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Good day, and welcome to Suominen's Q4 and Full Year 2021 Result Publication. My name is Emilia Peltola, and I'm heading Suominen's Communications and Investor Relations. Today, our President and CEO, Petri Helsky; and CFO, Toni Tamminen, will present the results. And after the presentation, there is time for questions. So please, Petri, the floor is yours.
Thank you, Emilia. Good morning, and welcome also on my behalf. Here, we see the agenda. And in brief about the year 2021, the net sales of Suominen were EUR 443 million. Toni will come more in detail about all these different aspects in the next few minutes. But concerning the revenue, the negative impact from currencies was about EUR 11 million. We reached a strong EBITDA of EUR 47 million which, nevertheless, was lower than the record level from the year before. But this EUR 47 million that we reached in '21 was the third highest in Suominen's history. So we can be happy about that, taking into account that the journey during this second year of the pandemic was really anything but uneventful. Our cash flow totaled EUR 11 million. And the Board of Directors proposes to the AGM a dividend of EUR 0.20 per share. And Toni, if you then go a bit more thoroughly into the figures.
Thank you, Petri. Good morning to everyone. So starting with the net sales, it was a very twofold year. So the first half of the year, our sales volumes continued on the record high levels of 2020. However, then in Q3 we had this sudden drop of demand caused largely by overstocking in the supply chain. And then we had recovery in Q4. But overall, we had -- if you look at the year as a whole, we had a decrease in sales volume from the record 2020, whilst at the same time, raw materials increased, I would say, even in an unprecedented manner of raw material prices and our sales prices followed those. So as Petri said, currencies impacted net sales negatively by EUR 11 million compared to 2020. And overall, we reached a sales figure of EUR 443 million, which is some EUR 15 million, EUR 16 million lower than 2020.
Yes, perhaps good to mention what Toni was saying about the unprecedented increase in the raw materials that the starting level of many of our raw materials was a situation where the raw materials were at historically low point on prices. And then during last year, again, many of the raw materials of ours reached the historically record high levels. So it was really quite a roller coaster that we were enjoying.
Yes. Thanks, Petri. And as said, in Q4, we had the volumes recovered from that weak Q3 and sales increased year-on-year. And actually, we ended up with the highest sales figure for quarterly sales figure for the year at EUR 115.6 million. On the recovery, it needs to be said that this was by no means even. So with some customers, we were back to very good volume levels. However, some others still continue to struggle with their high inventory levels. And as we come later to the guidance, we see that phenomenon, unfortunately, continuing still, especially in Q1 '22.Share of new products, which has been on an extremely good level at Suominen, continued. So we also in the -- for the full year, we had over 25% of the sales were coming from new products. Then if we move on to the EBITDA. So in Q4, we reached an EBITDA of EUR 9 million, significant improvement from Q3, with full year EBITDA landing at EUR 47 million, as commented by Petri. Currencies had a pretty minor impact in Q4 and minus EUR 2.4 million in the full year. And of course, compared to the record year 2020, very high comparison period, so the EBITDA decrease, the main driver was the lower sales volumes, especially for the full year due to this drop in Q3. And these increases in the raw material, freight and energy costs, we were not fully able to push them through to our sales prices. This is quite natural, as we have commented multiple times. We have this lag in our sales pricing mechanisms or sales pricing formulas, and as the raw materials continue to increase all the way to the end of the year, due to this lag, the sales price impact was not there in full. Then looking at the cost side. So obviously, with the drop in volumes, we took action to save on the fixed cost wherever we can. Those had a positive impact. And then especially in Q4, we had a positive impact from operating income and expenses. But overall, if we look at the whole profit and loss statement, I think I have gone through most of it, but as Petri said, even if it was a very rocky ride, it was the third best EBITDA year in Suominen's history, and this we can be happy about. Finally, to take a look at the cash flow. So for the full year, we had cash flow from operations of EUR 11.1 million, which decreased significantly from the high 2020 level. There, we have 2 main drivers. Of course, the result was weaker, but we had also quite a bit more cash tied up in net working capital. Again, when you look at the raw material and other cost situation, when your raw material costs go up and your sales prices go up on the net working capital, this means that your receivables go up, your inventories go up and your payables go up in value. So the increase in payables is not enough to compensate for the other 2 items. So that is a main element why we had an increase in net working capital. If you look at Q4 versus Q3, we improved. We had a negative cash flow from operations in Q3, now we went back to positive. Of course, the results improved. And also, while we had still some increase in net working capital in Q3, the impact was lower than in -- sorry, we had an increase in Q4, the impact was lower than in Q3. And I think that concludes the financial review. Petri, do you have anything to add?
