Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (March 2017)
60 slides from Huhtamaki Oyj's roadshow presentation, March 2017
Slide 1: Roadshow presentation February-March 2017
Roadshow presentation February-March 2017
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 EBIT margin Our ambition €2.9bn 9.4% The preferred global Comparable growth ROI food packaging brand 4% 14.7% Employees Manufacturing sites Our purpose 17,000 74 Helping great products Operations in reach more people, 34 countries
Slide 3: We’re well positioned to deliver on our ambitions
We’re well positioned to deliver on our ambitions Who we are: Who we serve: What we offer: Main materials we use: FOODSERVICE #1 packaging company Paperboard operating globally MOLDED FIBER #1 company globally Recycled fibers FLEXIBLE PACKAGING Plastic & other #1 company in emerging materials market
Slide 4: Our three business areas are organized into four reporting segments
Our three business areas are organized into four reporting segments Foodservice Flexible Molded fiber Share of net sales packaging packaging packaging per segment in 2016 9% 25% 31% 35% Foodservice Europe-Asia- Flexible Packaging Molded Fiber Oceania and North America kdfgjkl jhgfkjfdhgdfhg – 39 pla
Slide 5: 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 6: 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 7: Flexible Packaging: Strengthening our position
Flexible Packaging: Strengthening our position Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America. Our products Our competi
Slide 8: Molded Fiber: Focus on profitable growth to enhance our positions
Molded Fiber: Focus on profitable growth to enhance our positions Recycled molded fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production in Europe, Oceania, Africa and South America. Our products Our competitive M€ Long-term ambition 2016 2015 2014
Slide 9: Growing into a preferred global food packaging brand – next steps
Growing into a preferred global food packaging brand – next steps
Slide 10: 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 11: … and 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 12: We target long-term growth both organically and via acquisitions
We target long-term growth both organically and via acquisitions 3-5 year growth ambition 5+% + 5+% 10+% € 5+bn p.a. if major Comparable Acquisitive acquisition growth growth ambition ambition € 4+bn with capex and add-on acquisitions Net sales Comparable growth 2010 2011 2012 2013 2014 2015 2016* 1
Slide 13: Growth and operational efficiency drive profitability improvement
Growth and operational efficiency drive profitability improvement – Summary of our new 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 grow
Slide 14: We’re an industrial manufacturing company by nature
We’re an industrial manufacturing company by nature In 2012-2016, we have invested – M€ 688 in organic growth as capex – M€ 415 in acquisitions → Topline growth approx. € 1 bn(1 with CAGR at approx. 9.1% And we continue to address profitable growth opportunities – To expand our footprint – To widen
Slide 15: We have built a unique global footprint…
We have built a unique global footprint… Manufacturing units 2010 New manufacturing units 2011-2014 15 Investor Relations, March 2017 New manufacturing units 2015-2016 Sales only Head office
Slide 16: … by making major investments in growth in 2012-2016
… by making major investments in growth in 2012-2016 Short-run flexible Paper and plastic packaging, Net sales in disposable packaging, Eastern Europe China & HK 2012-2016(1 Pressed plates, US Bags & UAE, Malaysia Folding carton, Europe + € 1 bn wraps, from € 1.9 bn Corrugated Russia US, UK, to € 2.
