Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Investor Day (March 2020)
56 slides from Huhtamaki Oyj's investor day presentation, Mar 24, 2020
Slide 1: Strategy Update
Strategy Update March 24, 2020
Slide 2: Agenda
Agenda 1. Shaping the sustainable future 2. Financials supporting our strategic priorities 3. Conclusions Strategy Update March 2020
Slide 3: COVID-19 Update
COVID-19 Update Charles Héaulmé President and CEO
Slide 4: Commitment to our priorities: protect people, food, planet
These unprecedented times remind us of our beliefs and reinforce our commitment to our priorities: protect people, protect food, protect the planet. COVID – 19 Update March 2020 4
Slide 5: In active crisis management mode since mid-January
In active crisis management mode since mid-January Our guiding principles Our key global employee actions • The safety and health of all our stakeholders • Provision of up-to date guidelines on how remains our number one to manage exposure and/or any illness focus and priority during COVID-19 • Hygi
Slide 6: Actions taken to safeguard business continuity
Actions taken to safeguard business continuity Product Safety Production Processes Business and Financials Ensuring Huhtamaki products are safe Manufacturing operations are certified Daily business continuity review to use — anytime, anywhere and audited for safety — Frequency and — global process r
Slide 7: Status of our operations to-date
Status of our operations to-date Health of employees Situation in China To date, 3 employees (out of 18,589) diagnosed with After the temporary interruption in manufacturing during the COVID-19. All three cases are in self-isolation at home and extended Chinese New Year, we are now running at full c
Slide 8: Our perspective for 2020 – resilience through diversified portfolio
Our perspective, today, for 2020 – resilience built-in through diversified portfolio Food on-the-go Food on-the-shelf (Foodservice packaging) (Flexible and Fiber packaging) Foodservice sales will be temporarily affected by closures of Demand for flexible packaging and fiber packaging resilient to qu
Slide 9: Shaping the sustainable future
Shaping the sustainable future Charles Héaulmé President and CEO
Slide 10: Agenda
Agenda 1. Delivering growth 2. A changing world 3. Ambition & strategic priorities 4. Strong business segments Strategy Update March 2020
Slide 11: Delivering growth
ing growth i oO e Oo ‘Huhtamaki
Slide 12: Huhtamaki operates on a global scale
Huhtamaki operates on a global scale NET SALES €3.4B ADJUSTED EBIT MARGIN 8.6% MANUFACTURING UNITS 81 OPERATING COUNTRIES 35 EMPLOYEES 18,598 Strategy Update March 2020 12
Slide 13: 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 Foodservice packaging Molded fiber packaging Flexible packaging Strategy Update Marc
Slide 14: We are integrating Fiber Packaging and Foodservice EAO
We are integrating Fiber Packaging and Foodservice EAO Our current segment structure Our new segment structure Rationale for the integration o Improving customers access Foodservice EAO North America to combined fiber and paperboard technology Fiber and Foodservice North America o Leveraging organiz
Slide 15: Introducing our diverse Global Executive Team
Introducing our diverse Global Executive Team Charles Héaulmé Arup Basu Clay Dunn Eric Le Lay Thomas Geust President President, President, President, Foodservice EAO CFO and CEO Flexible Packaging North America and Fiber Packaging Marina Madanat Sami Pauni Teija Sarajärvi Antti Valtokari Thomasine K
Slide 16: We have delivered strong growth
We have delivered strong growth Netsales, Net sales,M€ M€ Adjusted EBIT, Adjusted EBIT, M€ M€ Free cashflow, Free cash flow, M€M€ Dividend, €/share Dividend, €/share 226 0.89 0.89 3,399 3,399 293 204 +40% +52% +54% +67% +214% +248% +48% 2,429 0.6 0.60 2,236 190 175 65 2014 2019 2014 2019 2014 2019 2
Slide 17: Leveraging our unique value proposition
Leveraging our unique value proposition Customer Global Multiple Sustainability centricity footprint technologies Long-standing relationships Assets in North America Molded fiber packaging 70% of raw materials from and Europe renewable source Trusted and reliable partner Foodservice packaging Increa
Slide 18: BEUR 1.5 invested globally in geographic, sustainability and new business model expansion
BEUR 1.5 invested globally in geographic, sustainability and new business model expansion Markets Products Business Models Achieving scale in core European Expanding in sustainable folding Short-run for foodservice and and USA markets carton, bags and wraps flexible packaging businesses Expanding in
Slide 19: A changing world
A changing world
Slide 20: Four transformative trends impact future of food packaging
The future of food packaging is impacted by four transformative trends 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. Sustainability w
Slide 21: The next billion consumers will come from emerging markets
The next billion consumers will come from emerging markets Middle class will increase by 1.8B people in the next 10 years Coming from China, India, South East Asia and longer-term Africa Demanding safe access to affordable food every day, enabled by packaging Driving the need for local scale and cos
