Translation: Original published in Finnish on 8/10/2026 at 7:30 am EEST.

Suominen's Q2 result exceeded our expectations and outperformed the comparison period. The company reiterated its full-year guidance of increasing earnings. However, earnings remain weak in absolute terms, and the improvement in earnings driven by the efficiency program that we forecast will be negated by multiple digestion, which is why we consider the expected return to be weak. We reiterate our Reduce recommendation but raise our target price to EUR 0.63 (was EUR 0.60) due to increased estimates. 

Result improved year-on-year and exceeded expectations

Suominen's revenue grew by 6% from the comparison period and also clearly from the Q1 level, although it fell short of our estimate. This was supported by growth in volume in particular. The company noted that it is already facing some capacity constraints in the US market because demand is strong and its factories' delivery reliability remains somewhat weak. Delivery reliability will be gradually improved in the coming years as part of the ongoing Full Potential program.

Suominen's adjusted EBITDA was 4.3 MEUR, exceeding the forecasted 3 MEUR as well as the comparison period. The result also turned slightly positive at the adjusted EBIT level, but after financial expenses, the company still incurred a clear loss. Reported figures were weighed down by non-recurring items related to efficiency improvements.

Earnings growth was supported by volume growth, fixed cost savings implemented previously, and the initial effects of the Full Potential program, which was launched in January. However, earnings were weighed down by the increase in raw material prices, which could not yet be fully passed on to customers during Q2. Earnings are also slightly negatively impacted by the new production line completed in Alicante that is not yet in commercial use and still incurs costs.

The company has guided for improved earnings for 2026

Suominen guides for an improvement in adjusted full-year EBITDA. Based on Q2 results that exceeded our expectations, we have raised our forecasts and now expect full-year adjusted EBITDA to come in at approximately 15 MEUR. Thus, the threat of a profit warning we saw earlier has eased thanks to positive developments. However, based on the company’s comments as well, we still see a risk of major operational disruptions similar to last year's, which could hurt earnings.

We expect rising earnings in the coming years, but clearly below the company's target

We anticipate that Suominen will achieve a significant improvement in earnings in the coming years, bolstered by the efficiency program, though we doubt it will even come close to its 10% EBITDA margin target. Our adjusted EBITDA margin estimate for 2028-29 is 6-7%. This is because we believe the benefits of efficiency improvements will be passed at least partially on to customer prices, along with normal cost inflation. In the medium and long term, however, we still expect a higher margin level than in the next few years.

Share prices in a clear earnings improvement, the expected return is weak

The share price is so high relative to earnings that it requires several years of strong earnings growth before the valuation is at a justified level (EV/EBIT somewhat neutral at 10x only in the 2030s). On our estimates, the company's EPS will not turn positive until 2028. Due to limited competitive advantages, we do not believe that the company can achieve a return on capital that sustainably exceeds the required return in the long term. This limits the stock's upside, even in a positive scenario. The value of our DCF model is in line with the target price at EUR 0.63. The DCF model assumes a significantly better margin for the company in the long term than the current one.