Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (September 2020)
64 slides from Huhtamaki Oyj's roadshow presentation, September 2020
Slide 1: Becoming the first choice in sustainable food packaging
Becoming the first choice in sustainable food packaging Roadshow presentation July–September 2020
Slide 2: 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 Foodservice packaging Molded fiber packaging Flexible packaging 2 July-September 202
Slide 3: Huhtamaki operates on a global scale
Huhtamaki operates on a global scale Figures for 2019 NET SALES €3.4B ADJUSTED EBIT MARGIN 8.6% MANUFACTURING UNITS 81 OPERATING COUNTRIES 35 EMPLOYEES 18,598 3 July-September 2020 Roadshow presentation | Huhtamaki
Slide 4: We operate through 3 business segments
We operate through 3 business segments North America Fiber and Foodservice Flexible Packaging Net sales per segment Europe-Asia-Oceania (2019) 18 manufacturing units in 33 manufacturing units in 29 manufacturing units in 36% 34% 2 countries 28 countries 16 countries 4,200 employees 6,800 employees 7
Slide 5: Understanding the value of packaging within the broader sustainability context
Understanding the value of packaging within the broader sustainability context Hygiene Food safety Packaging promotes hygiene and prevents spread of Packaging keeps food safe from spoilage and disease preserves its original properties Food availability Food waste prevention Packaging enables food av
Slide 6: 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 – Future consumer will require packaging to be innovative, individual and sustainable – Digitalization will influence packaging and the way we do business – Sustainabil
Slide 7: Our strategic priorities
Our strategic priorities We are for shaping the sustainable future of everyday life to offer wellbeing, convenience and responsible lifestyle to billions of people everywhere OUR AMBITION and FOUR STRATEGIG PRIORITIES Our ambition is to be the first choice in sustainable food packaging GROWTH COMPET
Slide 8: We have high financial and sustainability ambitions
We have 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% Carbon neutral 100% >80% 100% >90% 100% production of products designed renewable or r
Slide 9: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors
Slide 10: 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 11: Appendix: The role of packaging
Appendix: The role of packaging
Slide 12: 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 13: 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 wasted food systems of lost food Source: CGIAR Research Program on Climate Change, Agriculture and Food Sec
Slide 14: 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 14 July-September 2020 Roadshow presentation | Huhtamaki
Slide 15: 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 16: Recyclable packaging, consumer awareness 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 16 Jul
Slide 17: 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 17 July-September 2020 Roadshow presentation | Huhtamak
Slide 18: Examples of recent innovations and product launches
Examples of recent innovations and product launches Micro- High- wave quality and oven alternative Huhtamaki Fresh ready safe to plastic meal tray – a recyclable Cooler to straws alternative to black plastic, touch than Huhtamaki paper straws made of renewable raw plastic materials – an eco-friendly
Slide 19: Appendix: Segments and financials
Appendix: Segments and financials
Slide 20: Operating model: We are a converter
Operating model: We are a converter Inputs Our activities Outputs Impacts Raw materials Conversion to food packaging Safe, convenient and fit-for-purpose Nature • Paperboard • Cup forming consumer packaging • Renewable and recyclable materials • Plastic resins • Folded carton • Reducing food waste w
