menu Stock exchange release Huhtamäki Oyj’s Interim Report January 1–September 30, 2021: Solid performance despite a challenging cost environment share Share HUHTAMÄKI OYJ INTERIM REPORT 21.10.2021 AT 8:30 Huhtamäki Oyj’s Interim Report January 1–September 30, 2021: Solid performance despite a challenging cost environment Q3 2021 in brief Net sales increased 6% to EUR 896 million (EUR 847 million) Adjusted EBIT was EUR 76 million (EUR 86 million); reported EBIT was EUR 65 million (EUR 65 million) Adjusted EPS was EUR 0.51 (EUR 0.56); reported EPS was EUR 0.41 (EUR 0.43) Comparable net sales growth was 4% at Group level and 5% in emerging markets The impact of currency movements was EUR 3 million on the Group’s net sales and EUR 0 million on EBIT Q1-Q3 2021 in brief Net sales increased 3% to EUR 2,575 million (EUR 2,489 million) Adjusted EBIT was EUR 233 million (EUR 229 million); reported EBIT was EUR 211 million (EUR 217 million) Adjusted EPS was EUR 1.53 (EUR 1.46); reported EPS was EUR 1.35 (EUR 1.40) Comparable net sales growth was 6% at Group level and 11% in emerging markets The impact of currency movements was EUR -78 million on the Group’s net sales and EUR -8 million on EBIT Key figures EUR million Q3 2021 Q3 2020 Change Q1-Q3 2021 Q1-Q3 2020 Change Net sales 896.3 847.3 6% 2,575.3 2,489.0 3% Comparable net sales growth 4% 2% 6% -1% Adjusted EBITDA1 119.2 127.2 -6% 358.0 356.3 0% Margin1 13.3% 15.0% 13.9% 14.3% EBITDA 108.0 120.1 -10% 337.1 363.2 -7% Adjusted EBIT2 76.3 85.5 -11% 233.1 229.2 2% Margin2 8.5% 10.1% 9.1% 9.2% EBIT 64.9 64.7 0% 211.5 217.4 -3% Adjusted EPS3 0.51 0.56 -10% 1.53 1.46 4% EPS, EUR 0.41 0.43 -6% 1.35 1.40 -3% Adjusted ROI2 11.5% 11.9% Adjusted ROE3 15.1% 14.9% ROI 9.7% 11.3% ROE 12.4% 14.3% Capital expenditure 62.3 40.6 54% 147.2 120.3 22% Free Cash Flow -9.9 103.7 <-100% 27.5 149.6 -82% 1 Excluding IAC of -11.2 -7.1 -21.0 6.8 2 Excluding IAC of -11.4 -20.9 -21.6 -11.8 3 Excluding IAC of -10.4 -13.8 -18.2 -6.8 Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2020. Figures of return on investment (ROI), return on equity (ROE) and return on net assets (RONA) as well as net debt to EBITDA presented in this report are calculated on a 12-month rolling basis. The figures in the tables are exact figures and consequently the sum of individual figures may deviate from the sum presented. Key figures have been calculated using exact figures. Charles Héaulmé, President and CEO ”Huhtamaki delivered a solid third quarter in the face of a challenging environment, demonstrating the resilience of our diversified product portfolio. Demand for our products improved during the quarter, supported by the continued recovery of on-the-go consumption. We continued to focus on mitigating the inflationary environment, managing the availability of raw materials and addressing the continued impact of COVID-19. During the third quarter of 2021, our net sales increased by 6% with a comparable sales growth of 4%. All our business segments contributed to our solid growth, particularly visible in emerging markets. At the Group level, comparable net sales growth from the beginning of the year was 6% compared to the previous year, with a double-digit growth in Foodservice Europe-Asia-Oceania with Q3 segment sales returning to pre-pandemic levels. While the adjusted EBIT margin in the third quarter decreased driven by input costs, the year-to-date margin was 9.1%, reflecting our operational performance and ability to manage inflation impact. We have continued to execute on our strategic priorities, and I am pleased to see how we are making progress on our sustainability, innovation and competitiveness initiatives. During the quarter Huhtamaki’s climate targets were approved and validated by the globally recognized Science Based Targets initiative (SBTi). In July we launched Push Tab® paper, an industry-first sustainable renewable paper-based blister solution for the global healthcare industry. We also launched next generation tube laminates with renewable content for use in cosmetics and food sectors. During the third quarter we completed the acquisition of Elif, a