1(5) SUOMINEN CORPORATION INTERIM REPORT JANUARY 1 MARCH 31, 2004 SUOMINEN'S FINANCIAL RESULTS FOR THE FIRST QUARTER DECLINED ON THE PREVIOUS YEAR Net sales: EUR 62.1 million (EUR 41.7 million January 1 - March 31, 2003) Operating profit: EUR 3.1 million (3.8) Earnings/share: EUR 0.06 (0.12) Cash flow from operations/share: EUR 0.13 (0.08) Return on invested capital (ROI): 7.8 % (14.0) Prospects for the rest of the year: The results for the full year are estimated to be on the level of 2003. FINANCIAL RESULTS Suominen Corporation recorded first-quarter net sales of EUR 62.1 million, representing an increase of 49 per cent on the previous year. The increase was due to the company acquisition in the Wet Wipes business area. Without the acquisition, there would have been a decrease in net sales of 5 per cent. The profit before taxes during the first quarter was EUR 2.0 million (3.3). The Wet Wipes business area recorded an operating profit of EUR 0.5 million, Nonwovens an operating profit of EUR 1.5 million (2.5) and Flexible Packaging an operating profit of EUR 0.9 million (1.1). The operating profit for Other Business Operations was EUR 0.2 million (0.2). The goodwill arising from the acquisition of the Wet Wipes business area was reduced by EUR 2.8 million after reassessment of the final acquisition price. Net sales of Suominen Wet Wipes during the first quarter were EUR 23.1 million or 8 per cent less than in the same period of the previous year. The volumes of baby wipes rose, the volumes of personal care wipes remained on the level of the previous year, and the volumes of household cleaning wipes declined considerably as a result of product transfers. Prices for end products and for the raw materials used in them declined on the previous year. Due to the low volumes of household cleaning wipes, capacity utilisation and profitability decreased. Costs were adjusted to the lower level of capacity utilisation and modernisation of production facilities continued. The financial results and profitability of Nonwovens declined from the good first quarter of the previous year due to a drop in sales prices. Net sales decreased by 5 per cent and amounted to EUR 19.9 million. Sales volumes of hydroentangled wiping products increased on the previous year in both Europe and the USA and sales of hygiene and health care product materials rose substantially. Rationalisation of production has increased efficiency and improved the cost position of operations. Net sales of Flexible Packaging amounted to EUR 16.6 million and were 4 per cent below the figure for the previous year. The decrease was due to lower sales prices and fluctuations in exchange rates. Profit declined as sales prices decreased more than raw material prices. The volume of sales was on the level of the previous year. The volumes of food and retail packaging rose and those of hygiene product and special packaging decreased. Volumes continued to increase in Poland. In Russia, sales were down on the corresponding period of 2003. In Other Business Operations, Webbing Products sustained an operating loss of EUR 0.2 million mainly because of the expenses involved in reorganisation. Operations are being continued under the name Inka and a decision was made to centralise production at Virrat, Finland and in Estonia. FINANCING Interest-bearing liabilities totalled EUR 81.5 million or EUR 5.1 million more than at the beginning of the year. The company has EUR 10 million in capital loans. Net financial costs were EUR 1.0 million (EUR 0.5 million). They were 1.6 per cent (1.3 %) of net sales and 33.3 per cent (14.4 %) of operating profit. EUR 1.9 million in working capital were tied up in the cash flow statement. When the company's capital loans are included in shareholders' equity, the equity ratio was 37.5 per cent (40.9 %) and the ratio of interest-bearing net liabilities to shareholders equity (the gearing rate) was 102.8 per cent (96.1 %). Including the capital loans in liabilities, the corresponding figures were 32.4 per cent and 134.2 per cent. Cash flow per share from operations was EUR 0.13 (0.08). INVESTMENTS The Company s gross investments in production totalled EUR 3.9 million (EUR 1.0 million). Planned depreciation was EUR 4.6 million (3.6). Of the total investments Wet Wipes represented EUR 0.3 million, Nonwovens EUR 0.4 million and Flexible Packaging EUR 3.0 million. The most important investment project was the expansion of the Flexible Packaging plant in Poland. ANNUAL GENERAL MEETING OF SHAREHOLDERS The Annual General Meeting of Shareholders was held on March 15, 2004. The Annual General Meeting decided to pay a dividend of EUR 0.30 per share for 2003, totalling EUR 7,107,245.40. The Annual General Meeting approved the financial statements for 2003 and released the members of the Board of Directors and the President and CEO from liability for the financial period. Members of the Board of Directors Kari Haavisto, Pekka Laaksonen and Heikki Mairinoja were re-elected for the years 2004-2006. The Board of Directors comprises the following persons: Matti Kavetvuo, Kari Haavisto, Pekka Laaksonen, Heikki Mairinoja and Heikki Bergholm.
