Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (September 2018)
53 slides from Huhtamaki Oyj's roadshow presentation, September 2018
Slide 1: Roadshow presentation July-September 2018
Roadshow presentation July-September 2018
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 €3.0bn 9.0% The preferred global Comparable growth ROI food packaging brand 3% 13.6% Employees Manufacturing sites Our purpose 18,200 78 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 markets mater
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 2017 9% 27% 31% 33% Foodservice Europe-Asia- Flexible Packaging Fiber Packagingj Oceania and North America kdfgjkl dhgdfhg – 40 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 MEUR Lo
Slide 9: Q2 2018: Good comparable net sales growth, negative currency impact
Q2 2018: Good comparable net sales growth, negative currency impact
Slide 10: Good comparable growth, further boosted by acquisitions
Good comparable growth, further boosted by acquisitions Net sales growth split in Q2 18 17 – 6% comparable growth with all -48 business segments contributing 45 – 10% in emerging markets; India, 786 Eastern Europe and MEA leading 772 – 2% from acquisitions – Currency headwind of MEUR 48 (app. -6%) M
Slide 11: Organic growth 6% in H1
Organic growth 6% in H1 22 Net sales growth split in H1 18 85 -107 – 6% comparable growth 1 511 1,511 – 9% in emerging markets – 1% from acquisitions – Negative currency translation impact of M€ 107 (app. 7%) M€ H1 17 Organic Acquisitions Translation impact H1 18 11 Roadshow presentation July-Septem
Slide 12: Accelerating group growth
Accelerating group growth Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 H1 18 FY 2017 Long-term ambitions Foodservice E-A-O 5% 5% 6% 4% 2% 3% 5% 4% 5-7% North America 2% 5% 2% 2% 1% 2% 3% 2% 2-5% Flexible Packaging 11% 6% 9% 7% -2% 3% 9% 4% 6-8% Fiber Packaging 3% 5% 4% 5% 8% 4% 4% 5% 5-7% Group 6% 5% 5% 4% 1
Slide 13: Costs of growth visible in results
Costs of growth visible in results MEUR Q2 18 Q2 17 Change H1 2018 H1 2017 Change Q2 18 Highlights Net sales 785.9 771.9 2% 1,511.1 1,511.3 -0% – Earnings improvement in Adjusted EBITDA1 100.7 106.4 -5% 190.8 200.4 -5% Foodservice E-A-O and Flexible Margin1 12.8% 13.8% 12.6% 13.3% Packaging Adjusted
Slide 14: Significant negative currency impact
Significant negative currency impact Closing rates Average rate H1 2017 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Average rate H1 2018 Foreign currency USD 1.08 1.14 1.18 1.19 1.24 1.16 1.21 translation impact INR 71.11 73.71 77.11 76.47 80.80 79.68 79.49 GBP 0.86 0.88 0.88 0.89 0.88 0.89 0.88 Q2 18: CNY 7.44 7
Slide 15: Inflationary pressures on raw materials
Inflationary pressures on raw materials 140 – Overall cost inflation 120 – Prices for plastic resins increased across markets – Prices for paperboard were 100 higher than previous year – Prices of recycled fiber 80 varied; low in Europe, high in North America 60 PS PP PE +10% +22% +3% (end of Q2 18
Slide 16: Debt position reflects dividends and acquisitions in Q2
Debt position reflects dividends and acquisitions in Q2 Covenant level 3.5 AMBITION – Net debt/EBITDA at 2.2 2-3 – At the end of Q2 18 – Cash and cash equivalents MEUR 117 1.7 1.9 1.9 1.8 1.8 2.2 – Unused committed credit facilities available MEUR 305 – Dividends of MEUR 84 were paid in May 0.56 0.6
Slide 17: Loan maturities extended in the course of 2017
Loan maturities extended in the course of 2017 Debt maturity structure June 30, 2018 600 – Average maturity 4.1 years at 500 the end of Q2 2018 (4.4 at 400 the end of Q2 2017) 300 200 100 MEUR0 2018 2019 2020 2021 2022 Later Finance lease liabilities Commercial paper program Uncommitted loans from f
Slide 18: Free cash flow improved
Free cash flow improved 202 200 – Improvement across main categories MEUR – Acceleration in Q2 with 27 2 1 1 MEUR 45 free cash flow -7 -5 -12 -15 -20 -25 -64 -79 -81 -95 Reported Change in Net financial Taxes Capital Proceeds Other Free cash EBITDA working items expenditure from selling flow capital
Slide 19: Solid financial position
Solid financial position MEUR June 2018 Dec 2017 June 2017 Total assets 3,147 2,931 2,914 – Higher assets reflect investments Operating working capital 591 512 535 and acquisitions Net debt 835 698 756 Equity & non-controlling interest 1,231 1,208 1,142 – Major investments in ramp-up Gearing 0.68 0.
