Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (December 2021)
70 slides from Huhtamaki Oyj's roadshow presentation, December 2021
Slide 1: Becoming the first choice in sustainable packaging solutions
Becoming the first choice in sustainable packaging solutions Roadshow presentation October–December 2021
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 technology Paperboard conversion Molded fiber Flexibles 2 October–December Roadshow
Slide 3: Huhtamaki operates on a global scale
Huhtamaki operates on a global scale Figures for 2020 NET SALES €3.3B ADJUSTED EBIT MARGIN 9.1% MANUFACTURING UNITS 81 OPERATING COUNTRIES 35 EMPLOYEES 18,227 3 October–December Roadshow presentation | Huhtamaki 2021
Slide 4: We operate through 3 business areas
We operate through 3 business areas Fiber and Foodservice North America Flexible Packaging Net sales per business Europe-Asia-Oceania area (2020) 34 manufacturing units and 18 manufacturing units and 29 manufacturing units and 32% 34% operations in 28 countries operations in 2 countries operations i
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: Our strategy builds on transformative trends impacting the future of packaging
Our strategy builds on transformative trends impacting the future of packaging • 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 • Sus
Slide 7: 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 8: 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 9: First choice in sustainable packaging solutions
We have high financial and sustainability ambitions Our ambition First choice in sustainable packaging solutions 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
Slide 10: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors 10 October–December Roadshow presentation | Huhtamaki 2021
Slide 11: 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 12: Appendix: The role of packaging
Appendix: The role of packaging
Slide 13: 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 14: 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 15: 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 16: 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 16 October–December Roadshow presentation | Huhtamaki 2021
Slide 17: 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 18: Consumer awareness and efficient collection, sorting 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 18 Oct
Slide 19: 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 19 October–December Roadshow presentation | Huhtamaki 2
Slide 20: 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 21: Appendix: Segments and financials
Appendix: Segments and financials
Slide 22: Operating model: We are a converter
Operating model: We are a converter Key inputs Our activities Key outputs Key impacts Raw materials Advanced manufacturing Safe, convenient and fit-for-purpose Environment - Paperboard - Cup forming consumer packaging - Replacing non-renewable materials - Plastic resins - Folded carton production -
Slide 23: 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 24: 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 €1,139 mn ADJUSTED EBIT MARGIN 12.0% #1 globally operating EM
Slide 25: 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 €1,051 mn ADJUSTED EBIT MARGIN 7.7% #
Slide 26: 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 27: 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 28: Segment key figures (1/2)
Fiber Packaging and Foodservice E-A-O have been integrated as on June 1, 2020 Segment key figures (1/2) • Improving customers access to combined fiber and paperboard technology • Leveraging organization synergies and growth opportunities (plastic substitution, food delivery) Foodservice Europe-Asia-
Slide 29: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2013 2014 2015 2016 2017 20181 2019 2020 Long-term ambition Net sales 725.3 769.3 947.7 1,005.1 1,000.4 1,002.7 1,152.7 1,138.9 Comparable growth 5% 6% 4% 6% 2% 5% 9% 1% 3-5% Adjusted EBIT 38.4 38.4 88.2 107.6 104.1 73.0 111.4 136.6 Margin 5
