Suominen Oyj

Suominen's Q1 was fairly in line with Vara Research consensus, while the company also announced a large EUR 10m cost-savings programme. Sales volumes declined y/y, while pricing was supportive on the back of increased raw material prices and commercial execution. We still continue to expect tariff-induced uncertainties to become more visible from Q2 onwards, with higher Asia imported stock levels possibly burdening ASP development. We derive a slightly higher DCF- and multiples-based fair value range of EUR 1.6-2.3 (1.5-2.3) per Suominen share. Marketing material commissioned by Suominen Oyj.

Suominen Q1 comparable EBITDA of EUR 4.1m came fairly in line with Vara Research consensus expectation of EUR 4.2m. Net sales of EUR 118m increased 3% y/y and came 2% above consensus expectations, supported by higher raw materials and improved mix while burdened by lower volumes y/y. The company notes volatile market sentiment with cautious customers while it has seen stable demand for its products during Q1. FX had a slightly positive impact on top line while EUR 0.5m negative impact on EBITDA. Americas sales were stronger than we had anticipated while EMEA came in line with our expectations. Stock levels of Asian imported goods are increasing in both business areas which could burden pricing, we believe. The company maintained its guidance for increasing comparable EBITDA in 2025 intact, while consensus has modelled EUR 24.5m in 2025E after EUR 17.0m in 2024. In addition, the company initiates EUR 10m costs savings programme, fully implemented within 24 months. Initially, we expect muted consensus revisions while cost savings programme could be viewed positively.

We expect modest Q1 sales growth of 1% for Suominen, driven mainly by price increases following higher pulp prices, and we expect a soft volume development. Weakened FX has likely burdened the Americas business in late Q1, while the overall tariff-induced uncertainties could affect the coming quarters. However, we expect self-help measures to mitigate some of the uncertainties in H2, and we expect a 0.6pp EBITDA margin improvement for 2025E, with 4% sales growth. We derive a fair value range of EUR 1.5-2.3 (1.6-2.4) per Suominen share. Marketing material commissioned by Suominen Oyj.

Suominen's Q4 comparable EBITDA fell clearly short of Vara Research consensus, owing to volume pressure and higher raw material costs. The company expects solid end-market demand to continue, however increasing import volumes from low-cost countries and possible supply-chain issues linked to US tariffs could hamper margins in 2025. The company continues to improve its operational efficiency and new investments should start to support earnings from H2 onwards. We derive a lower DCF- and multiples-based fair value range of EUR 1.6-2.4 (1.8-2.6). Marketing material commissioned by Suominen Oyj.

Suominen Q4 comparable EBITDA of EUR 4.2m fell 40% short of Vara Research consensus expectation of EUR 7m owing to slight volume decline y/y. The company expects its target market to remain solid in 2025 in the short term although some uncertainties related to global economic sentiment remain. Sales prices and mix improved y/y in Q4, while FX had a slight negative impact. Americas sales were weaker than we had anticipated while EMEA came above our expectations. The company has resolved the operational issues seen in Q3 while competition from low-cost countries increased, mainly in Europe. Board of directors propose no dividend for 2024 while consensus had expected EUR 0.02 per share. The company guides for increasing comparable EBITDA in 2025, while consensus has modelled EUR 30.7m in 2025E after EUR 17.0m in 2024. We note operational issues in Q3 while we do not know if the company has been able to resolve these during the quarter. Initially, we anticipate consensus to take down 2025 estimates more than 10%.

For Q4, we expect the gradual volume and price improvement to continue, while variable costs could decline with lower pulp prices. However, we note a recent uptick in pulp prices and clearly positive momentum with three consecutive market pulp price increases from multiple pulp majors. Hence, we expect Suominen to benefit from lower pulp prices in H1 2025 too, while expected raw material headwinds in H2 could be mitigated by self-help measures and new investments in Alicante and Bethune. Our DCF- and multiples-based fair value range is EUR 1.8-2.6 (1.7-2.4). Marketing material commissioned by Suominen Oyj.

Suominen's Q3 earnings fell significantly short of Vara Research consensus, mainly due to a EUR ~3m negative impact from operational issues during the quarter. The operational issues should not have a major impact on Q4 figures, as we understand it. The top line grew 5% y/y and was supported by improved volumes and sales prices. The market outlook remains stable and we expect a gradual volume recovery going forward, with self-help measures and new investments in Alicante and Bethune offering support for the bottom line in the latter part of 2025 and beyond. We expect falling pulp prices to support earnings, as sales prices tend to follow with a lag. Our DCF- and multiples-based fair value range is EUR 1.7-2.4 (1.8-2.5). Marketing material commissioned by Suominen Oyj.

Suominen’s results turned into sequential decline in Q3 due to operational issues and fell short of Vara Research consensus expectations. The company expects its target market to remain stable in the short term although some uncertainties related to global economic sentiment remain. Sales volumes, prices and margins increased y/y in Q3, while FX had a negative impact. Americas sales were weaker than we had anticipated while EMEA came above our expectations. Guidance of improving comparable EBITDA was maintained intact, while consensus has modelled EUR 24.4m in 2024E after EUR 15.8m in 2023. We note operational issues in Q3 while we do not know if the company has been able to resolve these during the quarter. Initially, we anticipate consensus to take down 2024 estimates more than 10% with more muted revisions for 2025E. In order to reach its guidance, Suominen has to deliver above EUR 3m comparable EBITDA in Q4, while we have anticipated EUR 6.6m.

We expect Suominen to deliver another quarter of improving profitability, driven by increased volumes and sales prices y/y. Declining raw material prices will likely alleviate some margin pressure going forward, as we expect sales prices to lag pulp prices. Overcapacity, especially in the European market, could partly counteract the otherwise improving operating environment. We trim 2024E-26E sales by 1% and cut 2024E adjusted EBITDA by 6%. We raise 2025E-26E EBITDA by 3-4%. Our fair value range increases slightly to EUR 1.8-2.5 (1.7-2.4), based on a combination of DCF- and multiples-based valuation approaches. - Marketing material commissioned by Suominen Oyj.

Suominen's Q2 earnings fell slightly short of Vara consensus expectations, which leaves some uncertainty over the recovery pace heading into important H2. Volume development was positive, with an improving sale mix, but sales prices declined. New products continue to support the mix, and the company announced a EUR 20m investment into a new production line at the Alicante site. The company expected a stable market development, while lower pulp prices could support earnings going into 2025, we believe. Our DCF- and multiples-based fair value range is EUR 1.7-2.4 (1.8-2.5). Marketing material commissioned by Suominen Oyj.