Translation: Original published in Finnish on 5/7/2026 at 7:19 pm EEST.

Suominen’s Q1 result was weak. The company reiterated its guidance for an improved full-year result, but our forecast declined to last year's level. We still expect the company to make an equity financing solution this year to support its weak balance sheet. Following lower estimates, we lower the target price to EUR 1.0 (was EUR 1.1) and reiterate our Reduce recommendation. 

Q1 revenue and earnings declined more than expected

Q1 revenue was 96 MEUR, which was about 5% below our expectations and down as much as 19% year-on-year. The decline was due to the after-effects of production disruptions in the US, which led some customers to use other suppliers, capacity changes in Europe, and a negative currency exchange impact of ~5 percentage points.  Comparable EBITDA remained at 2.2 MEUR, which was clearly below our expectations (3.1 MEUR) and the comparison period (4.1 MEUR). Reported EBITDA turned negative (-0.3 MEUR) due to 2.5 MEUR in non-recurring items related to the profitability program and savings program. EPS was EUR -0.10 versus our estimate of EUR -0.04, reflecting both weaker operating profit and non-recurring items.

Guidance was reiterated, our forecast fell to last year's level

The company reiterated its guidance for the full year. The Q2 outlook was mixed. On the other hand, Suominen believes it can regain half of the volumes lost in the US due to production disruptions as early as Q2. In addition, it stated that the order book is increasing overall, which may be due to customers increasing their inventories ahead of price increases and potential availability issues. Thus, volume development in Q2 should be good, especially compared to the last two quarters. On the other hand, the increase in the price of oil-based raw materials and energy will start to be reflected in the company's costs during Q2. The company announced it has switched to monthly pricing as costs rise sharply, which helps pass on increased costs to customers. However, given the steep increase, we believe that rising costs will create a headwind for Suominen's earnings during Q2 and Q3.

Following the weak Q1 result, we significantly lowered our forecasts for both this year and next. Our adjusted EBITDA forecast for this year is now practically at the comparison period's level (13 MEUR), and thus, in our opinion, there is a clear downside risk to the guidance. However, we expect the adjusted EBITDA development to be on an upward trend towards the end of the year.

In our view, the balance sheet requires a correction this year

The company's net debt/adj. EBITDA was already over 6x at the end of 2025, and the company has renegotiated its covenants. In our forecasts, indebtedness will not improve this year through operational development. For this reason, we expect the company to issue a 25 MEUR hybrid bond this year (which is recognized as equity in accounting). We believe that with this support, the company will also be able to arrange the refinancing of the 50 MEUR bond maturing next year, as the hybrid bond would strengthen the company's cash position and balance sheet ratios. The interest expenses of the hybrid bond will decrease our EPS estimates. As an alternative to a hybrid loan, we see a share issue.

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. On our estimates, the company's EPS will not turn positive until 2029. 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 1.0.