Slide 30: Group financials 2010-2020
Group financials 2010-2020 2010 2011 20122 20131 20141 2015 2016 2017 20182 2019 2020 Net sales MEUR 1,952 2,043 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 3,302 Comparable growth3 3% 5% 3% 3% 6% 4% 4% 3% 5% 6% -2% Adjusted EBITDA4 MEUR 214 208 254 242 259 342 382 390 399 456 473 Margin4 11.0%
Slide 31: 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 Q3 20 Q4 20 Q1 21 Q2 21 Foodservice E-A-O 3% 2% 4% 6% 5% 5% 5% 3% 4% 3% 4% 4% -4% -28% -1% -7% -2% 40% North America 2% 1% 2% 2% 5% 2% 2% 11% 5% 13% 14% 6% 9%
Slide 32: Solid track record of growth investments
Solid track record of growth investments Paper and Huhtamaki CAPEX M&A spend plastic blueloop disposable 1,433 624 packaging, China & HK 2013–2020 Pressed Short-run Ireland Fresh ready- (EUR million) plates, US flexible meal trays, packaging, UK Eastern Europe Folding Labels, India Corrugated Bags &
Slide 33: 22 acquisitions completed since 2011
22 acquisitions completed since 2011 Date (completed) Acquired company Country Acquiring segment Sep 2021 Elif Holding A.Ş. Turkey Flexible Packaging Jun 2021 Jiangsu Hihio-Art Packaging Co. Ltd China Foodservice E-A-O Mar 2020 Laminor S.A. Brazil Flexible Packaging Jan 2020 Mohan Mutha Polytech Pri
Slide 34: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 35: 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. Huhtamäki Oyj 3,395,709 3.15% 0 0.00% 3. Ilmarinen Mutual Pension Insurance Company 2,942,000 2.73% 367,000
Slide 36: Foreign shareholding and distribution by geography
Foreign shareholding and distribution by geography Total number of shareholders and foreign shareholding Approximate shareholder distribution by geography (Ownership as a percentage of identified shareholders in September 2020) 45,000 54% 5% 1% 52% 4% 40,000 7% 50% 8% 35,000 48% 8% 56% 30,000 46% 44
Slide 37: Global Executive Team
Global Executive Team Charles Héaulmé Marco Hilty1 Eric Le Lay Ann O’Hara Thomas Geust President and CEO President, Flexible Packaging President, Foodservice EAO President, North America CFO and Fiber Packaging Thomasine Kamerling Marina Madanat Sami Pauni Teija Sarajärvi2 Antti Valtokari EVP Sustai
Slide 38: 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 39: Q3 2021 results: Solid performance despite a challenging cost environment
Q3 2021 results: Solid performance despite a challenging cost environment
Slide 40: Q3 2021: Solid comparable net sales growth
Q3 2021: Solid comparable net sales growth Development of net sales in Q3 2021 Net sales increased 6% in Q3 2021 (EUR million) • Comparable net sales growth 4% 6 3 (5% in emerging markets) 40 • 1% from acquisitions – Elif impact from Q4 onwards 896 847 • Slight positive currency impact Q3 2020 Organ
Slide 41: Q1-Q3 2021: Solid growth, especially in the emerging markets
Q1-Q3 2021: Solid growth, especially in the emerging markets Development of net sales in Q1-Q3 2021 Net sales increased 3% in Q1-Q3 2021 (EUR million) • Comparable net sales growth 6% 12 152 -78 (11% in emerging markets) • Positive impact from acquisitions – Elif impact from Q4 onwards 2,489 2,575 •
Slide 42: Continued growth in all segments
Continued growth in all segments Long-term Comparable growth Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q1-Q3 20 Q1-Q3 21 ambitions Foodservice E-A-O -1% -7% -2% 40% 2% -11% 11% 5-7% North America 4% -2% -2% 9% 5% 2% 4% 3-5% Flexible Packaging 1% -0% 0% 6% 7% 2% 4% 6-8% Fiber Packaging 7% 8% 4% 1% 2% 9% 2% 3-5%
Slide 43: Raw material cost impact visible in Q3
Raw material cost impact visible in Q3 MEUR Q3 21 Q3 20 Change Q1-Q3 21 Q1-Q3 20 Change Net sales 896.3 847.3 6% 2,575.3 2,489.0 3% 1 Adjusted EBIT 76.3 85.5 -11% 233.1 229.2 2% Margin 8.5% 10.1% 9.1% 9.2% Adjusted EPS, EUR2 0.51 0.56 -10% 1.53 1.46 4% Capital expenditure 62.3 40.6 54% 147.2 120.3 2
