Good day everyone, and welcome to Suominen's Q4 and full year 2023 result publication. My name is Emilia Peltola, and I'm heading Suominen's Communication and Sustainability team. Today, our President and CEO, Tommi Björnman, and CFO, Janne Silonsaari, will present the result, and the agenda goes as follows: So Tommi will first summarize the year 2023 in brief, then Janne more in detail in the financial review, and Tommi again conclude the presentation with the progress in strategy and outlook for this year. But Tommi, please.
Thank you, Emilia, and good morning everybody also on my behalf. And, we thought to start this presentation with a small, short video, which is actually explaining a little bit the Suominen. So let's look at the video first, and then I will continue with the full year brief.
We are Suominen, a global nonwovens manufacturer with Finnish roots, best described by three words: pure Nordic quality. First, being pure is about the sustainability of the whole company, from the manufacturing process to the materials used. Purity and cleanliness are the sole purpose of our products. Secondly, we're Nordic. If anything, the Nordics are known for their responsibility, well-being, and honesty. For us, it also means strong ethics and staying true. You can trust things really are as they are said to be. Finally, there's quality, plain and simple. Quality of products, service, and everything else. With Suominen, you know what you get, and what you get is pure Nordic quality.
Okay, thank you. Hopefully, we enjoyed the video. So just in order to look at briefly what happened within the 2023 last year, so our top line was slightly lower. That was mainly coming from the raw material prices drop, as we have the mechanism of the pass-through method with our mainly customers. And at the same time, of course, we were slightly able to improve our margins. Our top bottom line, EBITDA, improved from EUR 15.3 million to EUR 15.8 million. And we continued to have a strong cash flow from the operations, ended up with EUR 30.7 million compared to last year, EUR 14 million. And then based on this strong cash flow, the board of directors did decided that to give the dividend for the owners of EUR 0.10 per share.
Now, I would like to pass over the presentation to Janne, that he will review the financial part of the operation. Janne, please.
Okay, thank you, Tommi. Good morning also on my behalf, and here we have full year and Q4 net sales. The net sales declined from 2022, mainly due to the lower sales prices resulting from lower raw material prices. And as a reminder, it's typical in this industry that a lot of sales pricing is indexed and follows the raw material price trends. Sales volumes decreased slightly from 2022, mainly related to the plant closure in Mozzate, and currencies impacted negatively, roughly EUR 7 million. In Q4, we saw a positive development, and this was mainly driven by higher sales volumes. And worth mentioning is that share of the new products sold are on very good level and over 35% of new... of net sales during 2023.
As a reminder, new products are considered, which are launched during the past three years, and majority of these are part of our sustainable product offering. Then comparable EBITDA. Full year EBITDA slightly increased compared to the previous year, as Tommi mentioned, ended up roughly 4% higher despite of the challenging business environment. As you can see on the right-hand side, we had a fairly two-folded year. First half of the year, profit was low, but we saw good development on the EBITDA levels during the second half of the year, when our actions, especially on commercial excellence side, started gradually contributing. Here is still a full profit and loss, including one-off costs. Those are related to the Mozzate plant closure.
Only minor costs incurred during Q4 2023. I believe this was EUR 11,000 totally, and for the full year 2023, roughly EUR 4.8 million Mozzate plant closure-related costs, and EUR 9.6 million as a total during 2022 and 2023. On a positive note, our cash flow from operations was very strong, regardless of challenges in business environment, so we were able to continue the strong trend during Q4. Main contribution came from good control of net working capital and mainly from inventories. As a CFO, I'm pleased with our ability to manage the operations and produce positive cash flow from operations despite the challenges on profitability side. So good to end on positive note, and Tommi, back to you.
... Okay, thank you, Janne. So let's look at little bit something that we— This is a slide which we have used in many of our presentations already. Just a reminder, this is the frame what we look at our strategy. It's from 2020 to 2025. You know, the cornerstone, of course, of that is the sustainability, and we want to be the sustainability leader in the nonwovens industry. And then the other one is, of course, link that we have a very strong focus on customers and efficiencies. And this is, of course, the frame what we are going to review within this year in order to see that how we would be able to enhance the strategy once going forward. And maybe once we take the next slide, so looking at the highlights, actually, this gives also the reflection of the areas where we are focusing.
The first one, of course, was something that we concluded the investment in Nakkila in Finland. Actually, that was a line upgrade, and mainly the idea behind that upgrade was something that we would be able to offer more sustainable products from our platform from Finland. Then the other part, of course, is something which linked to the efficiency. It was the closure of the Mozzate site in Italy that is concluded within last year. And of course, the impact of that is fully in our P&L. On that, of course, there will be some cash flow impacts coming once going forward, once we move the lines. But generally speaking, Mozzate closure went according to the plan, and we were able to transfer majority of the products and customers to other European sites.
