Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (June 2019)
60 slides from Huhtamaki Oyj's roadshow presentation, June 2019
Slide 1: Roadshow presentation May-June 2019
Roadshow presentation May-June 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 8.0% The first choice in food packaging Comparable growth Adjusted ROI 5% 11.9% Employees Manufacturing sites Our purpose 17,700 78 Helping great products reach more people, Operations in mo
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 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 Packagingj Oceania and North America kdfgjkl dhgdfhg – 39 plants on – 2
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: 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 7: 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 8: 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, Asia and South America. Ou
Slide 9: 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 10: Becoming the first choice in food packaging – next steps
Becoming the first choice in food packaging – next steps
Slide 11: 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 12: 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 13: 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 14: 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 15: 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 16: Q1 2019: Solid comparable net sales growth and profitability
Q1 2019: Solid comparable net sales growth and profitability
Slide 17: Strong total net sales growth
Strong total net sales growth Net sales growth split in Q1 19 + +11% – 5% comparable net sales growth with all segments contributing 19 802 – 7% in emerging markets – 3% from acquisitions 25 – Positive currency impact 33 M€ 725 Q1 18 Organic Acquisitions Translation impact Q1 19 17 Roadshow presenta
Slide 18: Comparable net sales growth
Comparable net sales growth Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 2018 Long-term ambitions Foodservice E-A-O 4% 3% 5% 5% 5% 4% 5-7% North America 5% 11% 2% 2% 5% 5% 2-5% Flexible Packaging 5% 4% 6% 11% 6% 7% 6-8% Fiber Packaging 4% 5% 4% 3% 5% 4% 5-7% Group 5% 6% 4% 6% 5% 5% 5+% – Good volume growth across
Slide 19: Strong net sales growth and solid profitability
Strong net sales growth and solid profitability MEUR Q1 19 Q1 18 Change FY 2018 FY 2017 Change Q1 19 Highlights Net sales 802.1 725.2 11% 3,103.6 2,988.7 4% – 11% reported net sales growth, with Adjusted EBITDA1 107.0 95.6 12% 398.7 389.7 -4% all segments contributing Margin1 13.3% 13.2% 12.8% 13.0%
Slide 20: Q1 2019 Business segment review
Q1 2019 Business segment review
Slide 21: Foodservice Europe-Asia-Oceania: Solid comparable net sales growth boosted by acquisitions
Foodservice Europe-Asia-Oceania: Solid comparable net sales growth boosted by acquisitions 2018 Net sales MEUR 882 Adjusted EBIT margin1 8.7% MEUR 228 8.8% 6 – Strong net sales growth – Contribution from acquisitions MEUR 23 4 – Good growth in QSR, folded carton and ice cream packaging in Europe; so
Slide 22: North America: Strong comparable net sales growth
North America: Strong comparable net sales growth 2018 Net sales MEUR 1,003 MEUR 256 Adjusted EBIT margin1 7.3% 8.0% 12 – Good demand in retail private label tableware 10 – Growth further supported by successful pricing 8 6 actions 4 – Branded retail sales impacted by late Easter 2 227 257 242 277 2
Slide 23: Flexible Packaging: Significant earnings improvement driven by India
Flexible Packaging: Significant earnings improvement driven by positive development in India 2018 Net sales MEUR 952 MEUR 252 9.1% Adjusted EBIT margin1 7.1% 12 – Good net sales growth 10 8 – Especially in India, driven by good export sales 6 – Middle East and Africa also growing well 4 2 – Profitab
Slide 24: Flexible Packaging unit in Egypt inaugurated on April 11, 2019
Flexible Packaging unit in Egypt inaugurated on April 11, 2019 – Commercial deliveries began in Q1 2019 – Ramping-up to be finalized during 2019 – Initial investment of MEUR 23 million to bring app. MEUR 20 net sales – Potential to expand later – Huhtamaki share of JV 75% 24 Roadshow presentation Ma
Slide 25: Fiber Packaging: Earnings burdened by investments in innovation
Fiber Packaging: Earnings burdened by investments in innovation 2018 Net sales MEUR 283 MEUR 72 9.6% Adjusted EBIT margin1 11.0% 6 – Solid net sales growth led by Oceania, Central Europe and Africa; challenging economic 4 conditions in Brazil – Growth in Russia constrained by lack of capacity 2 – Go
Slide 26: Q1 2019 Financial review
Q1 2019 Financial review Huhtamaki
Slide 27: Good profit improvement down to EPS
Good profit improvement down to EPS Q1 19 Q1 18 Change FY 2018 FY 2017 Change MEUR Q1 Highlights Net sales 802.1 725.2 11% 3,103.6 2,988.7 4% – Productivity improvements Adjusted EBITDA1 107.0 95.6 12% 398.7 389.7 -4% visible in EBIT and EBITDA Margin1 13.3% 13.2% 12.8% 13.0% – Net financial items b
Slide 28: Currency impact turned positive
