Suominen Oyj (SUY1V) Earnings Call Transcript & Summary

Good afternoon, and welcome to Suominen's Capital Markets Day. My name is Emilia Peltola, and I'm heading Suominen's Communication and Investor Relations, and I will host this event today. Today, we start with the presentation by our President and CEO, Petri Helsky, followed by business area updates. Then we will have a short break; and after the break, we will continue with innovations and financials. There is time for 1 or 2 questions after each presentation, and then we will have a joint Q&A session after all of the presentations. [Operator Instructions] Today, Petri Helsky, Toni Tamminen and Markku Koivisto will give their presentations from here, Helsinki; and Lynda Kelly will join us via video from U.S. Also Mimoun Saïm and Klaus Korhonen are present at this event, and they can ask your questions if needed. But that's all about practicalities. So Petri, please, floor is yours.

Thank you, Emilia. Thanks. And welcome also on my behalf to this Suominen Capital Markets Day event. Let's start by very briefly going through what Suominen is all about. I think you are -- most of you are very familiar with this. So Suominen is a nonwovens roll goods producer. Our revenue last year, 2019, was EUR 411 million. The split was such that 36% of the net sales originated from Europe and 64% from North and South America. We are globally present. We have 8 production sites, 4 of them in Europe. Italy has 2; Spain, 1; Finland, 1. We have 3 plants in the U.S. and 1 plant in Brazil. There are about 700 Suominen people worldwide. You will hear more about our innovations, and we have a strong R&D function. And we really believe that we are and continue to be the frontrunner in nonwovens innovations and sustainability. Looking at the Suominen figures from the past year, so these are from 2014 to 2019, you see that our revenue was relatively flat around EUR 400 million annually over the past several years. We had a declining trend in the operating profit starting from '16 onwards and hitting a low point then in '18. In 2019, we saw the trend start to point upwards and if -- again, looking at our cash flow from operations, you will see that they have remained relatively steady despite the profitability challenges that we've had. Then looking at the first half of this current year, we had a very strong sales, EUR 230 million, very good results. So operating profit, we reached EUR 18 million; EBITDA, EUR 29.3 million, which means that the EBITDA percent was 12.6%. Market trends. Suominen, we are the leaders in spunlace nonwovens market with the largest global asset base, and the good news is that the nonwovens market for our type of products is growing in all regions. The COVID pandemic has increased sales volumes in all of our markets, and the higher demand, we expect to continue in the coming months. The regulators, meaning the legislation and also the consumer behavior, are drivers for more sustainable products, and we at Suominen have excellent opportunities to meet this growing demand. We are the inventors of the wetlaid spunlace category for flushable nonwovens, and demand also in this area will continue to grow in all of our regions. A few more words about the impact of COVID. I said this has impacted positively our sales volumes. What is perhaps even more important is that we expect that this changed behavior amongst the consumers will lead to a higher demand for wipes also in the coming years once and after the pandemic starts to be over. We have had to take as many companies, of course, a lot of proactive mitigation measures in order to make sure that we can continue to run safely our operations. And so far, we have had rather limited impacts on our plants and other operations from this. Of course, there remain some risks in these times that we could be facing, either short supply of key raw materials or potential closures of either our customer sites or our own sites. We have seen, of course, some issues also linked to logistics; and this may, of course, continue to take place also going forward. We published our new strategy in the first days of January. Our mission is to enable our customers to win by creating quality nonwovens. And you see that our vision is to be the frontrunner for nonwovens innovation and sustainability. Markku will talk more about this also in his part about our technology and R&D. We have split our thinking in 5 strategic focus areas, and we have also then a strategy implementation program going on with many of our employees then busy with different strategy working groups and KPIs and targets for each of these areas. A few words about the progress, additionally. So we have been increasing our -- or will be increasing our capacity by upgrading and restarting an existing production line in Italy. This, we announced earlier this autumn. We will be strengthening our capabilities for sustainable nonwovens by another investment in Italy. This one, we announced in mid-April. And as well we signed a multiyear supply agreement with Ahlstrom-Munksjö earlier this year, which is again then linked to wetlaid products, which we source and sell them in Europe. The share of new products has been now steadily over 25% of net sales; and to mention a few, we came with -- as the first producer with the HYDRASPUN Royal, which achieved the Fine to Flush certificate. And Markku will also talk about this more in his presentation. We also, in the spring time when the pandemic caused real short supply and lack of facial masks here locally in Finland, we were able to quickly develop FIBRELLA Shield for face mask applications, trying to at least help in the dire need, which existed in Finland. And I think that this is a good example of our capabilities in R&D. Even if facial mask is not really our normal business, we were able to come with a solution also in this field. We don't expect that to become a big business for us, but it's more trying to support the society around us and help wherever we could. People are, of course, the most important enabler for any strategy implementation; and some examples of our safety culture is that, with the help of these proactive COVID measures, we really have been able to secure our plants and make sure that our employees have been able to work in a safe manner and have our operations running also in this very strange times. At the same time, as we published our new strategy, we also came out with our new sustainability agenda. We have split this to 4 different themes, and with -- we have identified now concrete targets for each of these theme areas and also KPIs, which we will be following up. And the sustainability targets which we have, we will be reporting then for the first time in this 2020 year's sustainability report, which will be published early next year. I think, as Emilia said, there would be time for a couple of questions perhaps at this stage before we then move on to the business areas.

