Good morning from Espoo. Welcome to the Suominen Q4 and full year 2024 results publications. My name is Minna Rouru, and I'm the Chief People and Communications Officer. Joining me today are Suominen's President and CEO, Tommi Björnman, and CFO, Janne Silonsaari. They will present the results, and afterwards there will be time for questions and answers. Tommi and Janne, the floor is yours.
Okay, thank you, Minna. Also on my behalf, welcome to this call, and it's very nice to have you all online. Let's look at the agenda first. We will have a quick brief review of Q4 results as well as the highlights of 2024. I will hand it over to Janne that he would explain the financial review. Once he has concluded that, I will have a few words about the progress in our strategy, and then what is our outlook for 2025. I will hand it over back to Minna for questions and answers. Let's look at the next. Q4, it was a good quarter for us. We had a 3% growth. If we compare that, the comparable quarter was EUR 114.9 million, and we were able to achieve EUR 118.5 million, which actually generated that 3% growth.
During that time, comparable EBITDA was EUR 4.2 million, which in the comparison period was EUR 5.3 million, which was slightly, you know, on our perspective, it was something considered not that good one, quite moderate. Operations from the quarter Q4, the cash flow from operation was EUR 6.5 million, comparable period was EUR 13.1 million. In order to look at how it was for the full year 2024, the turnover increased by 2.5% during the period. Comparable EBITDA improved moderately, which was a shy 8% increase from EUR 15.8 million to EUR 17 million. During the period, we were able to maintain the cash flow from operation at the level of EUR 3.9 million. As a company and discussion with the board of directors is proposing to annual general meeting that we would not distribute dividends during from the fiscal year 2024.
This is, of course, mainly coming from the considerations in order to support the cash balance, as we have two major investments ongoing: the investment in North America, in Bethune, and the other one in Alicante. Please, Janne, let's look at the financial numbers more in detail.
All right. Hi, and good morning on my behalf as well. Let's start with the net sales. Full year net sales totaled at EUR 462 million. Main drivers were higher sales volumes, which were then offset by lower sales prices resulting from the lower raw material prices. As a reminder, industry has traditionally a lot of index pricing, which ties sales price to the raw material movements. Q4 sales volume were a bit lower compared to the comparison period. We saw a lot of movement in trade flow in the market after the U.S. presidential election, which impacted negatively, especially in Europe. We were able to offset partly with the higher sales prices and product mix. Currencies had a negative impact during Q4 and full year. On a more positive note, the share of the new products continued on a good level and was 34% in 2024.
We consider new products such that have been commercialized during the past three years. All right, let's move on to the EBITDA. Comparable EBITDA on the right-hand side, Q4 EBITDA totaled at EUR 4.2 million, as Tommi mentioned earlier. We mentioned during the last result call in Q3, we experienced operational issues. Those were mostly fixed and only minor impact on Q4. During Q4, we faced higher raw material prices that we were not fully able to offset with the pricing. We were also impacted negatively by the trade flow balance shift from U.S. to Europe. Full year EBITDA totaled 17% and roughly 8% increase from previous year. Currencies impacted EBITDA positively by EUR 0.1 million in Q4, but negatively by EUR 0.8 million in full year level. We have the consolidated statement of profit and loss, and the main items impacting listed below the table.
Mozzate, the plant closure provisions were released in Q4 worth of EUR 1.1 million, meaning full year one-of f provisions releases were EUR 170,000 higher than one- off payments related to mainly restructuring activities we took earlier in the year. As a total, small positive net impact. We can move on to the cash flow from operations. In Q4, we saw improvement on net working capital, which led also to full year to positive. As a reminder, in 2023, we focused a lot on net working capital optimization. In 2024, we have increased buffer stocks due to the geopolitical uncertainty, and this has had an impact on the full year level through the net working capital. All right, Tommi, back to you.
Okay, thank you, Janne. In order to look a little bit at the progress in strategy, more or less it's something that this frame has been for 2020 till 2025. Actually, we are in the process of fine-tuning our strategy based on the changes in the geopolitical environment and on the business as such. We aim to launch the new strategy during this year, during 2025. Generally speaking, there are no major changes on this. Maybe just in order to share with you some of the highlights coming from the implementation of the strategy. Like Janne mentioned already, we have a 34% of the new product sales from our annual sales considered, which can be considered as a good one. Like Janne mentioned, this is the sales during the past three years.
At the same time, out of these new products, we were able to introduce a good amount of new sustainable products. Our target is to launch 10 new products within a year, and we launched 11. That led to the situation that if we look at the strategy frame, we told us that the base year where we compare our progress, especially for the sustainable products, our target was something that we would be able to increase the share of the sustainable products up to 50%. At the moment, we are delivering 87%. At the same time, at the same period, we mentioned that our aim from operations and generally speaking in lowering the greenhouse gases totalized, our target in 2019-2020 was something that we wanted to decrease the greenhouse gases by 20%. At the moment, our running rate is 24%.
