Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (June 2023)
77 slides from Huhtamaki Oyj's roadshow presentation, June 2023
Slide 1: Becoming the first choice in sustainable packaging solutions
Becoming the first choice in sustainable packaging solutions Roadshow presentation May-June 2023
Slide 2: Contents
Contents 1. Overview 2. Strategy 3. Segments 4. Financials 5. Sustainability and role of packaging 6. Other 2 May 17, 2023 Presentation name | Author | CONFIDENTIAL / INTERNAL
Slide 3: Overview
Overview 3 May-June 2023 Roadshow presentation
Slide 4: A strong local presence, delivering for our customers, globally
A strong local presence, delivering for our customers, globally (figures for 2022) NET SALES €4.5B ADJUSTED EBIT MARGIN 8.8% OPERATING LOCATIONS 116 OPERATING COUNTRIES 37 EMPLOYEES 18,927 4 May-June 2023 Roadshow presentation Fiber Foodservice E-A-O North America Flexible Packaging Sales and other
Slide 5: Providing packaging for food and everyday necessities
Providing packaging for food and everyday necessities Food service FMCG Retail Healthcare Customers Food packaging Packaging for everyday necessities Products Paperboard Flexibles Fiber Packaging technology Non-integrated Global Category Global Leader Global Leader Leader 5 May-June 2023 Roadshow pr
Slide 6: We operate through three business areas and four reporting segments
We operate through three business areas and four reporting segments Fiber Packaging and Foodservice E-A-O have been integrated as of June 1, 2020 Foodservice Fiber Packaging North America Flexible Packaging Europe-Asia-Oceania 10 manufacturing units 22 manufacturing units 18 manufacturing units 27 m
Slide 7: Products, customers and competitors per segment
Products, customers and competitors per segment Fiber Packaging and Foodservice E-A-O have been integrated as of June 1, 2020 Fiber Packaging Foodservice E-A-O North America Flexible Packaging Our products Our customers • Graphic Packaging • Westrock • Amcor • Dai Nippon Key • Hartmann • Local playe
Slide 8: Sales split by segment and key markets
Sales split by segment and key markets Net sales by segment Net sales by key markets Foodservice EAO 8% 25 % North America United States 34 % Germany Flexible Packaging 19.1 % UK 33 % Fiber Packaging 32.6 % Australia 1.7 % Turkey 2.4 % 2.7 % Thailand Adj. EBIT by segment 3.0 % South Africa 3.5 % Chi
Slide 9: Our 2030 Profitable Growth Strategy
Our 2030 Profitable Growth Strategy Scale up profitable Develop blueloop™ Drive world-class core businesses sustainable innovation operational in partnership with our performance customers Smart, fit-for purpose sustainable packaging solutions Powered by strategic capabilities Sustainability Innovat
Slide 10: Our long-term financial ambitions
Our long-term financial ambitions Group Segments Comparable Adj. EBIT Adj. RONA Absolute EPS growth growth margin Foodservice EAO 4-5% 10-12% 13-15% 5-6% 10-12% 13-15% 2-3x North America 5-6% 11-12% 15-17% Net debt / Comparable Adjusted EBIT Adjusted Adjusted growth margin ROI EBITDA Flexible Packag
Slide 11: First choice in sustainable packaging solutions
Our 2030 sustainability ambitions Our ambition First choice in sustainable packaging solutions 100% >80% 100% >90% 100% Carbon neutral production of products designed renewable or recycled of fiber from recycled of non-hazardous renewable and science-based to be recyclable, materials or certified so
Slide 12: Huhtamaki investment case
Huhtamaki investment case Huhtamaki is a market and technology innovation leader for essential packaging, creating value through: • Attractive portfolio of sustainable core businesses to capture strong underlying market growth • Technology innovation to capture value-added sustainable innovation opp
Slide 13: Strategy
Strategy 13 May-June 2023 Roadshow presentation
Slide 14: Packaging is essential for food and everyday necessities
Packaging is essential for food and everyday necessities Packaging supports food Packaging helps secure Packaging helps prevent Packaging has driven from farm to fork, making it hygiene and food safety food loss and waste, in social and economic more accessible and for consumers around food systems
Slide 15: Packaging paradigm shift creates profitable growth opportunities for Huhtamaki
Packaging paradigm shift creates profitable growth opportunities for Huhtamaki Consumers Sustainability everywhere, are accelerating agenda driving industry transformation, for sustainable, affordable, adaptable creating opportunities in sustainable and functional packaging solutions Customers Packa
