Okay, good morning and welcome to Suominen Q1 Results Audiocast. I'm the People and Culture Officer, Minna Rouru, and I'm here with our CEO, Tommi Björnman, and CFO, Janne Silonsaari. Let's begin the presentation, and afterward we will have time for questions and answers. Floor is yours, Tommi, go ahead.
Thank you, Minna. Good morning also from my side, and welcome. Our agenda today is that first I will go briefly through the Q1 in numbers, then I will hand it over to Janne to review the financials, then I continue with the strategy and outlook for 2025, and in the end I will hand it over back to Minna for questions and answers. Q1 in brief. Net sales increased by 3.4% and amounted from the previous period to EUR 117.5 million compared to that EUR 113.6 million. At the same time, the comparable EBITDA, there is a slight decrease from the previous period from EUR 4.5 million to EUR 4.1 million. At the same time, cash flow was improved from the previous period, but it was still a bit negative. Now I will hand it over to Janne for the financial review. Please, Janne.
All right, good morning from my behalf as well, and we'll walk through the financials, and let's start with the net sales. As Tommi mentioned, our first half net sales total EUR 117.5 million, rather stable level, and up roughly EUR 4 million or 3.4% from the comparison period. Sales volumes were lower than in the comparison period, but net sales were higher driven by the higher prices related to the higher raw material price levels, sales mix, and overall commercial actions. Currencies had a small positive impact on top line. Share of the new products was 27% of the net sales, again reminding that this is in this category we include products which have been commercialized during the last three years. Next, the EBITDA. Comparable EBITDA total EUR 4.1 million, which is EUR 0.4 million lower versus the comparison period.
Main impact coming from the increased operating expenses. We'll touch that later on in the presentation. Currencies had EUR 0.5 million negative impact. Majority of this is related to the USD fluctuation versus the comparison period. There were no items affecting the comparability in the first quarter of 2025. Last year we had a small adjustment related to the closure of Mozzate plant in Italy. Next is the consolidated statement of profit or loss. As mentioned, no items affecting comparability in Q1. If we want to highlight something from here, it's the net financial expenses. The currency valuation of USD-based bank accounts is causing roughly EUR 1 million difference versus the comparison period. That is the main big difference on the figures. The cash flow from the operations, that totaled -EUR 0.4 million, as Tommi mentioned.
During the first quarter we had an increase in working capital of EUR 2.8 million. This is mainly related to the inventories and higher accounts receivables. Behind this is US tariffs, which have caused a lot of uncertainty in the global supply chain, and we have taken precautionary measures to ensure the product availability and customer service. As I'm sure everyone else, we are following the development of the situation very carefully. That's from the financials. Tommi, back to you.
Okay, thank you, Janne. We drive to innovation and sustainability leadership in our industry. This is actually based on the strategy, which is the profitable growth through sustainability, customer focus, and efficiency. Let's look at it a little bit. During the first quarter, we announced our updated sustainability agenda for 2025 to 2030. We call this our sustainability diamond, which has four sides. Let's look at first the people and safety. Over there, we kept LTA as our target, but we added the DART index, and our target level for that is minimum 80%. In the low-impact manufacturing, we remained with the targets linked to the Paris Agreement, but we added actually one target for the zero manufacturing to the landfill. Then the element is the corporate citizenship. Over there, we look at a little bit the situation in such a way.
We achieved the EcoVadis Gold level, but not all our suppliers are qualified with EcoVadis. Therefore, actually, we developed a criteria for all our qualified suppliers, that this way we are able to maintain and keep the target levels and the alignment with our targets internally for sustainability. As well, we added a part that all our employees will be trained for sustainability through the sustainability program, which is part of Suominen Academy. The last side of the diamond is, of course, the sustainable nonwovens, which is even more visible for our customers because we are the enabler for our customers to be more sustainable. There, our target is that our raw material base contains minimum two-thirds of natural fibers, plant-based fibers or resources.
At the same time, also, that we continue to develop our legacy platform as well as the new sustainable products, where the sustainable product portfolio consists of minimum 50% or more than 50% of all the innovation activity and R&D activity. We hosted for the third time an innovation and sustainability seminar in Italy, where there were present our customers, suppliers, and other stakeholders from our innovation network. This is a part of our new fiber center approach. It is important to be ready for the green transition on the market and at the same time to support our latest investments both in the U.S.A. and in Spain. This was very well received and taken by the industry and out of the one to five. To 4.7. Also, today we announced a cost-saving program to secure our profitability.
This is a program to secure the profitable growth and ensure the long-term competitiveness. It is expected to result in savings of approximately EUR 10 million, and the savings are planned to realize over the coming two years. The saving program is expected to affect up to 60 positions globally from operations and global functions, of course, subject to the local consultation procedures. To the outlook, we confirm our outlook for 2025. Suominen expects that its comparable EBITDA in 2025 will improve from 2024. As a reference, in 2024, Suominen's comparable EBITDA was EUR 17 million. Thank you, and back to Minna.
Thank you, Tommi. Let's then move to the questions submitted online and then move on to questions in the chat. Any questions?
The next question comes from Joni Sandvall from Nordea. Please go ahead.
Yes, thanks, Tommi and Janne, for the presentation. Maybe starting with the topical question here on the U.S. tariffs. Have you seen any change in your customer behavior and actually what direct impact you are expecting from the tariffs going forward?
Okay, thank you, Joni. It's a very good question. First of all, it is something that actually the situation in the United States started already at the time before the presidential election, once there was already a fear about the tariffs, and then once the president was already elected, and then later once they imposed these new tariffs or the discussions about those tariffs started. This has caused a little bit of disturbance in the global supply chain and has caused quite much volatility in that. Of course, before the situation is cleared, we can continue to see the volatility on the market, but in a mid or a little bit longer term, if this will continue as it is, it might be good to be a local producer in the United States.
Yeah, thanks. Maybe second question on the high Asian imported stocks in the market. Does this have or has it had any impact on the pricing and how you expect this to evolve now during the rest of the year?
Maybe we need to look at a little bit. Thank you, Joni, again. Excellent question. I would hope that I would have a crystal ball, but of course what we can look at, the one thing is something that what we see from the market is something we are depending on the discussion with the customers because there are not yet all the statistics in the place in order to be able to see the trade flows in the United States and also in Europe. Maybe that question was twofold. What we can see, of course, is that if the tariff situation is going to continue, of course, it will come an impact, especially for the end users, consumers, that the price level is going to raise because certain parts of the products will be more expensive.
At the same time, also the same impact is also for the raw material, which of course we need to make sure that the raw material prices are kept true to the supply chain. That is particularly in the United States. The same impact about the trade flows we have also in Europe, of course, it's going to increase and it has already increased the competition in Europe. It is very uncertain at the moment to see where the market is heading to, but at the moment we see the volatility, but if this remains like it is, most probably it is something that it will impact the end product pricing both in the United States and Europe.
Okay, okay, that's clear. Going maybe into today's announcement of the cost-saving program, you are mentioning you're expecting the full effect in 24 months. When should we see the first improvements from the program and how does this actually compare to your ongoing or completed latest investments? Are you expecting to close some production lines?
Maybe I take the first part and then I hand it over to Janne. First of all, it is something that in order to look at a little bit the big picture, I understand the question so that why we are doing now, we did that already last year, we are doing a second one now. There is a huge uncertainty on the market. We have been able to improve the profitability, underlying profitability of the company. We are not satisfied. We are not at the level where we were targeting to, especially if we compare the time where we were before the COVID. Those are the elements in order to look at, but what we specifically want to emphasize here, it is something that we want to secure our profitable growth.
We want to secure our leadership, innovation, and sustainability, and these are the measures what we can do it. What it comes to then to the operation, etc., that's a little bit too early to look at, but we are looking at the moment our structural possibilities, both in operations and global functions, and maybe the latter part, Janne, to you.
Yes, so the question was regarding the closure of any production lines, and at the moment that is not included in the plan, and naturally going forward, we do not want to close anything out, but right now that is not included in the plan. Okay, okay, that is fully clear. Could you give any indication of one-off costs related to this cost-saving program? That will be determined naturally when we have gone through the local discussions and according to the local legislation and procedures. Then we can comment on that more. Not prepared to discuss or speculate on that yet. We will see what will be the outcome of the negotiations and discussion and then come back with the figure.
Okay, okay, thanks. Last one from me, maybe to Janne. Could you remind us of your FX hedging levels and maturities?
Yes, so currently the main currencies we have are euro and USD, and we have not hedged USD. It is in a way naturally hedged through that we are purchasing a certain amount of the raw materials in euro and a certain amount in USD, and then same goes, of course, with the sales prices.
Okay, thanks. That's all from me.
Thank you.
Thank you. Then we can look at the questions online, and I think these are pretty much the same that we already received. However, the first question from Rauli. Hi, what kind of one-off costs would you expect from the cost-saving program? In addition to the personnel reductions, where do you expect the saving to come?
Okay, I can continue, Janne here. Thanks for the question. The first one, we will come back to it once we have a bit more, less on the bonus. As said, naturally we do have certain plans, but that requires the negotiations according to the local procedure, and after that, we will be then ready to comment. In addition to the personnel reduction, we do have a certain amount of the external services and different cost items that we are, of course, looking at on operational expenses. That is a combination of the personnel cost and also so-called overhead costs.
Yeah, thank you, Janne. Another question from Rauli. Will the new cost-saving program have an impact already in 2025 and/or what do you expect to drive the guided earnings improvement for the full year?
Okay, I can continue from here again. We are expecting that we see impact from the cost savings already during the second half of the year, and that is part of what we expect to maintain the outlook or helping to maintain the outlook that we have to the market.
Thanks, Janne. Another one from Jonas. Canadian pulp imports, any problem for you in the Americas?
Jonas, thank you. That's a very specific question. Of course, we do buy some pulp from Canada, but at the moment it's something that luckily in the product portfolio and in the way how we manage our customers, especially in the United States, because a big part of the customers are contracted and we have indices with the clauses. This will be whatever will come from the Canadian side, more or less they will be passed through to the customer directly once the impact is visible or agreed. Thank you.
Thank you. Another one from Jonas. Could you describe Q1 volumes development quarter by quarter? Any disappointments in terms of, for example, baby wipes volumes or, for example, household volumes?
If we look at the comparison period from the last year, the volume was roughly 4% down and then slightly down from Q4 2024, so compared to the previous quarter. Tommi, I believe you can take the general market on the different end uses.
Maybe I start a little bit from the bigger picture. It's something that, especially once you look at the baby wipes business, that is considered as an essential part of the industry or essential business in that. Typically that type of businesses, they are not that heavily impacted by the business cycles. There is more impact, I mean, if you look at the end demand, the consumer demand, but there is a more movement, possible movement between the cycles from the branded to the private label or private label to the brand owners. Of course, because we are the market leader, we supply both sides of that, so we do not see that big change in volumes as such. Of course, we see more changes because of the supply chain disruptions, but lesser in terms of demand.
The household market is working roughly a little bit the same way, but we have a little bit less weight on that part of the business.
Thanks, Tommi. Then Jonas, another good one. Are the U.S. and Spain investments developing according to the plan after the recent trade war developments?
Yes, at the moment, I can confirm that both of them, something that we announced that during the first half of the year, the investment in the U.S.A. will be commercial, which is actually we can confirm that. The other one was something that during the first half of 2026, the Spanish investment will, so they are progressing as done. Of course, once we have been able to improve the capabilities in the United States, we have been able to bring a new product platform, which is more sustainable, I believe that we are better geared for the future.
Thank you, Tommi. Any other questions? I do not see any other questions in the chat. Would there be any questions online? If not, then we will go back to the presentation. Okay, I think that is the end of this call and a kind reminder of our second quarter results publication, which will happen August 7, 2025. I guess this is it.
Thank you all. Please have a nice summer. See you later. Bye-bye.
Thank you all. Bye-bye.