Suominen - The results look promising
Suominen posted Q1 adj. EBIT, at EUR 3.0m (vs. our EUR 2.0m estimate), substantially above our expectations. The company’s gross profit (and margin) improved due to higher prices and stabilizing input costs. Volumes were lost, yet the results point to Suominen having achieved a turnaround in earnings.
- Q1 revenue amounted to EUR 110m vs. our estimate of EUR 116m. Revenue grew by 3% y/y (EUR 3.2m in absolute terms). The EUR/USD exchange rate accounted for EUR +4.7m, quite in line with our EUR 4.3m positive expectation. This means organic growth was roughly EUR -1.5m. We expected clearly positive organic growth (around EUR 4m), estimating improved pricing would outweigh volume losses.
- Gross profit totaled EUR 8.9m (8.1% margin) vs. our EUR 8.0m (7.0% margin) projection.
- In other words, even though Suominen lost substantial volumes, price hikes and stabilizing input costs helped the company to achieve a major profitability improvement.
- Adj. EBIT reached EUR 3.0m (2.7% margin) vs. our EUR 2.0m (1.8% margin) estimate.
- Suominen retains its 2019 guidance for flat revenue and improving adj. EBIT.
- The company also announced the appointment of Mr. Toni Tamminen as CFO (effective 30 Jul 2019).