Slide 20: Progress towards long-term ambitions
Progress towards long-term ambitions Long-term FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 H1 2018 ambition Organic growth 3% 6% 4% 4% 3% 6% 5+% – Group organic EBITDA margin 11.2% 11.6% 12.5% 13.3% 13.0% 12.6% 14+% growth accelerated EBIT margin 7.4% 7.8% 8.7% 9.4% 9.0% 8.6% 10+% to meet the ambition R
Slide 21: Outlook 2018
Outlook 2018 The Group’s trading conditions are expected to remain relatively stable during 2018. 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 22: Q2 2018 by business segment
018 by business segment Huhtamaki
Slide 23: Foodservice Europe-Asia-Oceania: Earnings improvement continued
Foodservice Europe-Asia-Oceania: Earnings improvement continued 2017 YTD Net sales MEUR 808 MEUR 420 EBIT margin1 8.7% 9.4% 8 – Healthy volume development of core 6 paperboard product range and ice cream packaging, especially in continental Europe 4 – Good progress with global key accounts 2 – Solid
Slide 24: Acquisition of Tailored Packaging – national distribution network in Australia
Acquisition of Tailored Packaging – access to a national network of distribution centers in Australia – Foodservice packaging distribution and wholesale group based in Sydney – Ability to efficiently service main states across the country and strong sourcing capability – Debt free purchase price for
Slide 25: Acquisition of CupPrint in Ireland
Acquisition of CupPrint in Ireland - creating excellence in personalization and short runs – Custom printed cups with quick delivery time – Online service model allows efficient design and delivery of small runs (starting at just 1,000 cups) – Short run capability enhances Huhtamaki’s ability to sup
Slide 26: Huhtamaki in Ireland
Huhtamaki in Ireland – Three manufacturing units and three technologies – Paper cups, folded cartons and fiber packaging – Carton production waste recycled in Fiber Packaging – In total approximately 620 employees Foodservice manufacturing Fiber packaging manufacturing 26 Roadshow presentation July-
Slide 27: European Commission proposal for a directive on Single Use Plastics
European Commission proposal for a directive on Single Use Plastics – Directive aims to curb top sources of marine Items proposed to be banned represent app. pollution in Europe: single-use plastic items 2% of Foodservice E-A-O turnover in Europe found in EU waters and beaches – Applicable for a par
Slide 28: North America: Start-up of new investments continued
North America: Start-up of new investments continued 2017 Net sales MEUR 1,000 YTD MEUR 484 EBIT margin 10.4% 8.0% 6 – Foodservice and ice cream volumes grew, retail tableware flat due to lower promotional 4 activity 2 – Currency headwind (Net sales MEUR -23, 247 274 235 244 227 257 EBIT MEUR -2) 0
Slide 29: Flexible Packaging: Growth accelerating
Flexible Packaging: Growth accelerating 2017 Net sales MEUR 913 YTD MEUR 474 EBIT margin 7.6% 7.5% 12 – Solid volume growth across markets, 10 8 driven by India 6 4 – Currency headwind on net sales 2 – Net sales EUR -12 million 0 -2 232 224 230 227 234 240 – Earnings improved in India and in -4 Q1 1
Slide 30: Ajanta Packaging strengthens our labeling business in India
Ajanta Packaging strengthens our labeling business in India – Leader in Pressure Sensitive labels in India with two manufacturing units – Complementary to existing Huhtamaki business with similar customer base and additional printing technology – Debt free purchase price approx. EUR 13 million – Ann
Slide 31: Huhtamaki in India
Huhtamaki in India In total 18 manufacturing units and approx. 3,800 employees Delhi Ahmedabad Mumbai Flexible packaging manufacturing Labels manufacturing Hyberabad Cylinder manufacturing Foodservice manufacturing Sales unit Bangalore 31 Roadshow presentation July-September 2018
Slide 32: Fiber Packaging: Growth outside Europe
