Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Non-Deal Roadshow (May 2020)
64 slides from Huhtamaki Oyj's roadshow presentation, May 2020
Slide 1: Becoming the first choice in sustainable food packaging
Becoming the first choice in sustainable food packaging Roadshow presentation May 2020
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 Foodservice packaging Molded fiber packaging Flexible packaging 2 May 2020 Roadshow
Slide 3: Huhtamaki operates on a global scale
Huhtamaki operates on a global scale Figures for 2019 NET SALES €3.4B ADJUSTED EBIT MARGIN 8.6% MANUFACTURING UNITS 81 OPERATING COUNTRIES 35 EMPLOYEES 18,598 3 May 2020 Roadshow presentation | Huhtamaki
Slide 4: We operate through 3 business segments
We operate through 3 business segments North America Fiber and Foodservice Flexible Packaging Net sales per segment Europe-Asia-Oceania (2019) 18 manufacturing units in 33 manufacturing units in 29 manufacturing units in 36% 34% 2 countries 28 countries 16 countries 4,200 employees 6,800 employees 7
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: 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 – Future consumer will require packaging to be innovative, individual and sustainable – Digitalization will influence packaging and the way we do business – Sustainabil
Slide 7: Our strategic priorities
Our strategic priorities We are for shaping the sustainable future of everyday life to offer wellbeing, convenience and responsible lifestyle to billions of people everywhere OUR AMBITION and FOUR STRATEGIG PRIORITIES Our ambition is to be the first choice in sustainable food packaging GROWTH COMPET
Slide 8: We have high financial and sustainability ambitions
We have 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% Carbon neutral 100% >80% 100% >90% 100% production of products designed renewable or r
Slide 9: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors
Slide 10: 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 11: Appendix: The role of packaging
Appendix: The role of packaging
Slide 12: 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 13: 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 14: 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 14 May 2020 Roadshow presentation | Huhtamaki
Slide 15: 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 16: 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 16 May
Slide 17: 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 17 May 2020 Roadshow presentation | Huhtamaki
Slide 18: 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 19: Appendix: Segments and financials
Appendix: Segments and financials
Slide 20: Operating model: We are a converter
Operating model: We are a converter Inputs Our activities Outputs Impacts Raw materials Conversion to food packaging Safe, convenient and fit-for-purpose Nature • Paperboard • Cup forming consumer packaging • Renewable and recyclable materials • Plastic resins • Folded carton • Reducing food waste w
Slide 21: Fiber and Foodservice Europe-Asia-Oceania
Fiber and Foodservice Europe-Asia-Oceania Fiber Packaging and Foodservice EAO has 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, such
Slide 22: 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 €1,153 mn ADJUSTED EBIT MARGIN 9.7% #1 globally operating EMP
Slide 23: 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 €1,016 mn ADJUSTED EBIT MARGIN 8.1% #
Slide 24: Products, customers, sales split and competitors per segment
Products, customers, sales split and competitors per segment Fiber Packaging and Foodservice EAO has 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 Cent
Slide 25: Strategic focus areas for segments
