Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (September 2017)
61 slides from Huhtamaki Oyj's roadshow presentation, September 2017
Slide 1: Roadshow presentation July-September 2017
Roadshow presentation July-September 2017
Slide 2: We’re the global specialist in packaging for food and drink
We’re the global specialist in packaging for food and drink Net sales EBIT margin Our ambition €3.0bn 9.2% The preferred global Comparable growth ROI food packaging brand 2% 14.2% Employees Manufacturing sites Our purpose 17,400 76 Helping great products Operations in reach more people, 34 countries
Slide 3: We’re well positioned to deliver on our ambitions
We’re well positioned to deliver on our ambitions Who we are: Who we serve: What we offer: Main materials we use: FOODSERVICE #1 packaging company Paperboard operating globally FIBER PACKAGING #1 company globally Recycled fibers FLEXIBLE PACKAGING Plastic & other #1 company in emerging materials mar
Slide 4: Our three business areas are organized into four reporting segments
Our three business areas are organized into four reporting segments Foodservice Flexible Fiber Share of net sales packaging packaging packaging per segment in 2016 9% 25% 31% 35% Foodservice Europe-Asia- Flexible Packaging Fiber Packagingj Oceania and North America kdfgjkl dhgdfhg – 39 plants on – 2
Slide 5: Foodservice E-A-O: Geared for profitable growth
Foodservice E-A-O: Geared for profitable growth Foodservice paper and plastic disposable tableware, such as cups and lids, is supplied to foodservice operators, fast food restaurants and coffee shops. The segment has production in Europe, South Africa, Middle East, Asia and Oceania. Our products Our
Slide 6: North America: Continue on the growth path
North America: Continue on the growth path The North America segment serves local markets with foodservice packaging, Chinet® disposable tableware as well as ice-cream containers and other consumer goods packaging products. The segment has production in the United States and Mexico. Our products Our
Slide 7: Flexible Packaging: Strengthening our position
Flexible Packaging: Strengthening our position Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America. Our products Our competi
Slide 8: Fiber Packaging: Focus on profitable growth to enhance our positions
Fiber Packaging: Focus on profitable growth to enhance our positions Recycled and other natural fibers are used to make fresh product packaging, such as egg, fruit, food and drink packaging. The segment has production in Europe, Oceania, Africa and South America. Our products Our competitive M€ Long
Slide 9: Growing into a preferred global food packaging brand – next steps
Growing into a preferred global food packaging brand – next steps
Slide 10: Megatrends support food packaging growth…
Megatrends support food packaging growth… Food packaging offers stable Innovations create more growth opportunities Food contact sustainable and easy-to-use over the cycle requirements create packaging a higher entry barrier Megatrends create opportunities for us More people Growing middle class Mor
Slide 11: … and our positions offer good opportunities
… and our positions offer good opportunities Focus on consumer Major brand food and drink owners with high growth packaging ambitions as customers Product portfolio Geographic and innovations expansion Our growth opportunities Mature markets Developing markets approx. GDP growth + 2% even GDP growth
Slide 12: We target long-term growth both organically and via acquisitions
We target long-term growth both organically and via acquisitions 3-5 year growth ambition 5+% + 5+% 10+% € 5+bn p.a. if major Comparable Acquisitive acquisition growth growth ambition ambition € 4+bn with capex and add-on acquisitions Net sales Comparable growth 2010 2011 2012 2013 2014 2015 2016* 1
Slide 13: Growth and operational efficiency drive profitability improvement
Growth and operational efficiency drive profitability improvement – Summary of our new long-term ambitions Comparable growth 5+% 10+% 15+% 40-50% EBIT ROI DPS margin 5+% Balancing both EBIT margin and asset velocity → To deliver steadily improving returns Acquisitive growth → To ensure cash for grow
Slide 14: We’re an industrial manufacturing company by nature
We’re an industrial manufacturing company by nature In 2012-2016, we have invested – M€688 in organic growth as capex – M€415 in acquisitions → Topline growth approx. €1bn(1 with CAGR at approx. 9.1% And we continue to address profitable growth opportunities – To expand our footprint – To widen our
Slide 15: We have built a unique global footprint…
We have built a unique global footprint… Manufacturing units 2010 New manufacturing units 2011-2014 15 Roadshow presentation July-September 2017 New manufacturing units 2015-2016 Sales only Head office
