Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Investor Day (March 2023)
67 slides from Huhtamaki Oyj's investor day presentation, Mar 28, 2023
Slide 1: Huhtamaki Capital Markets Day
Huhtamaki Capital Markets Day March 28, 2023
Slide 2: Our Global Executive Team and today's presenters
Our Global Executive Team and today’s presenters Charles Héaulmé Thomas Geust Marco Hilty Eric Le Lay Ann O’Hara President and CEO CFO President, Flexible Packaging President, Fiber and President, North America Foodservice EAO Fredrik Davidsson Thomasine Kamerling Marina Madanat Sami Pauni Ingolf Th
Slide 3: Today's agenda
Today’s agenda Our 2030 Our Sustainability Our Financial Our Business Concluding Strategy Journey Ambitions Segments Remarks Charles Héaulmé Thomasine Kamerling Thomas Geust Marco Hilty Charles Héaulmé Eric Le Lay Ann O’Hara 3 March 28, 2023 Capital Markets Day 2023
Slide 4: 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 5: Redesigning the future of sustainable packaging solutions
REDESIGNING THE FUTURE ) of sustainable packaging solutions Huhtamaki
Slide 6: Our 2030 Strategy
Our 2030 Strategy Charles Héaulmé President & CEO 6
Slide 7: Huhtamaki is a global market and innovation leader in packaging for food and everyday necessities
Huhtamaki is a global market and innovation leader in packaging for food and everyday necessities 2020-2022 2023 onward 2022 Key figures Starting our transformation journey Accelerating our profitable growth 4,479 MEUR net sales 395 MEUR adjusted EBIT Net sales +32%, adjusted EBIT +35% Scale profita
Slide 8: Providing packaging for food and everyday necessities, globally
Providing packaging for food and everyday necessities, globally Food service FMCG Retail Healthcare Customers Food packaging Packaging for everyday necessities Products Paperboard Flexibles Fiber Packaging technology Non-integrated Global Category Global Leader Global Leader Leader 8 March 28, 2023
Slide 9: Packaging is essential for food and everyday necessities
Packaging is essential for food and everyday necessities Packaging supports food Packaging helps secure Packaging helps prevent Packaging has driven from farm to fork, making it hygiene and food safety food loss and waste, in social and economic more accessible and for consumers around food systems
Slide 10: Packaging paradigm shift creates profitable growth opportunities for Huhtamaki
Packaging paradigm shift creates profitable growth opportunities for Huhtamaki Consumers Sustainability everywhere, are accelerating agenda driving industry transformation, for sustainable, affordable, adaptable creating opportunities in sustainable and functional packaging solutions Customers Packa
Slide 11: Consumer demand for packaging is expected to grow, with further opportunities in sustainable innovation
Consumer demand for packaging is expected to grow, with further opportunities in sustainable innovation Food & everyday necessities packaging market Need for sustainable solutions represents innovation is projected to grow ~30% opportunities ~620 BEUR ~470 BEUR Flexibles Technologies for recyclable
Slide 12: Our leadership in three key packaging technologies uniquely positions us
Our leadership in three key packaging technologies uniquely positions us to capture innovation opportunities Fiber Paperboard Flexibles Global Leader Non-integrated Leader Global Category Leader Fiber Proprietary high- Application and barrier Recyclable mono- Flexibles Huhtamaki precision fiber inno
Slide 13: Our 2030 North Star
Our 2030 North Star Be the first choice in sustainable packaging solutions, driven by innovation and operational performance
Slide 14: We are on a transformation journey to become the first choice in sustainable packaging solutions
We are on a transformation journey to become the first choice in sustainable packaging solutions Our 2030 vision Game-changing technology & Our value proposition, today solution innovation Sustainable innovation in Our core business Solution innovation in partnership partnership with customers with
Slide 15: Our 2030 Profitable Growth Strategy
Our 2030 Profitable Growth Strategy Scale up profitable Develop blueloop™ Drive world-class core businesses sustainable innovation operational in partnership with our performance customers Smart, fit-for purpose sustainable packaging solutions Powered by strategic capabilities Sustainability Innovat