Slide 16: Consumer demand for packaging is expected to grow, with further opportunities in sustainable innovation
Consumer demand for packaging is expected to grow, with further opportunities in sustainable innovation 16
Slide 17: Our leadership in three key packaging technologies
Our leadership in three key packaging technologies uniquely positions us to capture innovation opportunities Fiber Paperboard Flexibles Global Leader Non-integrated Leader Global Category Leader Fiber Proprietary high- Application and barrier Recyclable mono- Flexibles Huhtamaki precision fiber inno
Slide 18: Our 2030 North Star
Our 2030 North Star Be the first choice in sustainable packaging solutions, driven by innovation and operational performance
Slide 19: We are on a transformation journey to become the first choice in sustainable packaging
We are on a transformation journey to become the first choice in sustainable packaging solutions Our 2030 vision Game-changing technology & Our value proposition, today solution innovation Sustainable innovation in Our core business Solution innovation in partnership partnership with customers with
Slide 20: Our 2030 Profitable Growth Strategy
Our 2030 Profitable Growth Strategy Scale up profitable Develop blueloop™ Drive world-class core businesses sustainable innovation operational in partnership with our performance customers Smart, fit-for purpose sustainable packaging solutions Powered by strategic capabilities Sustainability Innovat
Slide 21: We continue to invest in profitable sustainable core businesses and blueloop innovation
We continue to invest in profitable sustainable core businesses and blueloop™ transformative innovation, across our business segments Profitable growth opportunities in our core businesses and in Balanced investments in core and transformative sustainable innovation innovation Healthcare FMCG Foodse
Slide 22: blueloop focuses on scaling sustainable innovation in proprietary technologies
blueloop™ focuses on scaling sustainable innovation in proprietary technologies, driving value creation blueloop™ Fiber blueloop™ Flexibles High precision fiber forming Technologies for recyclable mono-material technologies and barriers for complex structures in Polyethylene, Paper, compostable appl
Slide 23: Our focus is on development and scaling of blueloop innovation
Our focus is on development and scaling of blueloop™ innovation Leveraging sustainable technology to drive core business and innovation Focusing on technology and development barrier development Retail Foodservice FMCG SMF portfolio includes established high-volume and developing high- Smooth Molded
Slide 24: We are introducing new sustainable blueloop solutions, many in partnership with customers
We are introducing new sustainable blueloop™ solutions, many in partnership with our customers Recyclable solutions Home compostable solutions ICON™ ice-cream packaging Mono-PET PushTab™ blister lids Paper based cup lids for Partnership with Nespresso technology with repulpable that run on existing
Slide 25: We are also stepping up structural and operational efficiencies
We are also stepping up structural and operational efficiencies Structural performance Operational performance improvement improvement World class operational Productivity measures Manufacturing excellence: continuous performance program operational improvement and Process automation digitalization
Slide 26: Operating model
Operating model 26 May-June 2023 Roadshow presentation
Slide 27: Segments
Segments 27 May-June 2023 Roadshow presentation
Slide 28: Fiber Foodservice - Overview
Fiber Foodservice - Overview Global Fiber leader Foodservice FMCG Retail Global paperboard conversion* leader 53% of sales 9% of sales 38% of sales Foodservice EAO Fiber Packaging Net sales 1,111 MEUR Net sales 363 MEUR Adj. EBIT margin 9.5% Adj. EBIT margin 11.0% Employees 6,116 100-110 BEUR market
Slide 29: Fiber Foodservice - Financial performance
Fiber Foodservice - Financial performance We have recovered growth and improved We have strengthened our innovation leadership, improved profitability cost position, while managing market disruptions Delivered strong growth and profitability, while managing Net sales and adj. EBIT margin consecutive
Slide 30: We are investing in sustainable innovation across our technology platforms
We are investing in sustainable innovation across our technology platforms, and driving operational improvement Paperboard conversion Rough Molded Fiber Smooth Molded Fiber Invest in new sustainable Unlock capacity and increase Invest in scaling up current solutions for FMCG sector operational perfo
