Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (December 2020)
63 slides from Huhtamaki Oyj's roadshow presentation, December 2020
Slide 1: Becoming the first choice in sustainable food packaging
Becoming the first choice in sustainable food packaging Roadshow presentation October–December 2020
Slide 2: Broadly serving food on-the-go and food on-the-shelf
Broadly serving food on-the-go and food on-the-shelf Food on-the-go Food on-the-shelf Markets Customers QSR Food Delivery FMCG Retail Products Convenience Food safety Food availability Food waste reduction Packaging Foodservice packaging Molded fiber packaging Flexible packaging 2 Roadshow presentat
Slide 3: Huhtamaki operates on a global scale
Huhtamaki operates on a global scale Figures for 2019 NET SALES €3.4B ADJUSTED EBIT MARGIN 8.6% MANUFACTURING UNITS 81 OPERATING COUNTRIES 35 EMPLOYEES 18,598 3 Roadshow presentation for Q4/2020 | Huhtamaki
Slide 4: We operate through 3 business segments
We operate through 3 business segments North America Fiber and Foodservice Flexible Packaging Net sales per segment Europe-Asia-Oceania (2019) 18 manufacturing units in 33 manufacturing units in 29 manufacturing units in 36% 34% 2 countries 28 countries 16 countries 4,200 employees 6,800 employees 7
Slide 5: Understanding the value of packaging within the broader sustainability context
Understanding the value of packaging within the broader sustainability context Hygiene Food safety Packaging promotes hygiene and prevents spread of Packaging keeps food safe from spoilage and disease preserves its original properties Food availability Food waste prevention Packaging enables food av
Slide 6: The future of food packaging is impacted by four transformative trends
The future of food packaging is impacted by four transformative trends – The next billion consumers will come from emerging markets – Future consumer will require packaging to be innovative, individual and sustainable – Digitalization will influence packaging and the way we do business – Sustainabil
Slide 7: Our 2030 strategy
Our 2030 strategy Protecting food, people and the planet Our ambition is to be the first choice in sustainable packaging solutions, enabling wellbeing and convenience for people around the world GROWING DRIVING OUR DEVELOPING OUR BUSINESS COMPETITIVENESS OUR TALENT EMBEDDING SUSTAINABILITY IN EVERYT
Slide 8: We have high financial and sustainability ambitions
We have high financial and sustainability ambitions Our ambition First choice in sustainable food packaging Comparable growth Adjusted EBIT margin Net debt/Adjusted EBITDA Dividend payout ratio 5+% 10+% 2-3 40-50% Carbon neutral 100% >80% 100% >90% 100% production of products designed renewable or r
Slide 9: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors
Slide 10: 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 11: Appendix: The role of packaging
Appendix: The role of packaging
Slide 12: The future of food packaging is impacted by four transformative trends
The future of food packaging is impacted by four transformative trends The next billion consumers will Future consumer will require Digitalization will influence Sustainability will drive come from emerging markets packaging to be innovative, packaging and the way we do innovation and collaboration
Slide 13: 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% 8% of global GHG emissions come from of global GHG emissions come from wasted food systems of lost food Source: CGIAR Research Program on Climate Change, Agriculture and Food Sec
Slide 14: 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 14 Roadshow presentation for Q4/2020 | Huhtamaki
Slide 15: 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 16: Consumer awareness and recycling infrastructure required to solve waste challenges
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 16 Roa
Slide 17: Recycling rates vary – significant potential to utilize valuable materials
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 17 Roadshow presentation for Q4/2020 | Huhtamaki
Slide 18: Examples of recent innovations and product launches
Examples of recent innovations and product launches Micro- High- wave quality and oven alternative Huhtamaki Fresh ready safe to plastic meal tray – a recyclable Cooler to straws alternative to black plastic, touch than Huhtamaki paper straws made of renewable raw plastic materials – an eco-friendly
Slide 19: Appendix: Segments and financials
Appendix: Segments and financials
Slide 20: Operating model: We are a converter
Operating model: We are a converter Inputs Our activities Outputs Impacts Raw materials Conversion to food packaging Safe, convenient and fit-for-purpose Nature • Paperboard • Cup forming consumer packaging • Renewable and recyclable materials • Plastic resins • Folded carton • Reducing food waste w