major supplier of sustainable flexible packaging to global FMCG brand owners, operating out of Turkey and Egypt. The acquisition of Elif expands our technology capabilities and product range. It also strengthens our position as a leading flexible packaging company in emerging markets. Together with all our employees, I warmly welcome our new Elif colleagues to the Huhtamaki family.” Financial review Q3 2021 Net sales by business segment EUR million Q3 2021 Q3 2020 Change Foodservice Europe-Asia-Oceania 244.6 230.8 6% North America 294.3 282.6 4% Flexible Packaging 283.9 266.0 7% Fiber Packaging 83.3 72.2 15% Elimination of internal sales -9.8 -4.3 Group 896.3 847.3 6% Comparable net sales growth by business segment Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Foodservice Europe-Asia-Oceania 2% 40% -2% -7% -1% North America 5% 9% -2% -2% 4% Flexible Packaging 7% 6% 0% -0% 1% Fiber Packaging 2% 1% 4% 8% 7% Group 4% 14% -0% -2% 2% The Group’s net sales increased 6% to EUR 896 million (EUR 847 million) during the quarter. Comparable net sales growth was 4%. Net sales growth was supported by the continued recovery in demand for foodservice packaging globally. Growth in retail tableware in North America remained strong. Comparable growth was the highest in the Flexible Packaging segment. Comparable sales growth in emerging markets was 5%. Foreign currency translation impact on the Group’s net sales was EUR 3 million (EUR -38 million) compared to 2020 exchange rates. Adjusted EBIT by business segment Items affecting comparability EUR million Q3 2021 Q3 2020 Change Q3 2021 Q3 2020 Foodservice Europe-Asia-Oceania 20.7 21.7 -4% -0.7 -17.3 North America 35.8 36.0 -1% -0.1 -3.2 Flexible Packaging 17.0 22.7 -25% -10.3 -0.7 Fiber Packaging 7.9 8.0 -1% -0.1 -0.2 Other activities -5.1 -2.9 -0.1 0.6 Group 76.3 85.5 -11% -11.4 -20.9 Adjusted EBIT margin by business segment Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Foodservice Europe-Asia-Oceania 8.5% 8.4% 8.5% 7.3% 9.4% North America 12.2% 13.0% 12.2% 11.8% 12.7% Flexible Packaging 6.0% 6.1% 8.1% 7.2% 8.5% Fiber Packaging 9.5% 10.3% 12.1% 14.8% 11.1% Group 8.5% 9.1% 9.6% 9.0% 10.1% The Group’s adjusted EBIT decreased to EUR 76 million (EUR 86 million) and reported EBIT was EUR 65 million (EUR 65 million). Adjusted EBIT decreased due to increased input costs. Earnings decreased especially in the Flexible packaging segment. The Group’s adjusted EBIT margin decreased and was 8.5% (10.1%). Foreign currency translation impact on the Group’s earnings was EUR 0 million (EUR -4 million). Adjusted EBIT excludes EUR -11.4 million (EUR -20.9 million) of items affecting comparability (IAC). Adjusted EBIT and IAC EUR million Q3 2021 Q3 2020 Adjusted EBIT 76.3 85.5 Acquisitions -6.9 -0.2 Restructuring costs including write-downs of related assets -4.5 -21.2 Settlement and legal fees of disputes -0.0 - Property damage incidents 0.0 - One-time gain from acquisition of Laminor - 0.5 EBIT 64.9 64.7 Net financial expenses were EUR 9 million (EUR 4 million). Tax expense was EUR 13 million (EUR 14 million). Profit for the third quarter was EUR 42 million (EUR 47 million). Adjusted earnings per share (EPS) was EUR 0.51 (EUR 0.56) and reported EPS EUR 0.41 (EUR 0.43). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -10.4 million (EUR -13.8 million) of IAC. Adjusted profit and IAC EUR million Q3 2021 Q3 2020 Adjusted profit for the period attributable to equity holders of the parent company 52.7 58.7 IAC in EBIT -11.4 -20.9 IAC in Financial items -2.1 3.0 Taxes relating to IAC 3.2 4.0 Profit for the period attributable to equity holders of the parent company 42.4 44.9 Financial review Q1-Q3 2021 Net sales by business segment EUR million Q1-Q3 2021 Q1-Q3 2020 Change Foodservice Europe-Asia-Oceania 687.8 615.6 12% North America 845.6 864.9 -2% Flexible Packaging 821.7 800.0 3% Fiber Packaging 242.2 222.5 9% Elimination of internal sales -21.9 -14.0 Group 2,575.3 2,489.0 3% Comparable net sales growth by business segment Q1-Q3 2021 Q1-Q3 2020 Q1-Q3 2019 Foodservice Europe-Asia-Oceania 11% -11% 4% North America 4% 2% 11% Flexible Packaging 