Slide 21: 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 22: 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 €1,153 mn ADJUSTED EBIT MARGIN 9.7% #1 globally operating EMP
Slide 23: 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 €1,016 mn ADJUSTED EBIT MARGIN 8.1% #
Slide 24: 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 ROW C
Slide 25: 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 26: 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 27: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2013 2014 2015 2016 2017 20181 2019 Long-term ambition Net sales 725.3 769.3 947.7 1,005.1 1,000.4 1,002.7 1,152.7 Comparable growth 5% 6% 4% 6% 2% 5% 9% 3-5% Adjusted EBIT 38.4 38.4 88.2 107.6 104.1 73.0 111.4 Margin 5.3% 5.0% 9.3% 10.7% 10
Slide 28: Group financials 2010-2019
Group financials 2010-2019 2010 2011 20122 20131 20141 2015 2016 2017 20182 2019 Net sales MEUR 1,952 2,043 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 Comparable growth3 3% 5% 3% 3% 6% 4% 4% 3% 5% 6% Adjusted EBITDA4 MEUR 214 208 254 242 259 342 382 390 399 456 Margin4 11.0% 10.2% 10.9% 11.2% 1
Slide 29: Comparable net sales growth by business segment
Comparable net sales growth by business segment Quarterly Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Foodservice E-A-O 3% 2% 4% 6% 5% 5% 5% 3% 4% 3% 4% 4% -4% -28% North America 2% 1% 2% 2% 5% 2% 2% 11% 5% 13% 14% 6% 9% -5% Flexible Packaging 3% -2% 7% 9% 6%
Slide 30: Solid track record of growth investments
Solid track record of growth investments Paper and Huhtamaki CAPEX M&A spend plastic blueloop disposable 1,210 584 packaging, China & HK 2013–2019 Pressed Short-run Ireland Fresh ready- (EUR million) plates, US flexible meal trays, packaging, UK Eastern Europe Folding Labels, India Corrugated Bags &
Slide 31: 20 acquisitions completed since 2011
20 acquisitions completed since 2011 Date (completed) Acquired company Country Acquiring segment Mar 2020 Laminor S.A. Brazil Flexible Packaging Jan 2020 Mohan Mutha Polytech Private Limited India Flexible Packaging Dec 2019 Everest Flexibles Pty Ltd South Africa Flexible Packaging Jun 2018 Ajanta P
Slide 32: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 33: Largest shareholders and split of shareholding
Largest shareholders and split of shareholding Shareholder Number of shares % of total shares Change Change % Split of shareholding 1. Finnish Cultural Foundation 12,010,653 11.15% 0 0.00% 2. Huhtamäki Oyj 3,410,709 3.17% 0 0.00% 3. Varma Mutual Pension Insurance Company 2,973,809 2.76% -10,000 -0.3
Slide 34: Foreign shareholding and distribution by geography
Foreign shareholding and distribution by geography Total number of shareholders and foreign shareholding Approximate shareholder distribution by geography (as in May 2019) 38,000 54% 10% 1% 36,000 52% 34,000 50% 12% 32,000 30,000 48% 51% 28,000 46% 26,000 26% 44% 24,000 42% Finland 22,000 Continenta
Slide 35: Global Executive Team
Global Executive Team Charles Héaulmé Arup Basu Clay Dunn Eric Le Lay Thomas Geust President and CEO President, Flexible Packaging President, North America President, Foodservice EAO CFO and Fiber Packaging Thomasine Kamerling Marina Madanat Sami Pauni Teija Sarajärvi Antti Valtokari EVP Sustainabil
Slide 36: Board of Directors
Board of Directors Pekka Ala-Pietilä Kerttu Tuomas Doug Baillie William R. Barker Chairman of the Board Vice-Chairman HR AC HR HR Born 1957, Finnish citizen Born 1957, Finnish citizen Born 1955, U.K. citizen Born 1949, U.S. citizen Starting date: April 24, 2012 Starting date: April 27, 2017 Starting
Slide 37: Our operating environment
Our operating environment (as given at Q2 2020 results)
Slide 38: Visible and tangible recovery; consumption shifts will drive innovation
Visible and tangible recovery – Consistent increase in order-in-take since April – Food on-the-go most impacted by the restrictions, order-in-take end June still lower than 2019 with variations across geographies Consumption shifts will drive innovation and new models – Shift to working from home, c