Slide 31: Fiber Foodservice - Long-term ambitions
Fiber Foodservice - Long-term ambitions Fiber Packaging long-term ambition How we get there Core businesses 3-4% 11-12% 14-16% Further improve productivity and operational Comparable Adjusted growth RONA performance in legacy Paperboard operations EBIT margin Expand in RMF through incremental innova
Slide 32: North America - Overview
North America - Overview Global Fiber leader Retail Tableware Foodservice FMCG Global Paperboard Conversion* leader 48% of sales 34% of sales 18% of sales Net sales Adjusted EBIT margin 1,468 MEUR 11.7% Employees Manufacturing units 4,268 18 30-40 BEUR markets growing at 3-5% p.a. Accelerating susta
Slide 33: North America - Financial performance
North America - Financial performance We are delivering strong financial performance We are investing into our core businesses, driving profitable growth Net sales and adj. EBIT margin Leveraging historic investments in profitable core Retail 1,800 12.0 % 12.0 % 14% Tableware and Foodservice growth
Slide 34: We will continue to develop our core businesses, with circular solutions
We will continue to develop our core businesses, with circular solutions and further operational improvements Driving growth through sustainable solutions Building on historic strengths and enhancing across all our businesses strategic capabilities Retail – Partnering with retailers to create the fu
Slide 35: Regulation and consumer preferences create additional growth opportunities for us
Regulation and consumer preferences create additional growth opportunities for us Retail Tableware Foodservice FMCG 17 states in the US Significant investments Continuing to expand the molded Investing in Rough Molded Fiber in Smooth Molded have introduced varying capacities for egg Fiber capacities
Slide 36: North America - Long-term ambitions
North America - Long-term ambitions North America long-term ambition How we get there Partner with strategic customers to continue to 5-6% 11-12% introduce new products and systems and help them Comparable Adjusted achieve sustainable solutions growth EBIT margin Build on our continuous improvement
Slide 37: Flexible Packaging - Overview
Flexible Packaging - Overview Huhtamaki is a global category leader Food & beverage Home & personal care Healthcare/Other 61% of sales 29% of sales 10% of sales Net sales Adjusted EBIT margin 1,558 MEUR 6.3% Employees Manufacturing units 8,316 27 100-120 BEUR market growing at 4-5% p.a. Opportunitie
Slide 38: Flexible Packaging - Financial performance
Flexible Packaging - Financial performance We have improved our market position, despite We are delivering growth, but need to address market headwinds profitability Improved position in flexo print and filmmaking Net sales and adj. EBIT margin technology, personal and homecare portfolio 1,800 8.1 %
Slide 39: We are taking immediate actions to transform our operational performance
We are taking immediate actions to transform our operational performance Take structural measures to improve Strengthen best practices and our cost position capabilities Operational performance program Implement productivity actions Health and Fire Safety Long-term ambition to Optimize manufacturing
Slide 40: We are rolling out our blueloop flexibles proprietary mono-material solutions
We are rolling out our blueloop™ flexibles proprietary mono-material solutions to support brands in achieving their 2025 pledges blueloop™ flexibles value proposition blueloop™ market opportunity Cost-effective solutions in mono- blueloop™ flexibles opens a market opportunity of material PP, PE, PET
Slide 41: Flexible Packaging - Long-term ambitions
Flexible Packaging - Long-term ambitions Huhtamaki Flexible Packaging long-term How we get there ambition Operations Improve productivity, reduce waste, optimize network 6-7% 9-11% Complete Elif integration Comparable Adjusted growth EBIT margin Capabilities Improve commercial and operational capabi
Slide 42: Financials
Financials 42 May-June 2023 Roadshow presentation
Slide 43: Group financials 2012-2022
Group financials 2012-2022 20122 20131 20141 2015 2016 2017 20182 2019 2020 2021 2022 Net sales MEUR 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 3,302 3,575 4,479 Comparable growth3 3% 3% 6% 4% 4% 3% 5% 6% -2% 7% 15% Adjusted EBITDA4 MEUR 254 242 259 342 382 390 399 456 473 488 596.9 Margin4 10.
