2008-02-14 07:00:00 CET
2008-02-14 07:02:28 CET
REGULATED INFORMATION
Huhtamäki Oyj - Financial Statement Release
Results 2007: Operational result at previous year's level
STOCK EXCHANGE RELEASE HUHTAMÄKI OYJ 14.2.2008 AT 8:00
* Group net sales were steady at EUR 2,311 million (+2%)
* Underlying result improved in Europe Rigid, remained on a good
level in Americas and weakened in Global Flexibles and Films as well
as in Asia-Oceania-Africa
* Non-cash goodwill and tangible asset impairment losses of EUR 104
million were booked in the fourth quarter
* Cash generation was positive at year-end and also net debt reduced
* The Board of Directors proposes an unchanged dividend at EUR 0.42
per share
* In 2008, Group EBIT is expected to be at the level of the
underlying EBIT in 2007 (EUR 136 million)
Key figures
EUR million Q4 2007 Q4 2006 2007 2006
Net sales 557.8 557.2 2,311.0 2,275.6
EBIT before corporate
items, underlying 29.2 24.2 139.9 138.1
Corporate net 0.3 -0.5 -3.8 19.5
EBIT, underlying* 29.5 23.7 136.1 157.6
EBIT margin %, underlying 5.3 4.3 5.9 6.9
EBIT, reported -78.5 20.4 28.1 145.5
EPS, reported -0.83 0.12 -0.22 0.94
* The underlying EBIT excludes goodwill and tangible asset impairment
losses and restructuring charges.
Interim CEO Timo Salonen: "Year 2007 was a challenging period for us.
During the year the raw material costs increased, currency impact was
adverse and a market slowdown in North America was seen in the second
half. With these in mind we are satisfied that we achieved an
underlying operational result at the previous year's level. Major
growth investments were initiated and completed and those will
provide an excellent platform for future success. We also defined our
strategic direction more firmly and will execute our plans
accordingly.""In 2008, we have to continue to control expenses as well as improve
productivity and effectiveness of passing on any increases in input
costs to selling prices. Progress will be made with the defined
strategy capitalizing on our positions of strength. Targeted capital
allocation and driving growth from our recent investments will result
in lower capital expenditure. This together with working capital
reduction is expected to generate stronger cash flow."
Overview
In 2007, the overall market demand for consumer packaging was healthy
in the emerging markets and stable in the majority of the mature
markets. The Group net sales remained steady, while an unchanged
operational result and an expected significant reduction in royalty
income led to the underlying EBIT coming below the previous year's
level.
The underlying result improved in the Rigid business in Europe, and
weakened in the Global Flexibles and Films businesses as well as in
Asia-Oceania-Africa. Profitability remained on a good level in the
Americas despite softer volumes in the second half of the year.
In the fourth quarter it was decided to book non-cash goodwill and
tangible asset impairment losses of EUR 104 million, mostly related
to the Rigid plastics production in Europe. These impacted the
reported Group EBIT. The cash generation turned positive at year-end,
and also net debt reduced significantly.
The Company's Chief Executive Officer resigned in November. Also a
number of changes took place in the Group Executive Team during the
year.
Business review by region
The Group net sales were EUR 2,311 million (+2% compared to year
2006). Sales performance was driven by a positive price/mix (+2%),
especially in the beginning of the year. Volume development (+1%)
picked up in the second half of the year. The impact from currencies
(-2%) was negative throughout the year.
The geographical distribution of sales was the following: Europe 53%
(52%), Americas 29% (31%) and Asia-Oceania-Africa 18% (17%).
October-December 2007: Net sales were unchanged at EUR 558 million.
Sales were positively impacted by volume growth (+2%) with minor
effect from price/mix changes (+1%), but offset by currency
translations (-3%).
Europe
EUR million Q4 2007 Q4 2006 2007 2006
Net sales 294.0 288.4 1,229.4 1,188.7
EBIT, underlying 13.2 3.4 56.2 52.1
EBIT margin %, underlying 4.5 1.2 4.6 4.4
EBIT, reported -65.7 0.4 -22.7 40.3
RONA % underlying
(12m roll.) - - 6.9 6.7
In Europe, the Flexibles and Foodservice businesses were the main
sales growth drivers. Growth opportunities in the Films business were
not fully captured due to the implementation and stabilization of the
new enterprise resource planning (ERP) platform. The sales
performance in the Rigid Consumer Goods business varied during the
year, however, with continued weakness in the UK and in Southern
Europe. Within Foodservice business, sales growth remained healthy
driven by Eastern Europe, which represented approximately 16% (11%)
of the region's sales. Sales development in the Molded Fiber business
was stable. For the full-year, the reported net sales were EUR 1,229
million (+3%) with a positive impact from volume (+2%) as well as
minor impact from price/mix changes (+1%).
The region's underlying EBIT was EUR 56 million (+8%), corresponding
to an EBIT margin of 4.6% (4.4%). This reflects improved performance
in the Rigid business, which was boosted by a EUR 5 million gain, net
of one-off costs, realized in the fourth quarter following the sale
of the facility in Portadown, UK. The positive development was offset
by lower profitability in the Films business, and a weaker price/mix
development experienced in the second half of the year in the
Flexibles business. The reported EBIT was EUR -23 million including
goodwill impairment losses of EUR 32 million, tangible asset
impairment losses of EUR 46 million and restructuring charges of EUR
1 million. The impairment losses resulted from the adjustment of book
values to lower future cash flow expectations in the Rigid plastics
business. The restructuring charges related to the closure of the
site in Göttingen, Germany, that was completed during the second
quarter of 2007 as part of an earlier restructuring program. In the
previous year the reported EBIT of EUR 40 million included EUR 12
million in restructuring charges. On a rolling 12-month basis, the
region's underlying return on net assets (RONA) was 6.9% (6.7%).