This is actually the implementation of the strategy based on the angle of sustainability. In order to support further that, we are increasing the capability of introducing new products to the markets and supporting both sustainable sales and new product sales, the investments in Bethune in South Carolina that would be operational during the first half of this year. The Alicante line, as earlier announced, that line will start up in the end of this year and will be operational starting from the first half of 2026. Both of the investments are in time. As an outcome of all this good work around the sustainability, we were able to achieve and upgrade our rating in EcoVadis from silver to gold. As a reminder, what the gold means.
We are among the top 1% in the industry of textile, other textile industries, and we are among the top five companies in all industries. This morning also, we announced our new updated sustainability agenda for 2025 to 2030. Here we call this presentation our Sustainability Diamond. One corner of this diamond is the people and safety, where we want to continue to strengthen our safety culture, promote human rights, provide employees equal opportunities, and foster the high performance culture. There we have two parameters which we follow. One is the LTA, which is the zero lost time accidents, and the other one is diversity, equity, and inclusion measurements, where we have set a target level of 80%.
Another corner of the diamond is the sustainable nonwovens, where we innovate the new sustainable nonwovens in order to give the commitment for our customer that they can drive their own sustainability. Here we have two measurements which we metrics what we are using. We mentioned that two-thirds of our raw materials used in the process should be plant-based. At the same time, more than half of the new innovation R&D initiatives should be focusing on sustainable products. The third angle of this diamond is corporate citizenship, where we promote responsible business practices. We communicate the issues and topics transparently. Of course, sustainability is a cornerstone, everything what we do.
What we see as the metrics in order to follow this corporate citizenship measurement, we say that all our qualified raw material suppliers should be able to meet the sustainability criteria defined by our operations, Suominen way of working. Another one is something that all our employees have completed the Suominen sustainability training program. The last corner, but not the least, of course, is a low impact on manufacturing in our diamond. We are decreasing the environmental impact, not only in our operation, but in the whole supply chain. Here what we say is that we will be within the reducing the Scope 1 and 2 and 3 greenhouse gas emissions according to the Paris Agreement. At the same time, we drive towards the zero manufacturing waste from landfill.
This is in a nutshell, our Sustainability Diamond, which we will follow in the coming 2025 to 2030 time period. Now, if we look at as an outlook to coming for that, at the moment it is something that the outlook will remain the same, but we will state that Suominen expects that its comparable EBITDA in 2025 will improve from 2024. Just as a reminder, the comparable EBITDA in 2024 was EUR 17 million. Thank you all. Let me hand it over back to Minna, and there is a time for questions and answers.
Thank you. Thank you, Tommi and Janne. Operator, would there be any questions from the lines?
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, Tommi and Janne, for the presentation. Maybe I start with the question related to volumes. In Q4, you mentioned that the competition from low-cost countries intensified. How this has evolved now going into 2025?
Maybe. Thank you, Joni. It's a good question. Of course, it was something that, as we all see, there is a big amount of uncertainty because of the geopolitical tensions and especially the discussions about the tariffs, which led to the situation that from the low-cost countries, naming China, Turkey, India, the main market for those markets has been always North America. At the moment, once the discussion started around the tariffs, they started to land more strongly in Europe. The impact we see is mainly in Europe linked to the end products. Especially if we look at the conventional products we have been producing, not linked that much to the new products or the more sustainable products, it's more for the conventional products. This is happening in Europe.
At the same time in the United States, because of the tariff discussions, it has led to the situation that, of course, in the supply chain of the raw materials, there are similar type of impacts which we need to just cope on the market and manage that. Generally speaking, this situation is going to continue at least during the first quarter. Just reminding you that what yesterday news, this morning we were able to read it, most probably this is going to intensify, which means that we believe that the uncertainty will continue. In a nutshell, if we look at Latin America, we have operation in Latin America. That market has been already fairly protected so that actually inside Brazil, there are already tariffs outside.
At the moment, there has been also some movements that in that market, they are looking at how they would be able to secure the local operations. In a way, it's partially good news for us because we have a good stronghold in North America with three factories. Of course, on the other hand, it's increasing the competition in Europe at the moment because European Commission do not have yet the same type of tariffs or support to the industry as the other markets. Hopefully I was.
Yeah, that's clear. Yeah, very good. Very good answer. Maybe then on the U.S. tariffs now for the Canadian and Mexico as an example. I believe you don't have a direct impact as you have local production in the U.S., but are you sourcing from example from Canada some raw materials which could have direct or indirect impact to you?