Strategic focus areas for segments Fiber Packaging and Foodservice EAO has 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 demand
Slide 26: Segment key figures (1/2)
Fiber Packaging and Foodservice EAO has been Segment key figures (1/2) 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-Oce
Slide 27: Segment key figures (2/2)
Segment key figures (2/2) North America Key figures (MEUR) 2013 2014 2015 2016 2017 20181 2019 Long-term ambition Net sales 725.3 769.3 947.7 1,005.1 1,000.4 1,002.7 1,152.7 Comparable growth 5% 6% 4% 6% 2% 5% 9% 3-5% Adjusted EBIT 38.4 38.4 88.2 107.6 104.1 73.0 111.4 Margin 5.3% 5.0% 9.3% 10.7% 10
Slide 28: Group financials 2010-2019
Group financials 2010-2019 2010 2011 20122 20131 20141 2015 2016 2017 20182 2019 Net sales MEUR 1,952 2,043 2,321 2,161 2,236 2,726 2,865 2,989 3,104 3,399 Comparable growth3 3% 5% 3% 3% 6% 4% 4% 3% 5% 6% Adjusted EBITDA4 MEUR 214 208 254 242 259 342 382 390 399 456 Margin4 11.0% 10.2% 10.9% 11.2% 1
Slide 29: Quarterly comparable net sales growth by business segment
Quarterly comparable net sales growth by business segment Long-term Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 FY 17 FY 18 FY 19 ambition Foodservice E-A-O 3% 2% 4% 6% 5% 5% 5% 3% 4% 3% 4% 4% 4% 4% 4% 5-7% North America 2% 1% 2% 2% 5% 2% 2% 11% 5% 13% 14% 6% 2% 5% 9% 3-5
Slide 30: Solid track record of growth investments
Solid track record of growth investments Paper and Huhtamaki CAPEX M&A spend plastic blueloop disposable 1,210 584 packaging, China & HK 2013–2019 Pressed Short-run Ireland Fresh ready- (EUR million) plates, US flexible meal trays, packaging, UK Eastern Europe Folding Labels, India Corrugated Bags &
Slide 31: 20 acquisitions completed since 2011
20 acquisitions completed since 2011 Date (completed) Acquired company Country Acquiring segment Mar 2020 Laminor S.A. Brazil Flexible Packaging Jan 2020 Mohan Mutha Polytech Private Limited India Flexible Packaging Dec 2019 Everest Flexibles Pty Ltd South Africa Flexible Packaging Jun 2018 Ajanta P
Slide 32: Appendix: Shareholders and management
Appendix: Shareholders and management
Slide 33: Largest shareholders and split of shareholding
Largest shareholders and split of shareholding Shareholder Number of shares % of total shares Change Change % Split of shareholding 1. Finnish Cultural Foundation 12,010,653 11.15% 0 0.00% 2. Huhtamäki Oyj 3,410,709 3.17% 0 0.00% 3. Varma Mutual Pension Insurance Company 2,983,809 2.77% 0 0.00% 4. I
Slide 34: Foreign shareholding and distribution by geography
Foreign shareholding and distribution by geography Total number of shareholders and foreign shareholding Approximate shareholder distribution by geography (as in May 2019) 38,000 54% 10% 1% 36,000 52% 34,000 50% 12% 32,000 30,000 48% 51% 28,000 46% 26,000 26% 44% 24,000 42% Finland 22,000 Continenta
Slide 35: Global Executive Team
Global Executive Team Charles Héaulmé Arup Basu Clay Dunn Eric Le Lay Thomas Geust President and CEO President, Flexible Packaging President, North America President, Foodservice EAO CFO and Fiber Packaging Thomasine Kamerling Marina Madanat Sami Pauni Teija Sarajärvi Antti Valtokari EVP Sustainabil
Slide 36: 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 37: COVID-19 update
COVID-19 update (as given at Q1 2020 results)
Slide 38: We play an essential role in the food supply chain
We play an essential role in the food supply chain As a global leader in food on-the go and food on-the-shelf packaging, we play a crucial role and are an integral part in the supply chain, to make food safe, convenient and available to everyone in the world. Our customers are essential in ensuring