Slide 21: Fiber and Foodservice Europe-Asia-Oceania
Fiber and Foodservice Europe-Asia-Oceania Fiber Packaging and Foodservice E-A-O have been integrated as of June 1, 2020 Recycled and other natural fibers are used to make fresh product packaging, such as egg, fruit, food and drink packaging, and foodservice paper and plastic disposable tableware, su
Slide 22: North America
North America Serves local markets with foodservice packaging, Chinet® disposable tableware as well as ice-cream containers and other consumer goods packaging products. Production in the United States and Mexico. NET SALES MARKET POSITION €1,153 mn ADJUSTED EBIT MARGIN 9.7% #1 globally operating EMP
Slide 23: Flexible Packaging
Flexible Packaging Flexible packaging is used for a wide range of pre- packed consumer products including food, beverages, pet food, hygiene and health care products. Production in Europe, Middle East and Africa, Asia and South America. NET SALES MARKET POSITION €1,016 mn ADJUSTED EBIT MARGIN 8.1% #
Slide 24: Products, customers, sales split and competitors per segment
Products, customers, sales split 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 Net sales Western Europe & UK Foodservice Europe split Europe ROW C
Slide 25: Strategic focus areas for segments
Strategic focus areas for segments 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 Egg and fruit protective packaging Global key accounts in QSR, Coffee and Retail, Foodservice, Consumer goods Strong dem
Slide 26: Segment key figures (1/2)
Fiber Packaging and Foodservice E-A-O have Segment key figures (1/2) been integrated as on June 1, 2020 • Improving customers access to combined fiber and paperboard technology • Leveraging organization synergies and growth opportunities (plastic substitution, food delivery) Foodservice Europe-Asia-
Slide 27: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2013 2014 2015 2016 2017 20181 2019 Long-term ambition Net sales 725.3 769.3 947.7 1,005.1 1,000.4 1,002.7 1,152.7 Comparable growth 5% 6% 4% 6% 2% 5% 9% 3-5% Adjusted EBIT 38.4 38.4 88.2 107.6 104.1 73.0 111.4 Margin 5.3% 5.0% 9.3% 10.7% 10
Slide 28: Group financials 2010-2019
Group financials 2010-2019 2010 2011 20122 20131 20141 2015 2016 2017 20182 2019 Net sales MEUR 1,952 2,043 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 Comparable growth3 3% 5% 3% 3% 6% 4% 4% 3% 5% 6% Adjusted EBITDA4 MEUR 214 208 254 242 259 342 382 390 399 456 Margin4 11.0% 10.2% 10.9% 11.2% 1
Slide 29: Comparable net sales growth by business segment
Comparable net sales growth by business segment Quarterly Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Foodservice E-A-O 3% 2% 4% 6% 5% 5% 5% 3% 4% 3% 4% 4% -4% -28% -1% North America 2% 1% 2% 2% 5% 2% 2% 11% 5% 13% 14% 6% 9% -5% 4% Flexible Packaging 3%
Slide 30: Solid track record of growth investments
Solid track record of growth investments Paper and Huhtamaki CAPEX M&A spend plastic blueloop disposable 1,210 584 packaging, China & HK 2013–2019 Pressed Short-run Ireland Fresh ready- (EUR million) plates, US flexible meal trays, packaging, UK Eastern Europe Folding Labels, India Corrugated Bags &
Slide 31: 20 acquisitions completed since 2011
20 acquisitions completed since 2011 Date (completed) Acquired company Country Acquiring segment Mar 2020 Laminor S.A. Brazil Flexible Packaging Jan 2020 Mohan Mutha Polytech Private Limited India Flexible Packaging Dec 2019 Everest Flexibles Pty Ltd South Africa Flexible Packaging Jun 2018 Ajanta P
Slide 32: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 33: 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 12,010,653 11.15% 0 0.00% 2. Huhtamäki Oyj 3,410,709 3.17% 0 0.00% 3. Ilmarinen Mutual Pension Insurance Company 2,830,000 2.63% -140,000
Slide 34: 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 2020) 38,000 54% 5% 1% 36,000 4% 52% 7% 34,000 50% 32,000 8% 30,000 48% 8% 56%
Slide 35: Global Executive Team
Clay Dunn (63) has decided to retire at the end of 2020. Ann O’Hara, (49), MBA, BSE (Chemical Engineering), has been appointed President, North Global Executive Team America business segment and a member of the Global Executive Team. Ann will join Huhtamaki on November 1, 2020 and will assume the ro
Slide 36: Board of Directors
Board of Directors Pekka Ala-Pietilä Kerttu Tuomas Doug Baillie William R. Barker Chairman of the Board Vice-Chairman HR AC HR HR Born 1957, Finnish citizen Born 1957, Finnish citizen Born 1955, U.K. citizen Born 1949, U.S. citizen Starting date: April 24, 2012 Starting date: April 27, 2017 Starting
Slide 37: Our operating environment
Our operating environment (as given at Q3 2020 results)
Slide 38: Safeguarding the safety of our employees and business continuity remains our number one priority