During the year, capacity expansion in Foodservice beverage cup
production was completed in several locations in Europe. Different
strategic options for the Consumer Goods business unit in the UK were
decided to be considered.
October-December 2007: In Europe, net sales were EUR 294 million
(+2%) driven by volume growth (+4%) that was partly offset by
price/mix changes (-2%). The region's underlying EBIT was EUR 13
million (EUR 3 million) in the quarter, corresponding to an EBIT
margin of 4.5% (1.2%). The reported EBIT was EUR -66 million
including goodwill impairment losses of EUR 32 million, tangible
asset impairment losses of EUR 46 million and restructuring charges
of EUR 1 million. In the previous year the reported EBIT of zero
million included EUR 3 million in restructuring charges.
Americas
EUR million Q4 2007 Q4 2006 2007 2006
Net sales 157.9 170.3 676.8 711.5
EBIT, underlying 10.7 13.9 62.9 61.3
EBIT margin %, underlying 6.8 8.2 9.3 8.6
EBIT, reported -6.2 13.9 46.0 61.3
RONA % underlying
(12m roll.) - - 11.7 11.0
In the Americas, sales growth in local currencies was solid in
Retail, demonstrating the strong market position of the Chinet®
brand. In the remaining Foodservice categories, growth picked up
towards year-end as a result of new product introductions. Sales
declined within Flexibles Pet food category and the Rigid Frozen
desserts especially during the second half of the year due to the
softness of market demand. In South America, which represented
approximately 13% (14%) of the region's sales, growth was on a good
level as a result of a favorable harvest season for fruit. For the
full-year, the positive impact from price/mix changes (+6%)
compensated for the decline in volume (-3%). The reported net sales
of EUR 677 million (-5%) was depressed by currency translations
(-7%).
The region's underlying EBIT was EUR 63 million (+3%), corresponding
to an EBIT margin of 9.3% (8.6%). This includes approximately EUR 6
million received as damages compensation in the first quarter of
2007. On a comparable basis, the result reflects volume shortfall and
negative currency impact largely compensated for by diligent price
management and continued improvement in operational efficiency. The
reported EBIT was EUR 46 million (EUR 61 million) including a
goodwill impairment loss of EUR 5 million and tangible asset
impairment losses of EUR 12 million. On a rolling 12-month basis, the
region's underlying RONA was 11.7% (11.0%).
The new capacity added during the year to the flexibles packaging
facility in Malvern, USA, is scheduled to be operational during the
first quarter of 2008.
October-December 2007: In the Americas, the reported net sales figure
of EUR 158 million (-7%) was impacted by currency translations (-9%).
The positive effect from price/mix changes (+6%) was partly offset by
volume decline (-4%). The region's underlying EBIT was EUR 11 million
(EUR 14 million), corresponding to an EBIT margin of 6.8% (8.2%). The
reported EBIT was EUR -6 million (EUR 14 million) including a
goodwill impairment loss of EUR 5 million and tangible asset
impairment losses of EUR 12 million.
Asia-Oceania-Africa
EUR million Q4 2007 Q4 2006 2007 2006
Net sales 105.9 98.5 404.8 375.4
EBIT, underlying 5.3 6.9 20.8 24.7
EBIT margin %, underlying 5.0 7.0 5.1 6.6
EBIT, reported -6.9 6.6 8.6 24.4
RONA % underlying
(12m roll.) - - 6.0 8.1
In Asia-Oceania-Africa, favorable volume growth was driven by the
Flexibles business, in which performance was solid in Thailand and
accelerating during the year in India following the introduction of
new capacity. In the Rigid businesses, sales performance was steady
in Oceania but weak in South Africa and Asia. For the full-year,
there was continued volume growth (+6%) and a positive impact from
price/mix changes (+2%). The reported net sales were EUR 405 million
(+8%) with a minor effect from currency translations (-1%). The
emerging markets represented approximately 59% (43%) of the region's
sales.
The region's underlying EBIT was EUR 21 million (-16%), corresponding
to an EBIT margin of 5.1% (6.6%). This reflects profitability in Asia
impacted by start-up costs associated with investments in new
capacity as well as unfavorable margin development, especially in
India. The reported EBIT was EUR 9 million including a goodwill
impairment loss of EUR 10 million and restructuring charges of EUR 2
million related to the closure of the production site in Hong Kong,
China. In the previous year the reported EBIT of EUR 24 million
included EUR 0.3 million in restructuring charges. On a rolling
12-month basis, the region's underlying RONA was 6.0% (8.1%).
At the beginning of 2007, a new flexible packaging facility started
production in Rudrapur, India. Another major project was the ongoing
relocation of the rigid packaging production from Hong Kong to a new
larger facility in Guangzhou, China, which is expected to be fully
operational during the first half of 2008. Furthermore, the
construction of a new flexible packaging facility in Bangkok,
Thailand, was started during the year with production expected to
commence around mid 2008. Different strategic options were decided to
be considered for all of the operations in South Africa.