Slide 17: 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’ loremipsum capabilities loremipsum lives easier loremipsum - Follow global
Slide 18: Our focus on food enables stronger collaboration between segments
Our focus on food enables stronger collaboration between segments Foodservice Molded E-A-O Fiber Our purpose: Stronger Our ambition: Helping great collaboration in The preferred products reach sourcing, operations, innovation, global food more people, commercial, people, and corporate responsibility
Slide 19: How we continue to drive growth
How we continue to drive growth Organic growth Outcome in organic CAPEX investments – Majority in business expansion – Estimated annual CAPEX What we do – Improved and fit-for-purpose 40% of EBITDA – Focus on consumer food machinery and drink packaging – Targeted manufacturing asset – Expand geograp
Slide 20: Stronger collaboration between segments supports profitability
Stronger collaboration between segments supports profitability What we have done What we will do – Focus on food – Continue building on our foundation – Segments share customers and technologies – Add stronger COLLABORATION across segments – Narrower scope enhances leverage – Sourcing – Sourcing ben
Slide 21: Solid balance sheet management continues…
Solid balance sheet management continues… Topline growth Profitability Tight management of operational net assets - Capex funded through EBITDA with focus on growth - Continuous improvement in working capital - Manufacturing asset velocity - M&A self-funded through profit and debt Segments focus on
Slide 22: … and cash flow generation remains in focus
… and cash flow generation remains in focus Tight working capital management EBITDA margin ambition 14+% Debt management – Utilize current beneficial Self-funded for Growth CAPEX finance cost environment dividend and growth to boost further growth - Without raising new equity Tax - Keeping net debt/
Slide 23: Solid progress in 2016 towards our long-term ambitions
Solid progress in 2016 towards our long-term ambitions Long-term FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 ambition Organic growth 3% 3% 6% 4% 4% 5+% – Continued good EBITDA margin 10.9% 11.2% 11.6% 12.5% 13.3% 14+% progress in 2016 EBIT margin 7.0% 7.4% 7.8% 8.7% 9.4% 10+% meeting our previous mid- R
Slide 24: Growing into the preferred global food packaging brand
Growing into the preferred global food packaging brand – continuing on our strategic path Grow AMBITION Build more Achieve our ambition 10+% - Organic and - Continue organic The preferred global food innovative growth 5+% investments packaging brand - Acquisitive growth 5+% - Continue disciplined ac
Slide 25: FY 2016: Solid progress
2016: Solid progress Huhtamaki
Slide 26: All-in-all 6% topline growth in Q4 2016…
All-in-all 6% topline growth in Q4 2016… Net sales growth split in Q4 2016 28 -2 732 – 3% comparable growth 15 – 5% in emerging markets 691 – 4% from acquisitions – No material impact from currency translation M€ Q4 15 Comparable Acquisitions, Translation impact Q4 16 growth divestments & other 26 I
Slide 27: … and 5% in FY 2016
… and 5% in FY 2016 Net sales growth split 83 in FY 2016 107 -51 2,865 2,726 – 4% comparable growth – 7% in emerging markets – 3% from acquisitions – Negative 2% from currency translation M€ FY 15 Comparable Acquisitions, Translation impact FY 16 growth divestments & other 27 Investor Relations, Mar
Slide 28: Comparable growth varied between segments
Comparable growth varied between segments Q4 16 Q3 16 Q2 16 Q1 16 2016 Long-term ambitions Foodservice EAO 3% 5% 7% 7% 5% 5-7% North America 5% 2% 8% 10% 6% 2-5% Flexible Packaging -3% -3% 2% 1% -1% 6-8% Molded Fiber 6% 6% 5% 4% 5% 5-7% Group 3% 2% 6% 6% 4% 5+% – Strong growth in the North America a
Slide 29: Solid progress across the board
Solid progress across the board M€ Q4 16 Q4 15 Change FY 2016 FY 2015 Change Q4 2016 Highlights Net sales 731.5 690.5 6% 2,865.0 2,726.4 5% – Earnings improvement Adjusted EBITDA1 95.2 82.4 16% 381.8 342.0 12% driven by solid Margin 13.0% 11.9% 13.3% 12.5% development in the Adjusted EBIT1 65.4 55.7
Slide 30: Negative impact from foreign currency translation moderated during the year
Negative impact from foreign currency translation moderated during the year Average Closing rates Average Foreign currency rate 2015 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 rate 2016 translation impact USD 1.11 1.09 1.14 1.11 1.12 1.05 1.11 INR 71.15 72.02 75.43 74.96 75.03 71.09 74.37 Q4 2016: GBP 0.73 0.73