No, I think that you covered the most. And let us answer then following questions if there are more detailed interest in the figures.All right, about our strategy implementation. I think that we have been implementing and executing our new Suominen strategy, which was launched in the beginning of year '20 very well. And the strategy slide that you now see in front of you is very much the same than the original launched. There is, however, a difference in the strategy headline. We wanted to bring up to that also that this growth and profitability really comes through sustainability, customer focus and efficiency. And those were in the text underneath the headline already prior to this, but now even in this short headline, we really underline the key elements in our strategy. So as I said, no other changes than that to our strategy. And if we then look at the progress in a few examples here, in the year '21, as we have said prior, we had 3 investment projects ongoing, and all those were now completed, 2 of them in Italy and 1 of them in the U.S. As Toni already said, the share of new product sales once again reached levels of above 25% of our total sales, which can be considered as a very good and strong level to be on. Very nice to see since sustainability is really in the core of Suominen's strategy is to see our progress also on the sustainability front. The sales of sustainable products has now increased by 47% comparing with the base year of 2019. You might remember that our target was to increase the sustainable product sales during the strategy period by 50%, so by year '25. And now, after year '21, we have already reached 47%. Our other sustainability target -- or one of the other sustainability targets is to launch 10 new sustainable -- or 10 sustainable products per calendar year. And last year, we launched 16 sustainable products. And finally also, we can see that what comes to the different consumption levels. For example, here, we mention water consumption. That has reduced by more than 20%. The greenhouse gas emissions have been reduced by more than 8%. And also for example, waste to landfill, we have been able to reduce by more than 16%. So very encouraging and good results also from the strategy implementation front. And as Toni said about the outlook, we expect that EBITDA in 2022 will decrease from the level of '21. And really, we see the beginning or the early part of this year, especially Q1, to be challenging. There are couple of main reasons. One is that this inventory buildup which caused a drop in demand in Q3, it has a bit of a seesaw pattern. So big drop in Q3 of last year, recovery in Q4. Now we see a bit again lower demand in Q1 of this year. And as Toni said, not really an even situation for all our customers, but for some of the customers. And then this current COVID situation, with the Omicron variant, has really caused a lot of sickness, absences in the entire supply chain, whether it is a supplier to ours, whether it's our own operations or the operations of our customers. So the Omicron has really led to -- a bit the entire supply chain from operating at full strength. And these mentioned reasons will indeed impact the result of ours negatively especially in the first quarter of the current year. I think that concludes the presentation. And Emilia perhaps back to you.
Thank you, Petri. Thank you, Toni. And now it's time for questions. And if we first take the questions from the lines. So operator, please, do we have any questions?
Thank you. We have 2 questions lined up. [Operator Instructions] Our first question comes from the line of Harri Taittonen of Nordea.
Maybe sort of one question on the organic sales growth. And it looked like it was just -- well, around 2% for the fourth quarter when you strip out the currency impact. And just thinking about this first half or the beginning of the year, you probably -- I mean, it sounds like you are expecting volumes down, but price is probably still up. But do you care to say at all like what do you think -- I mean is the destocking need so large that the organic growth will turn kind of negative beginning of this year or not? Or is it something you don't guide?
Toni, do you want to answer to this one?
