Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (September 2022)
67 slides from Huhtamaki Oyj's roadshow presentation, September 2022
Slide 1: Becoming the first choice in sustainable packaging solutions
Becoming the first choice in sustainable packaging solutions Roadshow presentation August-September 2022
Slide 2: Our 100-year Nordic legacy provides a strong foundation
Our 100-year Nordic legacy provides a strong foundation on our road to becoming the first choice in sustainable packaging solutions globally 2 April August22,15, 15.8.2022 2021 2022 Q2 2022 IR General Huhtamaki Presentation Presentation to shareholders Presentation | Charles Héaulmé
Slide 3: We believe in protecting food, people and the planet
We believe in protecting food, people and the planet…
Slide 4: What our purpose means
What our purpose means • Packaging creates value by securing hygiene, food availability and food safety for consumers around the globe. • Packaging also plays an instrumental role in reducing We believe in protecting food, people food waste, which remains by far the biggest and the planet and enabli
Slide 5: 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 technology Paperboard conversion Molded fiber Flexibles 5 August 15, 2022
Slide 6: A strong local presence, delivering for our customers, globally
A strong local presence, delivering for our customers, globally (Figures for 2021) NET SALES €3.6B ADJUSTED EBIT MARGIN 8.8% OPERATING LOCATIONS 114 OPERATING COUNTRIES 38 EMPLOYEES 19,564 6 August 15, 2022
Slide 7: We operate through three business areas
We operate through three business areas Fiber and Foodservice North America Flexible Packaging Net sales per business Europe-Asia-Oceania area (2021) 34 manufacturing units and 18 manufacturing units and 27 manufacturing units and 33% 35% operations in 28 countries operations in 2 countries operatio
Slide 8: 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 • The future consumer will require packaging to be innovative, individual and sustainable • Digitalization will influence packaging and the way we do business • Sustain
Slide 9: Packaging brings real value to society
Packaging brings real value to society Hygiene Food safety Packaging promotes hygiene and Packaging keeps food safe from spoilage prevents spread of disease and preserves its original properties Food availability Food waste prevention Packaging enables food availability Globally, 1/3 of food is wast
Slide 10: Our 2030 Strategy
Our 2030 Strategy Protecting food, people and the planet Our ambition is to be the first choice in sustainable packaging solutions, enabling wellbeing and convenience for people around the world GROWING IMPROVING OUR DEVELOPING OUR BUSINESS COMPETITIVENESS OUR TALENT EMBEDDING SUSTAINABILITY IN EVER
Slide 11: We focus on our strategic priorities to drive growth
We focus on our strategic priorities to drive growth Competitiveness Talent Sustainability Digitalization • Achieve world-class processes and • Develop strategic capabilities • Focus innovation on sustainable • Improve operational performance operational performance packaging designed for circularit
Slide 12: First choice in sustainable food packaging
We are committed to 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% 100% >80% 100% >90% 100% Carbon neutral production of products designed re
Slide 13: Appendix: The role of packaging
Appendix: The role of packaging
Slide 14: 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 15: Comparing carbon footprints of single-use and multi-use systems
Comparing carbon footprints of single-use and multi-use systems END-OF-LIFE MANUFACTURING END-OF-LIFE MANUFACTURING -4,491 kg CO2 eq. 13,403 kg CO2 eq. 634 kg CO2 eq. 3,453 kg CO2 eq. Multi-use tableware systems generate over PLASTIC MULTI-USE PAPER-BASED TABLEWARE* 2.8 times higher CO2-e SINGLE-USE
Slide 16: 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% 10% of global GHG emissions come from of global GHG emissions come from wasted food systems or lost food Source: CGIAR Research Program on Climate Change, Agriculture and Food Se
