Suominen - Inventory-induced negative revision
Suominen’s Q2 margins remained strong, but focus is now on the color Suominen provides on demand slowdown and inventory build-up in North America. The issue prompted the company to revise down its FY ’21 profitability outlook just ahead of the report.
- Suominen Q2 revenue was EUR 113.6m vs the EUR 120.0m/120.0m Evli/consensus estimates. Top line decreased by 7.0% y/y. Americas was EUR 67.4m vs our EUR 75.0m estimate, while Europe amounted to EUR 46.3m vs our EUR 45.0m estimate.
- Gross profit amounted to EUR 16.7m, compared to our EUR 16.8m estimate. Gross margin was 14.7% vs our 14.0% estimate.
- EBITDA was EUR 15.3m vs the EUR 14.8m/13.5m Evli/consensus estimates. EBIT came in at EUR 10.3m vs the EUR 9.8m/8.5m Evli/consensus estimates.
- Suominen now expects its comparable FY ‘21 EBITDA will decrease due to the nonwovens demand slowdown seen in H2’21. Continued volatility in the raw material and transportation markets also plays a role. Suominen reached EUR 60.9m in FY ’20 EBITDA, while our latest FY ’21 estimate was EUR 59.8m.
- Suominen sees that especially North American customers have started to experience demand slowdown. This has had a negative impact on Suominen’s orders as there has also been some inventory pile-up throughout the supply chain. Suominen expects the imbalance to clear out in Q4 and sees favorable long-term demand drivers intact.
- In our view the profit warning also exerts at least some downward pressure on our FY ’22 estimates (we had estimated EUR 56.0m in EBITDA).