Yes. Generally, of course, we do not give exact guidance on the volumes. But basically, if you think about that, as I said, so beginning of last year was still on the very high 2020 volume levels. And now as we are impacted by the destocking, of course, especially compared to Q1 '21, we expect volumes to be lower. And then, of course, it's then, as you've commented, prices will definitely go up from Q1 last year.
Yes, yes. Yes, sounds clear. Is this sort of supply issues more in the Americas or Europe? Or is it sort of both continents that you experienced in the first quarter?
Yes, these are really more customer-specific than even region-specific issues. And thereby, it so happens that, for us, the issue will be mainly amongst North American customers.
Okay. Okay, right, yes, which was the case last year also when you -- so that's good to know. Maybe -- I mean just on the sort of cost of goods, I mean EUR 107 million compared to EUR 94 million last year. Obviously, we know that there's been a lot of inflation everywhere on a broad front. But I mean, would you give some color and just remind -- energy has been quite a big issue for many suppliers. But that's not such a big issue for you, so it must be more coming from the sort of the fiber and chemicals, I suppose?
Yes. For us, of course, the real main portion of the increase has been coming from the fiber.
Yes. Yes. Yes. Is it -- I mean, looking ahead, I mean, is there any kind of a crystal ball, like do you see any kind of stabilization in Q2 or we know roughly where Q1 costs are. But how does it look if you look a little bit further in terms of costs?
Yes. Of course, we have been keenly following what inflation in general is expected to do and then, of course, more specifically concerning our raw materials. And of course, even in the spectrum of our main raw materials, the situation is not again even. We have seen, for example, pulp price to come down somewhat. But viscose and many of the other fibers have still been going in the other direction. And we cannot really see that in general we would see, at least in the early part of this year, really yet a relief. But as we were looking at the situation in late 2020 when overall the raw materials were at historically low levels, we thought that -- and rightfully so, that they are only likely to increase going forward. Now as I said, when we see many of the raw materials to be at historically high point, I think it is, of course, a matter of time only that they then start to move into the other direction.
Exactly. Yes. Yes. Last question, if I may, still follow-on the investments. Now that you completed the 3 investments, do you see like plan or sort of demand for new projects? And what would be kind of the CapEx expectations going forward from here?
Toni, do you want to give your answer to this one?
Yes. Well, obviously, the world is not ready, and we are evaluating all kinds of investments growth. As you can see in the strategy, we are targeting growth and profitability through sustainability, customer focus and efficiency. So really, growth and efficiency are the key words there. So we are evaluating various options, and will of course give more detail when we have something to inform. Then it depends on those growth investments. Our, let's say, base investments, I think we have communicated are somewhere there in the around 2% or slightly less than 2% of the annual revenue. So there, I would say, very roughly in the EUR 5 million to EUR 10 million a year range. And then the growth and other major projects would come on top of that.
Next question comes from Joonas Ilvonen of Evli.
It's Joonas. You elaborated quite a bit on these operational issues but, normally energy process. But maybe if we -- you just completed these investments in Italy and the U.S. and they were of relatively modest size. So I would assume that there will be no major associated ramp-up costs there. .
You are right. You are right. No, of course, every time you ramp up new capability or new capacity, you will have some costs, of course, running trials and learning how to run, for example, the new product and new product recipe. But you are right in saying that those are not very material.
And I would say a significant part of those costs are already in last year's numbers. So it's not really significant. And especially going forward, there should not be much.
One other, of course, cost item related to new capacity is that, of course, we need more operators. We need more shifts to run. And then you typically, of course, have already the cost of operators during the training period and the ramp-up period even if your output is not really at the design capacity. But again, also, as Toni said, of such costs, they were a big portion already during last calendar year.
And as well, raw materials and energy price is somewhat perhaps stable outflow from now on. But what about logistics and freight prices, do you have anything to add on those?