Slide 39: Our diversified portfolio provides resilience during the ongoing crisis
Our diversified portfolio provides resilience during the ongoing crisis Food on-the-go Food on-the-shelf (Foodservice packaging) (Flexible and Fiber packaging) Foodservice sales are temporarily affected by closures of Demand for Flexible packaging and Fiber packaging resilient quick-service restaura
Slide 40: Phased approach from initial crisis shock to managing the new normal
Phased approach from initial crisis shock to managing the “new normal” Phase 1 Phase 2 Phase 3 Initial shock Managing the crisis Planning Ahead • Daily crisis management at global • Manage cash daily and tightly • Define the opportunities that will and unit level unfold from the crisis, using our •
Slide 41: Making a difference where it matters most
Making a difference where it matters most Global donation to the Red Cross Local product donations Launch of protective face shields 41 May 2020 Roadshow presentation | Huhtamaki
Slide 42: Protect people, protect food, protect the planet
These unprecedented times remind us of our beliefs and reinforce our commitment to our priorities: protect people, protect food, protect the planet 42 May 2020 Roadshow presentation | Huhtamaki
Slide 43: Q1 2020 results
Q1 2020 results: Solid net sales growth and profitability in an increasingly uncertain environment
Slide 44: Solid net sales growth in the current global turmoil
Solid net sales growth in the current global turmoil Development of net sales in Q1 20 5% net sales growth in Q1 20 (EUR million) • Moderate 3% comparable net sales 10 11 growth (-3% in emerging markets) 22 • 1% from acquisitions 845 • 1% positive currency impact 802 Q1 2019 Organic Acquisitions Tra
Slide 45: Food on-the-shelf packaging continued to grow while the crisis affected food on-the-go
Food on-the-shelf packaging continued to grow while the ongoing crisis started affecting food on-the-go Comparable growth Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 2019 Long-term ambitions Foodservice E-A-O 4% 3% 4% 4% -4% 4% 5-7% North America 5% 13% 14% 6% 9% 9% 3-5% Flexible Packaging 5% 1% 4% 3% 2% 3% 6-8%
Slide 46: Increase in adjusted EBIT higher than sales growth
Increase in adjusted EBIT higher than sales growth MEUR Q1 20 Q1 19 Change FY 2019 Net sales 844.6 802.1 5% 3,399.0 Adjusted EBIT1 73.6 67.8 9% 293.1 Margin 8.7% 8.5% 8.6% Adjusted EPS, EUR2 0.46 0.44 5% 1.88 Capital expenditure 39.4 39.7 -1% 203.9 Q1 20 highlights • Earnings increase driven by more
Slide 47: Q1 2020 results: Business segment review
Q1 2020 results: Business segment review
Slide 48: Foodservice Europe-Asia-Oceania: COVID-19 impacts sales and earnings negatively
Foodservice Europe-Asia-Oceania: COVID-19 impacts sales and earnings negatively Key figures, MEUR Q1 20 Q1 19 Change Net sales and comparable growth (EUR million & %) Net sales 217.6 227.9 -5% Comparable growth -4% 4% 245 228 241 242 Adjusted EBIT1 17.5 20.1 -13% 218 2019 Margin 8.0% 8.8% 2020 Adjus
Slide 49: North America: Continued strong growth and earnings improvement
North America: Continued strong growth and earnings improvement Key figures, MEUR Q1 20 Q1 19 Change Net sales and comparable growth (EUR million & %) Net sales 286.2 255.7 12% Comparable growth 9% 5% 306 287 304 286 256 Adjusted EBIT1 30.4 20.6 48% 2019 Margin 10.6% 8.0% 2020 Adjusted RONA1 14.0% 9
Slide 50: Flexible Packaging: Solid net sales growth but decrease in earnings
Flexible Packaging: Solid net sales growth but decrease in earnings Key figures, MEUR Q1 20 Q1 19 Change Net sales and comparable growth (EUR million & %) Net sales 271.0 251.8 8% Comparable growth 2% 5% 271 261 255 252 249 Adjusted EBIT1 20.9 23.0 -9% 2019 Margin 7.7% 9.1% 2020 Adjusted RONA1 10.5%