Slide 39: The fundamental trends underlying our strategy remain true
The fundamental trends underlying our strategy remain true – the next billion consumers – the consumer of the future – digitalisation – sustainability Our Strategy is the right strategy – Ambition: first choice in sustainable food packaging – Strategic priorities: – accelerate Growth – improve Compe
Slide 40: Celebrating our 100-year legacy by donating up to 3 MEUR
Celebrating our 100-year legacy by donating up to 3 MEUR to initiatives addressing global sustainability challenges Caring immediately Acting today Educating for tomorrow Innovating for the future 0.5 MEUR to boost COVID- 0.6 MEUR to set a cleaning 0.9 MEUR to provide 1 MEUR to surface and 19 emerge
Slide 41: Q2 2020 results: Good resilience in the face of the COVID-19 crisis
Q2 2020 results: Good resilience in the face of the COVID-19 crisis
Slide 42: Q2 2020: Sales impacted by the COVID-19 related restrictions
Q2 2020: Sales impacted by the COVID-19 related restrictions Development of net sales in Q2 2020 Net sales growth -8% in Q2 2020 (EUR million) – Comparable net sales growth -8% (-12% in emerging markets) -76 14 -8 – 2% from acquisitions 867 – 1% negative currency impact 797 Q2 2019 Organic Acquisiti
Slide 43: H1 2020: Strong sales in Q1 offset the drop in sales in Q2
H1 2020: Strong sales in Q1 offset the drop in sales in Q2 Development of net sales in H1 2020 Net sales growth -2% in H1 2020 (EUR million) – Comparable net sales growth -3% 2 (-8% in emerging markets) -54 25 – 2% from acquisitions 1,669 – Insignificant currency impact 1,642 H1 2019 Organic Acquisi
Slide 44: Food on-the-shelf packaging continued to grow, food on-the-go significantly impacted
Food on-the-shelf packaging continued to grow, food on-the-go significantly impacted Comparable growth Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 H1 19 H1 20 Long-term ambitions Foodservice E-A-O 3% 4% 4% -4% -28% 4% -17% 5-7% North America 13% 14% 6% 9% -5% 9% 1% 3-5% Flexible Packaging 1% 4% 3% 2% 2% 3% 2% 6-8
Slide 45: Solid adjusted EBIT margin despite COVID-19 crisis
Solid adjusted EBIT margin despite COVID-19 crisis MEUR Q2 20 Q2 19 Change H1 20 H1 19 Change Net sales 797.1 867.3 -8% 1,641.7 1,669.4 -2% Adjusted EBIT1 70.1 78.3 -10% 143.7 146.1 -2% Margin 8.8% 9.0% 8.8% 8.8% Adjusted EPS, EUR2 0.44 0.51 -14% 0.90 0.95 -5% Capital expenditure 40.3 38.6 4% 79.7 7
Slide 46: Q2 2020 results: Business segment review
Q2 2020 results: Business segment review
Slide 47: Foodservice EAO: COVID-19 drives decrease in sales and earnings
Foodservice EAO: COVID-19 drives decrease in sales and earnings Key figures, MEUR Q2 20 Q2 19 Change Net sales and comparable growth (EUR million & %) Net sales 167.2 241.0 -31% Comparable growth -28% 3% 241 242 245 228 218 Adjusted EBIT1 6.2 22.0 -72% 2019 167 2020 Margin 3.7% 9.1% 4% -4% 3% -28% 4
Slide 48: North America: Strong performance during Q2 and H1
North America: Strong performance during Q2 and H1 Key figures, MEUR Q2 20 Q2 19 Change Net sales and comparable growth (EUR million & %) Net sales 296.1 306.4 -3% Comparable growth -5% 13% 306 296 287 304 286 256 Adjusted EBIT1 37.9 32.4 17% 2019 2020 Margin 12.8% 10.6% 5% 9% 13% -5% 14% 6% Comp. C
Slide 49: Flexible Packaging: Performance impacted by disruptions in the supply chain
Flexible Packaging: Performance impacted by disruptions in the supply chain Key figures, MEUR Q2 20 Q2 19 Change Net sales and comparable growth (EUR million & %) Net sales 263.1 248.7 6% 271 263 261 255 Comparable growth 2% 1% 252 249 Adjusted EBIT1 19.1 20.1 -5% 2019 2020 Margin 7.3% 8.1% 5% 2% 1%
Slide 50: Fiber Packaging: Significant growth in sales and solid profitability
Fiber Packaging: Significant growth in sales and solid profitability Key figures, MEUR Q2 20 Q2 19 Change Net sales and comparable growth (EUR million & %) Net sales 75.7 77.5 -2% Comparable growth 10% 7% 78 72 75 76 76 68 2019 Adjusted EBIT1 8.5 7.6 12% 2020 Margin 11.2% 9.8% 4% 9% 7% 10% 7% 8% Com
Slide 51: Q2 2020 results: Financials review
Q2 2020 results: Financials review
Slide 52: Solid EBIT margin whilst EPS affected by financial items and tax rate
Solid EBIT margin whilst EPS affected by financial items and tax rate MEUR Q2 20 Q2 19 Change H1 20 H1 19 Change – Net financial items increased Net sales 797.1 867.3 -8% 1,641.7 1,669.4 -2% following internal funding arrangements and Adjusted EBITDA1 112.1 118.6 -5% 229.1 225.5 2% precautionary mea
Slide 53: No significant impact from currencies
No significant impact from currencies Average Closing rates Average Change in rate rate average H1 2019 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 H1 2020 rate USD 1.13 1.14 1.09 1.12 1.10 1.13 1.10 3% Foreign currency INR 79.13 78.57 77.07 79.81 83.50 85.19 81.63 -3% translation impact GBP 0.87 0.89 0.89 0.85 0
Slide 54: Net debt decreased compared to Q2 2019 and Q1 2020
Net debt decreased compared to Q2 2019 and Q1 2020 Net debt, net debt/adj. EBITDA and gearing – Net debt/Adj. EBITDA at 2.0 Covenant level1 3.5 – At the end of Q2 2020: – Cash and cash equivalents EUR 234 million 2.4 2.4 Ambition – Unused committed credit 2.1 2.1 2.0 2.0 2–3 facilities available EUR
Slide 55: Loan maturities
Loan maturities Debt maturity structure June 30, 2020 – Average maturity 3.1 years at the (EUR million) end of Q2 2020 (3.2 Q2 2019) 600 – Unused committed credit facilities 500 of EUR 303 million maturing in 2022 400 300 – EUR 150 million Schuldschein in 3 and 5 year maturities signed on 200 June 2
Slide 56: Higher free cash flow
Higher free cash flow Free cash flow bridge Cash flow driven by: (EUR million) – Higher EBITDA despite impact from COVID 243 – Laminor gain of ~20 MEUR is 225 recognized as non-cash in ‘Other’ – Positive impact from working capital following active 46 34 receivables collection 1 2 -10 -10 -11 -19 -6
Slide 57: Stable financial position
Stable financial position MEUR Jun 2020 Jun 2019 – Higher total assets following growth Total assets 3,672 3,413 – Net debt decreased and gearing improved Operating working capital 617 662 Net debt 908 1,019 – Improvement in adjusted ROI, decrease in adjusted ROE Equity & non-controlling interest 1,
Slide 58: Progress towards long-term financial ambitions
Progress towards long-term financial ambitions H1 Long-term 2014 2015 2016 2017 20181 2019 2020 ambition Organic growth 6% 4% 4% 3% 5% 6% -3% 5+% Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0% 8.1% 8.6% 8.8% 10+% Net debt/Adj. EBITDA 1.0 1.6 1.8 1.8 2.3 2.0 2.0 2-3 Dividend payout ratio 47% 40% 40% 42% 50
Slide 59: Q2 2020 results: Looking forward
Q2 2020 results: Looking forward
Slide 60: Outlook 2020
Outlook 2020 Disturbance from the COVID-19 pandemic on Huhtamaki's operating environment is expected to continue. The demand especially for food on-the-go packaging may be significantly negatively impacted whilst demand for food on-the-shelf packaging and convenience tableware may be positively impa
Slide 61: Short-term risks and uncertainties
Short-term risks and uncertainties The COVID-19 pandemic including a potential second wave of the pandemic is a significant short-term risk potentially creating disturbance in the Group’s trading conditions and its operating environment, as well as in demand for the Group’s products. Volatile raw ma
Slide 62: Financial calendar 2020
Financial calendar 2020 October 22 Q3 2020 Interim Report November 10 Segment update and site visit in Hämeenlinna, Finland More information will follow. Event subject to restrictions following COVID-19. 62 July-September 2020 Roadshow presentation | Huhtamaki
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: ir@huhtamaki.com www.huhtamaki.com/investors