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Suominen Hit By Viscose Hikes

May 14, 2008

Results negatively impacted by soaring raw material costs.

Suominen Corporation’s results for the January-March 2008 period were negatively impacted by soaring raw material costs, according to a recent release from the company. Net sales for the quarter totaled €54.5 million, up slightly from the year-earlier period’s sales of €54.3 million. Sales for the full year in 2007 reached €215.2. Although Suominen saw a €0.2 million loss in earnings during the first quarter of 2008, the company expects underlying operating profit to improve on 2007, although no major changes are expected in the level of net sales. The second quarter of the year is anticipated to continue to be challenging.

In the first quarter of 2008, prices for raw materials and especially viscose continued to rise and were higher than in the first and last quarters of 2007. Increased raw material prices and the price reductions included in some long-term contracts lowered the company’s result by €1.5 million. Implementation of the company’s cost-saving and operational enhancement programs continued. An improvement of €1.0 million was achieved through these programs during the period under review.

Quarterly net sales of the Wipes and Nonwovens business area totaled €35.5 million, an increase of 3% on the corresponding period in 2007. The operating profit of Wipes and Nonwovens reached €-0.1 million versus €0.6 million during the corresponding 2007 period. Net sales of Wet Wipes totaled €18.5 million, an increase of 3% on the previous year. Delivery volumes grew; strong growth was seen in personal care wipes in particular. Average sales prices fell as expected, mainly due to long-term contracts. The margins were reduced due to increases in raw material prices. The business unit launched a revision of its production recipes, which will enable a shift to less expensive raw materials for some products.

Net sales of Nonwovens increased by 15% to €20.6 million. Net sales and delivery volumes increased over the first quarter of the previous year, thanks to higher volumes of thermal bonded material for hygiene products. In hydroentangled nonwovens, Suominen reported that the focus of sales shifted to Europe and there was an increase in internal deliveries. Prices for raw materials and especially for viscose continued to rise, which eroded the business unit’s margins and resulted in a lower result than in 2007. Production efficiency improved and was stabilized as a result of fewer production disturbances and a better yield.

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