Good morning, and welcome to Suominen's Q1 results audiocast. My name is Anu Ilvonen, and I work as the Director of Communications and Marketing for Suominen.

Joining me today to discuss our January-March results are our CEO Charles Héaulmé and CFO Janne Silonsaari. Without further ado, Charles, the floor is yours.

Thank you, Anu. Good morning to all of you.

Thank you for joining us this morning. We will have a look at our first quarter 2026, then Janne Silonsaari, our CFO, will take us through the financial review.

We'll talk about the full potential program that we have announced at the end of January this year, and then at our outlook before engaging into a Q&A session. About the first quarter 2026, a couple of words on our market.

The nonwovens market was relatively stable in the first quarter 2026, with particularly a growth continuing at a good pace in the MTT category, the moist toilet tissue, which is the growing category of nonwovens, and then baby wipes being more stable like the previous quarters. Important to say also about the market that during the first quarter of 2026, we have seen a limited impact from the war in Iran, in the Middle East.

However, and that's because this war started at the end of February, no real major impact in Q1. However, we are tightly monitoring, of course, the developments, because even though we are not operating directly with manufacturing operations in the Middle East, this may have some impact in the second quarter in terms of raw material availability, in terms of cost of the raw material and energy, as everyone knows and follows in the news, and therefore, we have also worked on the agility of our pricing model in order to remain competitive, but at the same time protect our margins.

Second point, the results of our first quarter 2026 with net sales decreasing 19% versus the first quarter of 2025. We'll come, of course, to explaining the variance between the two quarters.

This has driven a comparable EBITDA to decrease from €4.1 million to €2.2 million, and the cash flow from our operations was positive with €4.5 million. Couple of important events to be mentioned during this first quarter.

Linked to some major events that happened in our US plants, in two of our three US plants in the third quarter of 2025, this has impacted both sales and EBITDA during the first quarter as a collateral or indirect damage, if I may put it like this, particularly because the interruption of supply during those events has driven some customers to seek other supply sources, at least temporarily, for some of them. Second important point is that we have continued to execute the cost savings program that was launched back in May 2025.

You may remember that we had announced a program to reduce €10 million our cost over 24 months, and we have continued this execution, even accelerated this execution during Q1, and we are satisfied with being now on the track of delivering this €10 million within 2026. Then additionally, and very importantly, because our profitability has been disappointing for now a number of years consecutively since 2022, we decided in January, and announced on the 29th of January 2026, to initiate a three-year profitability improvement program targeting 10% EBITDA after three years of execution.

This program is comprehensive, I would say end-to-end, with three pillars. One is incremental improvement in all operational performance aspect of our business.

Second, we have a number of targeted investments that are not initiated yet, but that we are planning for the three years in order to improve our profitability. Then footprint optimization in the sense of where do we produce what is going to be an important aspect in terms also of portfolio management and improvement of our margins.

That's for the introduction to our Q1, and then we look now into more details at the financials with Janne. All right.

Good morning from my behalf as well. As told by Charles, the net sales totaled €95.6 million in the first quarter.

Level has been quite stable during the past quarter as you can see on the right-hand side trend graph. Net sales reflected lower volumes and currency effects, which is presented on the right-hand side graph bridge.

We have continued to be impacted by the last year third quarter incident, impact was roughly €8 million, similar level as the organic negative impact. Currency impact was -€5.6 million, and this is basically related to the USD to EUR conversion.

Share of the new products out of the total net sales was 26%, and share has been decreasing lately a bit with the lower volume, and this has been impacting negatively also on profit due to the negative mix impact from this. Comparable EBITDA totaled at €2.2 million, slightly up from the Q4, but lower versus the comparison period.

Main reason for decrease was lower sales volume, and also mix impacted negatively as mentioned. As stated, the Q3 incident impacted still on the order level quite a bit and had a negative impact.

Related to the incident last year, we did book €0.5 million insurance compensation for the Q1 and expecting to have remaining claim to be reviewed and completed by the end of the Q2. Organic impact was supported by the cost-saving actions, and small currency impact, again mainly from the USD-EUR conversion.

Consolidated statement of profit or loss, maybe worth highlighting is here that we did have quite high one-off costs during the Q1, and those have been related to the restructuring and profitability improvement program. Other than that, we can move on to the cash flow from the operations.

As Charles mentioned, this amounted €4.5 million in Q1, and main contribution coming from the working capital improvement, and especially on actions on receivables and inventories. Thank you, Charles.

Back to you.

Okay. The full potential program, as I was suggesting in the introduction, is very much around our profitability improvement.

We are going to focus during the three years 2026 to 2028 on resetting our profitability towards a 10% EBITDA level, and we will not focus on scaling the company during that period, because we believe that scaling should come as a second phase once our profitability is at industry standard level. As mentioned before, we have three main pillars in this profitability improvement program: operational performance, targeted investments, and then some footprint optimization.

Which drives me to explain a bit more how we have designed the plan from end to end touching all the aspects of the operational performance, with the fixed cost reduction that we have engaged with a €10 million reduction in 2025 and 2026. The €10 million will be done within the year 2026.

In terms of run rate, we will have by, let's say, the end of the year, if not a bit before, the run rate of the €10 million versus what it was in the first half of 2025. We have also designed to change our operating model.

This was announced back on the 29th of January. Why changing the operating model?

Not because of being dogmatic about an organization being better than another one, but when we are in a transformational situation, we need to have very clear line of command, and we need to have expertise and effectiveness in the execution. This is why I decided at the time in January to have a clear line of command on our manufacturing operations with a new Chief Operating Officer who started in the company on the 3rd of November 2025, and who is already transforming the way of managing the factories, the way of targeting, monitoring the performance of the factories, but also it's not only about giving targets and monitoring results, it's about giving the right resources in terms of leadership, but also continuous improvement methodology, particularly using the TPM, the very well experienced TPM methodology that many industries have already proven being very successful.

We are looking, of course, into direct and indirect procurement savings potential. This is an important area.

This is not as advanced today in terms of execution as the fixed cost savings that I was mentioning before. We are still very much into the planning phase on this, but have good expectations over the three years.

Production efficiency and output, I suggested it when mentioning the operating model. Portfolio, pricing, and business development, that has to do with, let's say, commercial excellence overall.

We have a portfolio that is pretty diverse between commoditized products and also high-margin new innovation. Therefore, we want to manage the portfolio in a more disciplined way in order to focus on our margins.

That means also that pricing will be an important tool and is already an important tool to better use going forward, and business development, meaning how do we acquire new businesses, and when I mean acquire, I am not talking about M&A, I am talking about how do we develop our business with new customers and eventually also new product, new categories. That's a business development activity that we are also started at the beginning of the year.

This is supported by two aspects which are extremely important in terms which I would summarize as the capabilities, but it includes the culture of the company, and then the employee engagement, competence into driving our business. The culture, we have started the deployment at the end of quarter four 2025.

It's a culture of accountability that we have defined for the company, and we are planning, and we are very well advanced already today, we're planning to have 100% of our employees, from management to shop floor, trained and participating to workshops on the culture of accountability and what it means within the year 2026. We are already, as we speak, at 70% deployment, an accelerated deployment in order to engage rapidly the organization to this transformation.

It resonates really well into the organization, and now we need to clearly get into quick wins in order to convince everyone that the turnaround is arriving. What are the deliverables that we have targeted?

We want to be a zero accident company, safety is number one. It's not a priority; it's a license to operate in manufacturing company like Suominen.

Second, we want to grow with our existing capacity, and when I say existing capacity, of course, that we have new capacity with the investment we've done in 2024-2025 in Alicante, Spain, in our factory in Spain. This new capacity, this new line is coming to commercial production in May this year, just now as we speak.

We want to raise the EBITDA from 3% to 10%, reduce our leverage, which is far too high right now, and we want to get into the corridor of two to three times the EBITDA in terms of net debt, and then raise the employee engagement from the low 60% where we are today to 80%, which would be up to the benchmark in the industry. That's for the targets we have with this full potential program, and I assume that there will be possibly some questions around this program.

If we look at now specifically 2026, now our outlook, which we have explained or presented last quarter on the 29th of January, our outlook is that we expect to increase our comparable EBITDA in 2026 compared to 2025. With this, I guess we can open the Q&A session.

Thank you. We have a question from Rauli from Inderes.

Did an increase in factoring or similar support the cash release from receivables?

Yes, I can take this. Thanks, Rauli, for the question.

It's Janne here. Yes, there was an increase on the AR selling balance, which supported partly the decreasing AR balance.

This did have indeed a impact on that area.

Thank you, Janne. Then we have a question from Joonas Ilvonen from Evli.

How is your volume outlook for the rest of the year? Could improved volumes in the US start to make sales mix more favorable soon?

To what extent do you think your mentioned agile pricing approach can protect margins in Q2? This is probably separate questions, and do you see the new Alicante production line being accretive to margins already in Q2 or will it take longer than that?

The first question was regarding the volume outlook for the year. The volume outlook is clearly, for the rest of the year is clearly higher than the first quarter.

The first quarter profit generation is disappointing, and and the main driver for it is low volume, low volume in January, but also low volume in February and March, particularly in the US, linked to the consequence of the events we had in the flooding we had in September in in our factory in Connecticut back in September last year. This specific gap is recovered at half already in the order intake in in Q2.

We we expect relatively solid demand in the rest of the year. Actually, during Q2, I mean at the beginning of Q2, the order intake, because also of the situation in the Middle East, had clearly increased.

Will it be sustainable? Not sure.

Once the conflict is resolved, maybe this additional order intake is linked to a stocking process happening in the industry. Clearly, volume will be will be better, and will support a better profit generation.

The second question, the third question was on the Alicante line, the second?

The second question was could improved volumes in the US start to make sales mix more favorable soon?

Absolutely. Yes, our margins are slightly better in the US, and therefore, because the main, how should I say, positive gap on volume will be in the US, that will have a positive mix impact.

Then Alicante, I think the question was really specific

as I

can remember, saying will it be accretive to margins in Q2 already? I would say no, not in Q2, because we start commercial production in May, and as you can imagine, you don't start overnight with full utilization of a line.

The full utilization will take up to 2027, but gradually, we're going to increase. Yes, there will be some positive benefits in the second semester, but not in the second quarter.

Then Joonas also asked about the agile pricing approach. To what extent do you think it can protect margins in Q2?

The agile pricing means we are in the industry a relatively established process to have a pricing per quarter, with the exception of the spot orders or negotiations, but otherwise, this was a quarterly pricing process, which as the war started in Iran and then Middle East, we immediately said we cannot stand with a quarterly commitment on pricing, because we don't have a visibility to a quarter on the cost, raw material cost, energy cost, availability, and so forth. Therefore, we have moved to at max a monthly pricing process, which means that it has enabled us so far to protect the margins and pass through the relevant cost increases.

Then

we have a question from Markku Moilanen from Nordea, and a very closely related question from Joni Sandvall from Nordea on the same topic, I will read them back to back. You mentioned that some customers in the US have temporarily sought other sources due to the incident in the US plants last year.

What makes you sure that these customers will return to Suominen later? Then Joni was asking, following US incidents in 2025, are you expecting to recover lost customers still during '26?

Yes, this is basically the same question in different words. The lost volume happened to be very temporarily driven at the beginning.

Today, we can say that within the second quarter, we will recover half of this gap. The second half of this gap is still a question mark.

Why? Because when you seek alternative supply, then obviously you enter into some contracting for some period of time, either volume and/or period of time, can be six months or so, and therefore, there is a question mark on the second half.

We are actively working on getting this volume back, knowing that this is with long-term partners, from that point of view where we have very good strategic alignment. On that point of view, we're not pessimistic, but of course we should not be also overoptimistic on this, and we need to get this volume back not at whatever pricing, so that's in the equation why half of this volume gap is not yet recovered for sure, but in half of it in the second quarter.

Still remaining on the topic of the US plants and the incident, Joonas Ilvonen from Evli is asking, when will the US plants return to fully normal operations?

