document summarizes the President & CEO's review from Suominen Corporation's Annual General Meeting. It discusses Suominen's purpose, leadership team, business areas, market position, financial results from 2015 which showed sales growth and improved profitability, outlook for 2016 which expects further sales and profit growth. It also reviews Suominen's strategy for 2015-2017 which focuses on delivering value in selected market applications, key account management, demand-driven supply chain, and building capabilities as a product company. The implementation of the strategy in 2015 included investments, product development improvements, and launching six new branded products.
2. Our purpose is to make nonwovens continuously better for people.
Corporate Executive Team and
Corporate Leadership Team
3/16/2016
Nina Kopola
President & CEO
Nina Kopola
President & CEO
Tapio Engström
CFO
Tapio Engström
CFO
Lynda A. Kelly
Care
Lynda A. Kelly
Care
Larry L. Kinn
Operations
Larry L. Kinn
Operations
Ernesto S. Levy
Convenience
Ernesto S. Levy
Convenience
Mimoun Saïm
Operations
Mimoun Saïm
Operations
Hannu Sivula
HR
Hannu Sivula
HR
Dan Dunbar
Sourcing
Dan Dunbar
Sourcing
Anu Heinonen
Communications
& IR
Anu Heinonen
Communications
& IR
Margareta Huldén
R&D
Margareta Huldén
R&D
Roberto Pedoja
Technology
Roberto Pedoja
Technology
Timo Rautakorpi
CIO
Timo Rautakorpi
CIO
Saara Söderberg
Marketing &Product
Management
Saara Söderberg
Marketing &Product
Management
2
3. Our purpose is to make nonwovens continuously better for people.
Contents
• Suominen today
• Market review
• Financial review 2015
• Outlook for 2016
• Strategy
• Strategy implementation in 2015
• Summary: Suominen’s year 2015
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4. Our purpose is to make nonwovens continuously better for people.
Suominen
today
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5. Our purpose is to make nonwovens continuously better for people.
Potential customers
Our customers convert nonwovens into products for
consumers and professionals
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Suominen End use applications
6. Our purpose is to make nonwovens continuously better for people.
Eight nonwovens plants in three continents serving both business areasEight nonwovens plants in three continents serving both business areas
Two business areas
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93% of Suominen’s net sales93% of Suominen’s net sales 7% of Suominen’s net sales7% 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:
- 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€
• Main end use areas:
- Wiping (baby, household,
personal care ,
industrial wipes
- Travel & catering applications
• Net sales of the business area
(2015): 411.5 M€
ConvenienceConvenience CareCare
7. Our purpose is to make nonwovens continuously better for people.
Leading market position in Convenience,
still a challenger Care
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#9#9 #1#1 ChallengerChallenger
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
8. Our purpose is to make nonwovens continuously better for people.
Year 2015 in a nutshell
Investment
program in
implementation
Investment
program in
implementation
6 new branded
products
6 new branded
products
Strong
cash flow
EUR 27,3 million
Strong
cash flow
EUR 27,3 million
Net sales
EUR 444,0 million
+10%
Net sales
EUR 444,0 million
+10%
Operating profit
EUR 31,2 million
+ 16%
Operating profit
EUR 31,2 million
+ 16%
Dividend proposal
0,02€/osake
Dividend proposal
0,02€/osake
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9. Our purpose is to make nonwovens continuously better for people.
Market
review
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10. Our purpose is to make nonwovens continuously better for people.
In medical and hygiene, our targeted market is over
EUR 2 billion
Global nonwovens market totals approx. EUR 26 billion
Upholstery 10%
Other 27 %
Building 7%
Filtration 9%
Floor coverings 6%
Automotive 5%
Wiping 8%
Medical 3%
Hygiene 25%
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Demand is growing in all market areas
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Aging population,
everyday convenience,
health and well-being
Aging population,
everyday convenience,
health and well-being
Growing middle class,
population growth
Growing middle class,
population growth
Growing middle class,
population growth
Growing middle class,
population growth
12. Our purpose is to make nonwovens continuously better for people.
There’s demand for Suominen’s products in both
developing and developed markets
Household wipesHousehold wipesUSD 14 000+USD 14 000+
Incontinence productsIncontinence productsUSD 10 000+USD 10 000+
Baby wipesBaby wipesUSD 7 000+USD 7 000+
Disposable diapersDisposable diapersUSD 4 000+USD 4 000+
Feminine care productsUSD 1 000+USD 1 000+
GDP per capita
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13. Our purpose is to make nonwovens continuously better for people.
Financial
review
2015
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Net sales grew by 10.5%
Net sales, EUR million
In FY2015, net sales grew 10.5% due to the strengthening of the USD compared to EUR.
Suominen’s net sales grew organically and excluding the effect of exchange rates by
roughly 1%.
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356,9 373,7
401,8
444,0
0
50
100
150
200
250
300
350
400
450
500
2012 2013 2014 2015
15. Our purpose is to make nonwovens continuously better for people.
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 of gross profit, expenses and
operating profit continued in 2015
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6,6%
6,0% 5,8% 5,7%
0%
2%
4%
6%
8%
2012 2013 2014 2015
* exlcuding non-recurring items.