Safeguarding the safety of our employees and business continuity remains our number one priority Impact on our employees – Slowdown in number of cases – Maintain very stringent health, safety and hygiene measures in our operations – Manufacturing premises all up and running – Gradually transitioning
Slide 39: COVID-19 continues to impact the business, but to a lesser extent than in the spring
COVID-19 continues to impact the business, but to a lesser extent than in the spring Gradual recovery in the short-term Other factors possibly impacting the demand business mid-term – After a fast recovery trend in June and July, – Managing capacity against continued foodservice demand remained belo
Slide 40: Q3 2020 results: Strong profitability improvement
Q3 2020 results: Strong profitability improvement
Slide 41: Q3 2020: Food on-the-shelf offset the lower demand of food on-the-go
Q3 2020: Food on-the-shelf offset the lower demand of food on- the-go Development of net sales in Q3 2020 Net sales growth -1% in Q3 2020 (EUR million) – Comparable net sales growth 2% 15 16 -38 (-2% in emerging markets) – 2% from acquisitions 855 – 5% negative currency impact 847 Q3 2019 Organic Ac
Slide 42: Q1-Q3 2020: Net sales at the same level as in 2019
Q1-Q3 2020: Net sales at the same level as in 2019 Development of net sales in Q1-Q3 2020 Net sales growth -1% in Q1-Q3 2020 (EUR million) – Comparable net sales growth -1% -39 41 -37 (-6% in emerging markets) – 2% from acquisitions 2,524 – 2% negative currency impact 2,489 Q1-Q3 2019 Organic Acquis
Slide 43: Food on-the-shelf packaging continued to grow, food on-the-go impacted by COVID-19
Food on-the-shelf packaging continued to grow, food on-the-go impacted by COVID-19 Long-term Comparable growth Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q1-Q3 19 Q1-Q3 20 ambitions Foodservice E-A-O 4% 4% -4% -28% -1% 4% -11% 5-7% North America 14% 6% 9% -5% 4% 11% 2% 3-5% Flexible Packaging 4% 3% 2% 2% 1% 3% 2
Slide 44: Increased adjusted EBIT and improved margin with flat sales
Increased adjusted EBIT and improved margin with flat sales MEUR Q3 20 Q3 19 Change Q1-Q3 20 Q1-Q3 19 Change Net sales 847.3 854.9 -1% 2,489.0 2,524.3 -1% 1 Adjusted EBIT 85.5 72.3 18% 229.2 218.4 5% Margin 10.1% 8.5% 9.2% 8.7% Adjusted EPS, EUR2 0.56 0.45 25% 1.46 1.40 5% Capital expenditure 40.6 5
Slide 45: Q3 2020 results: Business segment review
Q3 2020 results: Business segment review
Slide 46: Foodservice EAO: Continued COVID-19 driven decrease in sales and earnings
Foodservice EAO: Continued COVID-19 driven decrease in sales and earnings Key figures, MEUR Q3 20 Q3 19 Change Net sales and comparable growth (EUR million & %) Net sales 230.8 242.4 -5% Comparable growth -1% 4% 241 242 245 228 218 231 Adjusted EBIT 1 21.7 22.7 -4% 2019 167 2020 Margin 9.4% 9.4% 4%
Slide 47: North America: Strong performance throughout the year
North America: Strong performance throughout the year Key figures, MEUR Q3 20 Q3 19 Change Net sales and comparable growth (EUR million & %) Net sales 282.6 287.0 -2% Comparable growth 4% 14% 306 296 304 286 287 283 256 Adjusted EBIT 1 36.0 25.3 42% 2019 2020 Margin 12.7% 8.8% 5% 9% 13% -5% 14% 4% 6
Slide 48: Flexible Packaging: Growth still somewhat hampered by COVID-19
Flexible Packaging: Growth still somewhat hampered by COVID-19 Key figures, MEUR Q3 20 Q3 19 Change Net sales and comparable growth (EUR million & %) Net sales 266.0 260.7 2% 271 263 261 266 255 Comparable growth 1% 4% 252 249 Adjusted EBIT 1 22.7 20.6 10% 2019 2020 Margin 8.5% 7.9% 5% 2% 1% 2% 4% 1
Slide 49: Fiber Packaging: Moderate growth in sales and solid profitability
Fiber Packaging: Moderate growth in sales and solid profitability Key figures, MEUR Q3 20 Q3 19 Change Net sales and comparable growth (EUR million & %) Net sales 72.2 68.2 6% Comparable growth 7% 7% 78 72 75 76 72 76 1 68 2019 Adjusted EBIT 8.0 7.1 13% 2020 Margin 11.1% 10.4% 4% 9% 7% 10% 7% 7% 8%
Slide 50: Q3 2020 results: Financials review
Q3 2020 results: Financials review
Slide 51: Improvement in earnings with unchanged net sales
Improvement in earnings with unchanged net sales MEUR Q3 20 Q3 19 Change Q1-Q3 20 Q1-Q3 19 Change – Earnings improvement Net sales 847.3 854.9 -1% 2,489.0 2,524.3 -1% driven by favorable sales mix in North America and Adjusted EBITDA 1 127.2 113.5 12% 356.3 339.0 5% positive impacts from price Margi
Slide 52: Impact from currencies turned negative
Impact from currencies turned negative Average Average Change in Change in Closing rates rate rate average closing rate rate Q1-Q3 2019 Q1-Q3 2020 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 (Q3 vs. Q3) USD 1.12 1.12 0% 1.09 1.12 1.10 1.13 1.17 -7% Foreign currency translation impact INR 78.86 83.39 -5% 77.07 79.
