Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (March 2023)
69 slides from Huhtamaki Oyj's roadshow presentation, March 2023
Slide 1: Becoming the first choice in sustainable packaging solutions
Becoming the first choice in sustainable packaging solutions Roadshow presentation January-March 2023
Slide 2: 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 3: Our 100-year Nordic legacy provides a strong foundation
Our 100-year Nordic legacy provides a strong foundation on our road to becoming the first choice in sustainable packaging solutions globally 3 April February 22, 2021 21.2.2023 21, 2023 Q2 2022 IR General Huhtamaki Presentation Presentation to shareholders Presentation | Charles Héaulmé
Slide 4: We believe in protecting food, people and the planet
We believe in protecting food, people and the planet…
Slide 5: What our purpose means
What our purpose means • Packaging creates value by securing hygiene, food availability and food safety for consumers around the globe. • Packaging also plays an instrumental role in reducing We believe in protecting food, people food waste, which remains by far the biggest and the planet and enabli
Slide 6: 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 Paperboard conversion Molded fiber Flexibles Smooth Rough Packaging technology 6 February 21,
Slide 7: 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 7 February 21, 2023 Fiber Foodservice E-A-O North America Flexible Packaging Sales and other locations
Slide 8: We operate through three business areas
We operate through three business areas Fiber and Foodservice North America Flexible Packaging Net sales per business Europe-Asia-Oceania area (2022) 31 manufacturing units and 19 manufacturing units and 27 manufacturing units and 35% 33% operations in 27 countries operations in 2 countries operatio
Slide 9: 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 • The future consumer will require packaging to be innovative, individual and sustainable • Digitalization will influence packaging and the way we do business • Sustain
Slide 10: Packaging brings real value to society
Packaging brings real value to society Hygiene Food safety Packaging promotes hygiene and Packaging keeps food safe from spoilage prevents spread of disease and preserves its original properties Food availability Food waste prevention Packaging enables food availability Globally, 1/3 of food is wast
Slide 11: 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 IMPROVING OUR DEVELOPING OUR BUSINESS COMPETITIVENESS OUR TALENT EMBEDDING SUSTAINABILITY IN EVER
Slide 12: We focus on our strategic priorities to drive growth
We focus on our strategic priorities to drive growth Competitiveness Talent Sustainability Digitalization • Achieve world-class processes and • Develop strategic capabilities • Focus innovation on sustainable • Improve operational performance operational performance packaging designed for circularit
Slide 13: First choice in sustainable food packaging
We are committed to 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% 100% >80% 100% >90% 100% Carbon neutral production of products designed re
Slide 14: Appendix: The role of packaging
Appendix: The role of packaging
Slide 15: 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 16: 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 17: 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 18: 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 18 February 21, 2023
Slide 19: Only a small share of CO2 emissions of a latte 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 20: Consumer awareness and efficient collection, sorting and recycling 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 20 Feb
Slide 21: 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 21 February 21, 2023
Slide 22: Appendix: Segments and financials
Appendix: Segments and financials
Slide 23: Operating model: We are a converter
Operating model: We are a converter 23 February 21, 2023
Slide 24: 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 25: 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 €1,468mn Leading ADJUSTED EBIT MARGIN position 11.7% as globa
Slide 26: 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 €1,558mn Leading ADJUSTED EBIT MARGIN
Slide 27: 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 Retail Europe split Europe Central &
Slide 28: 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 29: 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 30: 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% 3-5% Adjusted EBIT 88.2 107.6 104.1 73.0 111.4 136.6 139.1 171.6 M
Slide 31: 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 32: Comparable net sales growth by business segment
Comparable net sales growth by business segment Quarterly Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Foodservice E-A-O 4% 3% 4% 4% -4% -28% -1% -7% -2% 40% 2% 12% 18% 18% 22% 15% North America 5% 13% 14% 6% 9% -5% 4% -2% -2% 9% 5% 11% 24% 14% 10%
Slide 33: Solid track record of growth investments
Solid track record of growth investments Huhtamaki blueloop Short-run Ireland Fresh ready- flexible meal trays, packaging, UK Eastern Europe Corrugated Bags & UAE, Folding Distribution, Paper folding wraps, Malaysia carton, Australia straws, carton, UK Russia Europe Europe USA Russia, USA, Brazil, U
Slide 34: 22 acquisitions completed since 2012
22 acquisitions completed since 2012 Date (completed) Acquired company Country Acquiring segment Feb 2023 Tailored Packaging Pty Ltd. (acquired fully) Australia Foodservice E-A-O Jan 2022 Huhtamaki Smith Anderson sp. z o.o (joint venture acquired fully) Poland Foodservice E-A-O Sep 2021 Elif Holding