And then looking at, again, the sustainability, like Janne mentioned, so we had a good level. Actually, I can even say a very good level of the new products what we introduced. Majority of those products are sustainable. And then in order to look at, so that the comparison what we have been using in order to look at the frame, we have been comparing as a start baseline, base year 2019, and from 2019 till today, we have been able to increase the share of the new products and the sustainable products with 79%. So generally speaking, the sustainable products have almost like doubled since 2019. And then as an evidence of that, we also measure ourselves internally. So how many new sustainable product launches we had within a year, and last year we had 12 of them.
These are always considered that what the customer considers as a new product for them and introduced. This is mainly something that what we do, is something utilizing our platform and investments in order to upgrade our current portfolio. Linked to that, of course, we continue to work around the sustainability, and last year, again, we had the EcoVadis assessment on that. We maintained the silver rating. We were able to improve our rating by five points, but unfortunately, we just missed two points from the gold level, which means that we continue to work around the sustainability in order to improve, to achieve the gold level also in EcoVadis. Then how we will do all of this was something that we reviewed the organization, and we changed the organization to be more closer to the customers.
We established a business area, regional business area organization in order to support this profitable growth journey. And we want really to mention that we see the situation in such a way we want to bring profitability first and then start looking at the growth. And then in order to look at so that how do we see 2024, so in this, in order to look at the outlook of 2024, we state that we would like to improve from 2023 till going to 2024. As a reminder, our EBITDA was 2023, EUR 50.8 million. And back to Emilia, so-
Yes. Thank you, Tommi and Janne. Now it's time for questions. From the lines, do we have any questions?
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Joni Sandvall from Nordea. Please go ahead.
Yeah, thanks. And, thanks for the good presentation. I have a couple of questions. I'll take those one by one. You reiterated your wording of positive signs from the market. So can you give any additional color on how you expect volumes to develop now in H1 and then in full year 2024?
Okay, Joni, that was a very good question. So, once we look at over here, so generally speaking, of course, the business environment, it continues to be challenging. So, if we look at generally speaking, so we have the war in Ukraine, we have the crisis in Gaza, the situation in Suez. Then, in order to look at, so that what is something, the interest rates are still high, we have the inflation, so which is impacting the general economy. But, in order to look at our hygiene business, personal care business, that tends to be fairly stable business. So, looking at the underlying demand within the market, it's fairly stable, and we could even say that in the United States, it's still on the stronger side... but at the same time, we have a competition.
So this is more linked to the activity, what we have in-house, what we do together with our customers, how we work with them, how we are improving our commercial excellence, how we improve our operational excellence. So it's more depending on us, how we succeed with the steps, what we have decided in order to improve the situation. It's less, the support coming from the market.
Okay. Okay, thanks. Now when the Nakkila investment is completed and taking into account the Mozzate closure, does this actually have volume impact? If we net this two out, should we see positive volume from the Nakkila investment?
So of course, that once we close the Mozzate, you know, so that generally speaking, if you look at net, net everything, so if we compare 2022 to 2023, we were something like 1,500 tons shy. So more or less, we closed the gap already within last year. And once we go forward, of course, our intention is to squeeze and sweat our assets as we can gradually, which is actually it's not very fast, but gradually we will sweat our assets, and this way we will get the support to our growth.
Okay, thanks. Then, maybe question related to costs, 'cause there are maybe tentative signs of rising pulp prices in the market. So, how you see the environment from your side now currently on the pricing front?
So like Janne mentioned earlier, so that we—the tendency, if you look at the industry standard, the industry standard more or less, or the way to operate in this industry, so it's something typically the raw materials are passed through. So meaning that actually with the main customers and in the main contracts, we have a pass-through clause. So if the raw material prices are going up and down, it has a certain impact, but more it's depending on us through the commercial excellence, so that what are the new products what we are able to introduce, what else we can do with the customers? It's impacting more than the market.
So, of course, we take everything what is granted and, we are able to have the support from the market, but it's mainly driven our internal activity and operations linked to the commercial excellence, how we do it.
Okay, thanks. And maybe one question to Jan about the inventories, 'cause those have reached now pretty much the pre-COVID levels. So is it fair to assume that there is not so much to... or there is not much improvement potential on that front in 2024?
That's of course kind of the question where you don't want to be too direct on your answer, but I think that you have done the homework well. So yes, we are pretty much on a pre-COVID level. And I put it this way: we are not likely see such a high improvement on the inventories when talking about the net working capital as we have done so far. So yes, probably there are certain spots where we can still improve, but I would turn my, you know, view more on the accounts payables, accounts receivable side on net working capital. And then naturally, overall, when talking about the cash flow, then EBITDA is the main focus on the improvement side.
Sure. Thanks. And last question from my side, regarding the guidance. You mentioned that you are expecting improving comparable EBITDA following in 2024 and in 2023, the improvement was only EUR 0.5 million. So how should we view this? Do you have some threshold or thresholds for the guidance?
Joni, that was an excellent question. So that, of course, we have to remember that our starting point is fairly low level. So, and how we see, you know, the management sees, so we are improving step by step, and it will take a certain time. Therefore, actually, that we gave 2024 guidance fairly conservative. And, we would rather like to see it in such a way that let's look at the situation again after the first quarter, once we can see the development of our commercial and operational excellence activity and what is the success rate of that. So that's just understanding the challenging business environment.
Okay, thanks. That's all from me.
The next question comes from Joonas Ilvonen from Evli. Please go ahead.
Hi, it's Joonas from Evli. You already touched upon on this sales volume outlook for this year, but could you maybe briefly elaborate on Q4 volumes? So I, I guess Americas development... I mean, you say that overall Q4 volumes increased slightly, but could you elaborate a bit on, you know, Americas versus Europe developments in Q4?
Okay, Joonas, that's also an excellent question. So, of course, we are not normally, we don't go too very deep on these regions, but generally speaking, it's something that what we can see that, you know, in the United States, like say, you know, that the basic underlying demand is at a fairly good level, so which is, of course, giving us a support on that. And maybe what I'm able to mention that also in Europe, the situation have slightly improved... as well, and this is something that what we see. So therefore, we are pretty confident what's going forward, that we see some positive signs, but we need to be a little bit cautious because it's so unpredictable. It's very difficult to see, and the uncertainty is not because of us, it's because of the whole economy.
Right. And, you also touched upon this raw material outlook. I don't know, do you have anything...? I mean, I guess, I guess those prices are now kind of stabilizing, or I guess that's your assumption, that they will remain somewhat stable this year. I mean-
So-
Compared to where they are now.
Yeah, okay. Okay, Joonas, I, I understand your question, so that what, what you are heading to that. So, you know, it's something that, you know, the... You know, generally speaking, once we're looking at what, what we succeeded in 2023, we were able to improve our sales margin, which was, of course, a good development. And then in order to look at... So we would like to rather look at the market in such a way that, yes, there, there are changes in raw material cost, but we need to adapt ourselves, and we, we need to make sure so that then whenever these are changing, that it has a minimal impact in the way how we run, run the business.
I wouldn't like to go and, you know, claim that with the, you know, you know, raw material prices going up or down, so we would rather run our business and try to make and maintain and improve our margins.
Good. And maybe final question: You also mentioned this, I mean, a couple of years ago, there was this Suez Canal crisis, and now there's the situation in the Red Sea. And has that been, like, any major issue from a logistical point of view so far?
So luckily, we are... If we look at it, it's one part of our sustainability strategy as well. We are local. So in a way, we want to be a local supplier. We are European supplier, so majority of our raw material customers, we operate in Europe. So we want to be close to them because actually that is the way how you can have the lowest possible carbon footprint. So which means that actually the Suez Canal is not that strongly impacting on us. So it is—it's not... We are not immune on that. We have... Of course, it has impact, but the impact at the moment is not material.
All right. Thanks. That's all from me. Thank you.
Thank you.
Are there any more questions from the lines? It seems not. We have one question from the chat. It's from Rauli Juva. "Your financials were quite high in Q4. What impact did that, and what kind of run rate should we expect for 2024?
Maybe, Janne, if you take from your view, and then I have kind of-
Okay. So with the financials, I'm assuming the reflection to the P&L. And naturally, we stated that our internal improvement actions in the commercial and operational excellence, excuse me, have been gradually starting to impact. And then Tommi touched on the... Our guidance for 2024. So naturally, we are expecting that we are able to continue the good trend, but I cannot guide any you know detail figure-wise or range-wise in that sense, because we have given the guidance on that we will improve on EBITDA from 2023. And we have stated few times that we see some positive signs on the, let's say, business environment, but that's more on the internal actions and how those are gradually impacting rather than the market.
Tommi mentioned already earlier that market in U.S., it's more balanced and stable demand-wise, while in Europe we still have certain uncertainty because of let's say, demand-supply balance in the market. That's a very, let's say, round and political answer, but if you want to reframe and be more detailed, then happy to answer on more detail level. Tommi... Do you want to continue anything?
No, I mean, just, something that you know, that it, it is like Sadis, and we are starting from a low level, and then we are doing this step by step, so it will take a certain time. There is a certain delay with actions, which is also very typical for this type of industry.
Thank you all. Before closing this session, I want to advertise that our Q1 result will be published on May 7th, and before that, on April 4th, we will be having our annual general meeting. Thank you all for participating, and have a good day.
Thank you.
Thank you.
Bye-bye.