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Good day, everybody, and welcome to Suominen's Half Year Financial report publication. My name is Emilia Peltola, I'm heading Suominen's Communications and Investor Relations. Today, our President and CEO, Petri Helsky and CFO, Toni Tamminen, presents the results. And after the presentation, there is time for questions. So Petri, please.
Thank you, Emilia. So second quarter of this current year was challenging for us on sales revenue side, we reached EUR 118 million, which was higher than in the same period last year, but unfortunately, on the EBITDA, we remained at EUR 1.9 million, which is, of course, significantly lower than in the comparison period. Last year when we had over EUR 15 million. The main reasons or the challenges for us also in the second quarter where the steep increase that we experienced in the raw materials and -- the other big item for us was still the low market demand on our North American side of business. The cash flow from operations was strong, almost EUR 12 million comparing with 1.2 a year ago. And then looking at the first half of the year, our sales reached EUR 228 million, which is more or less on the same level than last year. And also here, the EBITDA was disappointing 5.2% versus the very high level of close to EUR 34 million 1 year ago. The first half of '21 was still very much, of course, influenced by the COVID boost, which we saw in the nonwovens market. And now again, we have been living a bit the aftermath of the boom in the market, especially what comes to the high inventories that some of our North American customers built during last year, and which they have then been working downwards now already since some several months. The cash flow in the first half was then EUR 9.2 million comparing to EUR 17 million the year before. Toni, if you then go a bit more in detail into the numbers.
Thank you, Petri, and good morning also on my behalf. So as Petri mentioned, our sales in the second quarter were EUR 118 million. And of course, on the face of it, it looks good. So actually highest sales since Q2 '20. However, we were significantly helped by the strengthening USD, the positive impact from the currencies was EUR 8 million. And then when you dig a bit deeper into it. So sales volumes decreased, especially in the U.S., which drove the comparable sales down. In Europe, sales volumes were actually quite okay and quite more or less in line with the comparison period, the Q2 last year. Sales prices also had a positive impact, so following this raw material prices, they increased. And again, what we have been reporting our share of new product sales, so that continued on a strong level, above 25%. Then looking at the result. So as Petri said, EUR 1.9 million in Q2 for EBITDA, which is, of course, weak currencies had a negative impact on the results, of course, driven by the lower result in the U.S. And other than that, it is really these 2 items which Petri mentioned. So lower sales volumes, especially in the U.S. and higher costs and really in Q2, especially the raw material costs increased even a bit more steeply than expected. So comparing to Q1, we had an increase of high single digits essentially for the raw material costs. So really significant cost increase still on our raw materials in Q2. Sales prices compensated for this. But when you have this kind of a steep increase in a quarter and as we have been communicating many times, our mechanisms have this lag. So of course, our sales pricing did not fully reflect the steep increase we experienced in Q2. Then looking at the whole profit and loss statement. So, let's say, the gross profit nothing special to be honest. What can be seen a bit on the cost items or the cost rose is the impact of the stronger USD, on the other hand, then you can see on the net financial expenses, which were positive, so that is also mainly due to the stronger USD and reevaluation of USD based assets. And then finally, if we move to the cash flow. So as Petri mentioned, strong cash flow in Q2. This was driven by improvement in net working capital. So comparing to the comparison period -- in the comparison period, we had a negative impact from net working capital. Now we had an almost EUR 11 million positive impact from net working capital. I think that shortly about the results.
Thanks, Toni. And then about progress in strategy. This is already a familiar slide, the 1 slide about our strategy. And some highlights then from -- and it's not even really what comes to safety. Our target there is to reach 0 LTA. So no lost time accidents. And that we reached now in the first half and perhaps even exceptionally good achievement, we have reached in Paulinia, our plant in Brazil, which celebrated the achievement of having now reached 10 years without LTAs, which is remarkable in any industry. Perhaps at this stage, good to add that also business-wise, our Paulinia Brazilian operations are doing very well. So the headwind that we've been having in North America, what comes to customer demand has not been the case in South America. We also announced an investment in Nakkila, we will be upgrading 1 of our production lines there. And with the aim really to further improve our capabilities to produce sustainable nonwovens, and with this upgrade, we will increase both the end product quality, but also the efficiency in producing these sustainable fiber containing products. And we've also established convertibility tests that we call Green Lab in Nakkila. And there also the first tests have already started. So moving well on with our sustainability fee, which is, of course, in the core of Suominen strategy. And what comes to outlook, no change there. And as we had earlier already announced, our outlook is that in 2022, our comparable EBITDA will decrease clearly from year before.
Thank you, Petri, and Toni. And now it's time for questions.