Yes. Let's see. So do you have any questions to Petri at this point? It seems that no questions now. Maybe then in the joint Q&A session. So thank you, Petri.

Very good. I'll leave this to you. Thank you.

Thank you. And now it's time for Markku to continue with the Europe business area. So here you are.

Thank you. Hello, everyone. Also welcome from my side. I'm going to talk to you about Suominen in the European wipes market and start off with talking about the wipes market in general, then about Suominen, details about us and then go through a few trends, how they affect us and at the end, show you how well we are equipped to meet these trends. So the wipes market in Europe is and has been a steadily growing business with around EUR 4 billion of retail value. When looking at the different end uses, wipes for baby care is dominant with 42% of share, followed by personal care wipes, moist toilet tissue and home care wipes. Geographically looking, the big European markets are also here dominant. So Germany, U.K., France, Italy, Spain are the most important ones also in the wipes business. If we look at the players, you can split between private label and then the brands. And in the brands, P&G is clearly dominant, followed by Johnson & Johnson, Kimberly-Clark, Essity, Beiersdorf, and Unilever. On the private label sector, players like Carrefour, dm, Aldi, Lidl are the leading companies. Like in many developed consumer businesses, private labels are growing faster than the brands. Our converting customers are very well positioned to serve both the private label and the brands. Then about Suominen in Europe, we do operate 4 different plants in 3 different countries, so Nakkila in Finland, Alicante in Spain and then Mozzate and Cressa close to Milan in Italy. We use the main technologies for nonwovens, so spunlace, composites and wetlaid; and our main raw materials are viscose, pulp and polyester. Looking at the revenue in the past 5 years. It has been relatively stable, around EUR 160 million, EUR 170 million. And this year, the first quarter was a very nice bounce back, back to growth numbers. We managed to capture new businesses, and we ended up with EUR 82 million in sales for the first half of the year. So the year has been good so far for us. Demand for nonwovens has been growing in Europe. Main topics with customers have been really securing -- security of supply. And then more and more customers are looking at improving the sustainability performance of the products. We are finalizing or working on investments in Cressa; and these investments, they have 2 very important elements to it. Starting the idle line will give us the needed capacity to continue growing in Europe, and then the addition of pulp will strengthen our sustainability leadership also in the future to come. And the mentioned agreement with Ahlstrom-Munksjö on the wetlaid platform really secured us the capacity and the know-how for several years into the future. Trends and drivers in Europe in the wipes business, the most obvious one is the growth in demand and we have been enjoying in the past a healthy growth, which was now very much boosted by COVID. And with that, we have the demand up in basically in all segments and all production platforms. Attitude towards sanitizing and cleaning, in general, has changed, and we believe it's here to stay. And that creates, of course, also for us, for Suominen, a growing amount of opportunities around the household cleaning sector. Many industries were hit and many overly complex supply chains were hit by COVID, and also now our wipes customers do give a great value for a robust and reliable supply chain. Suddenly, closeness to the customer is, again, a very good asset. And then in direction of sustainability, is it then biodegradability, nonplastic use of recycled materials? The fastest growing claim or sales argument is absolutely sustainability. And that's, of course, for the reason that consumer's attitude and behavior starts to change. Also, regulations like single-use plastic in Europe or country-specific standards like Fine to Flush, they drive us into the same direction of more sustainable products. Suominen is very well positioned. We have many great strengths and sustainable advantages. We are the leading wipes producer in Europe with the widest production footprint. We reach all parts of the continent within 1 day and estimate to have a market share of about 15%. All our 4 plants are able to produce a spunlace product, and many of our customers do take advantage of cross qualifying these plants, giving them an added security of supply. And then our unique assets, able to produce pulp composites, give us really the advantage to build on those unique capabilities. Being a global company gives us the benefit of scale and ability to network between plants, share the best practices, leverage on procurement and other functions. Many of our customers have been customers with Suominen for decades, so that long relationship, we absolutely value today and in the future. And we are rightly considered as the leading innovator when it comes to sustainability in nonwovens. So we are very well positioned to deliver results in Europe. We continue to maximize production volumes and take full advantage of our specialty lines. We will finalize the investments ongoing in Cressa and with that, continue growing and utilize the added capacity. We continue supporting our key customers in their growth. We continue improving systematically our own skills, what comes to key account management and commercial skills and naturally continue to grow our sustainability leadership with unique products like BIOLACE Pure, which we aim to launch now. It's a viscose-pulp-viscose composite; and then with new innovations on the wetlaid platform, so introducing flushable technology that delivers the best dispersibility without compromising anything on the strength of the wipe. That's on Europe.