Slide 16: We continue to invest in profitable sustainable core businesses and blueloop innovation
We continue to invest in profitable sustainable core businesses and blueloop™ transformative innovation, across our business segments Profitable growth opportunities in our core businesses and in Balanced investments in core and transformative sustainable innovation innovation Healthcare FMCG Foodse
Slide 17: blueloop focuses on scaling sustainable innovation in proprietary technologies
blueloop™ focuses on scaling sustainable innovation in proprietary technologies, driving value creation blueloop™ Fiber blueloop™ Flexibles High precision fiber forming Technologies for recyclable mono-material technologies and barriers for complex structures in Polyethylene, Paper, compostable appl
Slide 18: We are introducing new sustainable blueloop solutions, many in partnership with our customers
We are introducing new sustainable blueloop™ solutions, many in partnership with our customers Recyclable solutions Home compostable solutions ICON™ ice-cream packaging Mono-PET PushTab™ blister lids Paper based cup lids for Partnership with Nespresso technology with repulpable that run on existing
Slide 19: We are also stepping up structural and operational efficiencies
We are also stepping up structural and operational efficiencies Structural performance Operational performance improvement improvement World class operational Productivity measures Manufacturing excellence: continuous performance program operational improvement and Process automation digitalization
Slide 20: Huhtamaki investment case – increasing our long-term growth and profitability ambition
Huhtamaki investment case – increasing our long-term growth and profitability ambition Huhtamaki is a market and technology innovation leader for essential packaging, creating value through: Absolute EPS growth Attractive portfolio of sustainable core businesses to capture strong underlying market g
Slide 21: Our Promise
Our Promise At Huhtamaki, we believe that packaging is essential to protect food, people and the planet. Everyone, everywhere, should have access to safe, hygienic, affordable food and everyday necessities We strive to deliver profitable growth, driving competitive next generation sustainable packag
Slide 22: Redesigning the future of sustainable packaging solutions
REDESIGNING THE FUTURE ) of sustainable packaging solutions Huhtamaki
Slide 23: Our Sustainability Journey
Our Sustainability Journey Thomasine Kamerling EVP, Sustainability and Communications 23 March 28, 2023 Capital Markets Day 2023
Slide 24: Sustainability-driven legislation is impacting packaging development, globally
Sustainability-driven legislation is impacting packaging development, globally Drive in Climate & environment reduction of Focus on waste resulting reduction of in push for CO2 emissions Energy crisis re-usables Materials & waste Reduction in Focus on use of management of plastics/plastic Food suppl
Slide 25: Changing consumer expectations – sustainable, affordable and adaptable packaging
Changing consumer expectations – increased focus on making packaging sustainable, affordable and adaptable Sustainable Affordable Adaptable Consumers expect business Consumers around the Consumers have adopted to play bigger world are adjusting a more integrated mix of role protecting climate & purc
Slide 26: The value of packaging is bigger than its impact on environment
The value of packaging is bigger than its impact on environment Packaging makes food more accessible and affordable Packaging Packaging helps enables social and secure hygiene economic progress and food safety Packaging helps prevent food loss and waste 26 March 28, 2023 Capital Markets Day 2023
Slide 27: First choice in sustainable packaging solutions
We set our 2030 sustainability ambitions in 2020, driving our transformational agenda Our ambition First choice in sustainable packaging solutions 100% >80% 100% >90% 100% Carbon neutral production of products designed renewable or recycled of fiber from recycled of non-hazardous renewable and scien
Slide 28: We have made good progress on our sustainability journey; we still have work to do
