Q2 2026 Suominen Oyj Earnings Call

August 7, 2026

Speaker #4: Good morning, everyone, and welcome to the Suominen Q2 webcast. My name is Marika Väkiparta. I'm the Chief Strategy and Transformation Officer at Suominen, and I'm hosting the call today.

Marika Väkiparta: Good morning, everyone, welcome to Suominen Q2 webcast. My name is Marika Väkiparta. I am the Chief Strategy and Transformation Officer at Suominen, I am hosting the call today. With me here I have our President and CEO, Charles Héaulmé. Good morning.

Speaker #4: With me here, I have our President and CEO, Charles Homais. Good morning.

Speaker #5: Good morning.

Charles Héaulmé: Good morning.

Speaker #4: And then Kimmo Raunio, our CFO. Good morning.

Marika Väkiparta: Kimmo Raunio, our CFO. Good morning.

Speaker #6: Good morning.

Kimmo Raunio: Good morning.

Speaker #4: On our agenda today, we're briefly discussing Q2 financial results, the Full Potential program and our outlook for 2027, and obviously at the end, we'll have the Q&A.

Marika Väkiparta: On our agenda today, we're briefly discussing our Q2 financial results, the Full Potential Program, and our outlook for 2027. Obviously, at the end we'll have the Q&A. The floor is yours, Charles.

Speaker #4: The floor is yours, Charles.

Speaker #5: Thank you, Marika, and good morning to all of you. It is my pleasure to welcome you to the results of the second quarter 2026 at Suominen.

Charles Héaulmé: Thank you, Marika. Good morning to all of you. My pleasure to welcome you for the results of the Q2 2026 at Suominen under the title Improved Sales and Comparable EBITDA During the Q2 of the Year. I'd like to give you a few highlights before Kimmo will take you through more details on the financials. As I said, improved sales during the quarter by almost 6% compared to the same period last year. Also, significantly increased compared to the Q1 of the year. With the sales increase also, we have increased the profitability, particularly at the level of comparable EBITDA, which is at a level of EUR 4.3 million in the Q2. If we compare it to last year, EUR 3.2 million.

Speaker #5: Under the title 'Improved Sales and Comparable EBITDA During the Second Quarter of the Year.' So I'd like to give you a few highlights before Kimmo will take you through more details on the financials.

Speaker #5: As I said, we improved sales during the quarter by almost 6% compared to the same period last year, and also significantly increased compared to the first quarter of the year.

Speaker #5: With the sales increase, we have also increased the profitability, particularly at the level of comparable EBITDA, which is at a level of €4.3 million in the second quarter.

Speaker #5: If we compare it to last year, €3.2 million, and that is very much linked to the first benefits that we see from actions implemented in the frame of our Full Potential Program. I will come back to this later in this call.

Charles Héaulmé: That is very much linked to the first benefits that we see from actions implemented in the frame of our Full Potential Program. I will come back to this later into this call. Third item is the cash flow. The cash flow from operations, which was slightly negative at EUR -4.5 million for the Q2. Those numbers put in perspective of the H1, obviously show that the Q2 is a significant improvement compared to the Q1. It was not all about the operations and the performance during the Q2 2026. You might know that we have made a decision to raise capital during the Q2. This was a successful share rights issue oversubscribed, which is giving a gross amount in equity of EUR 28 million to the company.

Speaker #5: The third item is the cash flow. The cash flow from operations was slightly negative at minus €4.5 million for the second quarter. These numbers, put in the perspective of the first semester, obviously show that the second quarter is a significant improvement compared to the first quarter.

Speaker #5: Now, it was not all about the operations and the performance during the second quarter of 2026. You might know that we made a decision to raise capital during the second quarter, and this was a successful share rights issue, oversubscribed, which is giving a gross amount in equity of €28 million to the company.

Speaker #5: And that is helping us to strengthen our balance sheet, but also accelerate the Full Potential Program, which we have started to move from planning to execution during the second quarter, with first signals of good benefits from this Full Potential Program, particularly in our manufacturing operations, where we started.

Charles Héaulmé: That is helping us to strengthen our balance sheet but also accelerate the Full Potential Program, which we have started to move from planning to execution during Q2 with first signals of good benefits from Full Potential Program, particularly in our manufacturing operations where we started. Also in the margin management, our margins have improved in Q2 compared to Q1, and that is encouraging, versus the plan that we have put in place. Also, we benefit from the fixed cost reduction initiative that we have engaged now exactly a year ago, and which is basically completed versus the objective that we have assigned ourselves to reduce the cost by EUR 10 million.

