Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (December 2019)
62 slides from Huhtamaki Oyj's roadshow presentation, December 2019
Slide 1: Roadshow presentation October-December 2019
Roadshow presentation October-December 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 and Africa, Asia and South
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: 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: Q3 2019: Strong net sales growth and improved profitability
Q3 2019: Strong net sales growth and improved profitability
Slide 18: Strong total net sales growth in Q3 2019
Strong total net sales growth in Q3 2019 Net sales growth split in Q3 19 + +10% – 7% comparable net sales growth 24 855 with significant growth in North 3 America segment 48 – 8% in emerging markets – 3% positive currency impact 780 M€ Q3 18 Organic Acquisitions Translation impact Q3 19 18 Roadshow
Slide 19: Comparable growth in line with our long-term ambition in Q1-Q3
Comparable growth in line with our long-term ambition in Q1-Q3 Net sales growth split in Q1-Q3 19 + +10% 68 2,524 – 6% comparable net sales growth 42 – 7% in emerging markets 124 – 2% from acquisitions 2,291 – 3% positive currency impact M€ Q1-Q3 18 Organic Acquisitions Translation impact Q1-Q3 19 1
Slide 20: All segments contributing to comparable net sales growth
All segments contributing to comparable net sales growth Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 YTD 19 YTD 18 FY 2018 Long-term ambitions Foodservice E-A-O 4% 3% 4% 3% 5% 4% 5% 4% 5-7% North America 14% 13% 5% 11% 2% 11% 3% 5% 2-5% Flexible Packaging 4% 1% 5% 4% 6% 3% 8% 7% 6-8% Fiber Packaging 7% 7% 4% 5% 4
Slide 21: Strong net sales growth and improved profitability
Strong net sales growth and improved profitability MEUR Q3 19 Q3 18 Change Q1-Q3 19 Q1-Q3 18 Change Q3 19 Highlights Net sales 854.9 779.8 10% 2,524.3 2,290.9 10% – 10% reported net sales growth, with Adjusted EBITDA1 113.5 94.2 20% 339.0 296.8 14% strongest growth in North America Margin1 13.3% 12.
Slide 22: Q3 2019 Business segment review
Q3 2019 Business segment review
Slide 23: Foodservice Europe-Asia-Oceania: Solid net sales growth and improved profitability
Foodservice Europe-Asia-Oceania: Solid net sales growth and improved profitability Net sales (MEUR) and comparable growth (%) – Solid net sales growth – Continued solid growth in QSR – Low-cost competition enhanced by the trade war – Conversion from plastics requires adaptation of 199 221 230 232 22
Slide 24: North America: Strong growth and earnings improvement continued
North America: Strong growth and earnings improvement continued Net sales (MEUR) and comparable growth (%) – Net sales growth due to volume growth but also following the pricing actions taken in the second half of 2018 – Net sales growth supported by all businesses, 227 257 242 277 256 306 287 stron
Slide 25: Flexible Packaging: Strong earnings improvement
Flexible Packaging: Strong earnings improvement Net sales (MEUR) and comparable growth (%) – Growth driven by emerging markets – Particularly by MEA, Thailand and India – Growth moderated by Europe – New factory in Egypt, that started in May 19, 234 240 242 236 252 249 261 continues to ramp-up as pl
Slide 26: Acquisitions strengthening footprint in the emerging markets
Acquisitions strengthening footprint in the emerging markets Announced on September 27, 2019 Announced on September 30, 2019 Everest Flexibles (Pty) Limited Mohan Mutha Polytech Private Limited Durban, South Africa Sri City, Andhra Pradesh, India – A privately-owned flexible packaging manufacturer –
Slide 27: Fiber Packaging: Solid comparable net sales growth
Fiber Packaging: Solid comparable net sales growth Net sales (MEUR) and comparable growth (%) – Net sales increased in Eastern Europe and South Africa – Strong demand for egg cartons especially in Europe and Russia 70 71 69 73 72 78 68 – The fruit packaging market continued to develop Q1 18 Q2 18 Q3
Slide 28: Q3 2019 Financial review
Q3 2019 Financial review Huhtamaki
Slide 29: Adjusted EPS growth driven by strong net sales
Adjusted EPS growth driven by strong net sales Q1-Q3 Q1-Q3 Q3 19 Q3 18 Change 2019 2018 Change MEUR Highlights Net sales 854.9 779.8 10% 2,524.3 2,290.9 10% – Strong growth and positive Adjusted EBITDA1 113.5 94.2 20% 339.0 296.8 14% currency translation Margin1 13.3% 12.1% 13.4% 13.0% Adjusted EBIT
Slide 30: Continuing positive currency impact, mostly from USD
Continuing positive currency impact, mostly from USD Closing rates Average rate Q1-Q3 2018 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Average rate Q1-Q3 2019 Foreign currency USD 1.20 1.17 1.15 1.12 1.14 1.09 1.12 translation impact INR 80.19 84.98 80.23 77.78 78.57 77.07 78.86 GBP 0.88 0.89 0.90 0.86 0.89 0.89
Slide 31: Net debt decreased mainly due to improved working capital
Net debt decreased mainly due to improved working capital Covenant level 3.5 – Net debt/EBITDA at 2.1 2.3 2.4 2.4 2.1 AMBITION 1000 2-3 – At the end of Q3 19 2.2 2.2 – Cash and cash equivalents 2.2 MEUR 128 800 1.8 – Unused committed credit Net debt, M€ facilities available MEUR 299 600 Net debt/EBI
