Translation: Original published in Finnish on 11/6/2026 at 8:30 am EET.

Suominen’s Q3 result was slightly better than we expected, but revenue fell clearly short of our forecast, and weak cash flow increased indebtedness. The earnings improvement we forecast from the efficiency program will go toward bringing the multiples down to acceptable levels, so we still see the expected return as weak. We reiterate our Reduce recommendation and lower our target price to EUR 0.52 (prev. EUR 0.60) due to a higher required return.

Profitability improved despite sluggish sales

Suominen’s Q3 revenue grew by only 1% from a weak comparison period to 101 MEUR, ~8% below both our estimate and consensus. Sales were weighed down by disruptions on two US production lines and the suspension of deliveries to a customer experiencing payment difficulties. Adjusted EBITDA nevertheless rose to 5.1 MEUR (Q3'25: 3.4 MEUR), beating our 4.6 MEUR forecast, as higher production volumes, lower fixed costs, and the initial benefits of the efficiency program supported the margin. The comparison period’s result had been weighed down by significant production disruptions. The company remained loss-making after financial expenses.

Operating cash flow was -8.5 MEUR, as raw material inventories and the US disruptions tied up working capital. Net debt rose to 74 MEUR, with net debt/adj. EBITDA at ~5.5x. After the period, the company negotiated additional headroom on its year-end 2026 leverage covenant, but the covenants will tighten in 2027. The 50 MEUR bond also needs to be refinanced before June 2027.

Slight upward revision to earnings forecasts

Suominen reiterated its guidance for improving adjusted EBITDA, and the guidance will be met with a Q4 result of just over 1 MEUR. We forecast an adjusted EBITDA of 15.7 MEUR for the full year, even though raw material prices that rose in September will weigh on Q4. We lowered our revenue forecasts by ~4% for 2026–28 due to lower volumes and product mix. Our earnings estimates increased especially for 2027, as we expect the benefits of the efficiency program to materialize faster than before. However, earnings will remain weak next year and will only rise more clearly in 2028–29. In addition, refinancing will significantly increase financing costs in the coming years.

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

We expect Suominen to show a clear earnings improvement in the coming years, supported by its efficiency program, although we do not believe the company will get very close to its target of a 10% adj. EBITDA margin. Our adj. EBITDA margin estimate for 2028-2029 is 6-7%. We believe that the benefits of efficiency measures will trickle down, at least in part, to customer prices and cover current normal cost inflation. In the medium and long term, however, we expect the margin to settle at a higher level than in the coming years.

Earnings multiples high for the next few years

The share’s earnings-based valuation is high throughout the forecast period (2028e EV/EBIT 13x, P/E ~50x), and on our estimates, the multiples only fall to acceptable levels in the 2030s. The dividend does not support the expected return either, as we forecast no dividends in the coming years. Given its limited competitive advantages, we do not believe the company can sustainably earn returns above its required return, which limits the upside even in a positive scenario. Our DCF value falls to EUR 0.55 (prev. EUR 0.61) on a higher risk-free rate.