October-December 2007: In Asia-Oceania-Africa, net sales of EUR 106
million (+8%) reflect positive volume growth. The region's underlying
EBIT was EUR 5 million (EUR 7 million) in the quarter, corresponding
to an EBIT margin of 5.0% (7.0%). The reported EBIT was EUR -7
million including a goodwill impairment loss of EUR 10 million and
restructuring charges of EUR 2 million. In the previous year the
reported EBIT of EUR 7 million included EUR 0.3 million in
restructuring charges.
Financial review
For the full-year, the underlying Group EBIT before corporate items
was EUR 140 million (EUR 138), corresponding to an EBIT margin of
6.1% (unchanged). Corporate net was EUR -4 million (EUR 20 million).
Hence, the underlying EBIT was EUR 136 million (EUR 158 million),
corresponding to an EBIT margin of 5.9% (6.9%). The reported EBIT was
EUR 28 million including goodwill impairment losses of EUR 47
million, tangible asset impairment losses of EUR 58 million and final
restructuring charges of EUR 4 million. In the previous year the
reported EBIT of EUR 146 million included restructuring charges of
EUR 12 million.
At EUR 43 million (EUR 37 million), the increase in net financial
items was mainly due to higher level of debt. The income tax expense
was EUR 6 million (EUR 13 million). The reported result for the
period was EUR -20 million (EUR 97 million), and earnings per share
(EPS) were EUR -0.22 (EUR 0.94).
The average number of outstanding shares used in the EPS calculation
was 100,426,461 (99,169,003) excluding 5,061,089 (unchanged)
Company's own shares.
On a rolling 12-month basis, the return on investment (ROI) was 1.8%
(9.4%) and return on equity (ROE) was -2.4% (11.7%).
October-December 2007: The Group's underlying EBIT before corporate
items was EUR 29 million (EUR 24 million), corresponding to an EBIT
margin of 5.2% (4.3%). Corporate net in the quarter was zero (EUR -1
million). Hence, the underlying EBIT was EUR 30 million (EUR 24
million), corresponding to an EBIT margin of 5.3% (4.3%). The
reported EBIT was EUR -79 million including goodwill impairment
losses of EUR 47 million, tangible asset impairment losses of EUR 58
million and restructuring charges of EUR 4. In the previous year the
reported EBIT of EUR 20 million included restructuring charges of EUR
3 million. Net financial items were EUR 12 million (EUR 9 million) in
the quarter. The reported result for the period was EUR -83 million
(EUR 13 million). The reported earnings per share (EPS) were EUR
-0.83 (EUR 0.12).
Balance sheet and cash flow
Free cash flow of EUR -28 million (EUR -8 million) was burdened
mainly by an increase in working capital as well as the continued
high level of capital expenditure. The cash flow generation improved,
and turned positive, in the second half of the year. Total capital
expenditure in 2007 amounted to EUR 148 million (EUR 154 million),
corresponding to an investment rate of 150% (162%) of depreciation
before impairments.
Direct expenditure on research and development amounted to EUR 18
million (EUR 19 million).
At the end of December 2007, net debt was EUR 749 million (EUR 711
million). This corresponds to a gearing ratio of 0.94 (0.83).
October-December 2007: Free cash flow was EUR 17 million (EUR -36
million) including capital expenditure of EUR 55 million (EUR 81
million).
Strategic direction
The Group's strategic framework was defined further during 2007. The
earlier confirmed financial targets for the Group remained unchanged.
Earnings before interest and taxes (EBIT) margin is targeted at 9%,
return on investment (ROI) target is 15%, gearing is at around 100%,
and an average dividend payout ratio is 40%. Enhanced shareholder
value will be created through focused growth, capitalizing on
Huhtamaki's positions of strength.
Flexibles and Films will expand globally and be recognized as an
innovative leader and best-in-class performer in chosen product and
market segments. Investments will be targeted on strengthening the
position especially in North America and Asia.
Rigid Food and Beverage Packaging will grow selectively with
particular focus on Foodservice in Europe and Asia and Retail in
North America. Huhtamaki's leading paper and fiber capabilities
strengthen its position also as a supplier of sustainable packaging
alternatives.
To support the strategic direction, capital expenditure will be
prioritized in areas with highest potential for profitable growth,
such as Asia and Eastern Europe. As a consequence of the focused
strategy, Huhtamaki will decrease its presence in business areas that
do not meet its profitability requirements or do not create value in
the execution of the Group strategy. In the short-term, working
capital reduction is a high priority within the Group.
Risks and uncertainties
Key risks are categorized to strategic, operational and financial
risks. All major business units and other units, on rotation
principle, participate in a regular risk analysis. Necessary measures
are taken to mitigate the potential effects of risks. However, if
such risks materialized, they could have material adverse effects on
the Group's business, financial condition and operating result.
Key strategic risks are related to price management, execution of
major change programs, and shifts in technologies and materials.
Risks relating to price management include risks of sub-optimal
pricing caused, for example, by raw material and energy price
fluctuations or changes in clientele. Price management projects
within this field have been continued. Careful project management
aims to mitigate the risks related with major change programs, such
as implementation of major business restructuring or development
programs. During the year Huhtamaki has promoted collaboration
between customers, R&D centers and business units in new product
development projects in order to manage risks relating to shifts in
technologies and materials. Environmental legal requirements on
materials used in products and on disposables are strictly followed
and the Group has adopted a global environmental policy supported by
local manufacturing site level environmental procedures.