Slide 32: Loan maturities
Loan maturities Debt maturity structure September 30, 2019 600 – Average maturity 3.0 years at 500 the end of Q3 2019 400 (3.9 at the end of Q3 2018) 300 – Unused committed credit facilities of MEUR 299 200 maturing in 2022 100 MEUR 0 2019 2020 2021 2022 2023 Later Drawn committed credit facilities
Slide 33: Strong free cash flow supported by improvement in profit and working capital
Strong free cash flow supported by improvement in profit and working capital Cash flow driven by: – Higher EBITDA following net 334 sales growth, pricing actions 308 and efficiency improvement measures – Partly offset by one-time gain in MEUR 117 2018 39 – Improvement in net working 3 2 capital in Q
Slide 34: Stable financial position
Stable financial position Sept Dec Sept MEUR 2019 2018 2018 Total assets 3,473 3,240 3,194 – Higher assets and net debt decrease Operating working capital 646 598 612 following growth Net debt 944 928 958 Equity & non-controlling 1,385 1,267 1,223 – Gearing improved interest Gearing 0.68 0.73 0.78 –
Slide 35: Progress towards long-term ambitions
Progress towards long-term ambitions FY FY FY FY FY YTD Q3 Long-term 2014 2015 2016 2017 20181 2019 ambition Organic growth 6% 4% 4% 3% 5+% 6% 5+% Adjusted EBITDA margin 11.6% 12.5% 13.3% 13.0% 12.8% 13.4% 14+% Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0% 8.1% 8.7% 10+% Adjusted ROI 12.6% 14.7% 14.7% 13
Slide 36: On sustainability of food packaging
On sustainability of food packaging
Slide 37: 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 37 Roadshow presentation July-September 2019
Slide 38: 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 39: 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 39 Roadshow presentation October-December 2019 Source: CGIAR Research Prog
Slide 40: 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 40 Roadshow presentation October-December 2019
Slide 41: 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 42: 100% renewable FutureSmart product line further reduces CO2 emissions
100% renewable FutureSmart product line further reduces CO2 emissions 42 Roadshow presentation October-December 2019
Slide 43: Recyclable packaging, consumer awareness and recycling infrastructure are 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 43 Roa
Slide 44: 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 44 Roadshow presentation October-December 2019 *Source: Smithers Pira: Future Lifecycles of Packaging Recycling to 2023
Slide 45: Huhtamaki Fresh ready meal tray
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 45 Roadshow presentation October-December 2019
Slide 46: Huhtamaki paper straws
Huhtamaki paper straws – an eco-friendly solution for enjoying cold drinks High-quality alternative to plastic straws Recyclable Made from 100% PEFC certified paper 46 Roadshow presentation October-December 2019
Slide 47: 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 47 Roadshow presentation October-D
Slide 48: Looking forward
Looking forward Huhtamaki
Slide 49: 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 50: Capital Markets Day 2020
Capital Markets Day 2020 March 24, 2020 Capital Markets Day Helsinki, Finland More information to follow. Date is preliminary and subject to change. 50 Roadshow presentation October-December 2019
Slide 51: Financial calendar 2020
Financial calendar 2020 February 13 Week 10 Results 2019 Annual Accounts 2019 April 29 July 23 October 22 Q1 2019 Interim Report Half-yearly Report 2020 Q3 2020 Interim Report Annual General Meeting 51 Roadshow presentation October-December 2019
Slide 52: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 53: Appendices
Appendices
Slide 54: 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 55: Quarterly comparable net sales growth by business segment
Quarterly comparable net sales growth by business segment Long- term Q3 19 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 4% 3% 4% 3% 5% 5% 5% 6% 4% 2% 3% 4% 4% 5% 5-7% North America 14% 13% 5% 11% 2% 2% 5% 2% 2% 1% 2% 5% 2% 6% 2-5% Flexible
Slide 56: 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 57: 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 58: Ownership
Ownership – 31,092 registered shareholders at the Shareholder distribution by sector Approximate shareholder distribution end of November 2019 October 31, 2019 by geography 1% – 53% of shares in domestic ownership 6% – 16% of shares controlled by non-profit 7% 10% organizations 9% 47% 12% 51% – Finn
Slide 59: Largest shareholders on November 30, 2019
Largest shareholders on November 30, 2019 (based on data from Euroclear Finland Ltd.) Shareholder Number of shares % of total shares 1. Finnish Cultural Foundation 12,010,653 11.15% 2. Huhtamäki Oyj 3,410,709 3.17% 3. Varma Mutual Pension Insurance Company 3,283,809 3.05% 4. Ilmarinen Mutual Pension
Slide 60: 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 61: 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 62: For further information, please contact us:
For further information, please contact us: www.huhtamaki.com » Investors ir@huhtamaki.com