Slide 17: 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 17 August 15, 2022
Slide 18: 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 19: Consumer awareness and efficient collection, sorting and recycling 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 19 Aug
Slide 20: 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 20 August 15, 2022
Slide 21: Our strong innovation pipeline has delivered sustainable packaging solutions
Our strong innovation pipeline has delivered sustainable packaging solutions for our customers, including: Paperboard conversion Molded fiber Flexibles Push Tab® paper Push-tab blister lid® McDonald’s Home Delivery range Sundae cup and cold cup lid Paperboard Futuro egg Next Generation yogurt cup ca
Slide 22: Appendix: Segments and financials
Appendix: Segments and financials
Slide 23: Operating model: We are a converter
Operating model: We are a converter 23 August 15, 2022
Slide 24: 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 25: 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 €1,160 mn ADJUSTED EBIT MARGIN 12.0% #1 globally operating EM
Slide 26: 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 €1,167 mn ADJUSTED EBIT MARGIN 6.8% #
Slide 27: 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 Centr
Slide 28: 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 29: 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 30: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2014 2015 2016 2017 20181 2019 2020 2021 Long-term ambition Net sales 769.3 947.7 1,005.1 1,000.4 1,002.7 1,152.7 1,138.9 1,160.3 Comparable growth 6% 4% 6% 2% 5% 9% 1% 6% 3-5% Adjusted EBIT 38.4 88.2 107.6 104.1 73.0 111.4 136.6 139.1 Margi
Slide 31: Group financials 2011-2021
Group financials 2011-2021 2011 20122 20131 20141 2015 2016 2017 20182 2019 2020 2021 Net sales MEUR 2,043 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 3,302 3,575 Comparable growth3 5% 3% 3% 6% 4% 4% 3% 5% 6% -2% 7% Adjusted EBITDA4 MEUR 208 254 242 259 342 382 390 399 456 473 488 Margin4 10.2%
Slide 32: Comparable net sales growth by business segment
Comparable net sales growth by business segment Quarterly Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Foodservice E-A-O 4% 3% 4% 4% -4% -28% -1% -7% -2% 40% 2% 12% 18% 18% North America 5% 13% 14% 6% 9% -5% 4% -2% -2% 9% 5% 11% 24% 14% Flexible Packaging 5% 1%
Slide 33: Solid track record of growth investments
Solid track record of growth investments Paper and Huhtamaki plastic CAPEX M&A spend blueloop disposable packaging, 1,571 1,043 China & HK Pressed 2014–2021 Short-run Ireland Fresh ready- (EUR million) plates, US flexible meal trays, packaging, UK Eastern Europe Folding Labels, India Corrugated Bags
Slide 34: 23 acquisitions completed since 2011
23 acquisitions completed since 2011 Date (completed) Acquired company Country Acquiring segment Jan 2022 Huhtamaki Smith Anderson sp. z o.o (joint venture acquired fully) Poland Foodservice E-A-O Sep 2021 Elif Holding A.Ş. Turkey Flexible Packaging Jun 2021 Jiangsu Hihio-Art Packaging Co. Ltd China
Slide 35: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 36: Largest shareholders and split of shareholding
Largest shareholders and split of shareholding Shareholder Number of shares % of total shares Change Change % 1. Finnish Cultural Foundation 11,314,840 10.50 % 0 0.00 % Split of shareholding 2. Ilmarinen Mutual Pension Insurance Company 3,641,458 3.38 % 385,917 11.85 % 3. Huhtamäki Oyj 3,395,709 3.1
Slide 37: Foreign shareholding and distribution by geography
Foreign shareholding and distribution by geography Total number of shareholders and foreign shareholding Approximate shareholder distribution by geography 55,000 54% (Ownership as a percentage of identified shareholders in September 2020) 50,000 52% 5% 1% 4% 7% 45,000 50% 40,000 48% 8% 35,000 46% 56
Slide 38: Global Executive Team