This is the case what I'm referring to. It is true that there are, if we look at our overall supply chain, there is a part of the supply chain where we cut the raw material outside the U.S. It's coming from the different countries, including Canada, especially mentioned over here. That is of course something that which we need to look at with our customers then how we would be able then to pass through these costs because these costs are not driven by the market. These are set by the authority. In the discussions, we have a little bit different position once we talk about this. We will see how the situation is going to develop. Is this going to be the final, etc.? Anyhow, what is sure is something this is increasing the uncertainty.
Okay, okay, that's clear. Maybe next one on Janne. You mentioned that you had some costs still related to these operational issues that we saw in Q3. Could you give any number on that? I'm just looking your gross margin now in Q4. It's down from Q1, Q3 level if we are adjusting for this around EUR 3 million costs in Q3. Raw mats were up, but any additional colors over this?
No, I would say that it's just the tails of the cost that we fixed already during the Q3. I have to admit that those are not very big ones. I don't put any single number there, but I would say just the small tails from the Q3.
Okay, okay. Maybe a question on the pulp prices which have now started to go upwards. Should we still expect now raw material costs were up, but should this actually come down during H1 before maybe going up then for the H2?
Maybe just a general comment about the raw material so that once we look at that good share of the business, we have contracts which actually enables us to have a system mechanism how we would be able to pass over the cost increases. Of course, before the cost increase would be able to pass it over, there is a certain lag, positive or negative lag depending on which direction the raw material costs are going. I would say that this is a normal business practice that there is this type of delay in the indices and in the mechanism. The volatility of the pulp prices, of course, we have seen it has gone up, it has come down, but we are more concentrating on looking at the mid and long-term view about the business.
We see clearly that the sustainability is going to stay. It's the direction where our customers are looking at, and it's very natural that actually we start to use more and more natural fibers. Of course, this becomes also more important for us, but we have the view more for the mid and long-term rather than short-term.
Okay. Last one, maybe a question related to customers and their needs. You said that the direction is clear, but have you seen any changes now under, let's say, in the U.S., there is the new government. Have you seen any changes on demand from your customer side for new products? Is there a shift maybe to lower-cost products in the market?
Let's look at this. Maybe we need to split this a little bit differently. In order to look at the market, generally speaking, the market, I mean, the general market and the growth of the market is good. I mean, the underlying demand is good. Of course, once you have the local production and then you have import, there is of course some fluctuation depending on the situation how the cost structure is changing. Especially once you put the tariffs, the swift and the swings can be fairly big ones in a short period of time because of course, some of the customers might be willing to optimize the supply chain. Generally speaking, if we look at then the pricing and the demand on the market side is something that big brands are driving the sustainability.
There is a more and more need of more sustainable products, especially in North America. It is not led by the legislation like in Europe, which is actually European progress is more, let's put it this way, more manageable and more visible and it's easier to follow. In the United States, because it's driven mainly by the big brands and now also the private label have started to use it. It is possible that there can be some short-term swings in the products. Generally speaking, there are no major changes in the end user demand or in the view how the brands or the private label is looking at the market at the moment. Maybe this is a little bit wait and see, depending a little bit how the legislation will change, but I would say the sustainability is already there.
The people will understand how important it is. We see what's happening to the nature, etc. I would say that the message has gone through and the train is moving. I don't believe that nobody's going to stop that train.
Okay, thanks. That's all from me.
Thank you, Joni.
The next question comes from Joonas Ilvonen from Evli. Please go ahead.
Joonas from Evli. If I may come back to the regional volume question. You say that the situation in Europe is rather more challenging now that there are more low-cost exports, but still your EMEA growth was, revenue growth was like 7.5% year on year in Q4, whereas Americas remained basically flat. Do you think will this impact be seen more during this year in Europe? Can you talk a little more about the U.S. demand outlook you see for this year that underpins your guidance? Because my feeling is that volume growth last year in the U.S. was still maybe somewhat below your expectations. Do you expect that there is good potential for additional volume recovery in the U.S. this year?
Yeah. Joonas, thank you. Also a very, very good question. Let me try to remember that question. First of all, if we look at Europe, something that in Europe, yes, very true. Actually, we were able to bounce back and utilize our assets better and drive it. The main driver for that was, of course, the new products we introduced and also, of course, also more sustainable products, which we have been pushing to the market. That is doing one part of that.
On the other hand, at the same time, we have this conventional business, which is more, let's say, put this as a little bit more possibilities that the Chinese, Turkish, and Indian suppliers can enter that market because some of those products are, I can't say standard products, but they are something conventional products where actually there is a better possibility for them to match it. At the same time in market, if you look at the European market as well, it's healthy. It's growing more than GDP, generally speaking, on the market and many places, double or triple the GDP growth depending on a little bit application. It's a more question in Europe about the mix and the capability of producing.
