Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (June 2017)
59 slides from Huhtamaki Oyj's roadshow presentation, June 2017
Slide 1: Roadshow presentation May-June 2017
Roadshow presentation May-June 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 €2.9bn 9.3% The preferred global Comparable growth ROI food packaging brand 3% 14.6% Employees Manufacturing sites Our purpose 17,300 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 May-June 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: Q1 2017: Net sales grew and earnings improved
Q1 2017: Net sales grew and earnings improved
Slide 26: All-in-all 10% topline growth in Q1
All-in-all 10% topline growth in Q1 17 Net sales growth split in Q1 17 – 3% comparable growth 20 739 – 2% in emerging markets 27 – 4% from acquisitions 20 – Positive currency translation 672 impact of M€20 – Demonetization action in India had a negative impact in growth. Without Indian impact: – Gro
Slide 27: All segments grew organically
All segments grew organically Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 2016 Long-term ambitions Foodservice EAO 3% 3% 5% 7% 7% 5% 5-7% North America 2% 5% 2% 8% 10% 6% 2-5% Flexible Packaging 3% -3% -3% 2% 1% -1% 6-8% Fiber Packaging 4% 6% 6% 5% 4% 5% 5-7% Group 3% 3% 2% 6% 6% 4% 5+% – Flexible Packaging segme
Slide 28: Net sales grew and earnings improved
Net sales grew and earnings improved M€ Q1 17 Q1 16 Change FY 2016 Q1 17 Highlights Net sales 739.4 672.3 10% 2,865.0 – Earnings growth driven by EBITDA1 94.0 84.6 11% 381.8 Foodservice EAO and Margin 12.7% 12.6% 13.3% North America segments EBIT1 62.8 57.8 9% 267.9 – ROI and ROE solid at PY Margin
Slide 29: Foreign currency translation turned positive
Foreign currency translation turned positive Average Closing rates Average Foreign currency rate Q1 16 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 rate Q1 17 translation impact USD 1.10 1.14 1.11 1.12 1.05 1.07 1.06 INR 74.43 75.43 74.96 75.03 71.09 69.69 71.35 Q1 17: GBP 0.77 0.79 0.83 0.86 0.85 0.86 0.86 M€ 20
Slide 30: Prices for plastic resins increased
Prices for plastic resins increased 140 – Prices for plastic resins increased markedly across 120 markets – Prices for paperboard 100 were relatively stable – Prices for recycled fiber 80 increased driven by higher demand in Asia 60 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 PS PP PE +32% +16% +12% (
Slide 31: Solid balance sheet allows continuing growth investments
Solid balance sheet allows continuing growth investments Covenant level 3.5 AMBITION – Net debt/EBITDA stable at 1.7 2.0 2-3 – At the end of Q1 17 1.8 1.8 – Cash and cash equivalents 1.7 1.6 M€100 – Unused committed credit facilities available M€308 – Schuldschein issued in April extending maturity
Slide 32: Free cash flow was negative due to high capex and working capital
Free cash flow was negative due to high capex and working capital 94 85 – Capex significantly above PY level due to high growth 26 investments especially in the M€ 0 1 0 1 U.S., Poland, India and China -4 -2 -6 – Working capital impacted by -9 -9 -26 -24 seasonal inventory buildup -46 -47 and sales
Slide 33: Stable financial position
Stable financial position M€ Mar 2017 Dec 2016 Mar 2016 Total assets 2,946 2,875 2,596 – Dividend of approx. M€76 to be paid Operating working capital 533 515 474 early May Net debt 681 675 549 – Dividend proposal €0.73 per share Equity & non-controlling 1,222 1,182 1,050 → Payout ratio 40% interest
Slide 34: Progress towards our long-term ambitions
Progress towards our long-term ambitions Long-term FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 ambition Organic growth 3% 3% 6% 4% 4% 3% 5+% EBITDA margin 10.9% 11.2% 11.6% 12.5% 13.3% 12.7% 14+% EBIT margin 7.0% 7.4% 7.8% 8.7% 9.4% 8.5% 10+% ROI 12.6% 12.1% 12.6% 14.7% 14.7% 14.6% 15+% ROE 15.8
Slide 35: 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 36: Q1 2017 by business segment
Q1 2017 by business segm« Huhtamaki
Slide 37: Foodservice Europe-Asia-Oceania: Solid net sales and earnings growth
Foodservice Europe-Asia-Oceania: Solid net sales and earnings growth Net sales M€741 M€193 EBIT margin 8.5%1 8.0% 8 2016 – Organic growth across Europe 6 – Integration of manufacturing operations 4 in China proceeding – Net sales declined due to planned exit of 2 159 194 195 193 193 non-core product
Slide 38: North America: Solid progress
North America: Solid progress Net sales M€1,005 M€247 EBIT margin 10.7% 9.1% 12 2016 – Sales growth from retail; Easter promotions 10 boosted private label tableware and Chinet® 8 6 – Sales of frozen dessert packaging declined 4 – Profitability improved driven by solid 2 235 266 244 260 247 manufact
Slide 39: Flexible Packaging: Return to growth path
Flexible Packaging: Return to growth path Net sales M€869 M€232 EBIT margin 8.5% 8.1% – Net sales grew driven by good development 2016 6 in Southeast Asia, Europe and Middle East 4 – Net sales declined in India 2 – Soft demand following the government’s 0 demonetization action in Q4 16; started to -
Slide 40: Fiber Packaging: Solid net sales growth, earnings declined
Fiber Packaging: Solid net sales growth, earnings declined Net sales M€268 M€72 EBIT margin 12.9% 10.1% 8 2016 – Good volume growth particularly in the UK 6 and Eastern Europe through added capacity 4 – South America net sales and earnings 2 declined in weak markets 66 66 67 69 72 0 Q1 16 Q2 16 Q3 1
Slide 41: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 42: Appendices
Appendices
Slide 43: 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 44: Net sales grew and earnings improved in Q1 2017
Net sales grew and earnings improved in Q1 2017 M€ Q1 17 Q1 16 Change FY 2016 FY 2015 Change Q1 17 Highlights Net sales 739.4 672.3 10% 2,865.0 2,726.4 5% – Solid improvement EBITDA1 94.0 84.6 11% 381.8 342.0 12% throughout the P/L Margin 12.7% 12.6% 13.3% 12.5% – Higher depreciation and EBIT1 62.8
Slide 45: Quarterly comparable growth by business segment since 2015
Quarterly comparable growth by business segment since 2015 Long-term 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 3% 3% 5% 7% 7% 8% 6% 2% 3% 5% 4% 4% 5-7% North America 2% 5% 2% 8% 10% 5% 7% -2% 7% 6% 4% 6% 2-5% Flexible Packaging 3% -3% -3% 2% 1
Slide 46: 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 47: Growth case: Expansion into Eastern Europe
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 48: Growth case: Delta Print and Packaging acquisition
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 49: Growth case: Foodservice packaging in India
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 50: Growth case: US west coast expansion
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 51: Growth case: South China expansion
Growth case Huhtamaki to expand and modernize operations in South China – Huhtamaki will invest M€15 in the expansion and modernization of its manufacturing operations in Guangzhou, South China – China is an important market for our quick service and specialty coffee customers – Growing population –
Slide 52: Growth case: Flexible Packaging emerging markets
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 53: Growth case: Foodservice greenfield in Ukraine
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 54: Debt maturity structure unchanged
Debt maturity structure unchanged Debt maturity structure March 31, 2017 600 500 – Schuldschein issued in April 2017 extending maturity 400 – Average maturity at 3.7 years as 300 of end of Q1 17 (3.9 at the end 200 of 2016) 100 M€0 2017 2018 2019 2020 2021 Later Finance lease liabilities Commercial
Slide 55: Ownership
Ownership Shareholder distribution by sector March 31, 2017 – 29,301 registered shareholders at the end of March 2017 6% – 53% of shares in domestic ownership 9% – 16% of shares controlled by non-profit 6% 47% organizations – Finnish Cultural Foundation 16% a major owner since 1943, 16% current owne
Slide 56: 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 57: Financial calendar 2017
Financial calendar 2017 July 21 Half-yearly Report 2017 October 26 Q3 17 Interim Report 57 Roadshow presentation May-June 2017
Slide 58: 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 59: 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