14,9
19,4
26,9
31,2
0%
2%
4%
6%
8%
0
10
20
30
40
2012 2013 2014 2015
Operating profit*, EUR million and %
Sales, operating and administration expenses,
% of net sales
16. Our purpose is to make nonwovens continuously better for people.
Balancing the product portfolio continues
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41%
21%
17%
11%
8%
2014: 401.8 M€
40%
22%
17%
11%
7%
2015: 444.0 M€
Typically products with higher added value
Baby wipes Personal care Household Workplace Medical & hygiene
47%
18%
19%
10%
6%
2012: 357.9 M€
17. Our purpose is to make nonwovens continuously better for people.
Profit for the period grew by 67% from the
comparison period
Profit for the period, EUR million
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-2,8
5,7
10,2
17,0
-5
0
5
10
15
20
2012 2013 2014 2015
18. Our purpose is to make nonwovens continuously better for people.
Dividend proposal doubled from the last year
Earnings per share, EUR Dividend per share, EUR
-0,01
0,02
0,04
0,06
-0,02
0
0,02
0,04
0,06
0,08
2012 2013 2014 2015
2014: Distribution of funds.
2015: Dividend proposal for the AGM.
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0 0
0,01
0,02
0
0,01
0,02
0,03
2012 2013 2014 2015
19. Our purpose is to make nonwovens continuously better for people.
Cash flow strong as expected in FY2015
Cash flow from operations, EUR million
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24,9
21,3
37,1
27,3
0
10
20
30
40
2012 2013 2014 2015
20. Our purpose is to make nonwovens continuously better for people.
Outlook for 2016
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21. Our purpose is to make nonwovens continuously better for people.
The first months of 2016
• Some customers postponed their orders in the last quarter of
2015 until after the turn of the year. We have received these
postponed orders.
• However, during the first months of the year, the demand has
not been at last year’s level.
• We anticipate the change in demand to be temporary,
deriving from the new manufacturing capacity just recently
launched in Europe and North America, our main market
areas.
• In longer term, the demand forecasts have not changed.
Suominen anticipates its target markets to grow annually by
some 2–9%, depending on the product segment and
geographical region.
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22. Our purpose is to make nonwovens continuously better for people.
Outlook for FY2016 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.
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23. Our purpose is to make nonwovens continuously better for people.
Strategy
2015–2017
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24. Our purpose is to make nonwovens continuously better for people.
1. Deliver superior value in thoughtfully selected market applications.
2. Drive proactive key account management for mutual value creation.
3. Execute demand driven supply chain.
4. Evolve culture and capabilities to build strong product company.
1. Deliver superior value in thoughtfully selected market applications.
2. Drive proactive key account management for mutual value creation.
3. Execute demand driven supply chain.
4. Evolve culture and capabilities to build strong product company.
Suominen’s strategy 2015–2017
Market Driven Product LeaderMarket Driven Product Leader
Vision – where?Vision – where?
Strategy – how?Strategy – how?
Our purpose is to make nonwovens continuously better for people.Our purpose is to make nonwovens continuously better for people.
Purpose – why?Purpose – why?
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25. Our purpose is to make nonwovens continuously better for people.
We aim at major shift in product portfolio
2017 (approx. EUR 500 million)
Illustrative.
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40%
17%
11%
22%
7%
2015 (EUR 444.0 million)
Baby wipes Household wipes
Workplace wipes Personal care wipes
Hygiene and medical products
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Understanding the end user needs is
at the heart of our strategy
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27. Our purpose is to make nonwovens continuously better for people.
Strategy
implementation
in 2015
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28. Our purpose is to make nonwovens continuously better for people.
Suominen’s strategy 2015–2017
28
Market Driven Product LeaderMarket Driven Product Leader
VisionVision
Business strategyBusiness strategy
3/16/2016
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 peopleOur purpose is to make nonwovens continuously better for people
PurposePurpose
28
29. Our purpose is to make nonwovens continuously better for people.
Deliver superior value
in selected market
applications
Deliver superior value
in selected market
applications
Key activities by focus area
3/16/2016 29
Approx. EUR 60 million growth
investment program progressed
Approx. EUR 60 million growth
investment program progressed
Product development process was
enhanced
Product development process was
enhanced
Six new branded products launchedSix new branded products launched
11
30. Our purpose is to make nonwovens continuously better for people.
Suominen responds to demand, especially in the fastest-
growing market segments, with its growth investments
The investment in Paulínia
expands the product
offering of the plant to,
e.g., medical nonwovens.
The investment in Paulínia
expands the product
offering of the plant to,
e.g., medical nonwovens.
The new production line
in Bethune, SC targets
especially the fastest-
growing wiping product
markets.
The new production line
in Bethune, SC targets
especially the fastest-
growing wiping product
markets.
A production line that was
shut down in 2012 was
restarted in Nakkila.
A production line that was
shut down in 2012 was
restarted in Nakkila.
