2009-02-10 07:30:00 CET
2009-02-10 07:31:24 CET
REGULATED INFORMATION
Huhtamäki Oyj - Financial Statement Release
Results 2008: Strong cash flow, significant debt reduction, stable sales
STOCK EXCHANGE RELEASE HUHTAMÄKI OYJ 10.2.2009 AT 8:30
- Sales growth achieved in constant currencies
- Raw material, energy and distribution costs remained high with a
rapid drop at year-end
- Reported earnings negative due to non-recurring charges
- Weak performance in Flexibles, Films and Asia-Oceania-Africa
- Strong cash flow improvement; significant debt reduction
- The Board of Directors proposes a dividend of EUR 0.34 (EUR 0.42
for 2007) per share
Key figures
EUR million Q1-Q4 2008 Q1-Q4 2007 Q4 2008 Q4 2007
Net sales 2,260.0 2,311.0 548.8 557.8
EBIT excl. non-recurring 91.0 136.1 10.9 29.5
charges
EBIT margin % 4.0 5.9 2.0 5.3
EBIT* -74.5 28.1 -147.7 -78.5
EPS -1.12 -0.22 -1.43 -0.83
ROI % (12m roll.) -4.8 1.8 - -
* 2008 EBIT includes EUR 165.5 million (EUR 108.0 million)
non-recurring charges.
CEO Jukka Moisio: "At the beginning of 2008 Huhtamaki targeted sales
growth and stable earnings, but towards the end of the year focus was
shifted to cash flow and debt reduction. Financially, our main
achievement in 2008 was positive free cash flow of EUR 104 million.
This compares favorably with negative cash flows in both 2007 and in
2006. As a whole our performance was not satisfactory and we have
accordingly addressed loss-making units and implemented actions to
reduce costs.
Furthermore, the Group's strategic direction was updated in 2008.
Focus will be put on businesses with a strong market position and
good growth potential. The smooth and rough molded fiber products,
release films, flexible packaging, foodservice paper cups and other
products based on paper forming technology were identified as
stronghold areas. Rigid plastic Consumer Goods operations were
reorganized as a separate business under strategic review. Following
the annual impairment testing that was conducted based on the updated
strategic direction and the new reporting segments, significant
non-recurring charges were recorded in the fourth quarter. As a
result, the reported earnings were negative in 2008.
2009 will be a demanding year for Huhtamaki. The economic downturn
will subdue short-term growth prospects, although our stronghold
businesses can, in normal circumstances, deliver 5% organic growth.
Economic uncertainty calls for prudent house-keeping, and cost
efficiency combined with strong positive cash flow are our
priorities. Another focus area for 2009 and onwards is to improve our
industrial performance through a worldwide implementation of the
continuous improvement program."
Overview
The demand for consumer packaging remained stable during the year
despite general economic uncertainty experienced in the majority of
the markets towards year-end. The Group's reported net sales declined
due to adverse currency translation impact while growth was achieved
in constant currencies.
Earnings for 2008 were below previous year. This development reflects
non-recurring charges as well as weak performance especially in
Flexibles and Films Global. Profitability excluding non-recurring
charges was on a good level in Rigid and Molded Fiber Americas as
well as in Molded Fiber Europe. Margin pressure was experienced
during most of the year as raw material costs in 2008 remained on a
high level compared to 2007.
Cash flow generation was good due to clearly improved working capital
management as well as lower capital expenditure. The inventory
reduction achieved at year-end resulted in strong cash flow but
depressed earnings due to unabsorbed manufacturing costs. Net debt
reduced strongly by year-end.
Business review by segment
The sales distribution in 2008 was the following: Flexibles and Films
Global 30% (31%), Rigid Europe 28% (27%), Molded Fiber Europe 6%
(6%), Rigid and Molded Fiber Americas 27% (26%) as well as Rigid and
Molded Fiber Asia-Oceania-Africa 9% (10%).
Flexibles and Films Global
Flexibles and Films are organized as a global segment. Flexibles are
used for food and pet food packaging as well as non-food consumer
packaging. Films are mainly used for technical applications in the
label, adhesive tape, hygiene and health care industries as well as
building and construction, automotive, packaging and graphic arts
industries.
EUR million Q1-Q4 2008 Q1-Q4 2007 Q4 2008 Q4 2007
Net sales 691.5 709.2 158.0 168.7
EBIT excl. non-recurring 24.8 46.8 1.5 7.8
charges
EBIT margin % 3.6 6.6 0.9 4.6
EBIT* 6.9 38.5 -16.4 -0.5
RONA % (12m roll.) 1.3 7.2 - -
* 2008 EBIT includes EUR 17.9 million (EUR 8.3 million) non-recurring
charges.