Let's first take questions from the lines. So operator, do we have any questions?
[Operator Instructions] And currently, we have 1 person lined up for a question. That's Harri Taittonen of Nordea.
Yes. On the cost and related to that, the working capital, of course, that line was quite positive, I mean was that related to volume or just sort of input prices? And I mean, if you can give some color on the working capital because it was quite a decent positive number for Q2. And maybe related to that, I mean, if you could sort of elaborate a bit on the cost trends by the main cost types, energy main materials that you are seeing at the moment because it's apparently looks like a bit mixed bag still.
Yes, starting from the working capital. So it is also a mixed bag. So really, if you think about -- we've managed to work on our receivables then -- so receivables came down and that was really driven by volume and better payment behavior by the customers, which we have been really working on. Payables increased. That was both volume and price -- and then also inventories increased mainly due, as you know, logistics issues have been ongoing. So we had been by design increased our inventories a bit to be able to ensure our production.
We suffered in the second quarter perhaps even a bit more than during the several COVID quarters prior with availability of raw materials. And also for that reason, in order to be able to produce, we decided to somewhat increase our inventory levels towards the end of the quarter. And the magnitude is that perhaps the most -- the biggest improvement came from the payables. Then about the cost elements. So as we have commented, in the report. So in general, we now expect at least the base of the increase of the raw materials to start moderating. Now of course, what might throw a bit of a spanner in the works is that energy then especially towards the end of the year, as we all know, is expected to continue climbing in Europe, and that likely will have also impact on the raw material costs. But overall, energy especially for our Italian operation will be increasing and raw materials in the U.S. a bit more favorable than in the Europe, but we expect overall that, that should now start moderating. And freights, I think, especially sea freights, the expectation is that the worst should start to be behind us. And there are also further signals even on a general economic level, which would seem to support the trend of, let's say, less overheated economy in the U.S. especially, which would then influence perhaps also the availability of transportation and trucks, which would help us and also the transportation costs. And as Toni said, also then on the raw material side, we are at least for the time being, seeing some moderation to pricing.
Yes. Yes. Okay. And just to clarify, Toni was saying about the high single-digit sequential increase in cost Q2 versus Q1, that was percentage-wise. I think I heard or...
Percentage wise so yes. Yes.
Which is more or less about the -- in absolute terms as well, if 1 looks at the COGS per quarter.
Indeed, indeed.
And I don't know maybe last question, if you want to, I mean, give some -- of course, this inventory situation has lasted now for some time. So I mean, what's the what kind of indications or signals how long might this correction take as it has been making a slightly slower progress than you have anticipated.
Yes, we are, of course, keenly following that topic, both in discussions with our customers and also reading what they publish when they come out with their results, for example. And indeed, unfortunately, it has taken longer than what our customers believed earlier because earlier what the customers had told us, but also published was that they believe that inventory of theirs would have melted by mid of this year, but it has taken longer. But there is some light in the tunnel already. So some of those customers for which we've seen a major drop in volumes they have restarted now in late Q2, again, ordering and receiving delivery. So it is starting to move and from that perspective, but also from what we've said earlier as well that we have been then changing the product mix of ours. And with this flexible production line that we have, which can be producing both the hard surface disinfection products, which has been mainly hit by this inventory buildup or we can produce moisture tissue products.
So we have been then very actively during the first half running trials and qualifying our MTT products then, and we have progressed in that and received brand new customers for us for which we have already started commercial runs. And also, we have increased the already existing MTT customers' volumes, and we will be ramping up the MTT volumes now in the second half as well. And both of those aspects help us, of course, in the second half versus the H1, which we just now had a look at.
And we have one further person in the queue. That's Antti-Pekka Viljakainen of Inderes.
Two follow-ups regarding the volumes. Could you please comment a bit your volume development in the second quarter compared to first quarter in North America and in Europe separate. The volumes in Q2 versus Q1 remained more or less on the same level? And the same goes for both continents?
Same goes for both continents.
Okay. That's clear. And could you also please comment a bit your volume development in July, did you see already year-on-year increase in volumes in July.
Yes. We are seeing positive development in July year-on-year. But as I -- just in the context of the previous question, this will be sort of a ramp-up period now during the second half. So we expect that, that the volumes will be continue to increase during the coming months.
And previously, the improvement is especially where the hole is in the U.S. So we already started to see improvement in July.
[Operator Instructions] There seems to be no further questions from the phones at this time.
Okay. So before closing this session, I want to advertise the Q3 results publication that will be on October 26. So thank you, everybody, for participating, and have a good day.
Thank you, everyone.
Thank you. Bye-bye.