We have made good progress on our sustainability journey; we still have work to do 2022 Results Global Sustainability and Safety Index extended to all participants of the global short-term incentive plan Sustainability-linked Bond Framework published and 500M€ sustainability-linked bond issued Scien
Slide 29: We play to win by making packaging that is fit-for-purpose
We play to win by making packaging that is: Fit-for-purpose A sustainable solution Our packaging is engineered to provide the We offer the most sustainable available right functionality to protect each product alternative We choose the right material for each We want to be the partner of choice to o
Slide 30: We develop game-changing alternative sustainable packaging solutions
In practice this means we develop game-changing alternative sustainable packaging solutions 1 Material positive Fully fiber-based cup and lid, Paper-based pushtab blister, Paper-based yogurt cup, replacing coated 2 Material / resource efficient paperboard and plastic replacing aluminium replacing pl
Slide 31: Packaging accounts for only 5% of greenhouse gas emissions in food systems
Packaging accounts for only 5% of green-house-gas emissions in food systems, low recycling rates remain a challenge Global greenhouse gas emissions from food systems. Food systems account for 26% of GHG emissions. Wasted food for 10%. Packaging accounts for 5% of green-house-gas emissions in Packagi
Slide 32: Scalable recycling pilots, closing the loop
Scalable recycling pilots, closing the loop The Cup Collective - An at-scale solution Accelerating plastic circularity in for paper cup recycling in Europe India Launched in Belgium with Stora Enso, Processing post-consumer multi-layered partnering with McDonalds, SNCB etc. plastics (MLP) to recycle
Slide 33: Our Financial Ambitions
Our Financial Ambitions Thomas Geust Chief Financial Officer 33 March 28, 2023 Capital Markets Day 2023
Slide 34: We are delivering towards the long-term ambitions we set in 2020
We are delivering towards the long-term ambitions we set in 2020 Net sales CAGR 9.6% (2019 -2022) Low leverage ambition 5+% Volume (capacity addition) and M&A 2-3x Exceeded slightly the ambition range for Comparable (Elif acquisition) driven growth Net debt / one quarter following the Elif acquisiti
Slide 35: Our investments have enabled us to build capabilities and technologies for the future
Our investments have enabled us to build capabilities and technologies for the future Key expansions coming online UAE, Malaysia Ireland CAPEX Net M&A 1,889 751 Fiber Short-run Huhtamaki flexible blueloop 2014–2022 packaging, (MEUR) SMF Lids Phase II 2023 Eastern Europe Paper straws, Europe Capsules
Slide 36: Our organic investments will drive our profitable growth and portfolio differentiation
Our organic investments will drive our profitable growth and portfolio differentiation Investment profile changing (illustrative) Capex is focused on scaling our core, while investing in innovation (MEUR) Paperboard conversion Fiber 318 259 <2.0x >10% 199 215 197 204 224 X = 13-15% 147 <10% 2015 201
Slide 37: We will continue our efficient use of capital to create shareholder value
We will continue our efficient use of capital to create shareholder value Sources Uses Capex for organic growth Profit improvement Cash flow Investments Acquisitions to gain scale and Working capital efficiency capabilities Predictable and growing Leverage Net debt / adj. EBITDA ambition Payout divi
Slide 38: We will continue to drive long-term profitable growth
We will continue to drive long-term profitable Long-term 10-12% growth ambition Adj. EBIT margin Key drivers for profitability improvement Adj. EBIT margin 11% Commercial excellence Value add of innovative technologies 10% Upgrading commercial Margin accretion through 9.4 % practices and digitalizat
Slide 39: Our focus has been on management of working capital to fund growth
Our focus has been on management of working capital to fund growth MEUR 2019 2020 2021 2022 150 109 104 100 83 71 71 52 57 50 29 7 6 0 -7 -18 -20 -25 -50 -46 -54 -100 -150 Q1 2019 Q3 2019 Q1 2020 Q3 2020 Q1 2021 Q3 2021 Q1 2022 Q3 2022 Free Cash Flow Change in Working Capital Normal working capital
Slide 40: Our balance sheet gives room to scale our core and invest in sustainable innovation