Slide 16: … by making major investments in growth in 2012-2016
… by making major investments in growth in 2012-2016 Short-run flexible Paper and plastic packaging, Net sales in disposable packaging, Eastern Europe China & HK 2012-2016(1 Pressed plates, US Bags & UAE, Malaysia Folding carton, Europe + €1bn wraps, from €1.9bn Corrugated Russia US, UK, to €2.9bn L
Slide 17: How we support our customers’ growth
How we support our customers’ growth We invest to expand We’re a safe pair of We offer a wide We take innovation our network and to hands throughout product range to into next level improve our our network make our customers’ loremipsum capabilities loremipsum lives easier loremipsum - Follow global
Slide 18: Our focus on food enables stronger collaboration between segments
Our focus on food enables stronger collaboration between segments Foodservice Fiber E-A-O Packaging Our purpose: Stronger Our ambition: Helping great collaboration in The preferred products reach sourcing, operations, innovation, global food more people, commercial, people, and corporate responsibil
Slide 19: How we continue to drive growth
How we continue to drive growth Organic growth Outcome in organic CAPEX investments – Majority in business expansion – Estimated annual CAPEX What we do – Improved and fit-for-purpose 40% of EBITDA – Focus on consumer food machinery and drink packaging – Targeted manufacturing asset – Expand geograp
Slide 20: Stronger collaboration between segments supports profitability
Stronger collaboration between segments supports profitability What we have done What we will do – Focus on food – Continue building on our foundation – Segments share customers and technologies – Add stronger COLLABORATION across segments – Narrower scope enhances leverage – Sourcing – Sourcing ben
Slide 21: Solid balance sheet management continues…
Solid balance sheet management continues… Topline growth Profitability Tight management of operational net assets - Capex funded through EBITDA with focus on growth - Continuous improvement in working capital - Manufacturing asset velocity - M&A self-funded through profit and debt Segments focus on
Slide 22: … and cash flow generation remains in focus
… and cash flow generation remains in focus Tight working capital management EBITDA margin ambition 14+% Debt management – Utilize current beneficial Self-funded for Growth CAPEX finance cost environment dividend and growth to boost further growth - Without raising new equity Tax - Keeping net debt/
Slide 23: Solid progress in 2016 towards our long-term ambitions
Solid progress in 2016 towards our long-term ambitions Long-term FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 ambition Organic growth 3% 3% 6% 4% 4% 5+% – Continued good EBITDA margin 10.9% 11.2% 11.6% 12.5% 13.3% 14+% progress in 2016 EBIT margin 7.0% 7.4% 7.8% 8.7% 9.4% 10+% meeting our previous mid- R
Slide 24: Growing into the preferred global food packaging brand – continuing on our strategic path
Growing into the preferred global food packaging brand – continuing on our strategic path Grow AMBITION Build more Achieve our ambition 10+% - Organic and - Continue organic The preferred global food innovative growth 5+% investments packaging brand - Acquisitive growth 5+% - Continue disciplined ac
Slide 25: Q2 2017: Net sales grew and profitability was at a good level
Q2 2017: Net sales grew and profitability was at a good level
Slide 26: Topline growth continued
Topline growth continued 17 Net sales growth split in Q2 17 6 7 772 – 1% comparable growth 742 – Negative 1% in emerging markets – 1% from acquisitions – Positive currency translation impact of M€ 17 – GST* reform in India had a negative impact on Group’s growth. Without the Indian impact: – Group’s
Slide 27: All-in-all 7% topline growth in H1 17
All-in-all 7% topline growth in H1 17 36 Net sales growth split in H1 17 1,511 32 – 2% comparable growth 29 1,414 – 1% in emerging markets – 2% from acquisitions – Positive currency translation impact of M€ 36 – India had a negative impact on Group’s growth M€ H1 16 Comparable Acquisitions, Translat
Slide 28: Comparable growth
Comparable growth Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 2016 Long-term ambitions Foodservice EAO 2% 3% 3% 5% 7% 7% 5% 5-7% North America 1% 2% 5% 2% 8% 10% 6% 2-5% Flexible Packaging -2% 3% -3% -3% 2% 1% -1% 6-8% Fiber Packaging 8% 4% 6% 6% 5% 4% 5% 5-7% Group 1% 3% 3% 2% 6% 6% 4% 5+% – Solid growth i
Slide 29: Profitability at a good level
Profitability at a good level M€ Q2 17 Q2 16 Change H1 17 H1 16 Change Q2 17 Highlights Net sales 771.9 742.0 4% 1,511.3 1,414.3 7% – Earnings at a good level Adjusted EBITDA1 106.4 105.9 0% 200.4 190.5 5% helped by Foodservice Margin 13.8% 14.3% 13.3% 13.5% EAO improvement Adjusted EBIT1 75.6 77.8