Slide 31: Prices for main raw materials relatively stable
Prices for main raw materials relatively stable 160 – Prices for main raw 140 materials (plastics, paperboard and recycled 120 paper) were relatively 100 stable throughout the year 80 60 40 2011 2012 2013 2014 2015 2016 PS PP PE +11% -5% +2% (end of 2016 vs. end of 2015) 31 Investor Relations, March
Slide 32: Stable solidity allows growth investments
Stable solidity allows growth investments Covenant level 3.5 AMBITION – Net debt/EBITDA stable 2.1 2.1 2.0 2-3 at 1.8 1.8 1.8 1.8 – At the end of 2016 1.6 1.6 – Cash and cash equivalents M€ 106 – Unused committed credit facilities available M€ 303 – Funds available for 0.68 0.64 0.68 0.60 0.53 0.52
Slide 33: Debt maturity structure unchanged
Debt maturity structure unchanged Debt maturity structure December 31, 2016 500 – Maturity of M€ 400 syndicated 400 revolving credit facility was 300 extended to 2022 in December – Average maturity remained at 200 3.9 years, end of 2015 level 100 M€ 0 2017 2018 2019 2020 2021 Later Finance lease lia
Slide 34: Free cash flow hit the earlier ambition level
Free cash flow hit the earlier ambition level 380 319 – Free cash flow improved driven by good profitability 100 91 development M€ 2 0 – Taxes higher vs. PY -10 -22 -3 -4 -19 -26 -51 -29 – Growth investments drove capex significantly above -147 -199 PY level due to higher Q4 Reported Change in Net f
Slide 35: Stable financial position
Stable financial position M€ Dec 2016 Dec 2015 Total assets 2,875 2,515 - Higher equity Operating working capital 515 459 - Net debt increased due to acquisitions Net debt 675 551 - ROI and ROE remained at good level Equity & non-controlling interest 1,182 1,036 Gearing 0.57 0.53 ROI1 14.7% 14.7% RO
Slide 36: The Board of Directors aims at predictable and growing dividends
The Board of Directors aims at predictable and growing dividends Dividend payout ratio 40-50% – The Board proposes a € 0.73 67% dividend per share 53% – Adjusted EPS € 1.83 48% 47% 47% 47% – Free cash flow before dividends 40% 40% M€ 100 for FY 2016 – Based on Board proposal, 11% increase in dividen
Slide 37: Solid progress in 2016 towards our long-term ambitions
Solid progress in 2016 towards our long-term ambitions Long-term FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 ambition Organic growth 3% 3% 6% 4% 4% 5+% – Continued good EBITDA margin 10.9% 11.2% 11.6% 12.5% 13.3% 14+% progress in 2016 EBIT margin 7.0% 7.4% 7.8% 8.7% 9.4% 10+% meeting our previous mid- R
Slide 38: Outlook 2017
Outlook 2017 The Group’s trading conditions are expected to remain relatively stable during 2017. 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 39: Q4 2016 by business segment
Q4 2016 by business segm« Huhtamaki
Slide 40: Foodservice Europe-Asia-Oceania: Significant earnings improvement
Foodservice Europe-Asia-Oceania: Significant earnings improvement Net sales M€ 668 M€ 741 Adjusted EBIT margin 7.9% 8.5% 10 2015 2016 – Good growth against strong Q4 15 driven by 8 coffee and QSR especially in Eastern Europe 6 – Moderate growth continued in China 4 – Strong earnings improvement supp
Slide 41: North America: Good holiday season sales
North America: Good holiday season sales Net sales M€ 948 M€ 1,005 EBIT margin 9.3% 10.7% 12 2015 2016 – Good growth driven by retail, especially 10 8 private label tableware 6 4 – Sales of frozen dessert packaging 2 declined 0 211 253 240 244 235 266 244 260 -2 – Earnings improved -4 Q1 15 Q2 15 Q3
Slide 42: Flexible Packaging: Net sales decline, solid earnings
Flexible Packaging: Net sales decline, solid earnings Net sales M€ 869 M€ 869 EBIT margin 7.9% 8.5% 6 2015 2016 – Net sales declined as a result of 4 – Soft local sales in India after the 2 demonetization action executed by the 0 government in early November -2 – Declining export sales to Africa in
Slide 43: Molded Fiber: Net sales and earnings growth
Molded Fiber: Net sales and earnings growth Net sales M€ 260 M€ 268 EBIT margin 12.9% 12.9% 8 2015 2016 – Strong volume growth in Europe with good 6 utilization of recently added capacity in the UK, Russia and Czech Republic 4 – New business and added capacity fully 2 onboard in Africa 65 66 62 67 6
Slide 44: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 45: Appendices
Appendices
Slide 46: Group financials 2009-2016