Key operational risks are destruction of production facilities,
disruptions in raw material supply, product safety and quality risks,
contractual risks and human resources risks. Special attention has
been put on establishing systems and procedures to serve best
practices deployment and compliance with these. Also Group-wide
insurance programs have been maintained to govern insurable
operational risks. The programs cover risks relating to property
damage, business interruption, various liability exposures and cargo
in the Group.
Financial risks are risks attached to credit, liquidity and interest
rates as well as foreign exchange risks. More information on
financial risks can be found in Note 27 to the Annual Accounts 2007.
Sustainability
Huhtamaki adheres to its Group Environmental Policy in order to
ensure globally consistent operating principles. This is complemented
by more detailed corporate instructions and guidelines such as the
code of conduct for Group suppliers. In addition, the Company is a
signatory to the International Chamber of Commerce (ICC) Business
Charter for Sustainable Development.
Environmental management activities are carried out primarily on the
site level. All manufacturing sites regularly report on their
environmental performance through environmental key performance
indicators. From the total number of reporting manufacturing sites,
47% (51%) follow an externally certified environmental management
system such as ISO 14001, the Eco-Management and Audit Scheme (EMAS)
or an internally audited program such as the US Environmental Care
Program. The significant direct environmental aspects of operations
are energy use, emissions into the air as well as solid waste.
Huhtamaki met its environmental targets, set in 2003 for 2007, on all
dimensions except the volatile organic compounds (VOC) emissions.
Increase in solvent based printing ink intensive production
outweighed the emission reduction activities and investments taken.
The Group pursues continuous improvement in each of the economical,
social and environmental dimensions of sustainability. During the
reporting period new environmental objectives for the year 2011 were
set. Customers are supported by offering biodegradable and
compostable tableware, recyclable molded fiber products and
lightweight flexible packaging.
Personnel
Huhtamaki had 15,092 (14,792) employees at year-end. The number of
employees in Europe was 6,676 (6,731); the corresponding figure for
the Americas was 3,830 (3,728) and for Asia-Oceania-Africa 4,586
(4,333). The average number of employees was 14,986 (14,749).
The parent company employed 794 (839) people at year-end, comprising
of the Group and European head office in Espoo 71 (75) and the
Finnish packaging operations 723 (764). The annual average was 825
(850).
Changes in Group Executive Team
Huhtamäki Oyj's Board of Directors and Chief Executive Officer (CEO)
Heikki Takanen agreed on Heikki Takanen's resignation from the
position of the Company's CEO as from November 14, 2007. With effect
from the same date, the Board of Directors appointed Chief Financial
Officer (CFO) Timo Salonen to act as an interim CEO. Furthermore,
Clay Dunn, Executive Vice President, Americas, was appointed as the
interim Chief Operating Officer (COO), to whom the regional Executive
Vice Presidents report to. The Board of Directors commenced a process
of recruiting a new CEO and the aforementioned appointments will be
in force until the new CEO has been elected. Earlier in the year,
following Sakari Ahdekivi leaving to join another company Timo
Salonen was appointed as CFO with effect from July 1, 2007.
Resolutions taken by the Annual General Meeting in 2007
The Annual General Meeting of Shareholders (AGM) of Huhtamäki Oyj was
held on April 12, 2007 in Helsinki, Finland. The meeting approved the
Company's and consolidated financial statements for 2006 and
discharged the members of the Board of Directors and the CEO fromliability. The dividend for 2006 was set at EUR 0.42 per share,
increasing by 11% from the previous year. The meeting approved the
proposal of the Board of Directors regarding the amendment of the
Articles of Association of Huhtamäki Oyj. The AGM granted the Board
of Directors authorization to decide on the conveyance of the
Company's own shares. The authorization is valid until December 31,
2009.
The Board of Directors was re-elected and comprises of the following
persons: Ms. Eija Ailasmaa, Mr. George V. Bayly, Mr. Robertus van
Gestel, Mr. Paavo Hohti, Mr. Mikael Lilius, Mr. Anthony J.B. Simon
and Mr. Jukka Suominen. The Board of Directors subsequently elected
Mikael Lilius as the Chairman and Jukka Suominen as Vice Chairman.
Events after the reporting period
Pii Kotilainen, Senior Vice President, Human Resources, and member of
the Group Executive Team resigned as from March 31, 2008. Eric Le Lay
was appointed Executive Vice President, Europe Rigid and a member of
the Group Executive Team, effective from March 12, 2008, following
the retirement of Walter Günter.
Possible remuneration based on the performance share incentive plan
established on February 7, 2006 would have become payable in 2008.
However, the targets set forth in the performance share incentive
plan for a determined earnings period have not been reached and no
remuneration will be paid under the plan.
On February 13, 2008 the Board of Directors of the Company decided on
establishing a new performance share incentive plan to form part of
the incentive and commitment program for the key personnel of the
Company and its subsidiaries. The plan offers a possibility to earn
the Company's shares as remuneration for achieving targets
established for the earnings criteria. The plan includes three (3)
earnings periods which are calendar years 2008, 2009 and 2010. A
possible remuneration shall be paid during the calendar year
following each earnings period. The incentive plan is directed to
approximately 20 persons. The aggregate maximum of 720,000 shares and
a cash payment equivalent to taxes arising from the reward to the key
personnel may be granted under the plan. As the cash proportion of
the reward shall, however, be paid an amount equivalent to the
transfer date value of the distributable shares in the maximum. The
plan requires a receiver to own the shares at least two years
following the grant. A receiver must also after the restriction
period continue to own the shares at least in an amount equivalent to
the value of 50 % of his/her annual gross salary, for a period
lasting until the end of the employment or service.