Thank you, Markku. And now it's time for questions concerning Europe business area. Let's wait a while. [Operator Instructions] Okay. So Antti Viljakainen here. How does overall market supply-demand balance look in Europe after the pandemic has boosted growth? Do you see the current strong demand to lead to significant increases in supply in Europe in next years?

In supply, was the question?

Yes.

So we believe the pandemic, as already stated, boosted the demand up, and some of it certainly will lead to behavior changes and will be here to stay. On the supply, we cannot really comment on what our competitors are doing. Some have announced projects coming in, but other than that, the supply will be pretty much what it is for the coming years. Typically, it takes a few years from starting planning to having the lines operational. We have announced our own growth investments, so that, I probably don't need to repeat.

Then we have a question from [ Raul Juba ]. You mentioned closeness to customers has become an advantage recently. How much of the market has historically been imported into Europe? And do you think there has been a clear change there supporting you?

An excellent question. Suominen has really benefited not just recently, but also historically, from good relationships to our customers. And yes, we saw some changes in the supply, some outside Europe, competition was not visible when the pandemic was at its worst.

Then a question from [ Asti Mikkonen ]. Your revenue is still lower than 2015 to '18. Are you running at full capacity? What is your estimated net mark sales with current capacity?

I think these both, I'm very sorry, our numbers we don't really disclose.

Then [ Aristal Instram ], are there any significant differences between the production cost in different countries on your plants?

Significant -- we can split between variable and fixed and significant cost differences, yes, on the labor side.

And then a question from Joonas Ilvonen. I assume household wiping has developed the strongest. Could you discuss other applications as well? For example, how have workplace wiping volumes developed in comparison?

Again, we don't disclose details on these numbers. What we have seen is that, yes, household has been growing and will be -- like I said, it -- we will have nice opportunities in the future, but all segments have been enjoying the growth.

