Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (December 2022)
67 slides from Huhtamaki Oyj's roadshow presentation, December 2022
Slide 1: Becoming the first choice in sustainable packaging solutions
Becoming the first choice in sustainable packaging solutions Roadshow presentation October-December 2022
Slide 2: 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 2 April October 22, 26, 26.10.202220212022 Q2 2022 IR General Huhtamaki Presentation Presentation to shareholders Presentation | Charles Héaulmé
Slide 3: We believe in protecting food, people and the planet
We believe in protecting food, people and the planet…
Slide 4: 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 5: 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 technology Paperboard conversion Molded fiber Flexibles 5 October 26, 2022
Slide 6: A strong local presence, delivering for our customers, globally
A strong local presence, delivering for our customers, globally (Figures for 2021) NET SALES €3.6B ADJUSTED EBIT MARGIN 8.8% OPERATING LOCATIONS 114 OPERATING COUNTRIES 38 EMPLOYEES 19,564 6 October 26, 2022
Slide 7: 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 (2021) 32 manufacturing units and 18 manufacturing units and 27 manufacturing units and 33% 35% operations in 27 countries operations in 2 countries operatio
Slide 8: 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 9: 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 10: 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 11: 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 12: 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 13: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors October Q2 13 2022 26, IR Presentation 2022
Slide 14: 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 15: Appendix: The role of packaging
Appendix: The role of packaging
Slide 16: 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 17: 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 18: 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 19: 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 19 October 26, 2022
Slide 20: 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 21: Consumer awareness and efficient collection, sorting and recycling infrastructure 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 21 Oct
Slide 22: 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 22 October 26, 2022
Slide 23: Our strong innovation pipeline has delivered sustainable packaging solutions
Our strong innovation pipeline has delivered sustainable packaging solutions for our customers, including: Paperboard conversion Molded fiber Flexibles Push Tab® paper Push-tab blister lid® McDonald’s Home Delivery range Sundae cup and cold cup lid Paperboard Futuro egg Next Generation yogurt cup ca
Slide 24: Appendix: Segments and financials
Appendix: Segments and financials
Slide 25: Operating model: We are a converter
Operating model: We are a converter 25 October 26, 2022
Slide 26: 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 27: 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 €1,160 mn ADJUSTED EBIT MARGIN 12.0% #1 globally operating EM
Slide 28: 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 €1,167 mn ADJUSTED EBIT MARGIN 6.8% #
Slide 29: 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 Centr
Slide 30: 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 31: 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 32: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2014 2015 2016 2017 20181 2019 2020 2021 Long-term ambition Net sales 769.3 947.7 1,005.1 1,000.4 1,002.7 1,152.7 1,138.9 1,160.3 Comparable growth 6% 4% 6% 2% 5% 9% 1% 6% 3-5% Adjusted EBIT 38.4 88.2 107.6 104.1 73.0 111.4 136.6 139.1 Margi
Slide 33: Group financials 2011-2021
Group financials 2011-2021 2011 20122 20131 20141 2015 2016 2017 20182 2019 2020 2021 Net sales MEUR 2,043 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 3,302 3,575 Comparable growth3 5% 3% 3% 6% 4% 4% 3% 5% 6% -2% 7% Adjusted EBITDA4 MEUR 208 254 242 259 342 382 390 399 456 473 488 Margin4 10.2%
Slide 34: 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 Foodservice E-A-O 4% 3% 4% 4% -4% -28% -1% -7% -2% 40% 2% 12% 18% 18% North America 5% 13% 14% 6% 9% -5% 4% -2% -2% 9% 5% 11% 24% 14% Flexible Packaging 5% 1%
Slide 35: Solid track record of growth investments