Fiber Packaging: Growth outside Europe 2017 Net sales MEUR 285 YTD MEUR 141 EBIT margin 9.9% 10.8% 10 – Strong growth continued in Russia, Brazil 8 and Africa 6 – Low volumes impacting North West Europe 4 – Earnings strong outside Europe 2 72 72 69 72 70 71 – Weak volumes in North West Europe 0 burd
Slide 33: Fresh – a fiber-based ready-meal tray for retail
Fresh – a fiber-based ready-meal tray for retail – Ovenable and microwaveable fiber based food tray – Aims to replace the commonly used black plastic ready-meal food trays – Trialed in the UK retail market in June ‘18 – Joint development between Huhtamaki, Södra, and Saladworks – Partly EU-funded pr
Slide 34: Building the best food packaging company in the world – next steps
Building the best food packaging company in the world – next steps
Slide 35: 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 36: 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 37: World changes create opportunities
World changes create opportunities Global challenges: – Marine plastics – Waste handling and processing – Food safety Changing consumer habits: – Lifestyle & convenience – Home delivery
Slide 38: 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* 2
Slide 39: 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 40: We have made major investments in growth in 2010-2017
We have made major investments in growth in 2010-2017 Short-run flexible Paper and plastic packaging, disposable packaging, Eastern Europe 2013-2017 China & HK Capex M€ 809 Folding carton, M&A spend Pressed UAE, Bags & Malaysia Europe M€2) 473 plates, US wraps, USA, Egypt, Corrugated Russia US, UK,
Slide 41: Our main footprint actions in 2017
Our main footprint actions in 2017 Decided to invest in MEUR 100 investment new unit in Finland in Arizona, US Acquired two new units in China Greenfield flexible One new, modern packaging unit in Egypt plant in South China Opened two new 41 Roadshow presentation July-September 2018 plants in India
Slide 42: 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 43: Growing into the preferred global food packaging brand
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 44: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 45: Appendices
Appendices
Slide 46: Group financials 2009-2017
Group financials 2009-2017 2017 2016 2015 2014 (1 2013 (1 2012 (2 2011 2010 2009 Net sales MEUR 2,988.7 2,865 2,726 2,236 2,161 2,321 2,043 1,952 1,832 Comparable growth (3 % 3 4 4 6 3 3 5 3 -5 Adjusted EBITDA (4 MEUR 389.7 382 342 259 242 254 208 214 193 Margin (4 % 13.0 13.3 12.5 11.6 11.2 10.9 10
Slide 47: Currency headwinds and costs of growth visible
Currency headwinds and costs of growth visible MEUR Q2 18 Q2 17 Change H1 2018 H1 2017 Change Q2 and H1 Highlights Net sales 785.9 771.9 2% 1,511.1 1,511.3 -0% – Good growth and significant Adjusted EBITDA1 100.7 106.4 -5% 190.8 200.4 -5% currency headwind Margin1 12.8% 13.8% 12.6% 13.3% – Foodservi
Slide 48: Quarterly comparable growth by business segment since 2016
Quarterly comparable growth by business segment since 2016 Long- term Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 FY 17 FY 16 FY 15 ambition Foodservice E-A-O 5% 5% 6% 4% 2% 3% 3% 5% 7% 7% 4% 5% 4% 5-7% North America 2% 5% 2% 2% 1% 2% 5% 2% 8% 10% 2% 6% 4% 2-5% Flexible Packaging 11%
Slide 49: 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 50: Ownership
Ownership Shareholder distribution by sector June 30, 2018 – 30,227 registered shareholders at the end of June 2018 5% – 52% of shares in domestic ownership 10% – 16% of shares controlled by non-profit 6% 48% organizations – Finnish Cultural Foundation a 15% major owner since 1943, current ownership
Slide 51: Financial calendar 2018
Financial calendar 2018 October 25 Q3 18 Interim Report 51 Roadshow presentation July-September 2018
Slide 52: 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 53: For further information, please contact us
For further information, please contact us: www.huhtamaki.com » Investors ir@huhtamaki.com