Our balance sheet gives room to scale our core and invest in sustainable innovation Net debt (MEUR) and net debt / adj. EBITDA Debt maturities (MEUR) at the end of 2022 2,500 3.5 600 3.0 3.1 3.0 3.0 538 3.0 500 475 2,000 2.5 2.5 Ambition: 1,572 1,626 2.5 392 1,520 1,483 1,471 2-3x 400 1,500 1.9 1.9
Slide 41: Our EPS growth has secured continuous dividend growth
In addition to growing organically and inorganically, our EPS growth has secured continuous dividend growth >1BEUR paid since 2008 Dividend growth CAGR >8% since 2008* EPS growth to allow for continued predictable dividend 0.94 1.00 payout 0.89 0.92 0.80 0.84 Sales and margin improvement 0.73 0.66 i
Slide 42: Our long-term financial ambitions are founded on scaling up the core and sustainable innovation
Our long-term financial ambitions are founded on scaling up the core and game-changing sustainable innovation, globally Key growth and profit drivers Absolute EPS growth Expanding core business in growing markets Innovation for in products and categories 5-6% 10-12% 13-15% 2-3x Net debt / Operationa
Slide 43: Redesigning the future of sustainable packaging solutions
REDESIGNING THE FUTURE ) of sustainable packaging solutions Huhtamaki
Slide 44: Business segments
Business segments 44 March 28, 2023 Capital Markets Day 2023
Slide 45: Flexible Packaging
Flexible Packaging Dr. Marco Hilty President, Flexible Packaging 45 March 28, 2023 Capital Markets Day 2023
Slide 46: Flexible packaging is the best technology to provide affordable access to food
Flexible packaging is the best technology to provide affordable access to food and everyday necessities, globally Huhtamaki is a global category leader Food & beverage Home & personal care Healthcare/Other 61% of sales 29% of sales 10% of sales Net sales Adjusted EBIT margin 1,558 MEUR 6.3% Employee
Slide 47: We are delivering solid growth, but need to address profitability
We are delivering solid growth, but need to address profitability We have improved our market position, despite We are delivering growth, but need to address market headwinds profitability Improved position in flexo print and filmmaking Net sales and adj. EBIT margin technology, personal and homecar
Slide 48: We are taking immediate actions to transform our operational performance
We are taking immediate actions to transform our operational performance Take structural measures to improve Strengthen best practices and our cost position capabilities Operational performance program Implement productivity actions Health and Fire Safety Long-term ambition to Optimize manufacturing
Slide 49: We are rolling out our blueloop flexibles proprietary mono-material solutions
We are rolling out our blueloop™ flexibles proprietary mono-material solutions to support brands in achieving their 2025 pledges blueloop™ flexibles value proposition blueloop™ market opportunity Cost-effective solutions in mono- blueloop™ flexibles opens a market opportunity of material PP, PE, PET
Slide 50: We remain committed to our long-term strong profitable growth ambition
We remain committed to our long-term strong profitable growth ambition Huhtamaki Flexible Packaging long-term How we get there ambition Operations Improve productivity, reduce waste, optimize network 6-7% 9-11% Complete Elif integration Comparable Adjusted growth EBIT margin Capabilities Improve com
Slide 51: Fiber Foodservice E-A-O
Fiber Foodservice E-A-O Eric Le Lay President, Fiber and Foodservice Europe-Asia-Oceania 51 March 28, 2023 Capital Markets Day 2023
Slide 52: Our fiber and paperboard technologies are an essential part of sustainable packaging innovation
Our fiber and paperboard technologies are an essential part of sustainable packaging innovation, globally Global Fiber leader Foodservice FMCG Retail Global paperboard conversion* leader 53% of sales 9% of sales 38% of sales Foodservice EAO Fiber Packaging Net sales 1,111 MEUR Net sales 363 MEUR Adj
Slide 53: We are delivering growth and improving profitability, while managing market disruption
We are delivering growth and improving profitability, while managing continued market disruption We have recovered growth and improved We have strengthened our innovation leadership, improved profitability cost position, while managing market disruptions Delivered strong growth and profitability, wh
Slide 54: We are investing in sustainable innovation across our technology platforms