4% 2% 3% Fiber Packaging 2% 9% 6% Group 6% -1% 6% The Group’s net sales increased 3% to EUR 2,575 million (EUR 2,489 million) during the review period. Comparable net sales growth was 6%. Net sales increased especially in the Foodservice Europe-Asia-Oceania segment, driven by continued recovery in demand for foodservice products. Sales of retail tableware in North America was strong. Comparable sales growth in emerging markets was 11%. Foreign currency translation impact on the Group’s net sales was EUR -78 million (EUR -37 million) compared to 2020 exchange rates. Adjusted EBIT by business segment Items affecting comparability EUR million Q1-Q3 2021 Q1-Q3 2020 Change Q1-Q3 2021 Q1-Q3 2020 Foodservice Europe-Asia-Oceania 58.3 45.3 29% -6.4 -19.4 North America 105.2 104.4 1% -0.7 -6.6 Flexible Packaging 55.3 62.7 -12% -13.0 -5.7 Fiber Packaging 25.7 24.8 4% -0.7 -1.7 Other activities -11.3 -7.9 -0.9 21.5 Group 233.1 229.2 2% -21.6 -11.8 Adjusted EBIT margin by business segment Q1-Q3 2021 Q1-Q3 2020 Q1-Q3 2019 Foodservice Europe-Asia-Oceania 8.5% 7.4% 9.1% North America 12.4% 12.1% 9.2% Flexible Packaging 6.7% 7.8% 8.4% Fiber Packaging 10.6% 11.1% 9.9% Group Total 9.1% 9.2% 8.7% The Group’s adjusted EBIT increased to EUR 233 million (EUR 229 million) and reported EBIT was EUR 211 million (EUR 217 million). Adjusted EBIT improved following continued focus on operational efficiency and pricing actions and was offset by higher input costs. The increase in earnings was mainly supported by the Foodservice Europe-Asia-Oceania segment. The Group’s adjusted EBIT margin decreased and was 9.1% (9.2%). Foreign currency translation impact on the Group’s earnings was EUR -8 million (EUR -3 million). Adjusted EBIT excludes EUR -21.6 million (EUR -11.8 million) of items affecting comparability (IAC). Adjusted EBIT and IAC EUR million Q1-Q3 2021 Q1-Q3 2020 Adjusted EBIT 233.1 229.2 Acquisitions -8.5 -0.7 Restructuring costs including write-downs of related assets -12.2 -33.6 Settlement and legal fees of disputes -0.5 - Property damage incidents -0.5 - One-time gain from acquisition of Laminor - 22.4 EBIT 211.5 217.4 Net financial expenses were EUR 24 million (EUR 22 million). Tax expense was EUR 44 million (EUR 44 million). The corresponding tax rate was 23% (23%). Profit for the period was EUR 144 million (EUR 152 million). Adjusted earnings per share (EPS) were EUR 1.53 (EUR 1.46) and reported EPS EUR 1.35 (EUR 1.40). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -18.2 million (EUR -6.8 million) of IAC. Adjusted profit and IAC EUR million Q1-Q3 2021 Q1-Q3 2020 Adjusted profit for the period attributable to equity holders of the parent company 159.3 152.6 IAC in EBIT -21.6 -11.8 IAC in Financial items -2.1 3.0 Taxes relating to IAC 5.6 2.0 Profit for the period attributable to equity holders of the parent company 141.0 145.8 Acquisitions and divestments On April 21, 2021 Huhtamaki announced its agreement to acquire the assets of Jiangsu Hihio-Art Packaging Co. Ltd., a leading manufacturer of paper bags, wraps and folding carton packaging in China. With this acquisition, Huhtamaki continues to strengthen its position as the leading foodservice packaging provider in Asia and expands its product portfolio in China allowing it to better serve its existing and new customers in this exciting growth market. Jiangsu Hihio-Art Packaging employs approximately 200 people in its manufacturing unit in Xuzhou city, Jiangsu. In 2020 the annual net sales of the privately owned business were approximately EUR 20 million. The debt free purchase price was EUR 31 million. The acquisition was completed on June 11, 2021 and since then the business has been reported as part of the Foodservice Europe-Asia-Oceania business segment. On August 16, 2021 Huhtamaki announced its agreement to acquire Elif Holding A.