Same question from [ Kirse Evantogori ]. What is the estimated amount of CapEx for the coming years? And here, I think we wait for CFO's presentation, and then he can answer this. It seems that this was the last question, so thank you, Markku.

Thank you.

And thank you for your questions.

And now we move to video connection and have Lynda Kelly from the U.S.

Thank you, Emilia. Good afternoon, everyone. As Emilia mentioned, I'm coming from the United States. It's a little bit early here in this morning, but I'm happy to be here with you right now. I'm going to spend some time talking about the Americas business, some market trends and what we're doing to deliver on the strategy in the Americas. A couple of points. Americas revenues ranged from EUR 254 million to EUR 275 million in the last 5 years. The last -- the first half of 2020, sales were very strong at EUR 150 million. We have 4 plants, as Petri mentioned, in the Americas. We have 3 in the United States, 1 in Brazil. And Brazil -- Bethune has 4 assets. It houses our new wetlaid investment. Green Bay nonwovens has 3 assets, including our new carding investment. Windsor Lock has 2 assets, and Brazil has 1 asset. Depending on the end product we're going to make, we'll use a number of raw materials. Could be pulp, viscose, polyester, polypropylene or cotton. Certification is very important. It's an important step to achieve our vision. And we have a number of certificates that we deploy. And these certificates, FSC, SFI, PEFI (sic) [ PEFC ], these certificates indicate that the forests are managed and harvest according to certain environmental and social standards. So really great things, these certificates that we have. Some highlights in 2020 in the Americas. Obviously, Petri mentioned it. The demand is strong for nonwovens. It was strong before COVID, and it continues to be strong. As we know, wipes offer convenience and portability, and a number of new applications have emerged in the wipes market. Our new investments in Bethune and Green Bay, they're running well. And when we talk about sustainability, we've launched our Bio GENESIS, a breakthrough household wipe, really catering to the trends in the U.S. for sustainable options. Markku mentioned our flushable technology. We continue to work on that innovation, and that wet wipe breaks up like toilet paper, a really important property when we talk about moist toilet tissue. The Americas market has changed a lot since COVID-19 and which started in March. I'm sure many of you heard about the panic in the U.S. with our consumers. They really panicked and began pantry filling with household wipes, household cleaners, toilet paper. And I thought it was really important to show you some pictures of what's going on. Actually, the first picture on the left is a recent picture in a local store, showing you again that our shelves aren't quite full with our household cleaners. And depending on what time of the day you go to the store, the shelves will have a different look. But this is an indication of what it looked like. The middle picture is actually a picture of the toilet paper aisle. This was at the start of the pandemic, and I know this was something that got a lot of press, was the run on toilet paper on this pandemic. So it is a little bit fuller but still not fully stocked in the U.S. when we talk about the toilet paper aisle. The third picture, one trend that's really taken hold in different parts of the United States that are mandated by the local government is wearing face masks and social distance. This has really been proven, at least in some cases, to mitigate or control a little bit of the COVID-19. So in the U.S., in certain locales, you have to wear face mask in public setting. So again, these are 3 pictures to kind of show you a little bit about what's going on in the current market. We are living in unprecedented times with this COVID, and it's making consumers really more safety conscious about themselves and their families, and they want to do everything they can to protect them. And we are seeing new consumer behaviors emerge. With this, they're consciously cleaning more than ever because many consumers look at this as a way to protect themselves and their family in this uncertain time. We know wipes offer portability and the assurance of killing germs, and that's what consumers have been looking for. They use them inside and outside their homes. They pack them in their briefcases and their backpacks. It's something that gives them that security. Many consumer companies believe this significant change has staying power, translating into increased market penetration. I just want to give you some examples of what we're seeing and hearing public comments about many household brands. I'm sure some of you may have heard the newly elected CEO of Clorox. She was recently on Good Morning America in August 11. This is a U.S. show, a morning show. And she commented they're making 1 million wipes a day and they still can't keep up with the demand. And she, as the CEO of Clorox, was providing helpful hints to consumers where to find their wipes, just an example. Reckitt Benckiser, the maker of Lysol, they also talked about not being able to keep up with the demand. We know out of stock levels usually run about 5% to 7% with these types of products, and they're running over 15% with the pandemic. So we continue to have out of stock with these types of products. At the same time of increasing consumer demand, there is a lot of activity also on the institutional side as well. And