Speaker #5: Also, in margin management, our margins have improved in the second quarter compared to the first quarter, and that is encouraging. Versus the plan that we have put in place, we also benefit from the fixed cost reduction initiative that we engaged exactly a year ago, which is now basically completed against the objective that we had set for ourselves to reduce costs by €10 million.

Speaker #5: Another important point of the quarter is that we have started however with some delay, but we have started the commercial technical and commercial qualification of our new production line in Alicante in Spain.

Charles Héaulmé: Another important point of the quarter is that we have started, however, with some delay, but we have started the technical and commercial qualification of our new production line in Alicante, in Spain, the line called Ali 55. That was at the very end of June, and we are happy to count with that additional line for ramping it up in Q3 and mainly in Q4, and then accelerating the ramp-up during 2027 for two reasons. It is additional capacity, but also it is for innovation on sustainable solutions based on pulp and fiber. Really an important line for our growth, but also for our differentiation as a sustainability leader. As I said, some early signs of improved production performance in line with our production program deployment that we have announced on 29 January this year.

Speaker #5: The line called Ali 55. That was at the very end of June, and we are happy to count with that additional line for ramping it up in quarter three and mainly in quarter four, and then ramping accelerating the ramp up during 2027 for two reasons.

Speaker #5: It's additional capacity, but also it is for innovation on sustainable solutions based on pulp and fiber. So, really an important line for our growth, but also for our differentiation as a sustainability leader.

Speaker #5: As I said, we've seen some early signs of improved production performance in line with our product program deployment that we announced on January 29 of this year.

Speaker #5: And then a few highlights also, because it's not only about the economic performance, but we want to be a great place to work—meaning a safe place to work for our employees, but also with an engaged workforce. And we have some important milestones and recognitions in this.

Charles Héaulmé: If you highlight also, because it is not only about the economic performance, but we want to be a great place to work, meaning a safe place to work for our employees, but also with an engaged workforce. We have some important milestones and recognitions in this. Recognition, for instance, in our factory in Finland, in Nakkila, but also in Paulínia in Brazil, where we have recently achieved 5,000 days without a lost time accident in the factory. Actually, if we extrapolate to July, we have passed now 14 years without LTA in that factory. These are key aspects that I wanted to highlight. Now handing over to Kimmo for the financial review.

Speaker #5: Recognition, for instance, in our factory in Finland, in Nakkila, but also in Paulínia in Brazil, where we have recently achieved 5,000 days without a lost time accident in that factory.

Speaker #5: Actually, if we extrapolate to July, we have now passed 14 years without an LTA in that factory. So these are the key aspects that I wanted to highlight. Now, handing over to Kimmo for the financial review.

Speaker #6: Thanks, Charles. So, my name is Kimmo Raunio, and I've been CFO of the company for a couple of months. Now, I'll walk you through our headline financials for the second quarter.

Kimmo Raunio: Thanks, Charles. My name is Kimmo Raunio, and I am CFO in the company since a couple of months, and now walking you through our headline financials in Q2. Net sales, we were growing in Q2 5.8 percentage points to EUR 105.6 million. That is growth both compared to Q2 last year and also compared to Q1 this year when the volume and net sales was depressed. Growth came primarily from our US operations. When we break it down a little bit, we had a volume increase compared to Q2 last year, and then average sales prices decreased following declining raw material costs and also especially changes in the sales mix. Currency had a minor negative impact in Q2. H1 2026 was still showing a decline compared to last year.

Speaker #6: Net sales were growing in the second quarter, 5.8%. It points to €105.6 million, and that growth is both compared to Q2 last year and also compared to Q1 this year when the volume and net sales were depressed.

Speaker #6: Growth came primarily from our US operations. When we break it down a little bit, we saw a volume increase compared to Q2 last year, and average sales prices decreased following declining raw material costs.

Speaker #6: And also, especially, changes in the sales mix. Currency had a minor negative impact in the second quarter. H1 2026 was still showing a decline compared to last year, and that's, of course, driven by the Q1 net sales, which were substantially lower than Q1 in 2025.