Solid track record of growth investments Paper and Huhtamaki plastic CAPEX M&A spend blueloop disposable packaging, 1,571 1,043 China & HK Pressed 2014–2021 Short-run Ireland Fresh ready- (EUR million) plates, US flexible meal trays, packaging, UK Eastern Europe Folding Labels, India Corrugated Bags
Slide 36: 23 acquisitions completed since 2011
23 acquisitions completed since 2011 Date (completed) Acquired company Country Acquiring segment Jan 2022 Huhtamaki Smith Anderson sp. z o.o (joint venture acquired fully) Poland Foodservice E-A-O Sep 2021 Elif Holding A.Ş. Turkey Flexible Packaging Jun 2021 Jiangsu Hihio-Art Packaging Co. Ltd China
Slide 37: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 38: 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. Ilmarinen Mutual Pension Insurance Company 3 668 000 3.40 % 0 0.00 % 3. Huhtamäki Oyj 3 395 709 3.15 % 0 0
Slide 39: 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) 55 000 54% 5% 1% 4% 50 000 52% 7% 45 000 50% 8% 40 000 48% 8% 56% 35 000
Slide 40: 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 41: 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 42: Continued strong performance
Continued strong performance Interim Report January-September 2022
Slide 43: Continued strong performance
Continued strong performance • Volatility continues – Significant inflation persists in most input costs, successful mitigating activities continue • Financial performance – Strong net sales growth continued, adj. EBIT margin improved, and cash flow turned positive in Q3 2022 • Divestment of operati
Slide 44: Enhancing innovation and technological capabilities
Enhancing innovation and technological capabilities Investing for the future • Developing our proprietary high-precision technology for smooth molded fiber applications • Accelerating our mono-material solutions for recyclable flexible packaging • Enhancing our pipeline of sustainable products Recen
Slide 45: Business performance
Business performance Huhtamaki
Slide 46: Q3 2022: Continued strong organic growth
Q3 2022: Continued strong organic growth Development of net sales in Q3 2022 Net sales increased 31% in Q3 2022 (EUR million) • Comparable net sales growth 17% (23 % in emerging markets), driven by -9 83 pricing 65 143 • 7% from Elif acquisition 1,178 896 • -1% from divestment • 9% positive currency
Slide 47: Q1-Q3 2022: Solid growth throughout the period
Q1-Q3 2022: Solid growth throughout the period Development of net sales during Q1-Q3 2022 Net sales increased 31% during Q1-Q3 (EUR million) 2022 186 • Comparable net sales growth 18% -9 187 (19 % in emerging markets) - pricing 436 and volume growth 3,375 • 7% from Elif acquisition 2,575 • 0% from d
Slide 48: Strong net sales growth across all segments
Strong net sales growth across all segments Q1- Q1- Long-term Comparable growth Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q3 21 Q3 22 ambitions Foodservice E-A-O 2% 12% 18% 18% 22% 11% 20% 5-7% North America 5% 11% 24% 14% 10% 4% 16% 3-5% Flexible Packaging 7% 12% 18% 19% 20% 4% 19% 6-8% Fiber Packaging 2% 2% 8
Slide 49: Improved adjusted EBIT despite inflation
Improved adjusted EBIT despite inflation MEUR Q3 22 Q3 21 Change Q1-Q3 22 Q1-Q3 21 Change Net sales 1,178.4 896.4 31% 3,375.4 2,575.3 31% 1 Adjusted EBIT 101.5 76.3 33% 301.7 233.1 29% Margin 8.6% 8.5% 8.9% 9.1% Adjusted EPS, EUR2 0.59 0.50 16% 1.84 1.52 21% Capital expenditure 57.4 62.4 -8% 185.3 1
Slide 50: Business segment review
Business segment review Huhtamaki
Slide 51: Foodservice EAO: Strong net sales and profitability improvement
Foodservice EAO: Strong net sales and profitability improvement Key figures, MEUR Q3 22 Q3 21 Change Net sales and comparable growth (EUR million & %) Net sales 300.5 244.7 23% Comparable growth 22% 2% 289 300 255 245 254 236 2021 Adjusted EBIT1 30.6 20.7 48% 207 Margin 10.2% 8.4% 2022 -2 % 18 % 40
Slide 52: North America: Good performance despite factors limiting growth
North America: Good performance despite factors limiting growth Key figures, MEUR Q3 22 Q3 21 Change Net sales and comparable growth (EUR million & %) Net sales 372.4 294.3 27% 375 372 Comparable growth 10% 5% 337 295 294 315 Adjusted EBIT 1 41.8 35.8 17% 256 2021 Margin 11.2% 12.2% 2022 -2 % 24 % 9
Slide 53: Flexible Packaging: Strong growth driven by Elif acquisition, pricing and volume
Flexible Packaging: Strong growth driven by the Elif acquisition, pricing and volume Key figures, MEUR Q3 22 Q3 21 Change Net sales and comparable growth (EUR million & %) Net sales 420.6 283.9 48% 421 Comparable growth 20% 7% 378 391 345 Adjusted EBIT 1 26.3 17.0 55% 267 271 284 2021 Margin 6.2% 6.