one of the things that was recently announced was a partnership between Uber and Clorox. And it's being piloted in 3 cities, Chicago, New York City and Atlanta, where it's in the app that if you have Clorox wipes and you're taking a ride in Uber, the client will see that wipes or the Clorox wipes are available in their cars, so they have that security that they can use the wipes in the cars. So that's a new application that's occurring as well as Reckitt Benckiser, the maker of Lysol, they've teamed up with the Mayo Clinic and Hilton to develop a Hilton CleanStay with Lysol protection, again, a program to ensure safest guest experience. So we're seeing the consumer side, the institutional side as well looking to protect themselves and their clients. As you can see, life and wipes is anything but normal right now. I'm going to take a few minutes to kind of give you some market data. According to Euromonitor, in 2019, the global wipes market was over a $14 billion market at the retail level, and baby wipes was at 44% of that market, so a large market. North America represents 38% of that total at a retail level of USD 5.4 billion. The largest market areas are baby wipes and home care wipes representing close to 75% of that market. And when we talk about who those brand owners are, Procter & Gamble is the largest brand owner in North America. They participate in many of the wipe segments that are categorized here. #2 is Kimberly-Clark. Kimberly-Clark is an interesting brand owner because they make some nonwovens. They convert some nonwovens, and they also brand the nonwovens. So they're the #2 in North America. #3 is Clorox, and Clorox participates in the household market as well as a little bit in the personal care market. Another interesting point in the North American market is the share of private label. Private label is 26%, which is the largest share of the entire market. And the #1 participant in the private label is Walmart, followed by Target. And there's many other retailers that make up private label. And we see in developed markets that private label usually has a larger share than the brands. And we continue to see in the North America market that -- I'm sorry, that focus on value and functionality is key to drive the wipes market in North America. According to Euromonitor in Brazil, retail sales are $281 million. For Brazil, baby wipes is the largest market. It's 86% of the retail sales. And when we look at the players, Kimberly-Clark is the largest player in the Brazil market with 36% market share. Kimberly-Clark got a very early start in Brazil in the early to mid-'90s. The #2 player is Johnson & Johnson, and they also have a strong presence in Brazil, and particularly with their baby line, their Johnson's Baby line. These 2 branded players make up 50% of the market share. Obviously, private label is 3% in Brazil, and we see this between emerging and developed regions that in an emerging market, brands tend to lead and they convert the market, and then the private label will follow later, so really interesting differences between the North American and the Brazilian market when we look at the overview of the wipes. You may ask yourself why Suominen. And I'm going to take you through a few points here. Well, obviously, we talked a little bit about this. We were early pioneers in the U.S. with our HYDRASPUN development for flushable product. We continue to lead the market and stay ahead of the regulations and sit on many industry committees. So this is a very strategic and important part of our business. And GENESIS, we invented GENESIS in the early 2000s, focusing on the household and workplace market. We are leaders in both of these markets. We're the largest supplier of wipes nonwovens in the regions that we play. We have very experienced people in our facilities and sites. And with our global platform, and Markku talked about this and Petri did as well and our similar technology platforms, we're able to offer peace of mind to our customers. This flexibility of supply is of utmost significance for our important customers now and into the future. And we have brand trust. Markku mentioned the decades of experience that we have. We have that with the brands. Drivers for our growth and profitability in the Americas. We mentioned already that this is a growing market. Before COVID, it was a growing market. After COVID, it's a growing market. Companies like Reckitt and Clorox and many others have publicly stated their intent to streamline product families to gain more efficiency. This efficiency benefits the entire supply chain. Sustainability trends are getting louder and louder in the Americas. Products such as the Bio GENESIS and our next-generation moist toilet paper answering some of that demand. We are providing opportunity for our consumers to choose some of our sustainable products. Our fiber-based nonwoven technologies like our investments in Bethune and in upgrade in Green Bay, provide the best platforms to deliver market needs and achieve our vision to be the frontrunners in nonwovens innovation and sustainability. We work every day to enable our customers to win by creating quality nonwovens. Doing this right every day provides us the privilege to deepen our long-term customer relationships. In closing, our strategy is right, focusing on wipes. Our markets are growing. We're optimizing our capacity. We're developing sustainable products, and we're continuing to deepen our customer relationships by offering security supply during these unprecedented times. Thank you.