2(5) PricewaterhouseCoopers Oy, Authorised Public Accountants, with Heikki Lassila, APA, as the principal auditor, were elected as auditors. The Annual General Meeting authorised the Board of Directors to decide on the acquisition of the Company's own shares within one year from the Annual General Meeting of Shareholders using assets available for distribution of profits, provided that the par value of the shares of the Company and it's subsidiaries thus acquired, combined with the par value of own shares acquired previously by the Company and its subsidiaries, does not exceed 5 per cent of the Company s total share capital at the moment of acquisition. The Annual General Meeting also authorised the Board of Directors to decide on the conveyance of the Company s own shares. According to the authority granted to the Board of Directors in 2003, the Company conveyed 8,999 of its own shares between January 1 and March 31, 2004. The average price of the conveyed shares was EUR 6.31. On March 31, 2004 Suominen Corporation held a total of 29,294 of its own shares, accounting for 0.1 per cent of the share capital and votes. The Board of Directors did not exercise its authority to buy the Company's own shares during the period under review. OTHER AUTHORISATION FOR THE BOARD OF DIRECTORS The Board of Directors is not currently authorised to issue shares or to launch a convertible bond or a bond with warrants. COMPANY SHARES The volume of Suominen Corporation's shares traded on Helsinki Exchanges from January through March was 2,545,709 shares or 10.7 per cent of the total. The trading price of the shares varied between EUR 5.20 and 6.99. The final trading price was EUR 5.30. The market capitalisation was EUR 125.6 million on March 31, 2004. OWN SHARES OF THE COMPANY On January 1, 2004 the Company held 38,293 of its own shares, with an acquisition value of 5.22 euros per share. PROSPECTS FOR THE REST OF THE YEAR On the basis of contracts made, customer-need forecasts, and orders in hand, net sales in 2004 are expected to increase by approximately 50 per cent, primarily as a result of the acquisition in the Wet Wipes business area. The volumes of all business areas are expected to grow, and net sales will probably remain on the level of the previous year or grow. Net sales in Other Business Operations are likely to decline. The overall price level will be lower than in 2003, and will not be offset entirely by reduced costs. Both operating profit and profit for the financial year are expected to be on the same level as in 2003. SUOMINEN CORPORATION CONSOLIDATED JANUARY 1 - MARCH 31, 2004 STATEMENT OF INCOME EUR 1 000 1-3/2004 % 1-3/2003 % Change % 1-12/2003 % Net sales 62 090 100.0 41 672 100.0 +49.0 179 750 100.0 Cost of goods sold -55 512-89.4-35 822-86.0 +55.0-158 065-87.9 Gross profit 6 578 10.6 5 850 14.0 +12.4 21 685 12.1 Sales and marketing expenses -1 389-2.2-1 226-2.9-4 780-2.7 Administration expenses -2 306-3.7-1 099-2.6-6 149-3.4 Other operating income and expenses 627 1.0 275 0.7 5 085 2.8 Depreciation on goodwill -458-0.7-2 0.0-474 -0.3 Operating profit 3 052 4.9 3 798 9.1-19.6 15 367 8.5 Financial income and expenses -1 015-1.6-545 -1.3 +86.2-2 707-1.5 Profit before income taxes 2 037 3.3 3 253 7.8-37.4 12 660 7.0 Income taxes * -632-1.0-783 -1.9-3 734-2.1 Profit for the period 1 405 2.3 2 470 5.9-43.1 8 926 5.0 * Taxes on the profit for the review period.
3(5) BALANCE SHEET EUR 1 000 3/2004 3/2003 12/2003 Assets Fixed assets Intangible assets 34 559 406 37 114 Tangible assets 99 400 86 067 100 519 Financial assets 556 682 629 Fixed assets, total 134 515 87 155 138 262 Current assets Inventories 24 493 18 668 24 311 Current receivables 35 633 28 608 29 980 Cash at bank and in hand 4 757 715 6 702 Current assets, total 64 883 47 991 60 993 Assets, total 199 398 135 146 199 255 Shareholders' equity and liabilities Shareholders equity Share capital 11 860 7 913 11 860 Own shares 153 200 200 Other restricted equity 27 801 10 648 27 801 Equity in untaxed reserves 15 383 19 294 16 751 Other unrestricted equity 9 593 17 323 14 202 Capital loans 10 000 10 000 Shareholders equity, total 74 790 55 378 80 814 Provisions 641 665 Liabilities Deferred tax liability 10 629 9 961 11 179 Non-current liabilities 61 929 25 247 57 134 Current liabilities 51 409 44 560 49 463 Liabilities, total 123 967 79 768 117 776 Shareholders' equity and liabilities, total 199 398 135 146 199 255 KEY FIGURES 3/2004 3/2003 12/2003 Earnings/share, EUR 0.06 0.12 0.43 Equity/share, EUR 2.73 2.69 2.98 Cash flow from operations/share, EUR 0.13 0.08 1.01 Return on equity, % (ROE) 8.3 16.5 14.6 Return on invested capital, % (ROI) 7.8 14.0 13.2 Equity ratio, % 32.4 40.9 35.5 Equity ratio, %, capital loans in equity 37.5 40.9 40.5 Gearing, % 134.2 96.1 112.9 Gearing, %, capital loans in equity 102.8 96.1 86.5 Gross investments, EUR 1 000 3 890 1 036 66 387 Depreciation, EUR 1 000 4 602 3 609 15 514 CASH FLOW STATEMENT EUR 1 000 1-3/2004 1-3/2003 1-12/2003 Cash flow before change in working capital 6 747 7 408 26 478 Change in working capital -1 894-4 515 2 762 Financial items and taxes -1 886-1 350-8 217 Cash flow from operations 2 967 1 543 21 022 Investments -3 838-818 -64 087 Proceeds from sale of fixed assets 956 11 7 104 Cash flow from investing activities -2 882-807 -56 982 Proceeds from issuance of share capital 21 100 Proceeds from capital loans 10 000 Dividends paid -7 089-10 994-22 102 Change in interest-bearing liabilities 5 064 7 331 30 012 Effect of exchange rate changes -4 12 23 Change in cash and cash equivalents -1 944-2 915 3 073
4(5) FIGURES BY BUSINESS AREA NET SALES EUR 1 000 1-3/2004 1-3/2003 Change % 1-12/2003 Wet Wipes 23 082 22 425 Nonwovens 19 891 20 953-5.1 77 490 Flexible Packaging 16 642 17 384-4.3 68 791 Others* 2 475 3 335-25.8 11 044 Total 62 090 41 672 +49.0 179 750 OPERATING PROFIT EUR 1 000 1-3 /2004 % 1-3/2003 % 1-12/2003 % Wet Wipes 508 2.2 1 221 5.4 Nonwovens 1 472 7.4 2 468 11.8 6 016 7.8 Flexible Packaging 884 5.3 1 118 6.4 4 385 6.4 Others* 188 7.6 212 6.4 3 746 33.9 Total 3 052 4.9 3 798 9.1 15 368 8.5 * Include Other Business Operations and consolidation items. QUARTERLY FIGURES EUR 1 000 II/2003 III/2003 IV/2003 I/2004 II/2003- I/2004 Net sales Wet Wipes 22 425 23 082 45 507 Nonwovens 18 412 19 941 18 184 19 891 76 428 Flexible Packaging 17 372 16 651 17 384 16 642 68 049 Others* 3 196 3 044 1 469 2 475 10 184 Net sales, total 38 980 39 636 59 462 62 090 200 168 Operating profit Wet Wipes 1 221 508 1 729 % of net sales 5.4 2.2 3.8 Nonwovens 1 129 2 135 284 1 472 5 020 % of net sales 6.1 10.7 1.6 7.4 6.6 Flexible Packaging 671 1 240 1 356 884 4 151 % of net sales 3.9 7.4 7.8 5.3 6.1 Others* -177 2 226 1 485 188 3 722 % of net sales -5.5 73.1 101.1 7.6 36.5 Operating profit, total 1 623 5 601 4 346 3 052 14 622 % of net sales 4.2 14.1 7.3 4.9 7.3 Net financial expenses -541-557 -1 064-1 015-3 177 Profit before extraordinary items 1 082 5 044 3 282 2 037 11 445 *Include Other Business Operations and consolidation items. AVERAGE PERSONNEL 2004 3 months 2003 3 months 2003 12 months Wet Wipes* 338 86 Nonwovens 209 227 227 Flexible Packaging 601 621 621 Webbing Products 142 150 145 Product and Process Development 34 40 36 Group Management and Administration 13 13 13 Total 1 337 1 051 1 128 * At the end of 2003 the personnel of the business area were 337.
5(5) CONTINGENT LIABILITIES EUR 1 000 3/2004 12/2003 For own debts Real estate mortgages 14 612 14 612 Business mortgages 5 707 5 707 Other own commitments Leasing payments and commitments 3 744 3 758 Rent commitments 11 914 13 542 DERIVATIVE CONTRACTS EUR 1 000 3/2004 12/2003 Currency derivatives Nominal value 7 772 7 896 Current value 27 94 Interest rate derivatives Nominal value 48 000 43 200 Current value -1 131-526 Electricity derivatives Nominal value 4 304 3 864 Current value 605 388 The figures have not been audited. Helsinki, 20 April 2004 SUOMINEN CORPORATION Board of Directors Additional information: Mr. Heikki Begholm, President and CEO, tel. +358 10 214 300 Suominen Corporation Telephone +358 10 214 300 Business ID 1680141-9 Hämeenkatu 7 B Fax +358 10 214 3530 Domicile Tampere P.O. Box 380 www.suominen.fi FIN-33101 Tampere firstname.lastname@suominen.fi Finland