Linked to this US events, these operational events in 2025, they are back in The factories are completely back into normal operations since already Q4, precisely the first event was on, as I remember, on July 21st. We were back in production mid-October on that on that production line, and I'll come back to to this in in a second.

The second one was, if I remember, on September 21st, the flooding in another factory, and we were operating back in also mid-October in that factory. The the factory's capabilities are not explaining the volume reduction in the first quarter.

Now the I would like to mention the first line where we had a relatively dramatic operational failure, we had an equipment that completely failed, and required more than two months of maintenance to get back the spare parts and installation and so on, it was a very significant event. We took the opportunity to do something that we are going to gradually do on most of our lines that require it.

We have we have taken the opportunity of this 2.5 months of interruption in the the third quarter until mid-October to upgrade that the line. Today that line is producing extremely well.

The last three months of production on on that line has been record high volume, and in the in the range of 50% additional volume versus what that line was able to produce in average in 2025, which is showing that, and the reason I'm saying that is because it is showing the very good news that if we have our equipment restored to the right basic standard, which has not been done in the last years, I would say, and therefore we have Part of our full potential program is to restore all our equipment to the basic standards of production of our industry. If we have this first condition, second, if we have the right leadership into these lines, which is the case on that line where we have engaged a new leader back in the third quarter of 2025, and third, if we engage into the continuous improvement methodology, TPM, that I was mentioning at the beginning, then we see relatively quickly, six months later, we see already the fruits of all these actions.

This is encouraging about the full potential program relevance. Then,

talking about production in Europe, Joni from Nordea is asking, Alicante line investment is coming online during Q2. Are you able to fit these volumes to the market, or is there risk of cannibalization?

This is a very good question. I would like to say to Joni's question that the Alicante new line, so-called Ali 55, first of all, it is an upgrade of the technology and capabilities for Suominen, meaning that that line is not just new capacity, it is new technology that we didn't have and that enables producing sustainable nonwovens based on pulp.

That is extremely important, because many customers are looking for more sustainable solutions and therefore transition from plastic substrate or polymer substrate to pulp-based substrate. That's a very important point.

The second, to the specific question about how this line will be occupied, when I was talking about footprint optimization before, we will have a mix of internal transfers of production in order to optimize the use of our equipment in the different lines in the different factories, and then incremental growth also. Some of it is already being contracted with new customers or existing customers.

That incremental growth will be visible in H2 2026 and in 2027.

Then reverting back to sort of figures, and on top line, Markku Moilanen from Nordea is asking, you highlighted that the market environment was stable in Q1, but Suominen sales declined by 19%. What caused that, and in what product groups are you losing market share?

The 19%, indeed, versus a relatively stable market can be surprising. The 19% needs to be precisely broken down.

We have a -5%, which is currency-related. That's the USD drop versus the Q1 of 2025.

Second, the temporary alternative supply that we were discussing before, roughly -7% is the impact. As I said, half of this -7% is already back in Q2.

Then the question will be on the other half going forward. Third, we have roughly -2% negative mix impact from high-value products to a more, I would say, commoditized products.

We have a negative mix impact. Then 5% roughly is coming from a capacity reduction that was decided in Europe in the second quarter of 2025.

One line was shut down to focus on profitability, and that also has an impact on the net sales.

Finally, let's move on to financing, and both Markku and Joni from Nordea are asking about what is your plan with the upcoming bond refinancing?

All right, I can take this. As a reminder, the €50 million bond matures in June 2027.

In the event of any material changes to the company's existing financing arrangements, we naturally provide further details at an appropriate time. I can comment on general level that we continuously evaluate different financing options and take into consideration, among other factors, the funding cost, prevailing market conditions, interest of the company's shareholders, and naturally the optimal balance of debt and equity in our capital structure.

We do not categorically rule out any specific type of financing as of now. Highlighting again that, in the event of any changes of this area, we will provide further details at appropriate time.

That was all the questions from the chat, and so I would like to welcome everybody to join us again for our Q2 results publication on August 7, and thank you for this call.

Thank you.

Thank you.