Currency impact turned positive Closing rates Average rate Q1 2018 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Average rate Q1 2019 – Foreign currency impact USD 1.23 1.24 1.16 1.17 1.15 1.12 1.14 compared to 2018 rates INR 79.10 80.80 79.68 84.98 80.23 77.78 80.11 – Net Sales MEUR 19 and EBIT MEUR 1 GBP 0.88 0.8
Slide 29: Raw material costs stable or moderating
Raw material costs stable or moderating 140 – Resin prices relatively stable – Paperboard prices stable on a 120 high level – Post-industrial fiber prices 100 moderated – OCC and post-consumer fiber stable but higher than Q1 18 80 60 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 Q1/18 Q1/19 PS PP PE -12
Slide 30: Impact of adopting IFRS 16 Leases standard
Impact of adopting IFRS 16 Leases standard – IFRS 16 Leases has been adopted as of Adjusted EBITDA, Net Debt, Jan 1, 2019 using full retrospective restated 2018 restated 2018 MEUR MEUR transition method 120 107 102 1 000 960 958 928 96 94 815 – Main impact from leases on warehouses, 100 800 plants,
Slide 31: Net debt/EBITDA ratio impacted by IFRS 16 implementation
Net debt/EBITDA ratio impacted by IFRS 16 implementation Covenant level 3.5 – Net debt/EBITDA at 2.4 AMBITION – Going forward, IFRS 16 restated 2-3 figures will apply – At the end of Q1 19 2.3 2.4 – Cash and cash equivalents MEUR 100 1.8 2.2 2.2 2.2 – Unused committed credit facilities available MEU
Slide 32: Loan maturities
Loan maturities Debt maturity structure March 31, 2019 600 – Average maturity 3.5 years at 500 the end of Q1 2019 400 (4.4 at the end of Q1 2018) – Unused committed credit 300 facilities of MEUR 302 200 maturing in 2022 100 MEUR 0 2019 2020 2021 2022 2023 Later Lease liabilities Commercial paper pro
Slide 33: Free cash flow
Free cash flow 107 96 – Working capital increase mainly due to late timing of MEUR 2 0 Easter season and -6 -4 -10 -10 -3 -3 preparation for Brexit -18 -14 -33 -60 -40 – Higher capex due to timing -68 Reported Change in Net financial Taxes Capital Proceeds Other Free cash EBITDA working items expend
Slide 34: Stable financial position
Stable financial position Mar Dec Mar MEUR 2019 2018 2018 Total assets 3,417 3,240 3,035 – Investments and acquisitions still visible – Higher assets Operating working capital 661 598 562 – Impact on key return ratios Net debt 980 928 815 – Dividend of approx. MEUR 88 to be paid early May Equity & n
Slide 35: Progress towards long-term ambitions
Progress towards long-term ambitions Long- FY FY FY FY FY term 2014 2015 2016 2017 20181 Q1 2019 ambition Organic growth 6% 4% 4% 3% 5+% 5% 5+% – 5+% comparable net Adjusted EBITDA sales growth ambition on 11.6% 12.5% 13.3% 13.0% 12.8% 13.3% 14+% margin track Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0%
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 May – June 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 May - June 2019 Source: CGIAR Research Program on
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 May - June 2019
Slide 41: Only a small share of CO2 emissions of a latte on the go
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 May - June 2019
Slide 43: Changes in consumer behavior and investments in waste management are required
Changes in consumer behavior and investments in waste management are required to solve littering and waste challenges Waste collection & Consumer Less recycling behavior marine plastics 43 Roadshow presentation May - June 2019
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 May - June 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 May - June 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 May - June 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 May - Jun
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: Financial calendar 2019
Financial calendar 2019 July 19 Half-yearly Report 2019 October 23 Q3 19 Interim Report 50 Roadshow presentation May - June 2019
Slide 51: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 52: Appendices
Appendices Huhtamaki
Slide 53: 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 54: Quarterly comparable net sales growth by business segment
Quarterly comparable net sales growth by business segment Long- term 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% 5% 5% 5% 6% 4% 2% 3% 4% 4% 5% 5-7% North America 5% 11% 2% 2% 5% 2% 2% 1% 2% 5% 2% 6% 2-5% Flexible Packaging 5% 4% 6% 11% 6%
Slide 55: 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 UAE, Bags & Europe USA, Egypt M&A spend plates, US Malaysia wraps, USA, Egypt, M€
Slide 56: 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 57: Ownership
Ownership Shareholder distribution by sector March 31, 2019 – 31,693 registered shareholders at the end of March 2019 6% – 55% of shares in domestic ownership 9% – 17% of shares controlled by non-profit 45% 9% organizations – Finnish Cultural Foundation a 15% major owner since 1943, current ownershi
Slide 58: 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 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