Yes. If we start with the sea logistics, you remember, we also -- at these events, we discussed those last year. And let's say, the global view during the early part of last year and perhaps still in the spring was that this turbulence might be over around summertime of '21. Then it -- it's just -- there was a slight easing of the situation. But in fact, it wasn't over, the turbulence. On the contrary, it became even worse. And now the view is that this turbulence in the logistics market will continue still for many a month, if not even during the entire duration of this year. And similarly so, especially in North America, the domestic transportation issues still remain. We still have the issues with lack of truck drivers. Especially again during this Omicron era, it has even got worse. And the congestion of the ports and also, for example, the Chicago rail yard, which has an impact on our operations. So no real improvement in the logistics front yet. And what comes to transportation prices then, I think we've all seen the fuel prices go up, which again then leads to increasing transportation costs. So I think that transportation front, we continue to have issues, as we have seen in the last several months.
We have one further question come from, that's from the line of Antti Viljakainen of Inderes.
Still back to this inventory issue. Can you find any common factors with the customers that are struggling with the inventories right now, especially in North America? And on the other hand, which -- what kind of customers are you finding with this problem?
Yes, it's -- they are, of course, the one and the same customers who we spoke about already during last year. And the commonality at these customers is that they were really having suddenly really multiple sourcing organization, working even separately from -- within their company from each other, creating a very big increase in the inventories. And it just takes time to melt. Also, they -- we are selling fabric to the customers of ours, which they will then convert to finished products. But in many of these cases, in fact in most of these cases, these inventory buildups were really made out of sourced finished goods, which they then have in stock and need to reduce the levels of inventory.
Yes. Perhaps to add to that, of course, from our point of view, the silver lining here is, first of all, that is finished good, if they sell finished goods, that does not keep forever firstly. And secondly, obviously, many of these customers have done major investments into their converting capacity. So it's not like a paradigm shift that they would now start sourcing these finished goods from third parties and then let their online stand still, that would make absolutely no sense. And the second silver lining is that, of course, we follow up on the import statistics, especially the U.S. And it's clear that now after this Q3, these imports have dried up more or less completely. It's just that there was such a big chunk of them at the time that it takes our customers time to work through those.
Yes. And of course, this just shows the complexity of these vast supply chains that our customers were, of course, basing their sourcing on the demand signal which they were receiving from the retail chains. And I think that it -- why it was so overheated was the fact that since the shelves were remaining empty all the time, every single part in the supply chain was adding substantial amounts to their demand signal just to make sure that when things are being then allocated, they at least get a part of their total demand. And it sort of exploded this situation, which now takes still some months to melt.
Okay. And the second one is about end demand at consumers. How do you see that? I know that your business is [indiscernible] by nature, but consumer confidence is -- U.S. has gone a bit down. How do you see end demand at customers -- end consumers, I mean?
Yes. Well, that has remained on a good level. So the end users, the consumer demand, has continued to be on a higher level than pre-pandemic. So that is another good news. Toni was listing some others. Did we lose you, Antti? Or did I drop down the line?
No, no. Yes. And one more about other income in Q4. You had some insurance fee, I guess, positive item in the profit and loss statement. Could you discuss a bit to where does this item derive from? And if this incident has actually a negative or positive total P&L impact and which year was that.
Toni, if you want to take this one.
Yes, this was actually a very recent event. So we had a fire incident at one of our production lines in Europe. And overall, it did not have a huge impact on our financials. I would even say that it happened there fairly recently. So the negative -- let's say, the negative impact from that line are bearing the Q4 higher lines. So both lost sales ex some extra cost. And then the positive is then in the insurance compensation in the other operating income. Overall, I would say that there is no significant net impact. But it's kind of a -- it's a bit of a shift from gross profit to other operating income.
[Operator Instructions] Okay, there seems to be no further questions on the phone lines at this time.
Thank you, operator. There are no further questions from the chat either. But before we close this call, I want to remind that our first quarter result publication will be on the 4th of May. Thank you for participating, and thank you, Petri and Toni.
Thank you, everyone.
Have a nice day.
Bye-bye.
Bye.