We are investing in sustainable innovation across our technology platforms, and driving operational improvement Paperboard conversion Rough Molded Fiber Smooth Molded Fiber Invest in new sustainable Unlock capacity and increase Invest in scaling up current solutions for FMCG sector operational perfo
Slide 55: Our focus is on development and scaling of blueloop innovation
Our focus is on development and scaling of blueloop™ innovation Leveraging sustainable technology to drive core business and innovation Focusing on technology and development barrier development Retail Foodservice FMCG SMF portfolio includes established high-volume and developing high- Smooth Molded
Slide 56: We will scale and optimize our core business, while investing in breakthrough innovation
We will scale and optimize our core business, while investing in breakthrough innovation Fiber Packaging long-term ambition How we get there Core businesses 3-4% 11-12% 14-16% Further improve productivity and operational Comparable Adjusted growth RONA performance in legacy Paperboard operations EBI
Slide 57: North America
North America Ann O’Hara President, North America 57 March 28, 2023 Capital Markets Day 2023
Slide 58: We have an attractive and resilient portfolio of businesses
We have an attractive and resilient portfolio of businesses, with a strong execution record Global Fiber leader Retail Tableware Foodservice FMCG Global Paperboard Conversion* leader 48% of sales 34% of sales 18% of sales Net sales Adjusted EBIT margin 1,468 MEUR 11.7% Employees Manufacturing units
Slide 59: We are delivering solid financial performance, on the back of investments
We are delivering solid financial performance, on the back of investments to scale our core business We are delivering strong financial performance We are investing into our core businesses, driving profitable growth Net sales and adj. EBIT margin Leveraging historic investments in profitable core R
Slide 60: We will continue to develop our core businesses, with circular solutions
We will continue to develop our core businesses, with circular solutions and further operational improvements Driving growth through sustainable solutions Building on historic strengths and enhancing across all our businesses strategic capabilities Retail – Partnering with retailers to create the fu
Slide 61: Regulation and consumer preferences create additional growth opportunities for us
Regulation and consumer preferences create additional growth opportunities for us Retail Tableware Foodservice FMCG 17 states in the US Significant investments Continuing to expand the molded Investing in Rough Molded Fiber in Smooth Molded have introduced varying capacities for egg Fiber capacities
Slide 62: We are raising our long-term profitable growth ambition
We are raising our long-term profitable growth ambition North America long-term ambition How we get there Partner with strategic customers to continue to 5-6% 11-12% introduce new products and systems and help them Comparable Adjusted achieve sustainable solutions growth EBIT margin Build on our con
Slide 63: Redesigning the future of sustainable packaging solutions
REDESIGNING THE FUTURE ) of sustainable packaging solutions Huhtamaki
Slide 64: Concluding remarks
Concluding remarks Charles Héaulmé President & CEO 64 March 28, 2023 Capital Markets Day 2023
Slide 65: We are committed to create value for our customers, employees, shareholders and the planet
We are committed to create value for our customers, employees, shareholders and the planet value for CUSTOMERS value for SHAREHOLDERS Absolute EPS growth INNOVATION GROWTH PERFORMANCE LEVERAGE EFFICIENCY CUSTOMER EXCELLENCE Increasing Share of sustainable Revenue Adj. EBIT% Net Debt/EBITDA Adj. ROI%
Slide 66: We have a strong vision for the future and strengths to capture significant market opportunities
We have a strong vision for the future and strengths to capture significant market opportunities Our vision Our strengths Our opportunities Protect food, people and the Partnering with customers, to Growth in core businesses planet deliver innovation Market transformation to Advance the future of su
Slide 67: Redesigning the future of sustainable packaging solutions
REDESIGNING THE FUTURE ) of sustainable packaging solutions Huhtamaki