Group financials 2009-2016 2016 2015 2014 (1 2013 (1 2012 (2 2011 2010 2009 Net sales M€ 2,865 2,726 2,236 2,161 2,321 2,043 1,952 1,832 Comparable growth (3 % 4 4 6 3 3 5 3 -5 Adjusted EBITDA (4 M€ 382 342 259 242 254 208 214 193 Margin (4 % 13.3 12.5 11.6 11.2 10.9 10.2 11.0 10.5 Adjusted EBIT (4
Slide 47: Good progress in profitability in 2016
Good progress in profitability in 2016 M€ Q4 16 Q4 15 Change FY 2016 FY 2015 Change Q4 16 Highlights Net sales 731.5 690.5 6% 2,865.0 2,726.4 5% – Earnings improvement Adjusted EBITDA1 95.2 82.4 16% 381.8 342.0 12% continued Margin 13.0% 11.9% 13.3% 12.5% – IACs related to restructuring Adjusted EBI
Slide 48: Comparable growth by business segment in 2015-2016
Comparable growth by business segment in 2015-2016 Long-term Q4 16 Q3 16 Q2 16 Q1 16 Q4 15 Q3 15 Q2 15 Q1 15 FY 16 FY 15 FY 14 ambition Foodservice E-A-O 3% 5% 7% 7% 8% 6% 2% 3% 5% 4% 4% 5-7% North America 5% 2% 8% 10% 5% 7% -2% 7% 6% 4% 6% 2-5% Flexible Packaging -3% -3% 2% 1% -1% 5% 4% 5% -1% 3% 7
Slide 49: 13 acquisitions completed since 2011
13 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 50: Expansion into Eastern Europe and capability for shorter runs
Expansion into Eastern Europe and capability for shorter runs – We acquired FIOMO in Czech Republic in January 2016 – 1 plant located in Prague – Situated in the middle of Europe and serving markets east and west – Dedicated to offset printing for flexible packaging – Complementing our offering in E
Slide 51: Huhtamaki entered the folding carton packaging business in Europe
Huhtamaki entered the folding carton packaging business in Europe by acquiring Delta Print and Packaging in May 2016 – Manufactures bespoke printed folding carton packaging for the UK and European foodservice, packaged food and retail markets – Plants in Belfast, UK and Gliwice, Poland – Net sales f
Slide 52: Huhtamaki entered the foodservice packaging market in India
Huhtamaki entered the foodservice packaging market in India – Huhtamaki acquired 51% of Val Pack Solutions Private Limited, a privately held paper cup manufacturer based in Mumbai, in July – Valpack is a well-established company with high manufacturing standards – Annualized net sales approx. EUR 4
Slide 53: Huhtamaki invests USD 100 million in expansion to the US west coast
Huhtamaki invests USD 100 million in expansion to the US west coast – A world class manufacturing and distribution unit will be set up in Goodyear, Arizona, close to Phoenix – Serves southwest and west coast foodservice packaging and retail tableware markets with full range of foodservice packaging
Slide 54: Huhtamaki to expand and modernize operations in South China
Huhtamaki to expand and modernize operations in South China – Huhtamaki will invest EUR 15 million in the expansion and modernization of its manufacturing operations in Guangzhou, South China – China is an important market for our quick service and specialty coffee customers – Growing population – R
Slide 55: Flexible Packaging invests to boost growth in emerging markets
Flexible Packaging invests to boost growth in emerging markets Greenfield in Egypt 3 projects in India – Huhtamaki’s entry into manufacturing flexible – 2 new units in North East India packaging in Africa – Flexible packaging manufacturing unit in Assam – State-of-the-art manufacturing unit in the –
Slide 56: Foodservice packaging greenfield in Ukraine
Our ongoing growth cases 5: Foodservice packaging greenfield in Ukraine – Huhtamaki will enter manufacturing foodservice packaging in Ukraine by setting up a greenfield paper cup manufacturing unit in Kiev – We’ve been present in Ukraine since 2002; Currently Ukrainian foodservice packaging markets
Slide 57: Ownership
Ownership Shareholder distribution by sector December 31, 2016 – 26,407 registered shareholders at the end of December 2016 6% – 52% of shares in domestic ownership 8% – 17% of shares controlled by non-profit 6% 48% organizations 15% – Finnish Cultural Foundation a major owner since 1943, 17% curren
Slide 58: Financial calendar 2017
Financial calendar 2017 Week 8 April 27 Annual Accounts 2016 Q1 17 Interim Report & Directors’ Report AGM July 21 October 26 Half-yearly Report Q3 17 Interim Report 2017 58 Investor Relations, March 2017
Slide 59: 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 60: For further information, please contact us:
For further information, please contact us: www.huhtamaki.com » Investors ir@huhtamaki.com Investor Relations Kaisa Uurasmaa Tel. +358 10 686 7815 kaisa.uurasmaa@huhtamaki.com