Outlook for 2008
In 2008, Group EBIT is expected to be at the level of the underlying
EBIT in 2007 (EUR 136 million). Group EBIT in the first quarter is
estimated to be lower than in the same period in the previous year.
Capital expenditure is expected to be clearly lower than in 2007 (EUR
148 million).
Volatile raw material and energy prices as well as movements in
currency translations are considered to be relevant short-term
business risks and uncertainties in the Group's operations.
Dividend proposal
The Board of Directors will propose to the Annual General Meeting
that a dividend of EUR 0.42 (unchanged) per share be paid.
Annual General Meeting 2008
The Annual General Meeting of Shareholders will be held on Monday,
March 31, 2008, at 4.30 pm (Finnish time), at Finlandia Hall,
Mannerheimintie 13 e, Helsinki.
Financial reporting in 2008
Huhtamaki will publish the interim report for January - March on
April 23, January - June on July 18 and January - September on
October 22.
Espoo, February 13, 2008
Huhtamäki Oyj
Board of Directors
For further information, please contact:
Mr. Timo Salonen, Interim CEO, tel. +358-10-686 7880
Ms. Kia Aejmelaeus, Head of Investor Relations, tel. +358-10-686 7819
Ms. Taina Erkkilä, Group Vice President, Communications, tel.
+358-10-686 7876
A conference for analysts, investors and media will be held at 11:00
Finnish time at the head office, address Keilaranta 10, Espoo.
Interim CEO Timo Salonen and interim COO Clay Dunn will present the
results, after which a buffet lunch is served.
A conference call for analysts and investors will start at 16:00
Finnish / 14:00 London / 09:00 New York time with a management
presentation, followed by a question and answer session. To
participate, please dial one of the following numbers 10 minutes
prior to the call start:
Number for participants from Finland: 0923 114 173
Number for participants outside of Finland: +44 (0) 1452 555 566
Conference ID: 33034135
All results materials will be available on our website at
www.huhtamaki.com. The results presentation slides will be online
approximately at 11:00 Finnish time. A replay of the conference call
in the form of an audio webcast will be available during the same
evening.
Huhtamäki Oyj January - December 2007
Group income statement (IFRS)
Q1-Q4 Q1-Q4 Q4 Q4
EUR million 2007 2006 2007 2006
Net sales 2311.0 2275.6 557.8 557.2
Cost of goods sold -2028.0 -1946.4 -543.8 -484.8
Gross profit 283.0 329.2 14.0 72.4
Other operating income 31.9 56.2 15.5 14.5
Sales and marketing -83.6 -82.8 -20.6 -21.1
Research and development -17.8 -19.3 -3.6 -4.2
Administration costs -122.6 -126.5 -31.9 -32.5
Other operating expenses -62.8 -11.3 -51.9 -8.7
-254.9 -183.7 -92.5 -52.0
Earnings before interest and taxes 28.1 145.5 -78.5 20.4
Financial income 9.2 11.0 2.8 1.9
Financial expenses -51.7 -47.8 -14.4 -11.3
Income of associated companies 0.4 0.5 0.1 0.2
Result before taxes -14.0 109.2 -90.0 11.2
Income tax expense -6.2 -12.6 7.3 1.3
Result for the period -20.2 96.6 -82.7 12.5
Attributable to:
Equity holders of the parent company -22.5 93.3 -83.7 11.8
Minority interest 2.3 3.3 1.0 0.7
Basic earnings per share (EUR)
for the shareholders of parent company -0.22 0.94 -0.83 0.12
Diluted earnings per share (EUR)
for the shareholders of parent company -0.22 0.93 -0.83 0.12
Group balance sheet (IFRS)
Dec 31 Dec 31
EUR million 2007 2006
ASSETS
Non-current assets
Goodwill 471.9 525.2
Other intangible assets 41.4 35.1
Tangible assets 799.3 840.1
Investments in associated companies 1.5 1.5
Available for sale investments 1.9 1.8
Interest bearing receivables 0.9 6.6
Deferred tax assets 13.7 14.1
Employee benefit assets 59.2 64.0
Other non-current assets 4.8 5.0
1394.6 1493.4
Current assets
Inventory 348.5 341.8
Interest bearing receivables 4.6 0.5
Current tax assets 17.9 9.9
Trade and other current receivables 394.8 400.7
Cash and cash equivalents 30.8 22.3
796.6 775.2
Total assets 2191.2 2268.6
EQUITY AND LIABILITIES
Share capital 358.7 358.7
Premium fund 104.7 104.7
Treasury shares -46.5 -46.5
Translation differencies -121.1 -106.7
Fair value and other reserves 1.4 2.1
Retained earnings 475.7 528.8
Total equity attributable to equity 772.9 841.1
holders of the parent company
Minority interest 20.5 19.3
Total equity 793.4 860.4
Non-current liabilities
Interest bearing liabilities 401.1 314.7
Deferred tax liabilities 38.8 62.9
Employee benefit liabilities 108.8 111.4
Provisions 60.3 46.8
Other non-current liabilities 4.3 3.9
