Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — Q1 2019 Earnings Presentation
42 slides from Huhtamaki Oyj's earnings presentation, 2019
Slide 1: Interim Report Q1 2019
Interim Report Q1 2019 CEO Jukka Moisio CFO Thomas Geust
Slide 2: 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 2 Interim report Q1
Slide 3: 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 4: 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 5: Business segment review
siness segment review Huhtamaki
Slide 6: 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 7: 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 8: Flexible Packaging: Significant earnings improvement driven by positive development in 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 9: 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% 9 Interim report Q1 2019
Slide 10: 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 11: Financial review
Financial review Huhtamaki
Slide 12: 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 13: 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 1.15 1.14 compared to 2018 rates INR 79.10 80.80 79.68 84.98 80.23 80.23 80.11 – Net Sales MEUR 19 and EBIT MEUR 1 GBP 0.88 0.8
Slide 14: 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 15: Impact of adopting IFRS 16 Leases standard
Impact of adopting IFRS 16 Leases standard – IFRS 16 Leases has been adopted using Adjusted EBITDA, Net Debt, full retrospective transition method restated 2018 restated 2018 MEUR MEUR 960 958 – Main impact from leases on warehouses, 120 96 107 102 1,000 815 928 94 plants, land and office buildings
Slide 16: 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 17: 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 18: 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 19: 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 May2 Equity &
Slide 20: 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 21: Looking forward
Looking forward Huhtamaki
Slide 22: 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 23: Financial calendar 2019
Financial calendar 2019 July 19 Half-yearly Report 2019 October 23 Q3 19 Interim Report 23 Interim report Q1 2019
Slide 24: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 25: Short-term risks and uncertainties
Short-term risks and uncertainties Volatile raw material and energy prices as well as movements in currency rates are considered to be relevant short-term business risks and uncertainties in the Group's operations. General political, economic and financial market conditions can also have an adverse
Slide 26: Our business segments
Our business segments Huhtamaki
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: Appendices
Appendices
Slide 33: We're the global specialist in packaging for food and drink
We’re the global specialist in packaging for food and drink Adjusted EBIT Net sales Our vision margin* €3.1bn 8.1% The first choice in food Comparable growth Adjusted ROI* packaging 5% 11.6% Employees Manufacturing sites Our purpose 17,700 78 Helping great products Operations in reach more people, 3
Slide 34: 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 FIBER PACKAGING #1 company globally Recycled fibers FLEXIBLE PACKAGING Plastic & other #1 company in emerging markets mater
Slide 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: For further information, please contact us:
For further information, please contact us: www.huhtamaki.com » Investors ir@huhtamaki.com