Kimmo Raunio: That's, of course, driven by the Q1 net sales, which was substantially lower than Q1 in 2025. Recapping the comparable EBITDA development. As Charles already highlighted, we posted EUR 4.3 million comparable EBITDA in Q2. That's +35 percentage points compared to Q2 last year. The main drivers in this positive development was basically improving volume and our cost reduction measures as part of our Full Potential Program. Having said that, we had a negative impact from our sales mix in Q2 2026, we also had a headwind from delays in adjusting some of our sales prices due to rapidly increasing some raw material costs driven by the oil price jump during the quarter. H1 2026, still a little bit negative compared to last year. Again, the Q1 performance giving that result. Next page, our consolidated statement of profit and loss.

Speaker #6: Recapping then the comparable EBITDA development—as Charles already highlighted—we posted €4.3 million comparable EBITDA in the second quarter. That's plus 35 percentage points compared to Q2 last year, and the main drivers in this positive development were basically improving volume and our cost reduction measures as part of the program.

Speaker #6: Having said that, we had a negative impact from our sales mix in Q2 2026, and we also had a headwind from delays in adjusting some of our sales prices due to rapidly increasing raw material costs driven by the oil price.

Speaker #6: Jump during the quarter. Whole first half 26 still a little bit negative compared to last year, and again the Q1 performance giving that result.

Speaker #6: Next page, our consolidated statement of profit and loss. I think it's good to highlight and understand that our Q2 figures are negatively impacted by items affecting comparability, and those items amounted to minus €2.1 million during the quarter, and a €4.6 million cost in the first half of 2026. And when you compare Q2 last year or the first half last year, these same items were minus €0.6 million, so there's a significant impact coming from the items affecting comparability as part of our full potential program execution.

Kimmo Raunio: I think it's good to highlight and understand that our Q2 figures are negatively impacted by items affecting comparability. Those items amounted to EUR -2.1 million during the quarter and EUR 4.6 million in H1 2026. When you compare Q2 last year or H1 last year, these same items were EUR -0.6 million. There's a significant impact coming from the items affecting comparability as part of our Full Potential Program execution. Finally, Q2 cash flow from operations, EUR -4.5 million. It's improvement from Q2 last year and especially in Q2, we had a net working capital buildup influencing negatively, originating from growing volume, especially in the US. H1 2026 cash flow from operations at breakeven, that's clear improvement from last year. Handing back over to you, Jos.

Speaker #6: Finally, Q2 cash flow from operations was minus €4.5 million. It's an improvement from Q2 last year, and especially during the second quarter, capital build-up influenced negatively, originating from growing volume, especially in the US.

Speaker #6: The whole first half of 2026 saw cash flow from operations at breakeven, and that's a clear improvement from last year. Now, handing back over to you, Charles.

Speaker #5: Thank you, Kimmo. A couple of words on the Full Potential program, just to remind you of something that we have obviously presented already back on January 29, but also for the first quarter results.

Charles Héaulmé: Thank you, Kimmo. A couple of words on the Full Potential Program. Just to remind something that we have obviously presented already back on 29 January, but also for the Q1 results. I would like to remind what we are doing in the company in order to reset our profitability to the level that we believe it should be, meaning that we are aiming midterm at reaching a 10% comparable EBITDA margin level. That is really the strategic focus during this period of time. We have engaged in this at the beginning of 2026. As I said before, starting to see early signs of improvement. Of course, it's early days into this journey that is engaging basically all the aspects of our operations and business. Particularly, we have three pillars that we are looking at implementing.

Speaker #5: But I would like to remind you what we are doing in the company in order to reset our profitability to the level that we believe it should be. We are aiming, mid-term, at reaching a 10% comparable EBITDA margin level, and that is really the strategic focus during this period of time.

Speaker #5: We have engaged in this at the beginning of 2026. As I said before, we are starting to see the signs of improvement. Of course, it's early days in this journey that is engaging basically all aspects of our operations and business, and particularly, we have three pillars that we are looking at implementing.

Speaker #5: And the first, and also in terms of timing, is pillar number one, which is called Operational Performance, where we are basically looking end-to-end at all the different chapters of our operations. We're looking at procurement, obviously—how to deliver and harvest more savings from procurement, whether it's on direct material or indirect supply. Sales excellence also, in terms of pricing management and margin improvement, and that includes portfolio management, products, and customers.

Charles Héaulmé: The first one also in terms of timing is the pillar 1, which is called operational performance, where we are basically looking end-to-end at all the different chapters of our operations. Looking at procurement, obviously, how to deliver and harvest more savings from the procurement, whether it is on direct material or indirect supply. The sales excellence also in terms of pricing management and margin improvement. That includes also a portfolio management product and customers. Something I mentioned, that was the first pillar that we looked at or we worked on since 2025, that's the fixed cost savings. Basically, we are in a position now to say that we have delivered on the commitments that have been given. Then a major chunk of our Full Potential Program is the manufacturing continuous improvement.