Slide 44: Positive progress in the execution of our sustainability initiatives
Positive progress in the execution of our sustainability initiatives leads to improvement in our GSI Renewable or recycled materials Renewable electricity Non-hazardous waste recycled Health and safety (% of total materials) (% of total electricity consumed) (% of total non-haz. waste) 2030 Lost tim
Slide 45: Q3 2021 results: Business segment review
Q3 2021 results: Business segment review
Slide 46: Foodservice EAO: Continued recovery in demand
Foodservice EAO: Continued recovery in demand Key figures, MEUR Q3 21 Q3 20 Change Net sales and comparable growth (EUR million & %) Net sales 244.6 230.8 6% Comparable growth 2% -1% 236 245 218 231 207 213 Adjusted EBIT 1 20.7 21.7 -4% 2020 167 Margin 8.5% 9.4% 2021 -4% -2% -28% 40% -1% 2% -7% Comp
Slide 47: North America: Foodservice and retail tableware driving growth
North America: Foodservice and retail tableware driving growth Key figures, MEUR Q3 21 Q3 20 Change Net sales and comparable growth (EUR million & %) Net sales 294.3 282.6 4% Comparable growth 5% 4% 286 296 295 283 294 256 274 1 2020 Adjusted EBIT 35.8 36.0 -1% Margin 12.2% 12.7% 2021 9% -2% -5% 9%
Slide 48: Flexible Packaging: Solid growth, headwind from raw material prices
Flexible Packaging: Solid growth, headwind from raw material prices Key figures, MEUR Q3 21 Q3 20 Change Net sales and comparable growth (EUR million & %) Net sales 283.9 266.0 7% 271 271 284 Comparable growth 7% 1% 267 263 266 251 1 2020 Adjusted EBIT 17.0 22.7 -25% Margin 6.0% 8.5% 2021 2% 0% 2% 6
Slide 49: Fiber Packaging: Continued growth, higher raw material prices impacting earnings
Fiber Packaging: Continued growth, higher raw material prices impacting earnings Key figures, MEUR Q3 21 Q3 20 Change Net sales and comparable growth (EUR million & %) Net sales 83.3 72.2 15% 83 85 Comparable growth 2% 7% 79 76 80 75 72 1 2020 Adjusted EBIT 7.9 8.0 -1% Margin 9.5% 11.1% 2021 9% 4% 1
Slide 50: Elif acquisition
Elif acquisition Huhtamaki
Slide 51: Elif acquisition helps to reinforce leadership position in emerging markets
Elif acquisition helps to reinforce leadership position in emerging markets • A trusted long-term partner for major global consumer brand owners in Europe, Middle East and Africa • Manufactures consumer packaging for e.g. diapers & feminine care, detergents, tissue paper and wet wipes, food and pet
Slide 52: Combined portfolio offers a comprehensive range of solutions
Combined portfolio offers a comprehensive range of solutions across food and non-food products Food & beverage Personal care Home care Pet care Industrial, retail & other • Dried food • Feminine care • Laundry detergents • Pet food • Retail & shopping Product • Confectionery • Baby & adult diapers •
Slide 53: The acquisition is in line with Huhtamaki's 2030 growth strategy
The acquisition is in line with Huhtamaki’s 2030 growth strategy sustainability ambitions Strengthening existing footprint Complimentary technologies Embedding sustainability and portfolio • Reinforces Huhtamaki’s position as a • Expands Huhtamaki’s technology • Elif has a similarly strong focus on
Slide 54: The acquisition of Elif makes strategic and financial sense for us
The acquisition of Elif makes strategic and financial sense for us Attractive multiples Net sales in 2020 Approx. EUR 163 million • Elif has grown since 2020 • Earnings’ accretive, with significantly higher profit than Huhtamaki Employees • Previous acquisitions broadly in the range of 8-10x EV/EBIT
Slide 55: Flexible Packaging is key to our 2030 growth strategy
Flexible Packaging is key to our 2030 growth strategy • Global flexible packaging market is estimated to grow at CAGR 6.1% until 2030 • Flexible packaging has great sustainability value − Makes food and products available everywhere − Light to transport − Ensures hygiene and food safety − Reduces th
Slide 56: Q3 2021 results: Financials review
Q3 2021 results: Financials review
