Good morning from Espoo and welcome to the Suominen Q2 results publication. My name is Minna Rouru and I'm the Chief People and Communications Officer. Joining me today is our CFO and Interim CEO, Janne Silonsaari. Janne will present the results and afterwards there will be time for questions and answers. Janne, the floor is yours.
Alright, thank you, Minna. Let's start the presentation. The agenda today is that we go through Q2 and the first half of the year figures in brief. Then we have a bit more deep dive on financial performance, a couple of words regarding the progress in strategy, and then the outlook for this year. At the end, as Minna stated, we will have the questions and answers session. Alright, here are Q2 and first half of the year figures in brief. Our net sales in Q2 decreased by 16% and amounted to €99.8 million, compared to roughly €119 million in the comparison period. Comparable EBITDA amounted to €3.2 million versus a comparison of €5 million, and cash flow from operations was roughly -€10 million . Another highlight is that Charles Héaulmé was appointed as the new President and CEO, and he will start on August 11th.
For the first half of the year in brief, our net sales decreased from the previous year and amounted to €217 million compared to €232 million in the previous year. Comparable EBITDA amounted to €7.3 million versus €9.5 million the previous year. Cash flow from operations was - €10.5 million compared to close to € 0 the previous year. Let's go to the more detailed figures on financial review and start with the net sales. As stated, we were heavily impacted by the tariff situation in the U.S. and uncertainty in the market. Especially volume in the U.S., was negatively impacted. As we have stated in the interim report, ahead of the announced high tariffs towards China, U.S. nonwovens customers stocked their inventories mainly with supply from China, and this led to excess inventories throughout the supply chain and impacted negatively the demand.
We saw a gradual recovery during the latter part of the quarter, but still our sales ended up roughly 15% lower versus the first quarter this year and 16% lower versus the comparison period a year before. Currencies impacted negatively as they mainly come from the USD/EUR changes, and that was - €3.6 million during Q2. New product sales totaled 28% of the net sales, and this is the new products launched within the last three years. Alright, then the comparable EBITDA, although we have been working on improving the sales margins, this was offset by the lower volume, which naturally had a negative impact on total profitability. Lower volume coupled with the BETUN investment ramp-up phase and costs related to the CEO change led to lower than expected comparable EBITDA in the second quarter, amounting to €3.2 million.
Currencies impacted €0.2 million in Q2 and roughly €0.9 million negatively in the first half of the year. As stated, the consolidated statement of profit and loss shows in previous slides the EBITDA with the main items affecting comparability, and below the table, the main items affecting comparability are coming from the severance costs related to the cost-saving program. This was the big one, roughly €600,000. There was a small positive impact from accrual release related to the Mozzate planned closure accrual, which was made earlier. Cash flow from operations: lower EBITDA is naturally impacting the cash flow from operations, but the main negative impact is coming from the net working capital and from there the accounts payables. This was impacted mainly by the lower volume, but also by the currency impact. No major happening behind the item, and it's really the volume item.
On net working capital, we have targeted actions, but those were not taking full effect. This is the area where we are focusing to be able to release cash going forward. I'm trusting that we will see a positive development in this area. A few words regarding the strategy: no major changes in this area. We have communicated that the current strategy period is valid until 2025. I'll let the new CEO comment on this area going forward. We will come back to this later. On sustainability, we have announced the new sustainability agenda, and this is and continues to be in the core of the company strategy and operations. This is the reminder of the sustainability agenda targets that we have administered already earlier. Work in this area has started and is ongoing in all the related areas.
As mentioned earlier, Suominen announced at the end of June that the company's CEO and President will change, and Charles Héaulmé will start as the new CEO and President next Monday, August 11th. Saving actions update: we announced saving actions to improve the profitability and initiated a cost-saving program targeting €10 million cost savings. We implemented headcount reduction at the end of the second quarter, which led to a decrease of approximately 60 positions globally. On top of that, we reduced the number of contractor roles and are implementing several other saving actions. Actions so far are proceeding well, and we are expecting positive impact from savings during the second half of the year and targeting to implement the majority of the actions by the end of the year.
Outlook. We repeat our outlook for 2025 and expect that Suominen comparable EBITDA, so earnings before interest, taxes, depreciation, and amortization, will improve from previous year 2024. As a reminder, in 2024, our comparable EBITDA was €17 million. Alright, any questions and answers or questions rather?
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.
Thanks, Janne, for the presentation. Maybe starting with this import pressure, can you give any color? Did this have any impact on Europe in Q2, and how do you expect this to develop in H2 given the higher U.S., tariffs?
Alright, thanks. A good question. For Europe, of course, the situation has been stable for a longer period of time. If the higher tariff, especially towards China, would have continued a longer period, that could have potentially impacted directly Europe as well, or let's say changed the current status. Going forward, we expect situations to stabilize now with the agreed tariff levels. Naturally, if the situation remains as is, we should not see further huge fluctuation as we did in the second quarter. Longer term impact for local producers is, of course, an item we are naturally following and having close dialogue with our customers that which direction that will go, because naturally this has caused also a lot of uncertainty and potential, let's say, supply reliability questions locally.
We are expecting the situation to continue, let's say, interesting, but at the moment we are looking for the situation to stabilize.
Okay, that's clear. Maybe follow up still on U.S. You mentioned that the demand situation or inventory situation has gradually improved towards the end of Q2. Could you give any color on what level, let's say, some kind of normal level are we currently?
Naturally, we don't have full visibility throughout the bull market and whole supply chain. I would say that during the second half of Q2, we saw a gradual recovery on a rather normal level. Of course, the question is what is the normal level and what is the, let's say, consumer confidence and impact on the market demand? That is something we are following closely. Traditionally, the second half of the year and especially Q3 has been stronger in nonwovens, especially in the U.S., due to the back-to-school campaigns, etc. This is something we are following closely. Generally, we commented and we are commenting that this, let's say, uncertainty in the market is of course and has been increasing as we have seen in many other companies' result announcements as well.
Okay, that's clear. Maybe about the cost-saving program. You have this $10 million program ongoing. Was there any positive impacts in Q2, and could you give any color on how much support you expect for the whole H2?
Naturally, we have started the actions already during Q2 and there have been small impacts, but I wouldn't call that material. Yes, we are aiming for the, let's say, headcount savings and reductions we have implemented now are expected to impact minimum €2 million during the second half of the year. Naturally, we are targeting the higher impact, but that is, let's say, what I can name now as the figure.
Okay, perfect. Last question from my side. Any additional color on the BETUN ramp-up situation and, you know, let's say that when it's completed so that you don't have any additional costs from that?
Let's say that we are on the final stage, translating here from the Finnish to English, but generally that is on the final stage. There are still different products and different trades that we are ramping up, so we have not finalized everything there. Generally, the production ramp-up has been going rather okay. It has been taking quite long, and there are always different costs involved when you are introducing a different and new trade as we have right now. I'm sure that we will be in a much better position commenting that during the Q3. It is still continuing, and I would expect that the biggest impact of the costs are there in Q2. I cannot say that it's been finalized or completed fully yet.
Okay, thanks. That's all for me.
Thank you.
The next question comes from Jonas Ilvenen from Evli. Please go ahead.
Hi, it's Jonoas from Evli. This U.S., inventory build-up situation complicates your earnings recovery further. Can you give any, I mean, you already commented on the outlook on that, can you give any color on your customer demand outlook? For example, Kimberly-Clark just released their earnings, and I think their relevant segment that includes wiping products had 5% volume growth year- on- year. Can you give any comments on that kind of consumer outlook?
Okay, thank you, Joonas. That is of course difficult as long as some of these, let's say, nonwovens or wipes businesses are part of either the bigger company or bigger division or business units. It's difficult to kind of split that, what belongs to the nonwovens and wipes. Generally, of course, the market itself is expected to grow. We would say that the main question mark right now is the consumer confidence in the market. We are expecting that the nonwovens market will grow. We have seen, let's say, some slowness time to time due to the consumer confidence. It changes a little bit between brand suppliers and these private labels. That is looking a little bit on what type of a balance the consumers and the demand shifts between those areas.
I know this isn't the perfect answer for you, but it's naturally something we are on close pulse on ourselves as well. Now looking forward, which direction is it going? As I stated, traditionally Q3 is strong on the demand. That is what we are following closely and seeing which direction the order books are developing.
Okay. Did you say that has the respective volume outlook improved during the past year or so?
You mean now on what level?
Maybe some, like in general, certain wipes products. I know it's a very rather diffuse market, like so many. In general, could you say that the volume outlook has improved a bit compared to a year ago or over the year? I think there has been a lack of volume in general, like lack of volume growth within those brands in the past year or so.
Yeah, if you're looking, let's say, short term backwards, I would say that in our opinion, there has not been a clear growth in our target markets. I would say that the market is in a way a little bit uncertain and in waiting mode regarding which direction it is going. Naturally, on the long term, we see that the growth path will continue. Maybe if you take a shorter path and compare it backwards, then we would say that yes, there has not been a huge growth on the base level.
Okay, that's clear. Another question on your sales prices and margins. Any comments on, could you give any color on this sales price increase base that you say, how much was it exactly in Q2?
We don't usually disclose the exact amount there, but how it usually works is that we are following the sales margins. As known traditionally in the nonwovens business, we have a lot of index-linked pricing, especially in the U.S. Those prices are following quite a bit the raw material price development. Naturally, we are following how the sales margin, so price minus variable costs, are developing. This is an area where we have been doing good work in the past and currently. Naturally, as the volume drop was that significant during Q2, this was fully offset and more than offset by the negative impact from the lower volumes.
My feeling was too that your sales margins developed quite well in Q2. Any comments on how it looks like now going into Q3 and Q4, whether, I mean, because raw material prices are again declining a bit? How does that dynamic, do you see it? Your sales margins still continue to expand in H2?
This is of course related to the many issues. We don't usually comment on this timing issue regarding the price formula, so index-linked pricing, because that works in both directions, which is clear. There's a lot of impact also on the general supply-demand balance on the market and how the tariff situation will play in the market, how the recovery from that Q2 will go. It's naturally an area where we are working very diligently. We will see. That remains to be seen which direction that will go and also a little bit how the market mix and the product mix will develop going forward.
Okay, thank you. That's all for me.
Right, thank you, Joonas.
As a reminder, if you wish to ask a question, please dial the Pound key, five on your telephone keypad. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions or closing comments.
Thank you. Okay, I'm now looking and reviewing the questions from the chat, but it seems that there are none, no questions. If that's the case, I think I'll go back to the presentation and remind you about our next result publication that happens on October 29th. Hope to connect you then again. I think Espoo will then thank you for attending to this audiocast and have a nice day, everyone.
Thank you all.