Slide 44: Segment key figures (1/2)
Segment key figures (1/2) Fiber Packaging and Foodservice E-A-O have been integrated as on June 1, 2020 Foodservice Europe-Asia-Oceania Key figures (MEUR) 2015 2016 2017 20181 2019 2020 2021 2022 Long-term ambition Net sales 667.5 741.0 807.5 881.7 956.7 829.1 941.8 1,110.7 Comparable growth 4% 5% 4
Slide 45: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2015 2016 2017 20181 2019 2020 2021 2022 Long-term ambition Net sales 947.7 1,005.1 1,000.4 1,002.7 1,152.7 1,138.9 1,160.3 1,468.3 Comparable growth 4% 6% 2% 5% 9% 1% 6% 14% 5-6% Adjusted EBIT 88.2 107.6 104.1 73.0 111.4 136.6 139.1 171.6 M
Slide 46: Comparable net sales growth by business segment
Comparable net sales growth by business segment Quarterly Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Foodservice E-A-O -4% -28% -1% -7% -2% 40% 2% 12% 18% 18% 22% 15% 11% North America 9% -5% 4% -2% -2% 9% 5% 11% 24% 14% 10% 10% 2% Flexible Packaging 2% 2% 1% 0% 0%
Slide 47: Our investments have enabled us to build capabilities and technologies for the future
Our investments have enabled us to build capabilities and technologies for the future Key expansions coming online UAE, Malaysia Ireland CAPEX Net M&A 1,889 751 Fiber Short-run Huhtamaki flexible blueloop 2014–2022 packaging, (MEUR) SMF Lids Phase II 2023 Eastern Europe Paper straws, Europe Capsules
Slide 48: Our organic investments will drive our profitable growth and portfolio differentiation
Our organic investments will drive our profitable growth and portfolio differentiation Investment profile changing (illustrative) Capex is focused on scaling our core, while investing in innovation (MEUR) Paperboard conversion Fiber 318 259 <2.0x >10% 199 215 197 204 224 X = 13-15% 147 <10% 2015 201
Slide 49: We will continue our efficient use of capital to create shareholder value
We will continue our efficient use of capital to create shareholder value Sources Uses Capex for organic growth Profit improvement Cash flow Investments Acquisitions to gain scale and Working capital efficiency capabilities Predictable and growing Leverage Net debt / adj. EBITDA ambition Payout divi
Slide 50: We will continue to drive long-term profitable growth
We will continue to drive long-term profitable Long-term 10-12% growth ambition Adj. EBIT margin Key drivers for profitability improvement Adj. EBIT margin 11% Commercial excellence Value add of innovative technologies 10% Upgrading commercial Margin accretion through 9.4 % practices and digitalizat
Slide 51: Our focus has been on management of working capital to fund growth
Our focus has been on management of working capital to fund growth MEUR 2019 2020 2021 2022 150 109 104 100 83 71 71 52 57 50 29 7 6 0 -7 -18 -20 -25 -50 -46 -54 -100 -150 Q1 2019 Q3 2019 Q1 2020 Q3 2020 Q1 2021 Q3 2021 Q1 2022 Q3 2022 Free Cash Flow Change in Working Capital Normal working capital
Slide 52: Net debt to adjusted EBITDA
Net debt to adjusted EBITDA Net debt, net debt/adj. EBITDA and gearing Covenant level 3.75 • Net debt/Adj. EBITDA at 2.4 3.0 3.0 • At the end of Q1 2023: Ambition 2.5 2.5 2.4 • Cash and cash equivalents 1,572 1,626 1,483 1,471 2-3x EUR 264 million 1,426 • Unused committed credit facilities Net debt,
Slide 53: Loan maturities
Loan maturities Debt maturity structure March 31, 2023 • Average maturity 2.8 years at the (EUR million) end of Q1 2023 (2.6 at the end of Q1 2022) 700 600 • 62% of gross debt with fixed rates, 500 38% in floating 400 300 200 100 0 2023 2024 2025 2026 2027 Later Lease liabilities Contingent consider
Slide 54: Our EPS growth has secured continuous dividend growth
In addition to growing organically and inorganically, our EPS growth has secured continuous dividend growth >1BEUR paid since 2008 Dividend growth CAGR >8% since 2008 EPS growth to allow for continued predictable dividend 0.94 1.00 payout 0.89 0.92 0.80 0.84 Sales and margin improvement 0.73 0.66 in
Slide 55: Sustainability and role of packaging
Sustainability and role of packaging 55 May-June 2023 Roadshow presentation
Slide 56: Sustainability-driven legislation is impacting packaging development, globally
Sustainability-driven legislation is impacting packaging development, globally Drive in Climate & environment reduction of Focus on waste resulting reduction of in push for CO2 emissions Energy crisis re-usables Materials & waste Reduction in Focus on use of management of plastics/plastic Food suppl
Slide 57: Changing consumer expectations
Changing consumer expectations – increased focus on making packaging sustainable, affordable and adaptable Sustainable Affordable Adaptable Consumers expect business Consumers around the Consumers have adopted to play bigger world are adjusting a more integrated mix of role protecting climate & purc
Slide 58: The value of packaging is bigger than its impact on environment
The value of packaging is bigger than its impact on environment Packaging makes food more accessible and affordable Packaging Packaging helps enables social and secure hygiene economic progress and food safety Packaging helps prevent food loss and waste 58 May-June 2023 Roadshow presentation
Slide 59: We have made good progress on our sustainability journey
We have made good progress on our sustainability journey; we still have work to do 2022 Results Global Sustainability and Safety Index extended to all participants of the global short-term incentive plan Sustainability-linked Bond Framework published and 500M€ sustainability-linked bond issued Scien
Slide 60: We play to win by making packaging that is:
We play to win by making packaging that is: Fit-for-purpose A sustainable solution Our packaging is engineered to provide the We offer the most sustainable available right functionality to protect each product alternative We choose the right material for each We want to be the partner of choice to o
Slide 61: We develop game-changing alternative sustainable packaging solutions
In practice this means we develop game-changing alternative sustainable packaging solutions 1 Material positive Fully fiber-based cup and lid, Paper-based pushtab blister, Paper-based yogurt cup, replacing coated 2 Material / resource efficient paperboard and plastic replacing aluminium replacing pl
Slide 62: Packaging accounts for only 5% of greenhouse-gas emissions in food systems
Packaging accounts for only 5% of green-house-gas emissions in food systems, low recycling rates remain a challenge Global greenhouse gas emissions from food systems. Food systems account for 26% of GHG emissions. Wasted food for 10%. Packaging accounts for 5% of green-house-gas emissions in Packagi
Slide 63: Scalable recycling pilots, closing the loop
Scalable recycling pilots, closing the loop The Cup Collective - An at-scale solution Accelerating plastic circularity in for paper cup recycling in Europe India Launched in Belgium with Stora Enso, Processing post-consumer multi-layered partnering with McDonalds, SNCB etc. plastics (MLP) to recycle
Slide 64: Comparing carbon footprints of single-use and multi-use systems
Comparing carbon footprints of single-use and multi-use systems END-OF-LIFE MANUFACTURING END-OF-LIFE MANUFACTURING -4,491 kg CO2 eq. 13,403 kg CO2 eq. 634 kg CO2 eq. 3,453 kg CO2 eq. Multi-use tableware systems generate over PLASTIC MULTI-USE PAPER-BASED TABLEWARE* 2.8 times higher CO2-e SINGLE-USE
Slide 65: Food is a major contributor to climate change
Food is a major contributor to climate change Global 1/3 of the food GHG emissions produced is lost or wasted approx. 25% 10% of global GHG emissions come from of global GHG emissions come from wasted food systems or lost food Source: CGIAR Research Program on Climate Change, Agriculture and Food Se
Slide 66: Packaging accounts for approx. 5% of food's CO2 footprint
Packaging accounts for approx. 5% of food’s CO2 footprint 80% 15% 5% Food production Transport and distribution Packaging 66 May-June 2023 Roadshow presentation
Slide 67: Only a small share of CO2 emissions of a latte on-the-go come from the cup
Only a small share of CO2 emissions of a latte on-the-go come from the cup, and these can be halved by increasing recycling Energy to make the latte 4% Cup & lid 9% Coffee production 14% CO2 of a latte Milk production 73% on the go The CO2 emissions of paper cups can be halved The fiber in our paper
Slide 68: Collection, sorting and recycling infrastructure are required
In addition to recyclable packaging, consumer awareness and an efficient collection, sorting and recycling infrastructure are required to solve littering and waste challenges Recyclable Collection, sorting Consumer Less waste in the packaging and recycling behaviour environment infrastructure 68 May
Slide 69: Recycling rates vary
Recycling rates vary – significant potential to utilize valuable materials Plastic packaging Paper Glass Metal ~14% ~70% ~50-80% ~30-90% Recycled Recycled Recycled Recycled Source: Smithers Pira: Future Lifecycles of Packaging Recycling to 2023 69 May-June 2023 Roadshow presentation
Slide 70: EU PPWR
EU PPWR Objective and content of PPWR proposal Regulation not a done deal • Mixed business implications • Legislative process lengthy and complex − Requirement for recyclability at-scale − Ongoing scrutiny in EU Parliament and Member States − Amount of recyclable content until late Q4 2023 (estimati
Slide 71: Other
Other 71 May-June 2023 Roadshow presentation
Slide 72: Largest shareholders and split of shareholding
Largest shareholders and split of shareholding Shareholder Number of shares % of total shares Change Change % Split of shareholding 1. Finnish Cultural Foundation 11,318,840 10.50 % 0 0.00 % 2. Varma Mutual Pension Insurance Company 4,419,171 4.10 % 0 0.00 % 3. Ilmarinen Mutual Pension Insurance Com
Slide 73: Foreign shareholding and distribution by geography
Foreign shareholding and distribution by geography Total number of shareholders and foreign shareholding Approximate shareholder distribution by geography (Ownership as a percentage of identified shareholders in September 2022) 60,000 54% 4% 1% 5% 55,000 52% 5% 50,000 50% 8% 45,000 48% 40,000 52% 10
Slide 74: Global Executive Team
Global Executive Team Charles Héaulmé Thomas Geust Fredrik Davidsson Marco Hilty Ann O’Hara President and CEO CFO President, Fiber Foodservice President, Flexible Packaging President, North America EAO, interim EVP, Digital and Process Performance Thomasine Kamerling Marina Madanat Sami Pauni Ingolf
Slide 75: Board of Directors
Board of Directors Pekka Ala-Pietilä Kerttu Tuomas Mercedes Alonso Doug Baillie William R. Chairman of the Vice-Chairman Barker Board HR AC AC HR HR Born 1957, Finnish citizen Born 1957, Finnish citizen Born 1966, Spanish and Swiss citizen Born 1955, U.K. citizen Born 1949, U.S. citizen Starting dat
Slide 76: Disclaimer
Disclaimer Information presented herein contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or Huhtamäki Oyj’s or its affiliates’ (“Huhtamaki”) future financial performance, including, but not limited to, strategic plans, potential growth, expe
Slide 77: Thank you!
Thank you! May-June 2023 Roadshow 77 presentation