Slide 30: Foreign currency translation impact was positive
Foreign currency translation impact was positive Average Closing rates Average Foreign currency rate H1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 rate H1 17 translation impact USD 1.12 1.11 1.12 1.05 1.07 1.14 1.08 INR 74.99 74.96 75.03 71.09 69.69 73.71 71.11 Q2 17: GBP 0.78 0.83 0.86 0.85 0.86 0.88 0.86 M€
Slide 31: Prices for plastic resins higher year-on-year
Prices for plastic resins higher year-on-year 140 – Prices for plastic resins and recycled fiber were volatile 120 during Q2, but higher vs. PY – Prices for paperboard were 100 relatively stable 80 60 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 PS PP PE +9% +6% +2% (end of Q2 17 vs. end of Q2 16) 31 R
Slide 32: Stable debt position
Stable debt position Covenant level 3.5 – Net debt/EBITDA stable at 1.9 AMBITION 2.0 2-3 – At the end of Q2 17 1.9 1.8 1.8 – Cash and cash equivalents 1.6 1.7 M€ 114 – Unused committed credit facilities available M€ 312 – Debt maturity extended by Schuldschein issued in April 0.68 0.61 0.57 0.66 – F
Slide 33: Debt maturity structure extended with new Schuldschein issuance
Debt maturity structure extended with new Schuldschein issuance 700 Debt maturity structure June 30, 2017 600 – Debt maturity extended by 500 M€ 150 Schuldschein issued in April 400 – Average maturity 4.4 years 300 at the end of Q2 17 (3.9 at 200 the end of 2016) 100 M€0 2017 2018 2019 2020 2021 Lat
Slide 34: Free cash flow burdened by high capex
Free cash flow burdened by high capex 200 190 – Capex significantly above PY 38 level due to high growth 1 1 1 3 investments especially in the M€ U.S. and China -15 -15 -12 -25 -21 -56 – High receivables due to strong -64 -79 -95 deliveries at the end of the quarter Reported Change in Net financial
Slide 35: Solid financial position
Solid financial position M€ June 2017 Dec 2016 June 2016 Total assets 2,914 2,875 2,748 – As a result of active investment agenda Operating working capital 535 515 527 → Higher asset base Net debt 756 675 728 → ROI burdened as latest investments not Equity & non-controlling delivering earnings yet 1
Slide 36: Progress towards our long-term ambitions
Progress towards our long-term ambitions Long-term FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 H1 2017 ambition Organic growth 3% 3% 6% 4% 4% 2% 5+% EBITDA margin 10.9% 11.2% 11.6% 12.5% 13.3% 13.3% 14+% EBIT margin 7.0% 7.4% 7.8% 8.7% 9.4% 9.2% 10+% ROI 12.6% 12.1% 12.6% 14.7% 14.7% 14.2% 15+% ROE 15.8
Slide 37: Outlook 2017
Outlook 2017 The Group’s trading conditions are expected to remain relatively stable during 2017. The good financial position and ability to generate a positive cash flow will enable the Group to address profitable growth opportunities. Capital expenditure is expected to be approximately at the same
Slide 38: Q2 2017 by business segment
Q2 2017 by business segm« Huhtamaki
Slide 39: Foodservice Europe-Asia-Oceania: Solid profitability improvement
Foodservice Europe-Asia-Oceania: Solid profitability improvement Net sales M€ 741 M€ 398 EBIT margin 8.5%1 8.5% 8 – Strong growth in the UK and Western Europe 6 driven by cold cups – Good development in Eastern Europe continued 4 – Earnings grew driven by volume growth and 2 159 194 195 193 193 205
Slide 40: North America: Good performance
North America: Good performance Net sales M€ 1,005 M€ 522 EBIT margin 10.7% 10.6% 12 – Capacity constraints in key categories 10 – Active investment agenda to address bottlenecks 8 6 – Growth was strongest in retail business driven by 4 private label tableware 2 235 266 244 260 247 274 – Foodservice
Slide 41: Flexible Packaging: Net sales and earnings declined due to adverse development in India
Flexible Packaging: Net sales and earnings declined due to adverse development in India Net sales M€ 869 M€ 456 EBIT margin 8.5% 7.2% 6 – Comparable net sales growth negative 2% 4 due to net sales decline in India, where the 2 GST reform caused severe headwind in 0 consumer markets -2 – Without the
Slide 42: Fiber Packaging: Strong net sales growth
Fiber Packaging: Strong net sales growth Net sales M€ 268 M€ 144 EBIT margin 12.9% 10.7% 10 – Strong net sales growth driven by good egg 8 packaging volumes in Eastern Europe, the UK 6 and Africa 4 – Net sales and earnings in South America 2 declined in challenging markets 66 66 67 69 72 72 0 – Earn
Slide 43: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 44: Appendices
Appendices
Slide 45: Group financials 2009-2016
Group financials 2009-2016 2016 2015 2014 (1 2013 (1 2012 (2 2011 2010 2009 Net sales M€ 2,865 2,726 2,236 2,161 2,321 2,043 1,952 1,832 Comparable growth (3 % 4 4 6 3 3 5 3 -5 Adjusted EBITDA (4 M€ 382 342 259 242 254 208 214 193 Margin (4 % 13.3 12.5 11.6 11.2 10.9 10.2 11.0 10.5 Adjusted EBIT (4