613.3 539.7
Current liabilities
Interest bearing liabilities
-Current portion of long term loans 17.9 41.7
-Short term loans 365.7 383.7
Provisions 8.0 11.9
Current tax liabilities 21.1 19.7
Trade and other current liabilities 371.8 411.5
784.5 868.5
Total liabilities 1397.8 1408.2
Total equity and liabilities 2191.2 2268.6
Dec 31 Dec 31
2007 2006
Net debt 748.5 710.7
Net debt to equity (gearing) 0.94 0.83
Changes in shareholders' equity
Attributable to equity holders Mino- Total
of the parent company rity
Share Share Trea- Trans- Fair Retai- Total inte-
capi- issue sury lation value ned equity rest
tal pre- sha- diff. and earn-
mium res other ings
reser-
ves
EUR million
Balance at
Dec 31,
2005 353.0 96.8 -46.5 -76.3 -0.2 475.2 802.0 18.4 820.4
Cash flow
hedges
-Hedge
result
deferred
to equity 1.7 1.7 1.7
-Hedge
result
recognized
in
income
statement 2.2 2.2 2.2
Translation
differences -30.4 -30.4 -2.4 -32.8
Deferred
tax
in equity -1.7 -1.7 -1.7
Other
changes -3.6 -3.6 -3.6
Income and
expense
recognized
directly
in equity -30.4 2.2 -3.6 -31.8 -2.4 -34.2
Result
for the
period 93.3 93.3 3.3 96.6
Total
recognized
income and
expense
for the
period -30.4 2.2 89.7 61.6 0.9 62.4
Dividend -37.5 -37.5 -37.5
Share-based
payments 1.4 1.4 1.4
Stock
options
exercised 5.7 7.9 13.6 13.6
Balance at
Dec 31,
2006 358.7 104.7 -46.5 -106.7 2.1 528.8 841.1 19.3 860.4
Balance at
Dec 31,
2006 358.7 104.7 -46.5 -106.7 2.1 528.8 841.1 19.3 860.4
Cash flow
hedges
-Hedge
result
deferred to
equity 0.5 0.5 0.5
-Hedge
result
recognized
in income
statement -3.7 -3.7 -3.7
-Hedge
result
transferred
to
carrying
amount
of hedged
items 1.7 1.7 1.7
Translation
differences -14.4 -14.4 -1.1 -15.5
Deferred
tax
in equity 0.8 0.8 0.8
Other
changes 10.0 10.0 10.0
Income and
expense
recognized
directly
in equity -14.4 -0.7 10.0 -5.1 -1.1 -6.2
Result
for the
period -22.5 -22.5 2.3 -20.2
Total
recognized
income and
expense for
the period -14.4 -0.7 -12.5 -27.6 1.2 -26.4
Dividend -42.2 -42.2 -42.2
Share-based
payments 1.6 1.6 1.6
Stock
options
exercised
Balance at
Dec 31,
2007 358.7 104.7 -46.5 -121.1 1.4 475.7 772.9 20.5 793.4
Group cash flow statement (IFRS)
Q1-Q4 Q1-Q4 Q4 Q4
EUR million 2007 2006 2007 2006
Result for the period* -20.2 96.6 -82.7 12.5
Adjustments* 243.2 126.9 126.5 21.8
-Depreciation, amortization and
impairment* 203.3 101.5 129.2 24.5
-Gain on equity of minorities* -0.4 -0.5 -0.2 -0.2
-Gain/loss from disposal of assets* -8.1 0.1 -8.6 0.2
-Financial expense/-income* 42.5 36.8 11.6 9.9
-Income tax expense* 6.2 12.6 -7.3 -1.2
-Other adjustments, operational* -0.3 -23.6 1.9 -11.3
Change in inventory* -14.8 -44.1 15.1 2.5
Change in non-interest bearing
receivables* -3.7 -9.7 27.3 34.0
Change in non-interest bearing
payables* -38.5 19.3 -5.3 -15.7
Dividends received* 0.9 1.0 0.5 0.7
Interest received* 1.3 2.7 0.0 0.0
Interest paid* -42.7 -38.0 -10.7 -9.3
Other financial expense and income* -1.1 0.7 -1.5 0.9
Taxes paid* -18.6 -16.3 -8.9 -4.1
Net cash flows from operating
activities 105.8 139.1 60.3 43.3
Capital expenditure* -147.9 -154.0 -55.5 -80.7
Proceeds from selling fixed assets* 14.3 6.5 12.0 1.7
Divested subsidiaries - 22.9 - -0.4
Proceeds from long-term deposits 7.2 1.6 0.1 -
Payment of long-term deposits -6.1 -3.9 -4.5 -0.5
Proceeds from short-term deposits 11.5 24.8 7.1 0.9
Payment of short-term deposits -11.0 -8.1 -7.1 -0.8
Net cash flows from investing -132.0 -110.2 -47.9 -79.8
Proceeds from long-term borrowings 520.2 409.0 188.5 16.0
Repayment of long-term borrowings -434.4 -495.5 -153.9 -49.3
Proceeds from short-term borrowings 2987.4 2612.7 820.4 655.2
Repayment of short-term borrowings -2995.0 -2543.6 -857.9 -600.7
Dividends paid -42.2 -37.5 - -
Proceeds from stock option exercises - 13.5 - 8.7
Net cash flows from financing 36.0 -41.4 -2.9 29.9
Change in liquid assets 8.5 -15.3 8.7 -6.3
Cash flow based 9.8 -12.5 9.5 -6.6
Translation difference -1.3 -2.8 -0.8 0.3
Liquid assets period start 22.3 37.6 22.1 28.6
Liquid assets period end 30.8 22.3 30.8 22.3
Free cash flow (including figures
marked with *) -27.8 -8.4 16.8 -35.7
NOTES FOR THE RESULT REPORT
Changes in accounting principles
The Group has adopted the following IFRS standards and
interpretations considered applicable to Huhtamaki, with effect from
January 1, 2007:"IAS 1 Presentation of Financial statements: Capital disclosures: The
Amendment to IAS 1 requires information about capital and capital
management during the accounting period.