Slide 53: Net debt decreased compared to Q3 2019 and Q2 2020
Net debt decreased compared to Q3 2019 and Q2 2020 Net debt, net debt/adj. EBITDA and gearing – Net debt/Adj. EBITDA at 1.9 Covenant level1 3.5 – At the end of Q3 2020: – Cash and cash equivalents EUR 315 million 2.4 2.4 Ambition – Unused committed credit 2.1 2.0 2.1 2.0 1.9 2–3 facilities available
Slide 54: Loan maturities
Loan maturities Debt maturity structure September 30, 2020 – Average maturity 3.0 years at the (EUR million) end of Q3 2020 (3.0 at Q3 2019) 600 – Unused committed credit facilities 500 of EUR 306 million maturing in 2022 400 300 200 100 0 2020 2021 2022 2023 2024 Later Bonds and other loans Uncommi
Slide 55: Higher free cash flow
Higher free cash flow Free cash flow bridge Cash flow driven by: (EUR million) – Higher EBITDA despite impact from COVID 363 334 – Laminor gain of ~20 MEUR is recognized as non-cash in ‘Other’ 150 – Capex in Q3 2020 EUR 13 117 million lower than in Q3 2019 1 3 -15 -14 -18 -8 -28 -36 -34 -29 -120 -13
Slide 56: Stable financial position
Stable financial position MEUR Sep 2020 Sep 2019 – Higher total assets following growth Total assets 3,685 3,473 – Net debt decreased and gearing improved Operating working capital 590 649 Net debt 896 944 Equity & non-controlling interest 1,379 1,385 Gearing 0.65 0.68 Adjusted ROI1 11.9% 12.0% Adju
Slide 57: Progress towards long-term financial ambitions
Progress towards long-term financial ambitions Long-term 2014 2015 2016 2017 2018 2019 Q1-Q3 2020 ambition Organic growth 6% 4% 4% 3% 5% 6% -1% 5+% Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0% 8.1% 8.6% 9.2% 10+% Net debt/Adj. EBITDA 1.0 1.6 1.8 1.8 2.3 2.0 1.9 2-3 Dividend payout ratio 47% 40% 40% 42%
Slide 58: Q3 2020 results: Looking forward
Q3 2020 results: Looking forward
Slide 59: Outlook 2020
Outlook 2020 Disturbance from the COVID-19 pandemic on Huhtamaki's operating environment is expected to continue. The demand especially for food on-the-go packaging may be significantly negatively impacted whilst demand for food on-the-shelf packaging and convenience tableware may be positively impa
Slide 60: Short-term risks and uncertainties
Short-term risks and uncertainties The COVID-19 pandemic including a potential second wave of the pandemic is a significant short-term risk potentially creating disturbance in the Group’s trading conditions and its operating environment, as well as in demand for the Group’s products. Volatile raw ma
Slide 61: Financial calendar 2020
Financial calendar 2020 November 9, 2020 February 11, 2021 Week commencing Founder’s Week: March 1, 2021 Results 2020 Building our sustainability Annual Accounts legacy Virtual event. February 11, 2021 July 22, 2021 October 21, 2021 Q1 2020 Interim Report & Half-yearly Report Q3 2020 Interim Report
Slide 62: 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 63: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors