Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (September 2019)
64 slides from Huhtamaki Oyj's roadshow presentation, September 2019
Slide 1: Roadshow presentation July-September 2019
Roadshow presentation July-September 2019
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 Adjusted Our vision € 3.1bn EBIT margin* 8.1% The first choice in food packaging Comparable growth Adjusted ROI* 5% 11.6% Employees Manufacturing sites Our purpose 18,100 79 Helping great products reach more people, Operations in
Slide 3: Our business is consumer food and drink packaging
Our business is consumer food and drink packaging Food-on-the-go Pre-packed food Convenience Short shelf life Food safety Long shelf life Food waste prevention Our packaging protects food and drink products, delivering them to consumers safely and in good condition, helping to reduce waste. 3 Roadsh
Slide 4: Our operating model
Our operating model Inputs Our activities Outputs Raw materials Conversion to food packaging Safe, convenient and fit-for-purpose • Paperboard • Cup forming consumer packaging • Plastic resins • Folded carton • Recycled fiber • Extrusion and lamination 1/3 1/3 66% • Molded fiber • Plastic thermoform
Slide 5: We use different materials for different purposes, aiming for optimal packaging
We use different materials for different purposes, aiming for optimal packaging 2/3 of raw material we use is renewable ‒ Virgin fiber is used due to food Recycled fibers are derived contact regulation from either post-consumer ‒ 97% of virgin fiber used is certified or post-industrial recycled mate
Slide 6: 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 2018 9% 28% 31% 32% Foodservice Europe-Asia- Flexible Packaging Fiber Packaging Oceania and North America – 40 plants on – 28 plants on – 11
Slide 7: 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 8: 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 9: Flexible Packaging: Strengthening our position
Flexible Packaging: Strengthening our position Flexible packaging is used for a wide range of pre-packed consumer products including food, beverages, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America. Ou
Slide 10: 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 MEUR Lo
Slide 11: Becoming the first choice in food packaging – next steps
Becoming the first choice in food packaging – next steps
Slide 12: 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 13: … 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 14: Growth and operational efficiency drive profitability improvement
Growth and operational efficiency drive profitability improvement – Summary of our 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 growth i
Slide 15: 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’ capabilities loremipsum lives easier - Game-changing - Follow global - Glo
Slide 16: Achieve our vision: The first choice in food packaging
Achieve our vision: The first choice in food packaging Grow AMBITION Build more Sustainability 10+% - Organic and - Continue organic - Ensure food safety innovative growth 5+% investments - Reduce food waste - Acquisitive growth 5+% - Continue disciplined - Fit-for-purpose material acquisitions choi
Slide 17: Q2 2019: Strong net sales growth and solid profitability
Q2 2019: Strong net sales growth and solid profitability
Slide 18: Strong total net sales growth in Q2
Strong total net sales growth in Q2 + +10% Net sales growth split in Q2 19 25 867 – 6% comparable net sales growth with significant growth in North 13 America segment 43 – 7% in emerging markets – 2% from acquisitions 786 – Positive currency impact M€ Q2 18 Organic Acquisitions Translation impact Q2
Slide 19: H1 comparable growth in line with our long-term ambition
H1 comparable growth in line with our long-term ambition + +10% Net sales growth split in H1 19 44 – 5% comparable net sales growth 1,669 38 – 7% in emerging markets – 3% from acquisitions 76 – Positive currency impact 1,511 M€ H1 18 Organic Acquisitions Translation impact H1 19 19 Roadshow presenta
Slide 20: All segments contributing to comparable net sales growth
All segments contributing to comparable net sales growth Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 H1 19 FY 2018 Long-term ambitions Foodservice E-A-O 3% 4% 3% 5% 5% 5% 4% 4% 5-7% North America 13% 5% 11% 2% 2% 5% 9% 5% 2-5% Flexible Packaging 1% 5% 4% 6% 11% 6% 3% 7% 6-8% Fiber Packaging 7% 4% 5% 4% 3% 5
Slide 21: Strong net sales growth and good profitability
Strong net sales growth and good profitability MEUR Q2 19 Q2 18 Change H1 2019 H1 2018 Change Q2 19 Highlights Net sales 867.3 785.9 10% 1,669.4 1,511.1 10% – 10% reported net sales growth, all Adjusted EBITDA1 118.6 107.0 11% 225.5 202.6 11% segments contributing Margin1 13.7% 13.6% 13.5% 13.4% – E
Slide 22: Q2 2019 Business segment review
Q2 2019 Business segment review
Slide 23: Foodservice Europe-Asia-Oceania: Strong net sales growth including acquisitive growth
Foodservice Europe-Asia-Oceania: Strong net sales growth including acquisitive growth 2018 Net sales MEUR 882 Adjusted EBIT margin1 8.7% YTD MEUR 469 9.0% 6 – Strong net sales growth 4 – Contribution from acquisitions – Good growth in QSR continued 2 – Net sales growth and price increases contribute
Slide 24: Responding to market need - expansion into paper straws
Responding to market need - expansion into paper straws – Premium recyclable paper straws made of 100% PEFC certified paper – Purpose-built machinery for Huhtamaki – New, dedicated manufacturing facility opened in Antrim, Northern Ireland in May 2019 – Deliveries ongoing – Ramp-up to be finalized du
Slide 25: North America: Strong growth from investments and Easter timing
North America: Strong growth from investments and Easter timing 2018 Net sales MEUR 1,003 YTD MEUR 562 Adjusted EBIT margin1 7.3% 9.4% 14 – Good volume development from new business 12 10 gains and timing of Easter deliveries 8 – Net sales further boosted by pricing actions 6 – Significant earnings
Slide 26: Flexible Packaging: Significant earnings improvement
Flexible Packaging: Significant earnings improvement 2018 Net sales MEUR 952 YTD MEUR 501 Adjusted EBIT margin1 7.1% 8.6% 12 10 – Moderate comparable growth due to 8 negative development in Europe 6 – Good growth in Middle East and Africa, 4 Southeast Asia also developing well 2 234 240 242 236 252
Slide 27: Huhtamaki blueloop – Next generation flexible packaging driving for circularity
Huhtamaki blueloop – Next generation flexible packaging driving for circularity – New range of recyclable flexible packaging – Innovative mono-material structures enable recycling without compromising barrier properties – blueloop solutions use PP, PE or paper due to their wide recyclability and app
Slide 28: Fiber Packaging: Solid comparable growth - earnings weighed down by costs of Fresh project
Fiber Packaging: Solid comparable growth - earnings weighed down by costs of Fresh project 2018 Net sales MEUR 283 YTD MEUR 149 9.7% Adjusted EBIT margin1 11.0% 8 – Strong net sales growth led by Eastern Europe 6 and Oceania – New capacity supports growth in 4 Australia 2 – Net sales grew in Russia
Slide 29: Fresh – the natural alternative to black plastic ready meal trays
Fresh – the natural alternative to black plastic ready meal trays – Recyclable and home compostable* fiber tray for chilled ready meals – Microwave and oven safe – Made of fibers from FSC certified (Nordic) forests – Patented technology – Ongoing investment in Lurgan, Northern Ireland to scale up ma
Slide 30: Q2 2019 Financial review
Q2 2019 Financial review Huhtamaki
Slide 31: Solid improvement through to EPS
Solid improvement through to EPS Q2 19 Q2 18 Change H1 2019 H1 2018 Change MEUR Q2 and H1 Highlights Net sales 867.3 785.9 10% 1,669.4 1,511.1 10% – Strong growth and positive Adjusted EBITDA1 118.6 107.0 11% 225.5 202.6 11% currency translation Margin1 13.7% 13.6% 13.5% 13.4% – Topline growth, pric
Slide 32: Positive currency impact, primarily from USD
Positive currency impact, primarily from USD Closing rates Average rate H1 2018 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Average rate H1 2019 Foreign currency USD 1.21 1.16 1.17 1.15 1.12 1.14 1.13 translation impact INR 79.49 79.68 84.98 80.23 77.78 78.57 79.13 GBP 0.88 0.89 0.89 0.90 0.86 0.89 0.87 Q2 19: CN
Slide 33: Raw material costs relatively stable
Raw material costs relatively stable 140 – Resin prices relatively stable, some variation across 120 polymers and markets – Paperboard prices relatively stable, but on a slightly higher 100 level than previous year – Prices of recycled fiber stable 80 or trending down depending on markets 60 Q1/11 Q
Slide 34: Higher working capital visible in net debt
Higher working capital visible in net debt Covenant level 3.5 2.4 2.4 – Net debt/EBITDA at 2.4 2.3 AMBITION 1000 2-3 – At the end of Q2 19 2.2 – Cash and cash equivalents 2.2 2.2 MEUR 123 800 1.8 – Unused committed credit facilities available MEUR 303 600 – Dividends of MEUR 88 were paid in May 400
Slide 35: Loan maturities
Loan maturities Debt maturity structure June 30, 2019 600 – Average maturity 3.2 years at 500 the end of Q2 2019 400 (4.1 at the end of Q2 2018) – Unused committed credit 300 facilities of MEUR 303 200 maturing in 2022 100 MEUR 0 2019 2020 2021 2022 2023 Later Lease liabilities Commercial paper prog
Slide 36: Free cash flow
Free cash flow – Improved EBITDA following 225 214 growth – Strong operating cash flow improvement offset by one- time gain booked in Q2 18 MEUR 34 36 – Working capital increase 2 2 mainly due to high -10 -8 -19 -20 -6 -6 receivables following good -80 -65 -78 -81 sales – Slightly lower capex due to
Slide 37: Stable financial position
Stable financial position Jun Dec Jun MEUR 2019 2018 2018 Total assets 3,413 3,240 3,265 – Higher assets and net debt increase Operating working capital 662 598 591 following growth Net debt 1,019 928 960 Equity & non-controlling 1,305 1,267 1,211 – Gearing slightly improved interest Gearing 0.78 0.
Slide 38: Progress towards long-term ambitions
Progress towards long-term ambitions Long- FY FY FY FY FY term 2014 2015 2016 2017 20181 H1 2019 ambition Organic growth 6% 4% 4% 3% 5+% 5% 5+% – Group comparable Adjusted EBITDA growth at the 5% 11.6% 12.5% 13.3% 13.0% 12.8% 13.5% 14+% margin ambition level Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0%
Slide 39: On sustainability of food packaging
On sustainability of food packaging
Slide 40: Major themes affecting the future of food packaging
Major themes affecting the future of food packaging 8.5bn people by 2030 38 megacities Climate change Littering & waste Resource scarcity 40 Roadshow presentation July-September 2019
Slide 41: Packaging enables our way of life
Packaging enables our way of life Thanks to packaging, Different materials Packaging reduces people can safely are needed for the overall consume food that is different purposes – greenhouse gas produced elsewhere, our aim is optimal emissions by reducing even on-the-go packaging, designed food wast
Slide 42: 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 food systems wasted of lost food 42 Roadshow presentation July-September 2019 Source: CGIAR Research Progra
Slide 43: 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 43 Roadshow presentation July-September 2019
Slide 44: 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 45: 100% renewable FutureSmart product line further reduces CO2 emissions
100% renewable FutureSmart product line further reduces CO2 emissions 45 Roadshow presentation July-September 2019
Slide 46: Changes in consumer behavior and investments in waste management are required
Changes in consumer behavior and investments in waste management are required to solve littering and waste challenges Waste collection & Consumer Less recycling behavior marine plastics 46 Roadshow presentation July-September 2019
Slide 47: 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 47 Roadshow presentation July-September 2019 *Source: Smithers Pira: Future Lifecycles of Packaging Recycling to 2023
Slide 48: Huhtamaki Fresh ready meal tray – a recyclable alternative to black plastic
Huhtamaki Fresh ready meal tray – a recyclable alternative to black plastic, made of renewable raw materials Micro-wave Cooler to and oven safe touch than plastic Natural look Renewable raw materials 48 Roadshow presentation July-September 2019
Slide 49: Huhtamaki paper straws – an eco-friendly solution for enjoying cold drinks
Huhtamaki paper straws – an eco-friendly solution for enjoying cold drinks High-quality alternative to plastic straws Recyclable Made from 100% PEFC certified paper 49 Roadshow presentation July-September 2019
Slide 50: Huhtamaki blueloop – flexible packaging designed for recycling
Huhtamaki blueloop – flexible packaging designed for recycling – Mono-material structures – Minimum 90% standard materials like PE, PP, or PET – Available already for several end applications ranging from candy and chocolates to dry foods and personal care products 50 Roadshow presentation July-Sept
Slide 51: Looking forward
Looking forward Huhtamaki
Slide 52: Outlook 2019
Outlook 2019 The Group’s trading conditions are expected to remain relatively stable during 2019. 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 53: Financial calendar 2019
Financial calendar 2019 October 23 Q3 2019 Interim Report 53 Roadshow presentation July-September 2019
Slide 54: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 55: Appendices
Appendices
Slide 56: Group financials 2009-2018
Group financials 2009-2018 2018(2 2017 2016 2015 2014(1 2013(1 2012(2 2011 2010 2009 Net sales MEUR 3,104 2,989 2,865 2,726 2,236 2,161 2,321 2,043 1,952 1,832 Comparable net sales growth(3 % 5 3 4 4 6 3 3 5 3 -5 Adjusted EBITDA(4 MEUR 399 390 382 342 259 242 254 208 214 193 Margin(4 % 12.8 13.0 13.
Slide 57: Quarterly comparable net sales growth by business segment
Quarterly comparable net sales growth by business segment Long- term Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 FY 18 FY 17 FY 16 ambition Foodservice E-A-O 3% 4% 3% 5% 5% 5% 6% 4% 2% 3% 4% 4% 5% 5-7% North America 13% 5% 11% 2% 2% 5% 2% 2% 1% 2% 5% 2% 6% 2-5% Flexible Packaging 1%
Slide 58: Solid track record of growth investments
Solid track record of growth investments Short-run flexible Ireland Paper and plastic packaging, disposable packaging, Eastern Europe China & HK Distribution, 2013-2018 Australia Folding carton, Capex M€ 1,006 Pressed Bags & UAE, Malaysia Europe USA, Egypt M&A spend plates, US wraps, USA, Egypt, M€
Slide 59: 17 acquisitions completed since 2011
17 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 60: Largest shareholders on August 31, 2019
Largest shareholders on August 31, 2019 (based on data from Euroclear Finland Ltd.) Shareholder Number of shares % of total shares 1. Finnish Cultural Foundation 12,010,422 11.15% 2. Varma Mutual Pension Insurance Company 3,483,809 3.23% 3. Huhtamäki Oyj 3,410,709 3.17% 4. Ilmarinen Mutual Pension I
Slide 61: Ownership
Ownership Shareholder distribution by sector August 31, 2019 – 31,356 registered shareholders at the end of August 2019 6% – 45% of shares in domestic ownership 8% – 17% of shares controlled by non-profit 9% 45% organizations – Finnish Cultural Foundation a 15% major owner since 1943, current owners
Slide 62: Definitions for performance measures
Definitions for performance measures Performance measures according to IFRS Earnings per share (EPS) attributable to equity holders of the parent company = Profit for the period – non-controlling interest Average number of shares outstanding Diluted earnings per share (diluted EPS) attributable to e
Slide 63: 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 64: For further information, please contact us:
For further information, please contact us: www.huhtamaki.com » Investors ir@huhtamaki.com