Slide 57: Earnings decreased due to increased input costs
Earnings decreased due to increased input costs MEUR Q3 21 Q3 20 Change Q1-Q3 21 Q1-Q3 20 Change • Sales growth supported by all Net sales 896.3 847.3 6% 2,575.3 2,489.0 3% segments in Q3 Adjusted EBITDA 1 119.2 127.2 -6% 358.0 356.3 0% • Input costs impacted earnings Margin 1 13.3% 15.0% 13.9% 14.3
Slide 58: Currency impact turned slightly positive in Q3 2021
Currency impact turned slightly positive in Q3 2021 Average Average Change in Change in Closing rates rate rate average closing Q1-Q3 20 Q1-Q3 21 rate Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 rate (YoY) USD 1.12 1.20 -7% 1.17 1.23 1.17 1.19 1.17 (YoY) 0% Foreign currency INR 83.39 88.09 -6% 86.28 89.88 86.25 8
Slide 59: Net debt to adjusted EBITDA increased following acquisition
Net debt to adjusted EBITDA increased following acquisition Net debt, net debt/adj. EBITDA and gearing • Acquisition of Elif impacting Covenant level 3.75 balance sheet 3.0 • Net debt/Adj. EBITDA increased to 3.0 1,404 Ambition • Gearing increased to 0.96 2.1 2.0 2–3 • Ratios presented excluding pro
Slide 60: Loan maturities
Loan maturities Debt maturity structure September 30, 2021 • To support the financing of the (EUR million) acquisition of Elif, Huhtamaki signed in August 2021 a bridge 700 financing facility of USD 500 million 600 500 • Committed credit facilities at the 400 end of Q3 2021 (including the bridge fin
Slide 61: Free cash flow below last year's level
Free cash flow below last year’s level Free cash flow bridge Cash flow driven by: (EUR million) • Adjusted EBITDA at previous 363 year’s level 337 • In comparison period, Laminor gain of ~20 MEUR is recognized as non-cash in ‘Other’ 150 • Large change in working capital 28 1 1 mainly following incre
Slide 62: Stable financial position also after acquisition of Elif
Stable financial position also after acquisition of Elif MEUR Sep 2021 Sep 2020 • Acquisition of Elif mainly impacting balance sheet in Q3 Total assets 4,418 3,685 • Higher total assets Operating working capital 690 590 Net debt 1,404 896 • Increased net debt and gearing Equity & non-controlling int
Slide 63: Progress towards long-term financial ambitions
Progress towards long-term financial ambitions Long-term 2014 2015 2016 2017 2018 2019 2020 Q1-Q3 2021 ambition Organic growth 6% 4% 4% 3% 5% 6% -2% 6% 5+% Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0% 8.1% 8.6% 9.1% 9.1% 10+% Net debt/Adj. EBITDA 1.0 1.6 1.8 1.8 2.3 2.0 1.8 3.0 2-3 Dividend payout ratio
Slide 64: Q3 2021 results: Looking forward
Q3 2021 results: Looking forward
Slide 65: Outlook 2021
Outlook 2021 (unchanged) The Group’s trading conditions are expected to improve compared to 2020, 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 66: Short-term risks and uncertainties
Short-term risks and uncertainties The COVID-19 pandemic may create further disturbances in the Group’s trading conditions and its operating environment, as well as in demand for the Group’s products. Availability and cost of raw material, distribution and energy as well as movements in currency rat
Slide 67: Solid performance despite a challenging cost environment
Solid performance despite a challenging cost environment • Solid growth, especially in emerging markets. Recovery in food on-the-go packaging accelerated • Significant inflationary cost environment impacted profitability, despite mitigation actions. Overall successful pass-through of raw material in
Slide 68: Financial calendar 2022
Financial calendar 2022 February 10, 2022 April 27, 2022 July 21, 2022 October 21, 2022 Results 2021 Q1 2022 Interim Report, Half-yearly Report 2022 Q3 2022 Interim Report Annual General Meeting Week commencing February 28, 2022 Annual Report 2021 68 October–December Roadshow presentation | Huhtamak
Slide 69: 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 70: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors