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Good day and welcome to Suominen's Q1 2023 results publication. My name is Emilia Peltola, and I'm heading Suominen's communications and investor relations. And today here with me are our new President and CEO, Tommi Björnman; and Interim CFO, Sirpa Koskinen. And as usual, after the presentation, there is time for questions and answers. And before Tommi will start the presentation -- I ask you to say a few words about yourself.
Okay. Good morning, everybody, and welcome also on my behalf for this, my first review after 35 days in the company. So just a few words about my experience. So I have been roughly 30 years in the industry, so -- and if we want to be very specific, more than 25 years in nonwovens. And my background a little bit is something that the longest assignment or work, what I had, is, of course, I was shy 17 years with Ahlstrom. And my 2 latest assignments were I was 4.5 years, roughly, in Israel, running Avgol nonwovens; and before that, 3.5 years in Saudi Arabia, running [ Mada Nonwovens ], so I have a fairly good understanding of the industry. And of course, I have not directly been working with the wipes customers; some of them, yes, mainly for the branded side. And it's very nice to be here and learn a little bit more about the wipes business and the opportunities what we have ahead of us over here. So maybe, Emilia, we could continue, yes, okay. So that -- we continue with the normal agenda what we had. We have, first, briefly some key takeaways from first quarter. Then we would look at the financial review, look at a little bit the highlights of the strategy and then a few words about the outlook. So in order to look at a little bit the key takeaways of that. So the first quarter was -- sales-wise, it was, I would say, satisfactory. So we were able to generate EUR 6.5 million better sales than comparable time last year, while, of course, with what's a little bit disappointing was something -- the comparable EBITDA was EUR 0.7 million less compared to last year, but maybe what is also very important, that we were able to better to -- manage our cash flow. So we were able to generate EUR 6 million more cash flow compared to the first quarter 2022. And then of course, over here we have a little bit more detailed information. So looking at the development of the top line, so especially looking at what is -- where we are, year-to-date numbers and then in comparable to the quarter. So here, over here, once you look at the first quarter numbers -- so we need to remember that in those numbers it's included also the 2 strikes. We had the strike in Finland, at the ports; as well as linked to the Mozzate plant closure. We had a strike on Mozzate side, which impacted also our top line. And then of course, in the numbers, a little bit later, we will come to the raw material impact more. But of course, sales prices may increase, but we were not able fully to compensate the raw material costs in the prices. Maybe the one thing we need to mention, which is not told here directly -- it is something if we look at the share of the new product sales. So it was a bit more than 40%. Actually this is the highest ever, if we look at the strategy period which started from 2022. So this gives a good platform once looking for the future. And just reminding you that, how we calculate the new products, it is the products which are less than 3 years old. Then if we look at a little bit on the EBITDA in a little bit more details. So on that -- so the challenge what we had, it is mainly coming through the -- our pricing mechanism, which we call lag. It was something we were able to correct our sales prices, but mainly due to the lag, so that -- it was not fully following through to the numbers. And that was actually generating us a bigger gap in our EBITDA numbers, but of course, in the numbers, so something that we wanted to show here, that the -- also the currency had a small impact on -- positively in our numbers. But generally speaking, that is mainly that -- the disappointment which came through the pricing mechanism and lag. Over here it is something that now once you look at a little bit the hard numbers. So especially that -- I'm not going to go through all the lines but maybe just pinpoint the cost of the goods sold line. So making the comparison from the first quarter 2022 to first quarter 2023, you may see the impact which is coming through the raw material pricing. And of course, that it is something that -- in the coming quarters and months, of course, that is something that we are expecting to have some relief on that side. And then maybe the most positive news what we have on this quarter, together with the good new product sales, is the operative cash flow, which was positive EUR 3.3 million, and EUR 6 million better than the previous quarter in the beginning of 2022. And generally speaking, it was something that we had a little bit tighter net working capital control. And this is, of course, the aim once going forward is -- because of the market un-stability, it is very, very important that we control the cash flow once going forward. And as normally, we have had some highlights coming from the strategy and the sustainability. On the strategy side, if we look at that, it is more or less remaining the same mission, vision, strategies; our strategy focus areas and values. So they remain the same. And we drive the company towards -- to become and to be the front-runner of the nonwovens innovations and especially on the sustainability area. Maybe that -- in order to look at that or something that we want to also enhance, our commercial excellence and innovation. And very good signs of that was something that, in February, we organized a sustainability and new fiber seminar in Nakkila. And the participants -- we had roughly 50 people but showing the high interest of the new products. It was very successful. And there were stakeholders from the different parts of the value chain. And all in all, we had an excellent feedback by organizing this type of focused meetings with our key customers and stakeholders. Maybe the second one, which is actually -- I'm very proud for the organization and for Suominen. EDANA have organized in the category -- in this category the second time the award. And we had an opportunity to win this award for the second time in a row. So that has been organized twice and we have -- both times, we have won the award. And this is our new product, Circula, which is based on the recycled pulp used in the material, which they considered that it was a good, groundbreaking idea in the nonwoven field that's using also recycled pulp in the nonwoven products. And of course, this is a sign of the good work done around the sustainability and innovation. And maybe now, just at the end of the presentation, just to repeat more or less that -- what has been our outlook for 2023. It is something that we expect that, our comparable EBITDA, compared to 2022, in 2023, it's going to increase. And just as a reminder: So the EBITDA in 2022 was EUR 15.3 million. Maybe I will hand it over now back to Emilia so that -- if there are any questions. So I'm happy to answer those questions. And really it was very, very nice to e-meet you. I'm looking forward to meet you in person one day.
Thank you, Tommi. So yes, now it is time for questions, so let's first take questions from the line. So do we have any questions?
[Operator Instructions] The next question comes from Joonas Ilvonen from Evli.
It's Joonas from Evli. I have a question related to -- I mean you mentioned tough competitive environment. Does that refer specifically to Europe? Or how do you see the competitive situation in the U.S. at the moment?
Yes. Very good question. Thank you for that. So if we look at the competition generally, so that -- actually that has become more fierce in all of the regions. And the main drivers, of course, were something that this is the, let's say, [ backdrop ] coming from the COVID period. Once the market was booming, a lot of companies decided to increase their capacity. And now we will see, once these lines are coming to the business, in the situation when the total market is unstable. So this creates, more or less, a little bit changed competition picture in all of the markets. So it's applicable in all the markets across the globe. And why am I able to say this? Of course, because in my previous company, we were operating on the same field, in the hygiene field. We were supplying mainly the components for the diapers -- but of course, that -- it's going more or less to the same end uses as the wipes.
All right. And when it comes to new product sales, the share of new products, would you say that you have made more progress in the U.S., better progress there, compared to Europe? Or are there any major differences [ in this sense ]?
Maybe. Just I can't remember on my head all the numbers where we are, but generally speaking, there is -- I can say that I have met all the main customers during the 34 days and 35 days that I have been in the company. I had opportunity to meet them. So I would say that the activity level is very, very good in all of the markets, so -- but unfortunately, I don't have any numbers in my head in order to be able to share with that, but that is something that maybe in the coming presentations we can a little bit more highlight, if that would be good for you to see it.
All right. And you are basically still expecting good volume recovery, especially in the U.S., this year. So how did the Q1 volumes in the U.S. look like compared to your own expectations?
Of course. Let's say, if we look at generally speaking, the first quarter was a disappointment, so it's no doubt about that. I would say so that generally speaking is something that we have -- we are fairly optimistic once we look at the second half of the year. So the first half of the year will be a little bit more challenging. It's unstable. It can be a little bit more volatile. And you -- sometimes you say it's a little bit bumpy road. Now we have a bumpy road. And the expectation is, once we go forward, so that -- it will release a little bit. And then as well, the actions and the activity what we have in place, we would be able to see effects of those. So the -- just in a nutshell say that the near future will be challenging, but the expectation for the second half is somewhat more positive.
Okay. Maybe a final question, related to your current cost structure. You have just completed the Mozzate plant closure, so how do you see your current cost structure, assuming that you will get these -- this volume growth comes through towards -- over the course of the year? So is it like already -- are you happy with your current cost structure, assuming that you get some more volumes?
Yes. So of course, the decision in order to make such a drastical change in order to close a site, of course, it's always a disappointment, but there are good reasoning, like you already indicated, so that we needed to take care of our cost structure. Of course, the expectation once going for the future is something that we are expecting to be more efficient not only on our cost structure but also in all efficiencies coming from the operations. So expectation is something that, yes, it will -- the situation should improve also internally which -- the cost which is in our control. And then of course, we'll try to drive also the activity, more activity, on the market and customer side.
Are there more questions...
The next question comes from Harri Taittonen from Nordea.
Yes. To follow-up on these previous questions, perhaps the U.S. situation. I think it was a story which evolved during the last 2 years, that the -- kind of the inventories were high at some [ end ] segments. And then it started to look better. And I just wonder how that is kind of going on. And now I think there was some -- also some improvement in the sort of the versatility of your production lines in the U.S. so that you were able to cater for sort of the wider customer segment. And so maybe, if you can give color on that one, that would be the first question. And the second one is on the working capital. I mean, is it something that -- I mean you did well now, for sure. Do you think that there is going to be help from the cycle in this year? I think, looking back, there was quite a bit of an increase in -- or tie-up in working capital in -- 2 years ago and then some positive developments last year, but how would you see the possibility to -- sort of a lower working capital for the rest of the year with the kind of prices and costs coming down?
Harri, again excellent questions. So if you look at the North America, so generally speaking. So it was very, very true, what happened in North America. So that -- during COVID, the market was booming. And everybody was loading so that -- the pantry loading was very, very high in North America. And then of course, that -- once the market started to stagnate and plummet, so that -- it had [indiscernible] impact for the whole supply chain not only for us but also our customers. We will still have a little bit impact coming from there so that it's not fully melted everything away, so -- and we see some light in the tunnel, but of course, it -- we will see that, a little bit in the near future, maybe after the second quarter, we would have a better visibility on the market because, like I said, there is a high volatility at the moment. The sentiment is, I would say, fairly positive, but there is so high volatility that it's very difficult in order to draw the picture. Because if you look at now, that order intake and, generally speaking, that how we receive the orders -- so it's fairly short sight, so it is not as long as it used to be. So maybe this is the indication that, once going forward, so that -- once we have a better visibility through the pipe, so -- then we can draw a little bit better conclusions. And then coming to your second point, linked to the working capital. Yes, I would say that, that is very natural in these type of situations. Once the market is unstable -- let's say we have a little bit headwind here and there. And we are a little bit uncertain about the inflation, how it's going to hit, et cetera, how it's going to impact on us, then we need to focus ourselves then to areas which is in our control. And working capital is one of them because we want to secure also the possibilities to invest in the future. And that is a very natural way of making the system so efficient so that we would be able to self-sufficiently finance our coming investments. So I'm not making any statements, but I will say that this is a very typical way how the companies are looking in these type of circumstances. And we do the same.
[Operator Instructions] There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you very much. It seems that there are no questions from the chat either, so before we end this session, I want to thank you, Tommi and Sirpa, all the participants; and then advertise our Q2 results that will be published on August 9. So thank you, everybody. And have a good day.
Nice to e-meet you. Thank you. Bye-bye...