Slide 35: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 36: Largest shareholders and split of shareholding
Largest shareholders and split of shareholding Shareholder Number of shares % of total shares Change Change % 1. Finnish Cultural Foundation 11,314,840 10.50 % 0 0.00 % Split of shareholding 2. Varma Mutual Pension Insurance Company 4,019,171 3.73 % 0 0.00 % 3. Huhtamäki Oyj 3,395,709 3.15 % 0 0.00
Slide 37: 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) 55,000 54% 4% 1% 5% 50,000 52% 5% 45,000 50% 8% 40,000 48% 52% 10% 35,00
Slide 38: Global Executive Team
Global Executive Team Charles Héaulmé Marco Hilty Eric Le Lay Ann O’Hara Thomas Geust President and CEO President, Flexible Packaging President, Fiber and President, North America CFO Foodservice EAO Fredrik Davidsson Thomasine Kamerling Marina Madanat Sami Pauni Ingolf Thom EVP Digital and EVP Sust
Slide 39: 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 HR 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 40: Strong performance in a volatile environment
Strong performance in a volatile environment Results 2022
Slide 41: Strong performance in a volatile environment
Strong performance in a volatile environment • Volatility continues – Variations in input cost development. Softening demand in many categories and geographies • Financial performance – Continued strong performance with 9% comparable sales growth in Q4 and 15% in 2022. Strong growth in adj. EBIT; Q4
Slide 42: Investing in next-generation innovation
Investing in next-generation innovation • Development of paper-based coffee capsules − Based on our proprietary high-precision technology • Other launches in 2022 − ICON - recyclable paper ice-cream packaging in North America − bluelooptm PaperLid − Push Tab® blister lid − OmniLock™ ultra paper fle
Slide 43: Evolving EU Packaging & Packaging Waste Regulation
Evolving EU Packaging & Packaging Waste Regulation, as proposed, will have positive and negative impacts 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 scruti
Slide 44: Business performance
Business performance Huhtamaki
Slide 45: Q4 2022: Continued strong organic growth
Q4 2022: Continued strong organic growth Development of net sales in Q4 2022 Net sales increased 10% in Q4 2022 (EUR million) • Comparable net sales growth 9% (6 % in emerging markets), driven by 0 -28 46 87 pricing • -3% from divestment 1,104 999 • 5% positive currency impact Q4 2021 Organic Acquis
Slide 46: FY 2022: Solid growth throughout the year
FY 2022: Solid growth throughout the year Development of net sales in 2022 Net sales increased 25% during 2022 (EUR million) • Comparable net sales growth 15% 187 -37 234 (16 % in emerging markets), driven by 520 pricing 4,479 • 5% mainly from Elif acquisition 3,575 • -1% from divestment • 6% positi
Slide 47: Growth remained strong in most segments
Growth remained strong in most segments Long-term Comparable growth Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 2021 2022 ambitions Foodservice E-A-O 12% 18% 18% 22% 15% 11% 18% 5-7% North America 11% 24% 14% 10% 10% 6% 14% 3-5% Flexible Packaging 12% 18% 19% 20% 1% 7% 14% 6-8% Fiber Packaging 2% 8% 16% 19% 17% 2
Slide 48: Improved adjusted EBIT despite inflation
Improved adjusted EBIT despite inflation MEUR Q4 22 Q4 21 Change 2022 2021 Change Net sales 1,103.6 999.5 10% 4,479.0 3,574.9 25% Adjusted EBIT1 93.3 82.2 14% 395.1 315.3 25% Margin 8.5% 8.2% 8.8% 8.8% Adjusted EPS, EUR2 0.65 0.54 20% 2.49 2.07 20% Capital expenditure 133.2 112.2 19% 318.5 259.4 23%
Slide 49: Sustainability Dashboard
Sustainability Dashboard – Good overall progress in line with our trajectory to reach our 2030 commitments Renewable or recycled materials Renewable electricity Non-hazardous waste recycled Health and safety (% of total materials) (% of total electricity consumed) (% of total non-haz. waste) 2030 Lo
Slide 50: Business segment review
Business segment review Huhtamaki
Slide 51: Foodservice EAO: Strong sales growth continued
Foodservice EAO: Strong sales growth continued Key figures, MEUR Q4 22 Q4 21 Change Net sales and comparable growth (EUR million & %) Net sales 266.7 254.0 5% Comparable growth 15% 12% 289 300 255 254 267 236 245 Adjusted EBIT 1 24.2 19.5 24% 207 2021 Margin 9.1% 7.7% 2022 -2 % 18 % 40 % 18 % 2% 22
Slide 52: North America: Growth continued, margin remained strong
North America: Growth continued, margin remained strong Key figures, MEUR Q4 22 Q4 21 Change Net sales and comparable growth (EUR million & %) Net sales 383.6 314.7 22% Comparable growth 10% 11% 375 372 384 337 315 Adjusted EBIT1 49.0 33.9 45% 295 294 2021 256 Margin 12.8% 10.8% 2022 -2 % 24 % 9% 14
Slide 53: Flexible Packaging: Challenging market conditions and one-off item
Flexible Packaging: Challenging market conditions and one-off item impacting Q4 profitability Key figures, MEUR Q4 22 Q4 21 Change Net sales and comparable growth (EUR million & %) Net sales 369.1 344.8 7% 421 Comparable growth 1% 12% 378 391 369 345 Adjusted EBIT1 15.5 24.5 -37% 267 271 284 2021 Ma
Slide 54: Fiber Packaging: Strong growth and profitability
Fiber Packaging: Strong growth and profitability Key figures, MEUR Q4 22 Q4 21 Change Net sales and comparable growth (EUR million & %) Net sales 87.4 91.5 -4% Comparable growth 17% 2% 95 91 89 91 87 1 79 80 83 2021 Adjusted EBIT 11.1 10.7 4% Margin 12.7% 11.7% 2022 4% 8% 1% 16% 2% 19% 2% 17% Comp.