Time to ask questions regarding Americas business area. I already have here one question from [ Mayam Amsellem ]. Do you manufacture nonwovens for the disinfection applications? If so, do you look at the consumer trends in behavior and the growth going forward?

So the disinfection, if I understand your comment and question, I believe you're talking about the household market because the household market in the United States, in order to sell a wipe in the household market, it has to be registered with the FDA, which assures that it meets the kill claims that the various household companies market on their products. So we do provide nonwovens and our GENESIS platform. We have the leading position, as I mentioned earlier with our GENESIS platform for household disinfecting as well as I think somebody might have asked about workplace. GENESIS is also used in workplace. And the consumer change is something that we continue to monitor. It is a -- there's a very strong demand. We do believe it will settle, and we have to assess that. But this consumer change, we believe, is here to stay. It's a way for consumers to protect themselves.

Thank you, Lynda. Do we have any other questions for Lynda? From [ Yorke Hile ], can you elaborate how the new Bethune factory has improved your ability to supply sustainable products compared to older lines?

As you know, the Bethune -- the new line in Bethune is a wetlaid product, and wetlaid products are based on fiber technology. And fibers are key to the sustainability claim.

From [ Raul Juba ], can you discuss the profitability of the Bethune plant? We've had some issues earlier. With the current demand, is the profitability at target level? Or if not, why is that? And when should it be contributing to its full potential?

The Bethune asset is delivering as planned at this point in time.

Thank you, Lynda. It seems that we don't have any more questions for you at this point. And now after Lynda's presentation, it's time for short break. So we see you again after 10 minutes. Thank you. [Break]

So welcome back. We continue our day with innovative Suominen and Markku Koivisto, please.

