Translation: Original published in Finnish on 10/30/2025 at 8:05 am EET.

Suominen's Q3 report contained limited new information following the preliminary information and lowered guidance provided by the company a couple of weeks ago. The new CEO will launch some kind of profitability program. In our opinion, this is essential, considering the company's loss-making earnings level. However, we believe the company's valuation already prices in a higher earnings level than our forecasts, and thus the expected return remains weak. We reiterate our Reduce recommendation and EUR 1.6 target price. 

Suominen already reported a weak result earlier

Suominen issued a profit warning a couple of weeks ago, in connection with which it already disclosed its Q3 revenue and adjusted EBITDA in advance. Thus, the report did not provide significantly new information. Suominen's adjusted EBITDA was 3.4 MEUR, which was also at the level of the weak comparison period and the previous quarter. According to the company, exceptional events (equipment failure and flood) weighed on the result by 2.8 MEUR, meaning that excluding these, the adjusted EBITDA would have been over 6 MEUR. However, Suominen has had problems at its plants in recent years, which in our view is due to historically insufficient investments in the maintenance and improvement of production capacity. Thus, we do not believe these problems can be considered entirely one-off, even if they do not occur every quarter.

The outlook for the rest of the year is also weak

The company's comments and guidance suggest that the Q4 adjusted EBITDA will not reach the 5-6 MEUR level described by the company as normal. Our forecast remained unchanged, meaning we expect an adjusted EBITDA of 4.5 MEUR for Q4 and thus an adjusted EBITDA of 15 MEUR for the full year. This is also in line with the guidance issued earlier in October.

The new CEO will likely announce his plans next year in two phases

Charles Heaulme started as Suominen's CEO in August. In our interview, he stated that he is currently evaluating the company and will communicate his plans for improving profitability once the work is complete. We estimate this will happen at the latest in connection with the Q4 report at the end of January 2026. The CEO already indicated that he estimates the profitability improvement measures will take 1.5-2 years, roughly 2026-27. We estimate that the measures will include further cost savings, and the company's production network may also need changes. The CEO clearly stated that Suominen's problems are largely internal, although the company also believes there is still overcapacity in the European markets, which is reflected in the competitive situation.

After the profitability program, the company plans to draw up a new strategy until 2030, which is scheduled for publication in summer 2026. In the medium term, Heaulme sees the industry consolidating and wants Suominen to grow into a larger size class. However, according to Heaulme, with the current profitability and balance sheet situation, the company does not have the resources for this, so profitability must be corrected first. In our forecasts, we expect adjusted EBITDA to double in two years. In our opinion, new measures are required to support this, as the result has been stagnating at roughly the same weak level for the fourth year in a row.

The share price reflects a clear earnings improvement, but the expected return remains weak

The share price is now so high relative to earnings that it requires several years of earnings growth before the valuation is at a justified level. Considering the limited competitive advantages, we do not believe that the company will be able to achieve a return on capital that is sustainably above the required return in the long term. The value of our DCF model, which assumes a clearly better long-term margin than the current one, is EUR 1.6, which is in line with our target price.