Slide 55: Financial review
Financial review Huhtamaki
Slide 56: Higher sales are driving improved earnings
Higher sales are driving improved earnings MEUR Q4 22 Q4 21 Change 2022 2021 Change • Q4 earnings improved following increased net sales, continued focus Net sales 1,103.6 999.5 10% 4,479.0 3,574.9 25% on operational efficiency, weighed 1 Adjusted EBITDA 143.3 130.3 10% 596.9 488.4 22% on by the Rus
Slide 57: Continued positive currency impact
Continued positive currency impact Average Average Change in Change in Closing rates rate rate average closing 2021 2022 rate Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 rate (YoY) USD 1.18 1.05 11 % 1.13 1.11 1.05 0.97 1.06 6% Foreign currency INR 87.50 82.70 5% 84.26 84.38 83.04 79.31 88.23 -5% translation impa
Slide 58: Net debt to adjusted EBITDA unchanged from Q3
Net debt to adjusted EBITDA unchanged from Q3 Net debt, net debt/adj. EBITDA and gearing • Net debt/Adj. EBITDA at 2.5 Covenant level 3.75 • At the end of Q4 2022: 3.1 • Cash and cash equivalents 3.0 3.0 3.0 EUR 309 million 2.5 Ambition 1,626 2.5 • Unused committed credit facilities 1,572 1,404 1,52
Slide 59: Loan maturities
Loan maturities Debt maturity structure December 31, 2022 • Average maturity 3.2 years at the (EUR million) end of Q4 2022 (2.6 at the end of Q4 2021) 700 600 • 63% of gross debt with fixed rates, 500 37% in floating 400 • Increased interest rate 300 200 100 0 2023 2024 2025 2026 2027 Later Lease li
Slide 60: Free cash flow impacted by working capital and capital expenditure
Free cash flow impacted by working capital and capital expenditure Free cash flow bridge Strong free cash flow in Q4 2022 (EUR million) of EUR 71 million 615 Full-year cash flow impacted by: 470 • Strong growth in EBITDA • Significant change in working capital mainly following increase 8 11 0 11 in
Slide 61: Stable financial position
Stable financial position MEUR Dec 2022 Dec 2021 • Assets mainly impacted by: • Divestment of Russia Total assets 4,821 4,542 • Currency impact Operating working capital 828 684 • Capex and operating working capital Net debt 1,471 1,520 • Operating working capital increased year on year due to highe
Slide 62: The Board aims for predictable and growing dividends
The Board of Directors aims for predictable and growing dividends Dividend per share (EUR) and payout ratio (% of adjusted EPS) 2022* 2021 Change 65% Adjusted EPS 2.49 2.07 20% Dividend per share 1.00 0.94 6% 53% 50% 50% Long-term ambition: 47% 47% 47% 47% 47% Payout ratio 45% Payout ratio 40% 45% 4
Slide 63: Progress towards long-term financial ambitions
Progress towards long-term financial ambitions Long-term 2015 2016 2017 2018 2019 2020 2021 2022 ambition Organic growth 4% 4% 3% 5% 6% -2% 7% 15% 5+% Adjusted EBIT margin 8.7% 9.4% 9.0% 8.1% 8.6% 9.1% 8.8% 8.8% 10+% Net debt/Adj. EBITDA 1.6 1.8 1.8 2.3 2.0 1.8 3.1 2.5 2-3 Dividend payout ratio 40%
Slide 64: Looking forward
Looking forward Huhtamaki
Slide 65: Outlook 2023
Outlook 2023 The Group’s trading conditions are expected to remain relatively stable, despite the continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable long-term growth op
Slide 66: Short-term risks and uncertainties
Short-term risks and uncertainties Significant and broad-based inflation (including raw materials, labor, distribution and energy), decline in consumer demand, availability of raw materials as well as movements in currency rates are considered to be relevant short-term business risks and uncertainti
Slide 67: Capital Markets Day to be arranged on March 28
Capital Markets Day to be arranged on March 28 March 28, 2023 April 27, 2023 July 20, 2023 October 20, 2023 Capital Markets Day 2023 Q1 2023 Interim Report Half-yearly Report 2023 Q3 2023 Interim Report in Espoo, Finland Annual General Meeting March 1, 2023 Annual Report 2022 67 February 9, 2023 Res
Slide 68: 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 69: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors 69 October 21, 2022 Interim Report January-September 2022