Speaker #5: Then, something I mentioned—and that was the first pillar that we looked at, or we worked on since 2025—that's the fixed cost savings. Basically, we are in a position now to say that we have delivered on the commitment that had been given.

Speaker #5: And then a major chunk of our Full Potential program is the manufacturing continuous improvement. For that, we are planning some specific investments to restore some equipment to the right conditions, but also it's about the people and the methodology of working.

Charles Héaulmé: For that, we are planning some specific investments to restore some equipment to the right conditions, but also it's about the people and the methodology of working. We are deploying the very well-known TPM methodology, total productive maintenance, which has been practiced with success in many industries. We have started to deploy it stepwise in different factories, not in all at the same speed. We are focusing on prioritizing where we have the main opportunities of improvement. That's a very important point. We have also implemented a new operating model, which is, we believe bringing more expertise and effectiveness in dealing with our business. That part has been done. There are still some fine-tuning, but that part has been done basically within Q1.

Speaker #5: So, we are deploying the TPM—the very well-known TPM methodology, Total Productive Maintenance—which has been practiced with success in many industries, and we have started to deploy it stepwise in different factories.

Speaker #5: Not in all, at the same speed. We are focusing and prioritizing where we have the main opportunities for improvement, so that's a very important point.

Speaker #5: And then we have also implemented a new operating model, which we believe is bringing more expertise and effectiveness in dealing with our business. That part has been done.

Speaker #5: There are still some fine-tunings, but that part has been done basically within the first quarter. The second pillar, which we have started slightly on some equipment—but not in all the different projects that are potentially coming up for the next couple of years—we are targeting some low-risk, good-return investments.

Charles Héaulmé: Second pillar, which we have started slightly on some equipment, but not in all the different projects that are potentially coming up for the next couple of years. We are targeting some low risk, good return investment in order to focus on profitability enhancement and of course, marginal growth. The essence of those investments will not be to add capacity, it will be to bring better profitability in the company. We will get growth thanks to our new capacity in Alicante, in Spain, as I said in the introduction, we are not planning to invest specifically for growth, but for profitable growth.

Speaker #5: In order to focus on profitability enhancement and, of course, marginal growth, the essence of those investments will not be to add capacity; it will be to bring better profitability to the company.

Speaker #5: We will get growth thanks to our new capacity in Alicante, Spain, as I said in the introduction. But we are not planning to invest specifically for growth, but for profitable growth.

Charles Héaulmé: The third pillar is some specific profitability measures, which have to do with low margin volume management, increasing the utilization of our current installed base, where we have room for growth, utilizing better our equipment, also some specific contract renegotiations, which will bring additional cost improvement. Those three pillars will contribute to bringing the profitability from where we are to where we want to be. That means 10% EBITDA. We believe that the operational performance improvement end-to-end will bring 3 points of margin, the targeted investment about 1 point on the full global scope, then the other structural profitability measures may bring 2%. That brings us all together to the 10% where we want to be.

Speaker #5: The third pillar is some specific profitability measures, which have to do with low-margin volume management, and increasing the utilization of our current installed base, where we have room for growth by utilizing our equipment better.

Speaker #5: And then also some specific contract renegotiations, which will bring additional cost improvement. So those three pillars will contribute to bringing profitability from where we are to where we want to be.

Speaker #5: That means 10% EBITDA. We believe that the operational performance improvement end-to-end will bring three points of margin. The targeted investment is about one point on the full global scope, and then the other structural profitability measures may bring 2%.

Speaker #5: That brings us all together to the 10%, where we want to be. In terms of, of course, this Full Potential program, when we announced it on January 29th, we had said, of course, this program will have some cost and investment, and we had mentioned a figure of €30 million, which is still valid for our overall plan, both in investments and indirect cost.

Charles Héaulmé: In terms, of course, this Full Potential Program, when we announced it on 29 January, we had said, of course, this program will have some cost and investment, and we had mentioned a figure of EUR 30 million, which is still valid for our overall plan, both in investment and in direct cost. We said roughly we believe EUR 20 million investment, EUR 10 million of cost. We're still in this ballpark in terms of our planning. In order to do two things, first of all, finance that program over time, second, strengthen our balance sheet very short term because our leverage had reached a level of 7 at the end of 2025, which is obviously too high. We have decided to raise capital, this has been successfully done without getting into the technicalities of it. It was oversubscribed. The subscription happened during the month of June.

Speaker #5: We said roughly, we believe €20 million investment, €10 million of cost—we're still in this ballpark in terms of our planning. But in order to do two things...

Speaker #5: First of all, finance that program over time, but second, strengthen our balance sheet in the very short term, because our leverage had reached a level of 7 at the end of 2025, which is obviously too high, and we have decided to raise capital, and this has been successfully done.

Speaker #5: Without getting into the technicalities of it, it was oversubscribed. The subscription happened during the month of June. We had announced this project on May 18, and it was closed on July 2.

Charles Héaulmé: We had announced this project on 18 May, and it was closed on 2 July with the approval of this offering and subscription. We are very happy with the success. Via this channel, like any other channel, I want to really thank our shareholders and all investors that really believe in the company and our plan, believe in the management, and trust that we are going to make happen what we have committed to. Thanks a lot for that. This is really reassuring and helping us to accelerate the execution of the program. That is what we wanted to share with you as an update this morning. Just one word on the outlook that has not changed. Our outlook is that we expect that to deliver in 2026 a comparable EBITDA that would be an improvement compared to 2025 as a reference.

Speaker #5: With the approval of this offering and subscription, we are very happy with the success. Through this channel, like any other channel, I want to really thank our shareholders and all investors that truly believe in the company and in our plan, believe in the management, and trust that we are going to make happen what we have committed to.

Speaker #5: Thank you very much for that. This is really reassuring and helps us to accelerate the execution of the program. That's what we wanted to share with you as an update.

Speaker #5: This morning, just one word on the outlook that has not changed. Our outlook is that we expect to deliver in 2026 a comparable EBITDA that would be an improvement compared to 2025 as a reference, just repeating that the comparable EBITDA for 2025 was €12.6 million.

Charles Héaulmé: Just repeating that the comparable EBITDA for 2025 was EUR 12.6 million. With this, handing over back to you, Marika, for the Q&A session.

Speaker #5: With this, I hand the order back to you, Marika, for the Q&A session.

Speaker #1: Thank you, Charles. I think we will first move on to any phone questions that we may have.

Marika Väkiparta: Thank you, Charles. I think we will first move into any phone questions that we may have.

Speaker #4: If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad.

Operator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Joni Sandvall from Nordea. Please go ahead.

Speaker #4: The next question comes from Joni Sandvall from Nordea. Please go ahead.

Speaker #2: Yeah, thanks, Charles and Kimmo, for the presentation. I have a couple of questions from my side. Starting first with the overall demand situation—have you seen any changes in this? And if you could split this between the Americas and Europe?

Joni Sandvall: Thanks, Charles and Kimmo for the presentation. A couple of questions from my side, starting first with the overall demand situation. Have you seen any changes on this? If you could split this on Americas and then Europe.

Speaker #5: Thanks, Joni. Regarding the question about demand—yes, it's a good question because I did not mention it. And I didn't mention it because there is nothing to really update on the demand.

Charles Héaulmé: Thank you, Joni, for the question. It's a good question because I did not mention it. I didn't mention it because there is nothing to really update on the demand. The market demand remains relatively solid. You may remember that there is overcapacity overall in Europe, much more than in the US. There is also, in this industry, increasing imports from low-cost countries producers. The demand is still good. In the case of Suominen, the good news is that the improvement will come from us, from our operational efficiency, our manufacturing efficiency, and with this, our real ability to supply, because I'm happy to report that the demand from our customers is exceeding what we have been able to deliver. Therefore, so critical that we continue or even accelerate the deployment of our program of improvement in our factories.

Speaker #5: The market demand remains relatively solid. You may remember that there is overcapacity overall in Europe, more than in the US. There is also, in this industry, increasing imports from low-cost country producers.

Speaker #5: But the demand is still good. In the case of Suominen, the good news is that the improvement will come from us— from our operational efficiency, our manufacturing efficiency, and with this, our reliability to supply. I'm happy to report that the demand from our customers is exceeding what we have been able to deliver, therefore it's so critical that we continue, or even accelerate, the deployment of our program of improvement in our factories.

Speaker #2: Okay, that's clear. Then, coming back still on the US, where you last year lost some volumes after this incident, and I think you mentioned in Q1 that you are expecting to recover some of these volumes already in Q2.

Joni Sandvall: Okay. That's clear. Coming back still on the US where you last year lost some volumes after this incident, and I think you mentioned in Q1 that you are expecting to recover some of these volumes already in Q2. How this has played out and what is your expectation now for H2?