Slide 22: Consumer of the future will require innovative, individual, sustainable packaging
Consumer of the future will require packaging to be innovative, individual and sustainable Consumer of the future values convenience and self expression Consciousness of personal and environmental wellbeing is increasing New brands and models are emerging in Food delivery, FMCG, Retail Increasing de
Slide 23: Digitalization will influence packaging and the way we do business
Digitalization will influence packaging and the way we do business The pace of digitalization will accelerate Creating demand for smart packaging for product traceability and consumer engagement Technology and analytics will reshape operations New digital-enabled business models will rise Strategy U
Slide 24: Sustainability will drive innovation and collaboration
Sustainability will drive innovation and collaboration Increasing consumer sentiment and regulation spreading globally Demanding circularity and plastic substitution solutions Driving a need for innovation in products and business models Requiring us to collaborate across the value chain Strategy Up
Slide 25: Addressing packaging waste is key for the future
Addressing packaging waste is key for the future 40% of plastics produced globally goes into packaging Together, five countries account for 55-60% of the plastic waste leakage Main items found in coastal clean-up: o Cigarette butts o Food wrappers o Straws & stirrers o Plastic cutlery, bags, bottles
Slide 26: Value of packaging within the broader sustainability context
Understanding the value of packaging within the broader sustainability context Health Food safety Packaging promotes hygiene and prevents Packaging keeps food safe from spoilage spread of disease and preserves its original properties Food availability Food waste prevention Packaging allows food to b
Slide 27: Partnering is key to making packaging sustainable
Partnering is key to making packaging sustainable We all need to co-operate – Huhtamaki, Industry, Regulators, Communities and Consumers – to promote and create a responsible Innovate for circularity Promote renewable sources lifestyle & recycling Help develop collection Invest in education Behave r
Slide 28: Ambition & strategic priorities
Ambition & strategic priorities
Slide 29: Huhtamaki Strategy
Huhtamaki Strategy We are for shaping the sustainable future of everyday life to offer wellbeing, convenience and responsible lifestyle to billions of people everywhere Our ambition is to become the first choice in sustainable food packaging Our strategic priorities are Growth, Competitiveness, Tale
Slide 30: We will grow our business
We will grow our business o Pursue scale in our core businesses through organic investments and M&A o Expand in emerging markets, especially Asia o Develop sustainable solutions o Develop food delivery packaging business o Step up long-term innovation and venturing Strategy Update March 2020 30
Slide 31: We will improve our competitiveness
We will improve our competitiveness o Achieve world-class operational performance o Focus on process performance o Achieve scale and structural efficiencies across the company o Digitize our operations and modernize IT Strategy Update March 2020 31
Slide 32: We will develop our skilled talent
We will develop our skilled talent o Develop strategic capabilities o Promote high-performance culture o Develop zero-accident safety culture o Embed our strong values in the way we work and in all our business decisions – everyday Strategy Update March 2020 32
Slide 33: We will embed sustainability in everything we do
We will embed sustainability in everything we do o Become world-class in environmental, social governance o Strengthen and focus innovation on sustainable packaging designed for recycling, composting or re-use o Achieve over 80% of renewable or recyclable raw material use o Achieve carbon-neutral pr
Slide 34: High ambition for sustainability, building on strong track record
We are setting high ambition for sustainability, building on a strong base and track record to deliver Achievements 2015 – 2019 Our 2030 ambition o Sustainable innovations in paper straws, blueloop and Fresh commercialized 100% Carbon of products designed to be neutral 100% o 13% lower GHG emissions
Slide 35: We are grounded in our strong values
We are grounded in our strong values Care Dare Deliver We care for each other, our We dare to innovate, grow and We commit and deliver solutions customers, partners and have an impact. We are a diverse to our customers, with integrity communities. We care for the and entrepreneurial team seeking and
Slide 36: First choice in sustainable food packaging: long-term financial ambition
Our long-term financial ambition Our ambition Comparable growth Adjusted EBIT margin 5+% 10+% First choice in sustainable food packaging Net debt/Adjusted EBITDA Dividend payout ratio 2-3 40-50% Strategy Update March 2020 36
Slide 37: Strong business segments
Strong business segments
Slide 38: Foodservice EAO
Foodservice EAO Global key accounts in QSR, Coffee and FMCG o Strong business with room to grow product portfolio and expand geographically o Well positioned to expand in emerging markets Plastic substitution o Unique platform in paperboard conversion and molded fiber, to develop complex sustainable