Global Executive Team Charles Héaulmé Marco Hilty Eric Le Lay Ann O’Hara Thomas Geust President and CEO President, Flexible Packaging President, Fiber and President, North America CFO Foodservice EAO Fredrik Davidsson Thomasine Kamerling Marina Madanat Sami Pauni Ingolf Thom EVP Digital and EVP Sust
Slide 39: Board of Directors
Board of Directors Pekka Ala-Pietilä Kerttu Tuomas Mercedes Alonso Doug Baillie William R. Chairman of the Vice-Chairman Barker Board HR AC HR HR HR Born 1957, Finnish citizen Born 1957, Finnish citizen Born 1966, Spanish and Swiss citizen Born 1955, U.K. citizen Born 1949, U.S. citizen Starting dat
Slide 40: H1 2022: Continued strong performance
H1 2022: Continued strong performance
Slide 41: Continued strong performance
Continued strong performance • Volatile market conditions – severe and broad-based inflation, supply chain constraints, challenges with raw material availability and geopolitical turmoil • Strong net sales and adjusted EBIT growth – driven by positive impact of acquisitions, pricing actions and incr
Slide 42: Expanding molded fiber manufacturing capacity in North America
Expanding molded fiber manufacturing capacity in North America • Expanding current production of rough molded fiber products in Hammond, Indiana, US • A USD 100 million investment, production expected to start ramping up towards the end of 2023 • Will enable Huhtamaki to better serve existing and ne
Slide 43: Business performance
Business performance Huhtamaki
Slide 44: H1 2022: Solid growth throughout the first half
H1 2022: Solid growth throughout the first half Development of net sales in H1 2022 Net sales increased 31% in H1 2022 (EUR million) • Comparable net sales growth 18% (17 % in emerging markets) - pricing 103 122 and volume growth 293 • 7% from acquisitions, mainly Elif 2,197 1,679 • 6% positive curr
Slide 45: Strong net sales growth across all segments
Strong net sales growth across all segments Long-term Comparable growth Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 H1 21 H1 22 ambitions Foodservice E-A-O 40% 2% 12% 18% 18% 17% 18% 5-7% North America 9% 5% 11% 24% 14% 4% 19% 3-5% Flexible Packaging 6% 7% 12% 18% 19% 3% 19% 6-8% Fiber Packaging 1% 2% 2% 8% 16% 3
Slide 46: Improved adjusted EBIT despite inflation
Improved adjusted EBIT despite inflation MEUR Q2 22 Q2 21 Change H1 22 H1 21 Change Net sales 1,147.3 876.9 31% 2,197.0 1,679.0 31% 1 Adjusted EBIT 102.7 79.8 29% 200.3 156.8 28% Margin 9.0% 9.1% 9.1% 9.3% Adjusted EPS, EUR2 0.63 0.53 18% 1.26 1.02 23% Capital expenditure 51.5 51.8 -1% 127.9 84.9 51
Slide 47: Business segment review
Business segment review Huhtamaki
Slide 48: Foodservice EAO: Strong overall performance
Foodservice EAO: Strong overall performance Key figures, MEUR Q2 22 Q2 21 Change Net sales and comparable growth (EUR million & %) Net sales 288.8 235.6 23% Comparable growth 18% 40% 289 255 245 254 236 2021 Adjusted EBIT1 25.3 19.9 27% 207 Margin 8.7% 8.5% 2022 -2 % 18 % 40 % 18 % 2% 12 % Comp. Cap
Slide 49: North America: Growth limited by raw material availability
North America: Growth limited by raw material availability Key figures, MEUR Q2 22 Q2 21 Change Net sales and comparable growth (EUR million & %) Net sales 374.8 295.2 27% 375 Comparable growth 14% 9% 337 295 294 315 Adjusted EBIT 1 41.9 38.2 10% 256 2021 Margin 11.2% 13.0% 2022 -2 % 24 % 9% 14 % 5%
Slide 50: Flexible Packaging: Strong growth continued
Flexible Packaging: Strong growth continued, supported by Elif acquisition and cost mitigation Key figures, MEUR Q2 22 Q2 21 Change Net sales and comparable growth (EUR million & %) Net sales 390.7 270.7 44% Comparable growth 19% 6% 378 391 345 Adjusted EBIT 1 26.9 16.6 62% 267 271 284 2021 Margin 6
Slide 51: Fiber Packaging: Growth accelerated, supported by volume and pricing
Fiber Packaging: Growth accelerated, supported by volume and pricing Key figures, MEUR Q2 22 Q2 21 Change Net sales and comparable growth (EUR million & %) Net sales 95.4 80.4 19% Comparable growth 16% 1% 95 91 91 1 79 80 83 2021 Adjusted EBIT 12.8 8.3 55% Margin 13.4% 10.3% 2022 4% 8% 1% 16 % 2% 2%