Speaker #2: So, how has this played out, and what is your expectation now for H2?

Speaker #5: So exactly in line with the answer to your first question, actually, yes, we have, from a demand point of view, what customers are willing to get supply from us compared to alternative supply.

Charles Héaulmé: Exactly in line with the answer to your first question, actually, yes, we are from a demand point of view, what customers are willing to get supply from us compared to alternative supply. We would be back basically at this point in time in line with what it was before. However, we have been facing some operational issues, not of the magnitude of what happened in 2025. In terms of our efficiency is not yet where it should be. It's going to be a long journey, which we will take step by step. We are, for instance, in some lines where we have started the restoration to basic conditions, changing or upgrading some leadership into lines and also implementing the TPM methodology. We have very clear signs.

Speaker #5: We would be back basically, at this point in time, in line with what it was before. However, we have been facing some operational issues—not of the magnitude of what happened in 2025.

Speaker #5: But in terms of our efficiency, it is not yet where it should be. It's going to be a long journey, which we will take step by step. But we have, for instance, in some lines where we have started the restoration to basic conditions, changing or upgrading some leadership in the lines, and also implementing the TPM methodology.

Speaker #5: We have very clear signs. And then it's not early signs. It's already six months in a specific line, for instance, of production performance, which we didn't have before.

Charles Héaulmé: It's not early signs, it's already 6 months in a specific line, for instance, of production performance, which we didn't have before. Now we need to deploy the same into other lines, other critical lines, in order to be able to reach the level of demand from our customers. We are under-supplying versus the demand at this point in time. That's really the key message, which may sound negative, but it's actually very positive in the sense of it's an opportunity for better output and better profit generation in the future, in the near future.

Speaker #5: Now we need to deploy the same into other lines, other critical lines, in order to be able to reach the level of demand from our customers.

Speaker #5: So, we are undersupplying versus the demand at this point in time. That's really the key message, which may sound negative, but it's actually very positive in the sense that it's an opportunity for better output and better profit generation in the future.

Speaker #5: In the near future.

Speaker #2: Okay, that's clear. And lastly on the mix impact, you mentioned some delays on this oil derivative cost push-through. So, how big of an impact did you have in Q2, and should we expect this to be transitional into Q3, then, on a positive note?

Joni Sandvall: Okay. That's clear. Lastly, on the mix impact, you mentioned some delays on this oil derivative, cost push-through. How big of impact you had in Q2 and should we expect this to be a transitionally to Q3 then on a positive note?

Speaker #5: Yes, maybe Kimmo will comment on this, but yes, we have some negative mix impact during the first semester, not just the second quarter—so in the first quarter and in the second quarter.

Charles Héaulmé: Yes. Maybe Kimmo will complement on this, yes, we have some negative mix impact during the H1, not just the Q2, in the Q1 and in the Q2. Some of it is linked to changes in the customer portfolio that we didn't necessarily want to happen, but that have happened. That's number 1. Second is also linked to pricing mechanism that in some cases, didn't have the agility because of applications of contract terms and conditions basically, which didn't have the agility that we wanted on a monthly basis, and therefore, some of the margin may have peaked from Q2 to Q3. Okay? That, yes, we have an impact in the Q2 numbers, which is not positive from the mix. Kimmo, do you want to add something on this?

Speaker #5: Some of it is linked to changes in the customer portfolio that we didn't necessarily want to happen, but that have happened. That's number one.

Speaker #5: But second is also linked to the pricing mechanism, that in some cases didn't have the agility because of applications of contract terms and conditions, basically, which didn't have the agility that we wanted on a monthly basis, and therefore some of the margin may have peaked from Q2 to Q3.

Speaker #5: So yes, we have an impact on the Q2 numbers, which is not positive from the mix. Kimmo, do you want to add something on this?

Speaker #3: No, not really. I think this is the case.

Kimmo Raunio: No, not really. I think this is the case.

Speaker #2: Okay, okay. Thank you. That's all from me.

Joni Sandvall: Okay. Thank you. That's all from me.

Speaker #5: Thank you.

Charles Héaulmé: Thank you.

Speaker #4: As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Samu Wilhelmsen from Nordea Markets.

Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Samu Wilhelmsson from Nordea Markets. Please go ahead.

Speaker #4: Please go ahead.

Speaker #2: Hi, thank you for your presentation. I have a couple of questions from the Create Research side as well. Maybe starting with the volumes, just a bit of clarification continuing on that point.