Sales within the segment declined during year. In Flexibles, sales
development was weak in Europe and North America all year mainly due
to softness in the pet food market; robust growth was seen in
Asia-Oceania but in the fourth quarter demand declined rapidly due to
intensified economic slowdown. In Films, sales were lower compared to
the previous year's level; after a weak start to the year sales
recovered in the second quarter but declined again due to market
softness at the end of the year.
Profitability reflects margin pressure due to higher raw material
costs, adverse currency translation impact, operational inefficiency
and unabsorbed manufacturing costs due to inventory reduction.
The flexible packaging operations in Malvern, USA, were decided to be
discontinued to address underutilized capacity and unsatisfactory
profitability and the site will be dedicated to the Films business.
The restructuring process at the Malvern facility will impact
approximately 80 employees. A one-time charge of approximately EUR 18
million was booked in the fourth quarter 2008. The discontinuation of
the loss-making Malvern Flexibles operation is expected by the end of
the first quarter 2009.
Production at the new flexible packaging facility in Bangkok,
Thailand, commenced in July 2008. The reconstructed flexible
packaging facility in Thane, India, was partially operational at
year-end 2008.
Rigid Europe
Rigid paper and plastic packaging serves foodservice and consumer
goods markets in Europe with fresh food, dairy, ice cream, beverage
and personal care packaging as well as disposable tableware. Rigid
packaging is supplied to foodservice operators, fast food restaurants
and food manufacturers.
EUR million Q1-Q4 2008 Q1-Q4 2007 Q4 2008 Q4 2007
Net sales 626.0 633.9 139.9 150.2
EBIT excl. non-recurring 9.0 11.6 -3.1 4.6
charges
EBIT margin % 1.4 1.8 -2.2 3.1
EBIT* -98.6 -67.3 -103.8 -74.3
RONA % (12m roll.) -27.9 -14.2 - -
* 2008 EBIT includes EUR 107.6 million (EUR 78.9 million)
non-recurring charges.
In 2008, the segment's sales in constant currencies were unchanged
from the previous year's level. However, the growth seen in the first
half of the year turned into a decline in the second half. The
development in sales mainly reflects Consumer Goods where market
softness continued in Germany and the discontinued operations in the
UK had a negative impact. While Foodservice showed growth driven by
strong performance in Eastern Europe for the full year, it was not
immune to the general economic uncertainty and experienced market
softness towards year-end.
Profitability reflects the benefits from earlier pricing efforts
visible in the second quarter. This was offset by operational
inefficiency as well as adverse currency translation impact,
unabsorbed manufacturing costs due to inventory reduction and an
inventory revaluation in the fourth quarter.
The reported EBIT was EUR -99 million (EUR -67 million) including
restructuring, goodwill impairment and tangible asset impairment
charges, total amount EUR 108 million (EUR 79 million).
In the UK, it was decided to discontinue the Consumer Goods rigid
plastic production in Portadown and in Gosport due to volume decline
as well as continued increases in manufacturing and energy costs. The
Consumer Goods business unit was loss-making with annual net sales of
around EUR 30 million. The closure was completed by year-end 2008 and
impacted 140 employees. Also, the rigid packaging site in
Karlholmsbruk, Sweden, was closed by year-end and impacted
approximately 40 employees. The annual net sales of the site were
around EUR 4 million.
At year-end the rigid packaging business organization was aligned
with the earlier announced strategic direction. Foodservice business
in Europe, Asia and Oceania was merged into one segment. Rigid
plastic Consumer Goods operations were reorganized as a separate
business under strategic review. In Europe and Oceania, this
reorganization will lead to a reduction of approximately 170
employees, of which 160 in Europe, during the first half of 2009. The
measures will improve the competitiveness of the business and reduce
the cost base by EUR 8 million on an annual basis. A one-time
restructuring charge of EUR 8 million was recorded for these measures
in the fourth quarter of 2008.
Molded Fiber Europe
Molded fiber is used to make fresh product packaging, such as egg and
fruit packaging.
EUR million Q1-Q4 2008 Q1-Q4 2007 Q4 2008 Q4 2007
Net sales 138.2 139.4 33.6 36.7
EBIT 10.3 10.7 2.3 3.5
EBIT margin % 7.4 7.7 6.8 9.5
RONA % (12m roll.) 8.6 9.0 - -
Sales and earnings within the segment were stable, despite a weaker
fourth quarter. At year-end the continued favorable development in
Eastern Europe was not enough to offset an adverse currency
translation impact and a decline in the machine and waste paper trade
businesses.