Slide 39: Fiber Packaging
Fiber Packaging Egg and fruit protective packaging o Steady underlying growth and plastic substitution in some geographies o Room to expand geographically, within product categories and to take share from plastic o Base to develop circular models together with Foodservice Molded fiber technology o P
Slide 40: North America
North America Retail, Foodservice, Consumer goods o Convenience lifestyle driving growth for our core products o Room to expand in growing categories – folded carton, molded fiber, private label pressed plates Unique capabilities position us well to capture growth o Brand building and retail experti
Slide 41: Flexible Packaging
Flexible Packaging Strong demand for flexible packaging o Strong underlying demand for FMCG products, driven by emerging markets o Flexible packaging remains superior solution for modern retail supply chain o Footprint in fast growing emerging markets with further room to expand o Accelerating innov
Slide 42: Financials supporting our strategic priorities
Financials supporting our strategic priorities Thomas Geust Chief Financial Officer
Slide 43: Building profitable growth from our excellent market position
Building profitable growth from our excellent market position Capture GROWTH Prioritized Improve INVESTMENTS PROFITABILITY Predictable Generate DIVIDENDS CASH FLOW Capital Markets Day 2020 43
Slide 44: Continue to grow by allocating capital efficiently
Continue to grow by allocating capital efficiently Net sales and growth rates Capture growth avenues (EUR million and %) 3,104 3,399 Additional Scale our core business 2,989 2,726 2,865 growth — Follow and serve our customers from M&A 2,236 — Expand in emerging markets Comparable Invest in growth pr
Slide 45: Focus on improving profitability
Focus on improving profitability Adjusted EBIT Actions to improve profitability (EUR million and % of net sales) Offer value to customers 9.4% Improve operational performance by 9.0% 8.7% 8.6% — Benefitting from scale 8.1% 7.8% 293 — Manufacturing efficiencies 268 268 — Eliminating waste 251 238 Mar
Slide 46: Capex and M&A support growth
Capex and M&A support growth Net sales Capital allocation (EUR million) 3,399 Strict discipline on selection of growth avenues Capex and M&A — Capex, M&A or partnering 2,236 1,653 — In line with our Net Debt / EBITDA ratio (2014-2019) MEUR Capex 2014 2019 — Continue to focus on growth investments —
Slide 47: Cash flow generation enables investments and a solid balance sheet
Cash flow generation enables investments and a solid balance sheet Free cash flow Deliver profitable growth, working capital efficiency and (EUR million) continued disciplined capital allocation Good free cash 226 flow development despite heavy Active screening of financing alternatives - diversifie
Slide 48: Growth visible also in dividends
Growth visible also in dividends Dividend per share and payout ratio Strong track record of dividends (EUR million) 2019 is the 11th year of growing dividends* 65% 53% Dividend has increased 162% since 2008* 50% 50% 47% 47% 47% 47% 42% 40% 40% 42% 40-50% CAGR 9% during the last 10 years* 0.89 0.80 0
Slide 49: Building profitable growth from our excellent market position
Building profitable growth from our excellent market position Capture Capex GROWTH M&A Partnering Prioritized Improve INVESTMENTS Capital efficiency PROFITABILITY Manufacturing efficiency Predictable Generate Earnings DIVIDENDS CASH FLOW Investments Retain a solid balance sheet Strategy Update March
Slide 50: Long-term financial ambitions
Long-term financial ambitions Comparable growth Adjusted EBIT margin 5+% 10+% Net debt/Adjusted EBITDA Dividend payout ratio 2-3 40-50% Strategy Update March 2020 50
Slide 51: Conclusions
Conclusions Charles Héaulmé President and CEO
Slide 52: Our business plan will deliver sustainable profitable growth
Our businesses plan will deliver sustainable profitable growth Strategy focused on four pillars Growth. Scale current core business, invest in emerging markets, invest in developing sustainable solutions, develop food delivery packaging business, step-up long-term innovation for growth. Competitiven
Slide 53: We have the strengths to embrace current transformative trends
We have the strengths to embrace current transformative trends Transformative trends Our global footprint and leadership in Emerging Markets Our fiber and paperboard expertise Our manufacturing scale and complex supply chain mgmt. capabilities Our innovation and execution culture Strategy Update Mar
Slide 54: In conclusion: high ambition grounded in strong culture
In conclusion: We have a high ambition grounded in our strong point of view and culture What we live by Care Dare What we stand for Shaping the sustainable future of everyday life to offer What is our ambition Deliver wellbeing, convenience and a responsible lifestyle to billions First choice in sus
Slide 55: Thank you!
Thank you! For further information, please contact us: www.huhtamaki.com/investors ir@huhtamaki.com
Slide 56: 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