Hello, everyone. Welcome back. I'll be speaking to you as the CTO of the company now. I will go through our resources and capabilities, what comes to R&D, talk about our focus areas and show you that we are very well equipped to meet the market demands today and in the future. About our team, we are a team of 16 nonwovens professionals, and something I'm really proud of is the diversity and the internationality of the team. We have people with Spanish, Italian, Finnish and Indian backgrounds. We have people who are homegrown, and some of them come with the highest academic degree. So 4 of the team actually have a PhD. and this diversity really gives us -- it's a really strong point for Suominen. We can have different views on the same topic, giving us a good advantage to talk with our customers. We have centralized our R&D activities to Nakkila in Finland and to Windsor Locks in the U.S. and also that you need to consider as an advantage, R&D type of work, you very often need to work on the same table. I mean it's about visuality. It's about touch and feel; and for that reason, you very often have to be physically at the same place. We are responsible for project portfolio management, technology development and IPR. We follow a robust project management process. We call it the Suominen stage and gate process and already mentioned today, but our results, our work and the results can be compared with similar industries. Sales of new products in Suominen is above 25%, and we do calculate new products as products that come through stage and gate in the last 3 years. About the labs and the pilot lines, like I said, they are located in Nakkila in Finland and in Windsor Locks, North America. In Nakkila, we have the carded spunlace line, also able to produce composites. And in the U.S., we have wetlaid and wetlaid composites. These lines are really key assets for us. We have 24/7 access to them, and they give us the opportunity, for example, to provide customer samples, initial customer samples for very early-stage discussions. The correlation between the pilot line and the real commercial line is very high. We can invite suppliers to work on small amounts of material and really get a feeling for what the nonwoven then could look like even if we have very little raw material to start off with available. And they give us the ability to customize customer products in manageable steps in direction of what the customer really is asking for. Focus areas, really 4, so sustainability, patterning, dispersibility and value proposition. Sustainability, I will touch in a minute a little bit more. But on the other 3, patterning is an area of expertise that Suominen has been investing in at least for the last 5 years. Patterning is a very nice technology in nonwovens. You can change the wipe in terms of visuality, performance or even the perceived softness, as we made quite interesting studies on it, without adding any variable cost to it. And without today's capability, we can't really design a patterning drum that delivers the most beautiful wipe with the best cleaning properties you can imagine. The next steps here are really that we are looking into making the drum production, the patterning drum production digital, giving us even more opportunities to serve our customers with shorter lead times and more flexibility in the future. About dispersibility, has been mentioned today already several times. We are the inventor of flushable wipes. We continue building on this capability continuously. And maybe the 2 examples mentioned today, the Bio GENESIS for a workplace wipe requiring high strength and then the toilet tissue-like break up that Suominen is going to launch, gives you a feeling of the different properties that we are able to deliver from the same platform. This is true leadership in dispersibility. Value proposition, it all starts, of course, with understanding the customer needs and how the customer is going to market his product, how is the product going to stand out against the competition. And here, we have become much, much better in turning the data that we have in -- from our labs into our value proposition that our customers can use in their own marketing. Then slightly more on sustainability. This is a complex theme. It means so many different things. Very often, customers talk about same properties with less material. And here, we have a fantastic example. We launched a product called FIBRELLA Combo, where we combined in a hygiene product 2 different layers into 1 layer, resulting in less material used, more easy handling for the consumer without losing any of the properties that the hygiene product requires. Recycled content is often a topic when we talk about sustainability. We have been working with recycled polyester and actually have been launching products this year into the marketplace based on recycled polyester. Maybe the most used words when we talk about sustainability are either nonplastic or biodegradable. And they are very often the customer means the same when they speak about this, but they are not always aligned. So everything that is nonplastic is not biodegradable and vice versa. And the products mentioned already our BIOLACE Air, the pulp-viscose and then BIOLACE Pure, viscose-pulp-viscose, are truly leaders in this category of nonplastic and biodegradability. And we continue to build on those products today and in the future. Creation of CO2 footprint or actually creation of Suominen's sustainability index based on a CO2 calculation is something where we have given a lot of energy into it. Any R&D project or product does always come with a CO2 calculation next to it. And it gives us a very nice opportunity to discuss the topic fact-based with our customers and then really gives the opportunity to jointly aim at an improvement also in what comes to sustainable performance. So as a summary, innovation and development are really in the core of Suominen's strategy. The team is absolutely industry leading and well resourced to meet the market needs. We follow a robust stage and gate process that delivers results today and in midterm. And Suominen is rightly seen as the leader in sustainable nonwovens. Thank you very much.

Thank you, again, Markku. Let's wait a while if you have some questions to Markku. [Operator Instructions] Okay. Could -- from Joonas Ilvonen, could you discuss the product development cycle length for products like FIBRELLA Combo?

Product cycle length, just to repeat. It starts with our own innovation or through discussions with the customers. We do actually live both worlds, and ideation, then piloting, sampling and customer trial runs, customer qualifications, and then hopefully ending up in a commercial business. Time span varies quite a lot depending on the complexity on FIBRELLA Combo, which was -- and it is very unique. It took us several months a year to go through the cycle.

Same question from [ Yorke Hile ]. Have you recently improved your innovative capabilities compared to your competitors as your profitability trend was negative in recent years without regard to new products introduced during 2016, 2019?