Huhtamaki Oyj · OMXHEX:HUH1V
Huhtamaki Oyj — ABG Nordic Opportunities Seminar 2018
30 slides from Huhtamaki Oyj's conference presentation, November 2018
Slide 1: Becoming the first choice in food packaging
Becoming the first choice in food packaging Thomas Geust, CFO ABG Nordic Opportunities November 2018, London
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 vision €3.0bn 9.0% The first choice in food Comparable growth ROI packaging 3% 13.6% Employees Manufacturing sites Our purpose 18,100 78 Helping great products Operations in reach more people, 34 countries more eas
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 Waste prevention Our packaging protects food and drink products, delivering them to consumers safely and in good condition, helping to reduce food waste. 3 ABG No
Slide 4: We use different materials for different purposes
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 5: Three business areas 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 2017 9% 27% 31% 33% Foodservice Europe-Asia- Flexible Packaging Fiber Packagingj Oceania and North America kdfgjkl dhgdfhg – 40 plants on – 2
Slide 6: We target long-term growth 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* 2
Slide 7: 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 8: 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 9: World changes create opportunities
World changes create opportunities Global challenges: – Marine plastics – Waste handling and processing – Food safety Changing consumer habits: – Lifestyle & convenience – Home delivery
Slide 10: Fresh – an example of sustainable innovation
Fresh – an example of sustainable innovation – Ovenable and microwaveable fiber based tray for ready meals – Biodegradable and widely recyclable – Aims to replace the commonly used black plastic trays – Joint development between Huhtamaki, Södra, and Saladworks – Partly EU-funded project with focus
Slide 11: 52% of global consumer packaging is made of plastics
52% of global consumer packaging is made of plastics – of which 14% get recycled today Glass Landfilled Metal Foil Plastics 52% Recycled or Leakage incinerated Paper Other 11 ABG Nordic Opportunities 2018
Slide 12: Food waste and loss is a global challenge
Food waste and loss is a global challenge – Using appropriate packaging can help reduce food waste at almost every stage of the food chain* 12 ABG Nordic Opportunities 2018 *Appropriate food packaging solutions for developing countries, FAO 2014
Slide 13: Packaging accounts for app. 5% of food's CO2 footprint
Packaging accounts for app. 5% of food’s CO2 footprint – Proper packaging results in less greenhouse gas emissions – In many applications more packaging leads to lower overall carbon footprint due to reduced food waste 13 ABG Nordic Opportunities 2018
Slide 14: What makes something recyclable?
What makes something recyclable? Packaging design Infrastructure Consumer We have little control We can inform the We have most control here – some ability to consumer but can’t make here – we can design the influence via partnership. the consumer recycle packaging with recyclable We can drive deman
Slide 15: Recycling rates vary
Recycling rates vary – upside potential to utilize valuable materials remain Plastic packaging Steel Paper ~14% ~70-90% ~50-60% recycled* recycled* recycled* 15 ABG Nordic Opportunities 2018 *Source: Ellen MacArthur foundation: The New Plastics Economy, Rethinking the future of plastics, 2016
Slide 16: Paper cup recycling
Paper cup recycling The fibre in our recyclable cup can be used Up to seven times and then composted or used to generate electricity Recyclable paper cup = — Good for the environment. Good for the economy. Good for people
Slide 17: 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€ 936 Pressed UAE, Bags & Europe USA, Egypt M&A spend plates, US Malaysia wraps, USA, Egypt, M€ 54
Slide 18: Achieving our vision: The first choice in food packaging
Achieving 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 ch
Slide 19: Q3 2018 results
Q3 2018 results Huhtamaki
Slide 20: Comparable growth
Comparable growth Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 YTD 18 YTD 17 FY 2017 Long-term ambitions Foodservice E-A-O 5% 5% 5% 6% 4% 5% 3% 4% 5-7% North America 2% 2% 5% 2% 2% 3% 1% 2% 2-5% Flexible Packaging 6% 11% 6% 9% 7% 8% 3% 4% 6-8% Fiber Packaging 4% 3% 5% 4% 5% 4% 5% 5% 5-7% Group 4% 6% 5% 5% 4% 5% 3%
Slide 21: Currency translation impacting good year-to-date growth
Currency translation impacting good year-to-date growth Net sales growth split in 49 Q1-Q3 18 -117 – 5% comparable growth 116 – 8% in emerging markets; 2,291 growth strongest in Africa, 2,243 Russia, Brazil and India – 2% from acquisitions – Negative currency translation impact of M€ 117 (app. 5%) M
Slide 22: Strong net sales growth, high cost environment
Strong net sales growth, high cost environment MEUR Q3 18 Q3 17 Change Q1-Q3 18 Q1-Q3 17 Change Q3 18 Highlights Net sales 779.8 732.0 7% 2,290.9 2,243.3 2% – Earnings improvement in Adjusted EBITDA1 87.6 94.0 -7% 278.4 294.4 -5% Foodservice E-A-O Margin1 11.2% 12.8% 12.2% 13.1% – High costs and unf
Slide 23: Up-trending cost environment in raw materials
Up-trending cost environment in raw materials 140 – Overall cost inflation – Sharp increase in plastic 120 resins in emerging markets – e.g. PET films up 25% in India during Q3 100 – Prices of fiber varied – OCC and post-consumer fiber low; post-industrial fiber 80 higher – Paperboard high, followin
Slide 24: Profit below long-term ambitions – actions ongoing
Profit below long-term ambitions – actions ongoing 1. Pricing Restore gross margin, currently impacted by cost increases (ongoing) 2. Cost-out and efficiency improvements Cost-out activities including: – Write-off of non-competitive lines; India, North America (Q4 2018) – Focused restructuring plans
Slide 25: Debt position includes Q2 acquisitions
Debt position includes Q2 acquisitions Covenant level 3.5 – Net debt/EBITDA at 2.2 AMBITION 2-3 – At the end of Q3 18 – Cash and cash equivalents MEUR 79 – Unused committed credit 1.7 1.9 1.9 1.8 1.8 2.2 2.2 facilities available MEUR 306 – Funds available for acquisitions approx. MEUR 400-500 0.56 0
Slide 26: Progress towards long-term ambitions
Progress towards long-term ambitions Long-term FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 YTD Q3 2018 ambition Organic growth 3% 6% 4% 4% 3% 5% 5+% – Group growth is EBITDA margin 11.2% 11.6% 12.5% 13.3% 13.0% 12.2% 14+% on track EBIT margin 7.4% 7.8% 8.7% 9.4% 9.0% 8.2% 10+% – Profitability improvemen
Slide 27: Helping great products reach more people, more easily
Helping great products reach more people, more easily
Slide 28: Financial calendar 2019
Financial calendar 2019 February 14 Week 8 Results 2018 Annual Accounts 2018 & Directors’ Report April 25 July 19 October 23 Q1 19 Interim Report Half-yearly Report Q3 19 Interim Report AGM 2019 28
Slide 29: 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 30: Thank You!
Thank You! For more information: www.huhtamaki.com [email protected]