Samu Wilhelmsson: Hi, thank you for your presentation. A couple of questions from the credit research side as well. Maybe starting with the volumes in terms of bit of a clarification, continuing that a bit. To what extent the volume growth stems now from winning back the US volumes after the production issues versus the underlying growth in customer demand that you touched recently. Also, do you see any restocking behavior from your customers ahead of your shift into the different pricing model?

Speaker #2: To what extent does the volume growth now stem from weighing back the US volumes after the production issues, versus the underlying growth in customer demand that you touched on recently?

Speaker #2: But also, do you see any restocking behavior from your customers ahead of your shift into the different pricing model?

Charles Héaulmé: No restocking from customers, we don't see it. We would like to be able to restock ourselves and then it's back to the first answer that I was giving. Because our production performance hasn't been to the level expected, we are first trying to supply the demand of the quarter, but not been able to upgrade, if I may say, our inventories, which from a cash flow point of view, would not be directly positive, but would help us going forward in Q3, Q4 deliver more to our customers. That's an axis of improvement that we want to drive in the next couple of months. From a volume point of view, as I mentioned, we are recovering the situation, that negative situation, particularly in the US that has been created last year. However, it's not only volume related, it's our margin increase.

Speaker #5: No restocking from customers—we don't see it. We would like to be able to restock ourselves, and then it's back to the first answer that I was giving because our production performance hasn't been at the level expected.

Speaker #5: We have first tried to supply the demand of the quarter, but have not been able to upgrade, if I may say, our inventories, which from a cash flow point of view would not be directly positive, but would help us going forward in Q3 and Q4 to deliver more to our customers.

Speaker #5: And that's an axis of improvement that we want to drive. In the next couple of months. So from a volume point of view, as I mentioned, we are recovering the we are recovering the situation that negative situation, particularly in the US, that has been created last year.

Speaker #5: However, it's not only volume-related. Our margin increased. It's also a pricing increase, and active work on our portfolio.

Charles Héaulmé: It's also pricing increase and active work on our portfolio.

Speaker #2: Okay, understood. Thank you. You mentioned there a bit on the cash flow. So despite the improvement in EBITDA cash flow, I think it was a bit on the soft side.

Samu Wilhelmsson: Okay, understood. Thank you. You mentioned there a bit on the cash flow. Despite the improvement in EBITDA cash flow, I think it was a bit on the softer side. What would you say that are the currently the main constraints on the cash conversion and when we would expect the profitability to translate more consistently into the free cash flow?

Speaker #2: So, what would you say are currently the main constraints on the cash conversion, and when would we expect the profitability to translate more consistently into free cash flow?

Speaker #5: Yeah, overall, our cash flow is, of course, negatively impacted by our EBDA, which is not where we would like it to be. That's why we have launched the Full Potential program, with the main target to lift up the profitability of the business.

Kimmo Raunio: Overall, our cash flow is of course negatively impacted by our EBITDA, which is not where we would like it to be. That's why we have launched the Full Potential Program, with the main target to lift up the profitability of the business. Then it's also fair to say that during H1, we have been incurring Items affecting comparability originating from the Full Potential Program, and the amount as such is quite substantial. Those are cash costs originating from basically necessary measures to get the Full Potential Program in place. Of course, typically in these type of exercises, you first take the measures which have some cost, and then you start to see the benefit.

Speaker #5: Then it's also fair to say that during the first half of the year, we have been incurring items affecting comparability originating from the Full Potential program, and the amount as such is quite substantial.

Speaker #5: And those are cash costs originating from basically necessary measures to get the full potential program in place. And of course, typically in these types of exercises, you first take the measures, which have some cost, and then you start to see the benefit.

Speaker #5: Then thirdly, in the first half of the year, our capital expenditures were more than €10 million, and there we still have an impact from the soon-to-be-completed equipment installations, especially in our new line in Spain, Alicante.

Kimmo Raunio: Thirdly, H1, our capital expenditures are more than EUR 10 million, and there we still have an impact of the soon-to-be-completed equipment installations, especially in our new line in Spain, Alicante.

Speaker #2: Okay, thank you. Then perhaps, last question from my side. Now, after the equity raise and the extension of the credit facilities, the next maturity is the senior secured bond, which is 10 months away.

Samu Wilhelmsson: Okay, thank you. Perhaps the last question from my side. After the equity raise and the extension of the credit facilities, the next maturity is the senior secured bond in 10 months away. How do you think about the balance between refinancing the bond early, given the interest is quite low, and waiting for further improvement in your financials before accessing the market?