Slide 54: Fiber Packaging: Solid performance continued
Fiber Packaging: Solid performance continued Key figures, MEUR Q3 22 Q3 21 Change Net sales and comparable growth (EUR million & %) Net sales 89.3 83.3 7% Comparable growth 19% 2% 95 91 89 91 1 79 80 83 2021 Adjusted EBIT 8.5 7.9 8% Margin 9.6% 9.5% 2022 4% 8% 1% 16 % 2% 19 % 2% Comp. Capital expend
Slide 55: Financial review
Financial review Huhtamaki
Slide 56: Higher sales are driving improved earnings
Higher sales are driving improved earnings MEUR Q3 22 Q3 21 Change Q1-Q3 22 Q1-Q3 21 Change • Sales growth supported by all Net sales 1,178.4 896.4 31% 3,375 2,575 31% segments Adjusted EBITDA 1 153.2 119.3 28% 453.6 358.1 27% • Earnings improved following Margin 1 13.0% 13.3% 13.4% 13.9% increased
Slide 57: Continued positive currency impact
Continued positive currency impact Average Average Change in Change in Closing rates rate rate average closing Q1-Q3 21 Q1-Q3 22 rate Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 rate (YoY) USD 1.20 1.07 11 % 1.17 1.13 1.11 1.05 0.97 17% Foreign currency INR 88.09 82.36 7% 86.47 84.26 84.38 83.04 79.31 8% translat
Slide 58: Net debt to adjusted EBITDA decreased following divestment of Russia
Net debt to adjusted EBITDA decreased following the divestment of operations in Russia Net debt, net debt/adj. EBITDA and gearing • Net debt/Adj. EBITDA at 2.5 Covenant level 3.75 3.1 • At the end of Q3 2022: 3.0 3.0 3.0 1,626 • Cash and cash equivalents 1,572 2.5 EUR 324 million 1,520 1,483 Ambitio
Slide 59: Loan maturities
Loan maturities Debt maturity structure September 30, 2022 • Average maturity 3.5 years at the (EUR million) end of Q3 2022 (2.6 at the end of Q3 2021) 700 600 500 400 300 200 100 0 2022 2023 2024 2025 2026 Later Lease liabilities Contingent considerations Available unused committed facilities Drawn
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 Cash flow impacted by: (EUR million) • Strong growth in EBITDA • Significant change in working 484 capital mainly following 337 increase in inventory • Higher capex 6 1 9 28 Free cash flow turned positive -25 -1
Slide 61: Stable financial position
Stable financial position MEUR Sep 2022 Sep 2021 • Assets mainly impacted by: • Divestment of Russia Total assets 5,338 4,419 • Currency impact Operating working capital 970 689 • Capex and operating working capital Net debt 1,483 1,404 • Operating working capital increased due to higher inventories
Slide 62: Progress towards long-term financial ambitions
Progress towards long-term financial ambitions Long-term 2015 2016 2017 2018 2019 2020 2021 Q1-Q3 22 ambition Organic growth 4% 4% 3% 5% 6% -2% 7% 18% 5+% Adjusted EBIT margin 8.7% 9.4% 9.0% 8.1% 8.6% 9.1% 8.8% 8.9% 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
Slide 63: Outlook 2022
Outlook 2022 (unchanged) The Group’s trading conditions are expected to improve compared to 2021, however with continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable growth
Slide 64: 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 65: Financial calendar 2023
Financial calendar 2023 February 9, 2023 April 27, 2023 July 20, 2023 October 20, 2023 Results 2022 Q1 2023 Interim Report, Half-yearly Report 2023 Q3 2023 Interim Report Annual General Meeting Week commencing February 27, 2023 Annual Report 2022 65 October 21, 2022 Interim Report January-September
Slide 66: 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 67: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors 67 October 21, 2022 Interim Report January-September 2022