Slide 46: Profitability at a good level, year-on-year improvement in H1
Profitability at a good level, year-on-year improvement in H1 M€ Q2 17 Q2 16 Change H1 17 H1 16 Change Q2 17 Highlights Net sales 771.9 742.0 4% 1,511.3 1,414.3 7% – Earnings at a good level despite Adjusted EBITDA1 106.4 105.9 0% 200.4 190.5 5% slight decline vs. PY Margin 13.8% 14.3% 13.3% 13.5% –
Slide 47: Quarterly comparable growth by business segment since 2015
Quarterly comparable growth by business segment since 2015 Long-term Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Q1 15 FY 16 FY 15 FY 14 ambition Foodservice E-A-O 2% 3% 3% 5% 7% 7% 8% 6% 2% 3% 5% 4% 4% 5-7% North America 1% 2% 5% 2% 8% 10% 5% 7% -2% 7% 6% 4% 6% 2-5% Flexible Packaging -2%
Slide 48: 13 acquisitions completed since 2011
13 acquisitions completed since 2011 – Paris Packaging, Inc., US, September 2011 (North America) – Ample Industries, Inc., US, November 2011 (North America) – Josco (Holdings) Limited, China, April 2012 (Foodservice E-A-O) – Winterfield, LLC, US, August 2012 (North America) – Webtech Labels Private
Slide 49: Growth case
Growth case Expansion into Eastern Europe and capability for shorter runs – We acquired FIOMO in Czech Republic in January 2016 – 1 plant located in Prague – Situated in the middle of Europe and serving markets east and west – Dedicated to offset printing for flexible packaging – Complementing our o
Slide 50: Growth case
Growth case Huhtamaki entered the folding carton packaging business in Europe by acquiring Delta Print and Packaging in May 2016 – Manufactures bespoke printed folding carton packaging for the UK and European foodservice, packaged food and retail markets – Plants in Belfast, UK and Gliwice, Poland –
Slide 51: Growth case
Growth case Huhtamaki entered the foodservice packaging market in India – Huhtamaki acquired 51% of Val Pack Solutions Private Limited, a privately held paper cup manufacturer based in Mumbai, in July – Valpack is a well-established company with high manufacturing standards – Annualized net sales ap
Slide 52: Growth case
Growth case Huhtamaki invests M$100 in expansion to the US west coast – A world class manufacturing and distribution unit will be set up in Goodyear, Arizona, close to Phoenix – Serves southwest and west coast foodservice packaging and retail tableware markets with full range of foodservice packagin
Slide 53: Growth case
Growth case Flexible Packaging invests to boost growth in emerging markets Greenfield in Egypt 3 projects in India – Huhtamaki’s entry into manufacturing flexible – 2 new units in North East India packaging in Africa – Flexible packaging manufacturing unit in Assam – State-of-the-art manufacturing u
Slide 54: Growth case
Growth case Foodservice packaging greenfield in Ukraine – Huhtamaki will enter manufacturing foodservice packaging in Ukraine by setting up a greenfield paper cup manufacturing unit in Kiev – We’ve been present in Ukraine since 2002; Currently Ukrainian foodservice packaging markets served on an exp
Slide 55: Growth case
Growth case Focus on growth in foodservice packaging in China… Integration of foodservice packaging Acquisition of IP’s foodservice packaging manufacturing operations in Southern China manufacturing operations in China – Consolidation of the foodservice packaging – Two manufacturing units located in
Slide 56: Growth case
Growth case … improves our geographic coverage – Strong, modern operations in Southern China – Entry into the greater Shanghai area – Strengthened capability in Northern China – Total population covered by our operations > 1 bn – Areas of highest disposable income Manufacturing unit Acquired manufac
Slide 57: Ownership
Ownership Shareholder distribution by sector June 30, 2017 – 30,128 registered shareholders at the end of June 2017 6% – 53% of shares in domestic ownership 10% – 16% of shares controlled by non-profit 47% 6% organizations – Finnish Cultural Foundation a 15% major owner since 1943, current ownership
Slide 58: The Board of Directors aims at predictable and growing dividends
The Board of Directors aims at predictable and growing dividends Dividend payout ratio 40-50% – The Board proposes a €0.73 67% dividend per share 53% – Adjusted EPS €1.83 48% 47% 47% 47% – Free cash flow before dividends 40% 40% M€100 for FY 2016 – Based on Board proposal, 11% increase in dividend →
Slide 59: Financial calendar 2017
Financial calendar 2017 October 26 Q3 17 Interim Report
Slide 60: 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 61: For further information, please contact us:
For further information, please contact us: www.huhtamaki.com » Investors ir@huhtamaki.com Investor Relations Kaisa Uurasmaa Tel. +358 10 686 7815 kaisa.uurasmaa@huhtamaki.com