Ş. (Elif), a major supplier of sustainable flexible packaging to global FMCG brand owners, with operations in Turkey and in Egypt. In line with Huhtamaki’s 2030 growth strategy, the acquisition adds scale in strategic geographies and supports Huhtamaki’s progress towards reaching its high sustainability ambitions. The acquisition also expands Huhtamaki’s technology capabilities and product range, allowing it to serve its customers even better. The net sales of the acquired business were approximately EUR 163 million (USD 195 million) in 2020. Elif employs approximately 1,500 people in its two manufacturing locations in Istanbul, Turkey and Cairo, Egypt. The cash free debt free purchase price was EUR 412 million (USD 483 million). The acquisition was completed on September 23, 2021 and since then the business has been reported as part of Huhtamaki’s Flexible Packaging business segment. Outlook for 2021 (unchanged) The Group’s trading conditions are expected to improve compared to 2020, however with continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable growth opportunities. Teleconference Huhtamaki will arrange a combined audiocast and teleconference on Thursday, October 21, 2021 at 9:30 Finnish time. Huhtamaki´s President and CEO Charles Héaulmé and CFO Thomas Geust will present the results. The event will be followed by a question and answer session. The event will be held in English, it can be followed real-time at: https://huhtamaki.videosync.fi/2021-q3-results If you wish to ask questions, please dial one of the following numbers 5-10 minutes prior to the call start: Finland: +358 981 710 310 Sweden: +46 85664 2651 UK: +44 333 300 08 04 US: +1 631 913 14 22 Confirmation code for the call is 85239739# Financial reporting in 2022 In 2022, Huhtamaki will publish financial information as follows: Results 2021 February 10 Interim Report, January 1 - March 31, 2022 April 27 Half-yearly Report, January 1 - June 30, 2022 July 21 Interim Report, January 1 - September 30, 2022 October 21 Annual Accounts 2021 will be published on the week commencing February 28, 2022. Huhtamäki Oyj’s Annual General Meeting is planned to be held on April 27, 2022. This is a summary of Huhtamäki Oyj's Interim Report January 1-September 30, 2021. The complete report is attached to this release and is also available at the company website at www.huhtamaki.com. For further information, please contact: Calle Loikkanen, Head of Investor Relations and Financial Communications, tel. +358 10 686 7125 HUHTAMÄKI OYJ Global Communications About Huhtamaki Huhtamaki is a key global provider of sustainable packaging solutions for consumers around the world, enabling wellbeing and convenience. Our innovative products protect on-the-go and on-the-shelf food and beverages, ensuring hygiene and safety, and help prevent food waste. We embed sustainability in everything we do. We are committed to achieving carbon neutral production and designing all our products to be recyclable, compostable or reusable by 2030. We are a participant in the UN Global Compact and EcoVadis has awarded Huhtamaki with the Gold medal for performance in sustainability. To play our part in managing climate change, we have set science-based targets that have been approved and validated by the Science Based Targets initiative. With 100 years of history and a strong Nordic heritage we operate in 36 countries and 84 sites around the world. Our values Care Dare Deliver guide our decisions and help our team of 19,400 employees make a difference where it matters. Our 2020 net sales totaled EUR 3.3 billion. Huhtamaki Group is headquartered in Espoo, Finland and our parent company, Huhtamäki Oyj, is listed on Nasdaq Helsinki Ltd. Find out more about how we are protecting food, people and the planet on www.huhtamaki.com. Attachment Huhtamäki Oyj Interim Report Q3 2021 get_app Huhtamäki Oyj Interim Report Q3 2021 Huhtamaki Fiber Foodservice E-A-O North America Flexible Packaging Contact us Linkedin Twitter Youtube Modern slavery statement About Products Investors Sustainability Careers Media LEGAL NOTICE PRIVACY NOTICE TERMS & CONDITIONS COOKIE PREFERENCES By clicking “Accept all cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. If you wish to withdraw or change your consent, you can do so at any time via the "Cookie settings" link on our footer.Privacy Notice Cookies settings Accept only essential Accept all cookies