IFRIC 8 Scope of IFRS 2 Share-Based Payments: The interpretation
applies to share-based payments, where the received compensation is
below the fair value of granted equity instrument.
IFRIC 9 Reassessment of Embedded Derivatives: The interpretation
requires the determination of whether the arrangement contains
embedded derivatives, which have to be reported separately as
derivative instruments.
IFRIC 10 Interim Financial reporting and Impairment: IFRIC 10 denies
to reverse the impairment charge reported in interim report at later
closing dates."
The effect of these newly adopted standards has not had a material
impact on the reported results or disclosures.
In 2006 in the Americas segment the price reduction type item has
been transferred from sales and marketing costs to amend net sales.
In the business segment the whole item fell on the Foodservice
segment. The effect of this restatement on net sales was EUR -3.9
million in Q1, EUR -6.7 million in Q2 and EUR -3.2 million in Q3 of
2006. The restatement did not have material impact on net sales based
key ratios.
Regions
Net
sales
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR
million 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006
Europe 294.0 310.2 320.3 304.9 1229.4 288.4 296.5 311.2 292.6 1188.7
Americas 157.9 170.0 185.2 163.7 676.8 170.3 173.8 191.1 176.3 711.5
Asia-
Oceania-
Africa 105.9 102.2 100.6 96.1 404.8 98.5 91.9 91.8 93.2 375.4
Total 557.8 582.4 606.1 564.7 2311.0 557.2 562.2 594.1 562.1 2275.6
Interregional sales are not significant.
EBIT
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006
Europe -65.7 14.7 14.7 13.6 -22.7 0.4 13.2 16.4 10.2 40.3
Americas -6.2 13.5 20.2 18.5 46.0 13.9 14.0 19.7 13.7 61.3
Asia-
Oceania-
Africa -6.9 4.5 5.3 5.7 8.6 6.6 7.5 4.1 6.3 24.4
EBIT before
corporate
items -78.8 32.7 40.2 37.8 31.9 20.9 34.7 40.2 30.2 126.0
Corporate net 0.3 0.5 -4.5 -0.1 -3.8 -0.5 3.4 9.6 7.0 19.5
Total -78.5 33.2 35.7 37.7 28.1 20.4 38.1 49.8 37.2 145.5
Underlying EBIT
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006
Europe 13.2 14.7 14.7 13.6 56.2 3.4 14.9 19.8 13.9 52.1
Americas 10.7 13.5 20.2 18.5 62.9 13.9 14.0 19.7 13.7 61.3
Asia-
Oceania-
Africa 5.3 4.5 5.3 5.7 20.8 6.9 7.5 4.1 6.3 24.7
EBIT before
corporate
items 29.2 32.7 40.2 37.8 139.9 24.2 36.4 43.6 33.9 138.1
Corporate net 0.3 0.5 -4.5 -0.1 -3.8 -0.5 3.4 9.6 7.0 19.5
Total 29.5 33.2 35.7 37.7 136.1 23.7 39.8 53.2 40.9 157.6
Net assets and RONA %
(12m roll.)
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
EUR million 2007 2007 2007 2007 2006 2006 2006 2006
Europe 812.6 819.5 803.8 789.7 782.7 779.4 778.6 784.8
RONA-% underlying 6.9 % 5.7 % 5.8 % 6.6% 6.7% 7.8% 8.2% 8.7%
RONA-% reported -2.8 % 5.3 % 5.2 % 5.5% 5.1% 6.1% 5.5% 0.1%
Americas 539.4 558.7 565.0 566.2 558.1 564.5 565.9 573.4
RONA-% underlying 11.8
11.7 % 11.8 % % 11.7% 11.0% 11.0% 10.9% 9.7%
RONA-% reported 11.8
8.5 % 11.8 % % 11.7% 11.0% 11.0% 10.9% 4.3%
Asia-Oceania-Africa 345.0 332.6 319.0 303.4 301.0 295.8 292.2 293.9
RONA-% underlying 6.0 % 6.7 % 7.9 % 7.9% 8.1% 8.1% 7.7% 8.4%
RONA-% reported 2.5 % 6.7 % 7.9 % 7.9% 8.1% 6.1% 5.6% 5.8%
Business segments
Net sales
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006
Consumer
Goods 356.9 377.4 390.2 389.2 1513.7 359.0 368.2 379.6 388.5 1495.3
Foodservice 200.9 205.0 215.9 175.5 797.3 198.2 194.0 214.5 173.6 780.3
Total 557.8 582.4 606.1 564.7 2311.0 557.2 562.2 594.1 562.1 2275.6
Intersegment sales are not significant.
