Suominen - Strong EBIT and updated guidance
Suominen reported Q1 revenue slightly above our estimate, while EBIT came in double our estimate. The beat was driven by higher gross margin. Suominen updates its guidance for FY ’20, expecting EBIT to improve clearly (previously improve).
- Q1 revenue amounted to EUR 110.2m vs our EUR 108.0m estimate. EUR 37m was attributable to Europe and EUR 73m to Americas. Nonwovens volumes increased while prices decreased along with raw materials. Suominen says the pandemic helped volumes towards the end of Q1 (for all markets) and expects extended strong demand in the short-term. In the long-term the pandemic may lead to continued increased demand for nonwovens in cleaning and disinfection applications. For now the company’s operations have been running basically normal, and nonwovens production has been classified essential.
- Gross profit stood at EUR 13.3m while our expectation was EUR 9.2m. This means gross margin was 12.1% vs our 8.5% estimate.
- Q1 EBIT was EUR 5.7m, compared to our EUR 2.9m estimate. The strong figure was due to higher volumes, improved production and raw materials efficiency as well as favorable raw materials prices.
- Suominen updates its guidance, and now expects FY ’20 EBIT to improve clearly (previously improve) but notes the result estimate for H2’20 is uncertain due to the pandemic.