Slide 52: Financial review
Financial review Huhtamaki
Slide 53: Higher sales are driving improved earnings
Higher sales are driving improved earnings MEUR Q2 22 Q2 21 Change H1 22 H1 21 Change • Sales growth supported by all Net sales 1,147.3 876.9 31% 2,197 1,679 31% segments Adjusted EBITDA1 153.8 121.0 27% 300.4 238.8 26% • Earnings improved following Margin 1 13.4% 13.8% 13.7% 14.2% pricing actions,
Slide 54: Continued positive currency impact
Continued positive currency impact Average Average Change in Change in Closing rates rate rate average closing H1 21 H1 22 rate Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 rate (YoY) USD 1.21 1.09 9% 1.19 1.17 1.13 1.11 1.05 12% Foreign currency INR 88.45 83.34 6% 88.31 86.47 84.26 84.38 83.04 6% translation impa
Slide 55: Net debt to adjusted EBITDA remained at the same level
Net debt to adjusted EBITDA remained at the same level Net debt, net debt/adj. EBITDA and gearing • Net debt/Adj. EBITDA at 3.0 Covenant level 3.75 3.0 3.1 3.0 3.0 • At the end of Q2 2022: 1,626 1,572 • Cash and cash equivalents 1,520 EUR 355 million 1,404 Ambition • Unused committed credit faciliti
Slide 56: Loan maturities
Loan maturities Debt maturity structure June 30, 2022 • Average maturity 3.5 years at the (EUR million) end of Q2 2022 (3.1 at the end of Q2 2021) 700 600 • Huhtamaki issued a EUR 500 500 million senior unsecured 400 sustainability-linked bond 300 200 100 0 2022 2023 2024 2025 2026 Later Lease liabi
Slide 57: Huhtamaki issued a sustainability-linked bond
Huhtamaki issued a sustainability-linked bond • Huhtamaki issued a EUR 500 million, 5-year, senior unsecured sustainability-linked bond • Interest at the rate of 4.25 per cent per annum, subject to an increased rate upon the failure to satisfy certain sustainability performance targets • Bond alloca
Slide 58: Free cash flow impacted by working capital and capital expenditure
Free cash flow impacted by working capital and capital expenditure Free cash flow bridge Cash flow impacted by: (EUR million) • Adjusted EBITDA increased significantly 294 • Large change in working capital 229 mainly following increase in trade receivables and inventory 1 1 8 1 35 • Higher cash taxe
Slide 59: Stable financial position
Stable financial position MEUR Jun 2022 Jun 2021 • Total balance sheet impacted by Elif acquisition in Q3 2021 Total assets 5,195 3,774 • Operating working capital increased Operating working capital 904 580 by higher inventories Net debt 1,626 933 • Stable financial position remains Equity & non-co
Slide 60: Progress towards long-term financial ambitions
Progress towards long-term financial ambitions Long-term 2015 2016 2017 2018 2019 2020 2021 H1 22 ambition Organic growth 4% 4% 3% 5% 6% -2% 7% 18% 5+% Adjusted EBIT margin 8.7% 9.4% 9.0% 8.1% 8.6% 9.1% 8.8% 9.1% 10+% Net debt/Adj. EBITDA 1.6 1.8 1.8 2.3 2.0 1.8 3.1 3.0 2-3 Dividend payout ratio 40%
Slide 61: Looking forward
Looking forward Huhtamaki
Slide 62: Outlook 2022
Outlook 2022 (unchanged) The Group’s trading conditions are expected to improve compared to 2021, however with continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable growth
Slide 63: Short-term risks and uncertainties
Short-term risks and uncertainties Significant and broad-based inflation in input costs (including raw materials, labor, distribution and energy), availability of raw materials as well as movements in currency rates are considered to be relevant short-term business risks and uncertainties in the Gro
Slide 64: Financial calendar 2022
Financial calendar 2022 October 21, 2022 Q3 2022 Interim Report 64 July 21, 2022
Slide 65: Learn more about our Fiber solutions
Learn more about our Fiber solutions 65 July 21, 2022 Half-yearly Report 2022
Slide 66: 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 67: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors 67 July 21, 2022