Speaker #2: So, how do you think about the balance between refinancing the bond early, given that interest is quite low, and waiting for further improvement in your financials before accessing the market?

Speaker #5: Yeah, that's a very good question. And as we stated in the report, we are currently on the back of the successful rights issue completed at the end of June, with the money received in early July.

Kimmo Raunio: Yeah, that's a very good question. As we state in the report, we are currently on back of the successful rights issue completed end of June with money received in the early July. We are now considering various alternatives for the bond, which is maturing next June, and we expect to come back in due time then when our plans are proceeding.

Speaker #5: So, we are now considering various alternatives for the bond, which is maturing next June. We expect to come back in due time, then, when our plans are proceeding.

Speaker #2: So, would you say that the primary objective is to secure the maturity well ahead of time, or is optimizing the financing costs more important now?

Samu Wilhelmsson: Would you say that the primary objective is to secure the maturity well ahead of time, or is optimizing the financing costs more important now?

Speaker #5: Yeah, these are the topics what we are just now considering. And of course, we need to balance between getting the refinancing completed with the reasonable cost and there are various alternatives which we are now as we speak currently planning for.

Kimmo Raunio: Yeah, these are topics what we are just now considering. Of course, we need to balance between getting the refinancing completed with the reasonable cost. There are various alternatives which we are now, as we speak, currently planning for.

Speaker #2: Okay, fair enough. Thank you very much for the questions.

Samu Wilhelmsson: Okay, fair enough. Thank you very much for the questions.

Speaker #5: Thank you.

Kimmo Raunio: Thank you.

Speaker #3: Okay, I believe those were—that was the last phone call.

Marika Väkiparta: Okay, I believe that was the last phone question.

Operator: There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.

Speaker #4: There are no more phone questions at this time, so I will hand the conference back to the speakers for any written questions and closing comments.

Speaker #3: Yes. So, there is still one chat question. Charles, you mentioned you have more demand than supply. Does that apply company-wide or to some specific geographies?

Marika Väkiparta: Yes. There is still one chat question. Charles, you mentioned you have more demand than supply. Does that apply company-wide or some specific geographies and/or products?

Speaker #3: And. Or products?

Speaker #5: Yeah, it's good that it makes it more specific to what I answered. That's particularly the case in the US. The US market is growing, particularly in the MTT category, which is the moisturized toilet tissue.

Charles Héaulmé: Yeah. Good that it makes it more specific to what I answered. It is particularly the case in the US. The US market is growing, particularly in the MTT category, which is the moisturized toilet tissue. Not so much into the baby wipes, which is obviously another of the biggest part of our core business. In the MTT, there is rapid growth in the US, and this is specifically in that area that we could be delivering more, and where we specifically need to improve our manufacturing efficiency in two factories, particularly one factory in the US, which we are actively working on. Most of the program of improvement was planned for execution in Q3, Q4 in that factory, and this is now taking place as we speak. Tangible improvement on this will be visible more in 2027, but we hope already in Q4 potentially.

Speaker #5: Not so much into the baby wipes, which is obviously another, or the biggest, part of our core business. But in the MTT, there is rapid growth in the US.

Speaker #5: And this is specifically in that area where we could be delivering more, and where we specifically need to improve our manufacturing efficiency in two factories.

Speaker #5: But particularly, one factory in the US, which we are actively working on. Most of the improvement program was planned for execution in Q3 and Q4 in that factory.

Speaker #5: And this is now taking place as we speak. Therefore, improvement—tangible improvement—on this will be visible more in 2027, but we hope already in Q4, potentially.

Speaker #3: Thanks. There are no additional questions. It's time to close the call. But before we do that, just a short reminder that our Q3 results publication is on November 5th this year.

Marika Väkiparta: Thanks. There are no additional questions. It is time to close the call, but before we do that, still a short reminder that our Q3 results publication is on 5 November this year. Hope you join us also then in our webcast. I want to thank everyone in this call, participators, and of course, Charles and Kimmo for the good conversation. Thank you all.

Speaker #3: So, I hope you will join us then also for our webcast. I want to thank everyone who participated in this call, and of course, Charles and Tim, for the good conversation.

Speaker #3: Thank you all.

Speaker #5: Thank you.

Charles Héaulmé: Thank you.

Speaker #2: Thanks a lot.

Kimmo Raunio: Thanks a lot.

Operator: The host has ended this call. Goodbye.

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Q2 2026 Suominen Oyj Earnings Call

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