Coming to the United States, if we look at our numbers, it was, of course, we can openly share here so that the market is doing well. Again, the growth is very nice. It is double or triple the GDP depending on the different applications. Of course, this was the incident what happened, for example, in the third quarter impacted on our volumes. If we look at our underlying profitability, which is moderate improvement, we are absolutely not happy for that. We are not happy for the volumes.
Okay, that's clear. This year, I mean, maybe last year you talked about more that it's the earnings recovery, it's more in your own hands. It's more about your own actions than market recovery. About this year, is it more like that you might also expect a bit more help from the market, that it's now maybe a little more stable and favorable?
Yeah. I would say that in order to look at the market, in this respect, if you look at as an overall demand, yes, of course, always once the market is growing, it's giving you a little bit help because, of course, new volumes are available on the market side. At the same time, of course, the competition has intensified. I would say that we can't say that we have a tailwind. We have rather a little bit because of this uncertainty. We have a headwind. It is true that this is more in our hands than in the hands of the market. We are not expecting any support from the market side. It's more how we ourselves, we will succeed in implementing and pushing through the commercial excellence activities and operational excellence activities.
Okay, that's good. Maybe final question. That you have done this strategy review process or is underway, have you identified any particular market niches where you would like to focus more in terms of product, say, more personal care or home care versus, say, industrial wipes in terms of sustainable products?
You have excellent questions. Joonas, in order to not answer you directly, I will answer that indirectly. Of course, it is very natural once you have a platform and you are increasing the new capabilities in the company. Once you find the solutions for a certain part of the business, it is very natural the other parts of the similar type of businesses would need the similar type of solutions. Answer to your question is yes. There are opportunities at the moment we are looking at. We are tracking and we have sharpened our pens in order to be able to make that plan. Once we are ready with the strategy, hopefully before the end of this year, we would be able to announce what would be the steps going forward.
We are working on those. Everything is based on the innovation, capability, and then the opportunity in order to offer the solution for the customer.
That's clear. That's all from me. Thanks.
Thank you.
There are no more questions at this time. I hand the conference back to the speakers.
Okay. Thank you, Joni and Jonas, for your questions. Now it is time to look at the questions in the chat. There is a first question that comes from Rauli, and it goes like, what level of CapEx you expect for 2025 given quite large ongoing investment projects?
All right. It's Janne Silonsaari here. That's a good question. Actually, the base CapEx that we have been reported has been plus minus EUR 10 million, and we have these two strategic growth investments ongoing, which we have announced that the better investment should be ready or will be ready around the first half of the year. That leaves the Alicante and maturity of the cost for this year. I would say roughly EUR 20 million-EUR 30 million on that ballpark, depending a little bit on the timing of the project cost, etc. That is the estimation at the moment.
Thank you, Janne. Rauli has another question. What kind of positive drivers do you see for your margins in 2025?
Maybe if thank you, Rauli. Good question. In order to look at what is happening, first, this is of course coming true to innovation and introduction of the new products. Every time once you have the possibility of introducing a new product, you have the possibility in order to revise and look at what is the value proposition for the customer, what is the benefit what the customer is going to get, and what is the benefit what Suominen is going to get from that. That is of course the key thing on that. Of course the other part of that, it is something that you need to be able to drive your commercial excellence. Once we talk about commercial excellence, commercial excellence is not only about the price. Of course, we need to be cautious about price. You can have the price increases.
You can have a discussion about the price. Commercial excellence includes also other components which are price type of things. For example, how we manage the supply chain, what is the efficiency of the supply chain, what is the cost of the transportation, how we pack the product, how we load it, what is the stuffing of the containers, are we very efficient in transportation, etc. There are many, many areas where you can see opportunities of improving your margins by doing that more efficiently, that we would be more efficient. Of course, the other part of the formula is this is the part which is actually part of the commercial excellence part. The other part of the formula is of course how you do your operations.
Do you drive your operational excellence in such a way that you are the most efficient, your waste levels are low, your OEE is high, etc. It is not just one trick. It is a combination of these actions coming from commercial excellence together with operational excellence. This is where we see that there are opportunities in order to improve our margins, continue to improve our margins. Of course, we have been able already, which is visible on the numbers as well. We have been able to improve our sales margin year on year.
Thank you, Tommi. And thank you, Rauli, for your questions. It seems to be the last question that we've had today. If not anything else, just a kind reminder of the Q1 2025 result publication that happens on May 7th. The annual general meeting takes place on April 25th. With this, thank you for attending this AudioCast and have a nice day, everyone.
Thank you.
Thank you. Bye-bye.