Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Suominen Oyj (OHEL:SUY1V, Financial) improved sales volume, sales prices, and sales margins in Q3, driven by successful commercial initiatives.
- The company achieved a gold medal level in the Ecovadis Assessment, highlighting its leadership in sustainability.
- A new production line is being added in Alicante, expected to be completed in the second half of 2025, indicating future capacity expansion.
- Despite operational issues, the company expects EBITDA to be better than last year, maintaining a positive outlook.
- Suominen Oyj (OHEL:SUY1V) has a strong presence in both the US and Europe, allowing it to mitigate geopolitical risks and maintain stable operations.
Negative Points
- Unexpected operational issues in Q3 led to a EUR3 million negative impact on EBITDA, which was below expectations.
- Cash flow from operations was negative EUR2.6 million, reflecting the operational challenges faced in the quarter.
- Currency fluctuations negatively impacted net sales by EUR1.4 million in Q3.
- The share of new products in sales decreased to 30% in Q3, down from the year-to-date average of 35%.
- Increased inventory levels, particularly in raw materials, have affected working capital due to global geopolitical uncertainties.
Q & A Highlights
Q: Have the operational issues faced in Q3 been resolved, and what was their impact on the top line?
A: The operational issues have been addressed with corrective actions, including small investments and procedural changes. The operations have stabilized, and there is no impact on customer service. The issues had a EUR3 million impact on EBITDA, but further details on the issues are not disclosed.
Q: With raw material prices declining, when should we expect this to impact your P&L, and how will it affect sales prices?
A: The impact of declining raw material prices typically lags by 3 to 4 months. While sales prices may adjust, the focus remains on maintaining sales margins, which are not expected to be affected.
Q: Financial expenses increased quarter-over-quarter. What was the reason for this?
A: There was no major reason for the increase in financial expenses; it was partly due to the timing of expenses. Interest levels are generally on a downward trend.
Q: Can we expect a reduction in working capital going into Q4?
A: If market demand and operations proceed as expected, inventory levels may be reduced, particularly in raw materials, as buffer stocks were increased due to global uncertainties.
Q: Are there any changes in the competitive landscape in the US or Europe?
A: The market remains stable, providing opportunities for high asset utilization. While there is some uncertainty in the US, local production in both the US and Europe positions the company well regardless of market direction.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
