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Suominen Sees Drop In Q1 Sales

April 30, 2009

Sales volumes hit by decline in customer stock levels and consumer demand.

Suominen Corporation generated net sales of €46.9 million in the first
quarter. down 14% from €54.5 during the year-ago first quarter. Operating profit was €3.6 million, up from -€0.1 in the same quarter of 2008. The company attributes decreased sales volumes to a decline in customer stock levels and a general reduction in consumer demand. On the positive side, the margins for sales improved, prices resumed a slight uptrend and cost levels were more favorable than in the corresponding period in 2008. Suominen's cost-saving and operational enhancement programs have continued, which brought operating expenses to a substantially lower level than in 2008.

In terms of individual segment results, net sales of the Wiping business area totaled €30.4 million, a decrease of 15% from the corresponding period
in 2008. The business area's operating profit was €1.4 million.Meanwhile, net sales of Nonwovens decreased 18% to €16.8 million. Delivery volumes of nonwovens for wipes declined both in Europe and the U.S., while deliveries of material for hygiene and health care products were on the level of the previous year. Suominen reacted to the lower demand during the first quarter with a shutdown for the winter holidays and a short temporary layoff period affecting its entire staff. According to the company, operating expenses decreased considerably on the previous year and the efficiency of production improved further as the yield of production increased and the amount of waste decreased.

Looking ahead, Suominen's net sales are expected to decline compared to the year before, not only due to the general economic uncertainty, but also due to the rationalization measures taken in the business units. The focus of the company's operations is on improving profitability and strengthening its cash flow and capital structure. The Stairs to Top enhancement program will be continued throughout the Group, and is expected to improve Suominen's competitiveness. Suominen reported that the prices for plastic raw materials have been difficult to predict, but the company expects the global recession and soft demand for raw materials to restrain the rise in raw material prices.
Suominen estimates that the financial results for the upcoming quarters will
come short of the first quarter. However, the financial performance and profit
after taxes for 2009 will improve on the previous year.

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