Slide 51: Fiber Packaging: Growth in sales and earnings
Fiber Packaging: Growth in sales and earnings Key figures, MEUR Q1 20 Q1 19 Change Net sales and comparable growth (EUR million & %) Net sales 74.5 71.5 4% Comparable growth 9% 4% 75 78 76 Adjusted EBIT1 8.2 6.9 20% 72 68 2019 Margin 11.0% 9.6% 2020 Adjusted RONA1 13.1% 13.5% 4% 9% 7% 7% 8% Comp. Ca
Slide 52: Q1 2020 results: Financials review
Q1 2020 results: Financials review
Slide 53: Increased net sales driving returns
Increased net sales driving returns MEUR Q1 20 Q1 19 Change 2019 Highlights Net sales 844.6 802.1 5% 3,399.0 • Solid growth and positive currency Adjusted EBITDA1 117.0 107.0 9% 456.3 translation Margin1 13.9% 13.3% 13.4% • Earnings increase driven by raw materials Adjusted EBIT2 73.6 67.8 9% 293.1
Slide 54: Continuing positive currency impact
Continuing positive currency impact Average Closing rates Average Change in rate rate average Q1 2019 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 2020 rate USD 1.14 1.12 1.14 1.09 1.12 1.10 1.10 3% Foreign currency INR 80.11 77.78 78.57 77.07 79.81 83.50 79.80 0% translation impact GBP 0.87 0.86 0.89 0.89 0.85
Slide 55: Net debt remained unchanged compared to Q1 2019
Net debt remained unchanged compared to Q1 2019 Net debt, net debt/adj. EBITDA and gearing • Net debt/Adj. EBITDA at 2.1 Covenant level1 3.5 • At the end of Q1 2020: • Cash and cash equivalents EUR 313 million 2.4 2.4 Ambition • Unused committed credit 2.1 2.1 2.0 2–3 facilities available EUR 175 98
Slide 56: Loan maturities
Loan maturities Debt maturity structure March 31, 2020 • Average maturity 3.2 years at (EUR million) the end of Q1 2020 (3.5 at the end of Q1 2019) 600 500 • Unused committed credit facilities of EUR 175 million 400 maturing in 2022 300 200 100 0 2020 2021 2022 2023 2024 Later Bonds and other loans
Slide 57: Lower free cash flow
Lower free cash flow Free cash flow bridge Cash flow driven by: (EUR million) • Higher EBITDA following improved performance 130 • EBITDA includes ~13 MEUR 107 net benefit from Items Affecting Comparability (IAC) • Laminor gain of ~20 MEUR is recognized as non-cash in 0 2 ‘Other’ -5 -6 -10 -10 -3 •
Slide 58: Stable financial position
Stable financial position MEUR Mar 2020 Mar 2019 • Higher total assets following growth Total assets 3,824 3,417 • Net debt unchanged, gearing improved Operating working capital 636 661 Net debt 980 980 • Improvement in adjusted ROI and adjusted ROE Equity & non-controlling interest 1,444 1,345 Gear
Slide 59: Progress towards long-term ambitions
Progress towards long-term ambitions Q1 Long-term 2014 2015 2016 2017 20181 2019 2020 ambition Organic growth 6% 4% 4% 3% 5% 6% 3% 5+% Adjusted EBIT margin 7.8% 8.7% 9.4% 9.0% 8.1% 8.6% 8.7% 10+% Net debt/Adj. EBITDA 1.0 1.6 1.8 1.8 2.3 2.0 2.1 2-3 Dividend payout ratio 47% 40% 40% 42% 50% 47%2 40-5
Slide 60: Q1 2020 results: Looking forward
Q1 2020 results: Looking forward
Slide 61: Short-term risks and uncertainties
Short-term risks and uncertainties The COVID-19 pandemic is a significant short-term risk creating disturbance in the Group’s trading conditions and its operating environment, as well as in demand for the Group’s products. Volatile raw material and energy prices as well as movements in currency rate
Slide 62: Financial calendar 2020
Financial calendar 2020 July 23 Half-yearly Report 2020 October 22 Q3 2020 Interim Report 62 May 2020 Roadshow presentation | Huhtamaki
Slide 63: 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 64: For further information, please contact us
For further information, please contact us: ir@huhtamaki.com www.huhtamaki.com/investors