The investment in Alicante
expands the product
offering of the plant to,
e.g., workplace wiping
products.
The investment in Alicante
expands the product
offering of the plant to,
e.g., workplace wiping
products.
3/16/2016 30
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31. Our purpose is to make nonwovens continuously better for people.
Examples of fast-growing market segments with
higher added value
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Flushable nonwovens
- Market growth 7–9% per year
- Growing number of applications
- Suominen has patented
technology
Flushable nonwovens
- Market growth 7–9% per year
- Growing number of applications
- Suominen has patented
technology
Household wipes
- Market growth 2–7% per year
- Growing number of applications
- Convenience, making daily
routines faster
Household wipes
- Market growth 2–7% per year
- Growing number of applications
- Convenience, making daily
routines faster
Workplace wiping
- Market growth 5–7% per year
- Main end use environments
include, e.g., hospitals,
restaurants, manufacturing
Workplace wiping
- Market growth 5–7% per year
- Main end use environments
include, e.g., hospitals,
restaurants, manufacturing
Medical nonwovens
- Market growth 3–5% per year
- Aging population and
challenges in healthcare, for
example, boost the growth
Medical nonwovens
- Market growth 3–5% per year
- Aging population and
challenges in healthcare, for
example, boost the growth
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32. Our purpose is to make nonwovens continuously better for people.3/16/2016 32
Product Development was improved
determinedly
Enhancing capabilities
• Suominen Innovation
Machine process
- Front End innovation
- Creating a prioritized
project portfolio
- Introduction of formal gate
process for running
projects
Enhancing capabilities
• Suominen Innovation
Machine process
- 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
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
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33. Our purpose is to make nonwovens continuously better for people.3/16/2016 33
Six new branded products in 2015
Five for Care, one for Convenience
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34. Our purpose is to make nonwovens continuously better for people.
Drive proactive key
account management for
mutual value creation
Drive proactive key
account management for
mutual value creation
Key activities by focus area
3/16/2016 34
Creating value together with customer
by, for example, organizing events
Creating value together with customer
by, for example, organizing events
Listening to the customer: Utilizing the
Customer Perception Survey results
Listening to the customer: Utilizing the
Customer Perception Survey results
22
35. Our purpose is to make nonwovens continuously better for people.
Execute demand
driven supply chain
Execute demand
driven supply chain
Key activities by focus area
3/16/2016 35
Defining and implementing
standardized global processes
Defining and implementing
standardized global processes
33
Comprehensive ICT systems renewal –
aim at an efficient, global supply chain
Comprehensive ICT systems renewal –
aim at an efficient, global supply chain
36. Our purpose is to make nonwovens continuously better for people.
Evolve culture and
capabilities to build strong
product company
Evolve culture and
capabilities to build strong
product company
Key activities by focus area
3/16/2016 36
44
Pivotal recruitments building new and
enhanced capabilities in several areas
Pivotal recruitments building new and
enhanced capabilities in several areas
Strategic sustainability initiatives in
progress, e.g., blind recruiting
Strategic sustainability initiatives in
progress, e.g., blind recruiting
37. Our purpose is to make nonwovens continuously better for people.
Progress in strategic sustainability initiatives
Finishing the
Supplier Code of
Conduct
Finishing the
Supplier Code of
Conduct
Product
sustainability
review
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
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
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44
37
38. Our purpose is to make nonwovens continuously better for people.
Award for FIBRELLA® Lite in Research, Innovation
& Science for Engineered Fabrics conference
3/16/2016 38
44
39. Our purpose is to make nonwovens continuously better for people.
Progress on mid-term financial targets
3/16/2016 39
5,0 %
12,4 %
15,7 % 15,9 %
0%
5%
10%
15%
20%
2012 2013 2014 2015
ROI, %
• Organic net sales growth, excluding
the effect of exchange rates,
compared with previous year.
• Target level marked with dashed line.
• Figures are for continuing
operations.
6,9 %
3,5 %
0,8 %
0%
2%
4%
6%
8%
10%
12%
2012 2013 2014 2015
n/a
Organic net sales growth, %
101,0 96,2
34,7
25,9
0
20
40
60
80
100
120
2012 2013 2014 2015
Gearing, %
40. Our purpose is to make nonwovens continuously better for people.
Summary
3/16/2016 40
41. Our purpose is to make nonwovens continuously better for people.
Summary
3/16/2016 41
Our profitability improved
markedly but we fell short of
the target set for organic
growth
Our profitability improved
markedly but we fell short of
the target set for organic
growth
Dividend proposal doubled
from the last year
Dividend proposal doubled
from the last year
In line with our strategy, we
built foundations for growth
by focusing on:
• Product development
• Investments
• Corporate culture
In line with our strategy, we
built foundations for growth
by focusing on:
• Product development
• Investments
• Corporate culture
In 2016, Suominen continues
to implement its strategy,
aiming at product leadership
and profitable organic growth
In 2016, Suominen continues
to implement its strategy,
aiming at product leadership
and profitable organic growth