EBIT
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006
Consumer
Goods -59.0 23.4 26.8 26.5 17.7 11.6 23.7 21.1 18.1 74.7
Foodservice -19.8 9.3 13.4 11.3 14.2 9.3 11.0 19.1 12.1 51.3
EBIT before
corporate items -78.8 32.7 40.2 37.8 31.9 20.9 34.7 40.2 30.2 126.0
Corporate net 0.3 0.5 -4.5 -0.1 -3.8 -0.5 3.4 9.6 7.0 19.5
Total -78.5 33.2 35.7 37.7 28.1 20.4 38.1 49.8 37.2 145.5
Underlying EBIT
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006
Consumer Goods 20.1 23.4 26.8 26.5 96.8 14.5 25.2 23.5 20.9 84.1
Foodservice 9.1 9.3 13.4 11.3 43.1 9.7 11.2 20.1 13.0 54.0
EBIT before
corporate items 29.2 32.7 40.2 37.8 139.9 24.2 36.4 43.6 33.9 138.1
Corporate net 0.3 0.5 -4.5 -0.1 -3.8 -0.5 3.4 9.6 7.0 19.5
Total 29.5 33.2 35.7 37.7 136.1 23.7 39.8 53.2 40.9 157.6
Other information
Q1-Q4 Q1-Q4
EUR million 2007 2006
Equity per share (EUR) 7.70 8.37
ROE, % -2.4 11.7
ROI, % 1.8 9.4
Capital expenditure 147.9 154.0
Personnel 15092 14792
Profit before taxes (12m roll.) -14.0 109.2
Depreciation 92.9 92.6
Amortization of other intangible assets 6.0 2.7
Share capital and shareholders
At year-end 2007, the Company's registered share capital was EUR
358,657,670.00 (unchanged) corresponding to a total number of
outstanding shares of 105,487,550 (unchanged) including 5,061,089
(unchanged) Company's own shares. The Company's own shares represent
4.8% of the total number of shares. The net figure of outstanding
shares was 100,426,461 (unchanged).
The ownership structure relating to the largest registered
shareholders was not subject to major changes over the year. At the
end of December 2007 there were 21,424 (21,582) registered
shareholders. Nominee registrations including foreign ownership
accounted for 26% (24%).
Share developments
The Company's share was quoted on the Helsinki Stock Exchange on the
Nordic Large Cap list under the Materials sector until the end of
2007. From the beginning of 2008, the Company's share is quoted on
the Nordic Mid Cap list for the same sector.
At the end of December 2007, the Company's market capitalization was
EUR 857 million (EUR 1,570 million) and EUR 816 million (EUR 1,494
million) excluding Company's own shares. With a closing price of EUR
8.12 (EUR 14.88) the share price decreased by 45% (+7%) from the
beginning of the year, while the OMX Helsinki CAP PI Index increased
by 4% (+25%). During the period, the highest price paid for the
Company's share was EUR 15.89 on January 15, 2007 (EUR 16.73 on April
7, 2006), and the lowest price paid was EUR 7.65 on December 28, 2007
(EUR 12.21 on June 13, 2006). The volume weighted average price was
EUR 11.33 (EUR 14.35).
The cumulative value of the Company's share turnover was EUR 1,483
million (EUR 1,086 million). The trading volume of 131 million (76
million) shares equalled an average daily turnover of EUR 6 million
(EUR 4 million) or, correspondingly 524,202 (301,371) shares.
In total, turnover of the Company's 2003 A, B and C option rights was
EUR 4 million, corresponding to a trading volume of 1,138,781. In
2006, turnover of the Company's 2000 A, B and C as well as 2003 A and
B option rights was EUR 15 million, corresponding to a trading volume
of 1,252,614. The Company's 2003 C option rights were listed on the
Helsinki Stock Exchange on May 2, 2007.
Contingent liabilities
Dec 31 Dec 31
2007 2006
EUR million
Mortgages 14.5 14.7
Guarantee obligations 2.8 3.8
Lease payments 55.6 59.3
Capital expenditure commitments 19.4 27.4
Nominal values of derivative instruments
Dec 31 Dec 31
2007 2006
EUR million
Currency forwards, transaction risk hedges 45 54
Currency forwards, translation risk hedges 101 112
Currency swaps, financing hedges 143 107
Currency options -1 1
Interest rate swaps 164 139
Electricity forwards 1 2
The following EUR rates have been applied to GBP, INR, AUD and USD
Q4/07 Q4/06
Income statement, average: GBP 1 = 1.461 1.467
INR 1 = 0.018 0.018
AUD 1 = 0.612 0.600
USD 1 = 0.729 0.796 Q4/07 Q4/06
Balance sheet, month end: GBP 1 = 1.364 1.489
INR 1 = 0.017 0.017
AUD 1 = 0.597 0.599
USD 1 = 0.679 0.759
Definitions for key indicators
Earnings per share = Profit before taxes - minority interest - taxes
/ Average number of shares outstanding
Earnings per share (diluted) = Diluted profit before taxes - minority
interest - taxes / Average fully diluted number of shares outstanding
Net debt to equity (gearing) = Interest bearing net debt / Equity +
minority interest (average)
Return on net assets (RONA) = 100 x Earnings before interest and
taxes (12 m roll.) / Net assets (12 m roll.)
Shareholders' equity per share = Equity / Issue-adjusted number of
shares at period end
Return on equity (ROE) = 100 x (Profit for the period) / Equity +
minority interest (average)
Return on investment (ROI) = 100 x (Profit before taxes + interest
expenses + net other financial expenses) / Balance sheet total -
Interest-free liabilities (average)
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