Rigid and Molded Fiber Americas
Rigid paper and plastic packaging, which serves ice-cream and other
consumer goods as well as foodservice markets, is complemented with
Molded Fiber Chinet® disposable tableware products. Similar market
channels are a common denominator.
EUR million Q1-Q4 2008 Q1-Q4 2007 Q4 2008 Q4 2007
Net sales 608.0 609.0 166.5 144.5
EBIT excl. non-recurring 45.3 60.3 8.4 10.6
charges
EBIT margin % 7.5 9.9 5.0 7.3
EBIT* 40.1 43.5 3.2 -6.2
RONA % (12m roll.) 9.6 9.5 - -
* 2008 EBIT includes EUR 5.2 million (EUR 16.8 million) non-recurring
charges.
The segment's growth in constant currencies was solid throughout the
year and accelerated towards year-end. In Retail, the positive volume
development was accelerated in the second half of the year through
promotional activity. The good sales momentum continued in South
America. In Consumer Goods, the sales recovery that started at the
end of the second quarter continued until year-end. In Foodservice,
the demand was soft all year.
Profitability reflects higher raw material, energy and distribution
costs as well as adverse currency translation impact partially offset
by the price increases implemented during the year. Furthermore,
while the trend in raw material prices and currency reversed in the
fourth quarter the benefit from these was eroded by inventory
revaluation and unabsorbed manufacturing costs due to inventory
reduction.
At the end of the year it was decided to optimize the rigid plastic
operations in North America and to close down the production unit in
Phoenix, Arizona. The manufacturing equipment and operations will be
consolidated into the Group's other plastics operations in Coleman,
Michigan and New Vienna, Ohio. The restructuring process at the
Phoenix facility will impact approximately 70 employees. A one-time
charge of approximately EUR 5 million was booked in the fourth
quarter 2008. The closure of the site is expected by the end of the
first half of 2009.
Rigid and Molded Fiber Asia-Oceania-Africa
Rigid paper and plastic packaging serves foodservice and consumer
goods markets. The segment also includes the Molded Fiber business
which makes fresh product packaging.
EUR million Q1-Q4 2008 Q1-Q4 2007 Q4 2008 Q4 2007
Net sales 209.8 233.3 53.1 60.9
EBIT excl. non-recurring -0.2 10.4 -0.1 2.6
charges
EBIT margin % - 4.4 - 4.3
EBIT* -35.0 6.5 -34.9 -1.3
RONA % (12m roll.) -20.2 3.2 - -
* 2008 EBIT includes EUR 34.8 million (EUR 3.9 million) non-recurring
charges.
The segment's sales development in constant currencies was
unfavorable, despite small growth being recorded in the fourth
quarter. The sales decline in Oceania and in South Africa reflects
general market softness. In Asia, sales performance was disappointing
as a result of the slower than planned generation of new business.
Profitability reflects low sales, operational inefficiency as well as
adverse currency translation impact.
The relocation from the site in Hong Kong to the new rigid packaging
facility in Guangzhou, China, was completed in May 2008. Production
in Hong Kong ceased at the end of the second quarter.
Financial review
The Group EBIT in 2008 was EUR -75 million (EUR 28 million),
corresponding to an EBIT margin of -3.3% (1.2%). In the fourth
quarter, the Group EBIT was EUR -148 million (EUR -79 million),
corresponding to an EBIT margin of -26.9% (-14.1%).
The full year Group EBIT includes tangible asset impairment charges
EUR 77 million (EUR 58 million), goodwill impairment charges EUR 72
million (EUR 47 million) and restructuring charges EUR 16 million
(EUR 4 million), total amount EUR 166 million (EUR 108 million). Of
the total amount, EUR 149 million were non-cash impairment charges.
These were mainly related to rigid plastics Consumer Goods businesses
in Europe and Oceania following the adjustment of book values to
lower future cash flow expectations as annual impairment testing was
conducted in accordance with the updated strategic direction and the
new reporting segments. Additionally, the non-cash impairment charges
were related to the processes to discontinue operations in Phoenix
and Malvern.
The distribution of the non-recurring charges by segment was the
following:
Flexibles and Films segment EBIT includes tangible asset impairment
charges EUR 9 million, goodwill impairment charges EUR 7 million (EUR
8 million) and restructuring charges EUR 2 million, total amount EUR
18 million (EUR 8 million).
Rigid Europe segment EBIT includes tangible asset impairment charges
EUR 62 million (EUR 46 million), goodwill impairment charges EUR 35
million (EUR 32 million) and restructuring charges EUR 11 million
(EUR 1 million), total amount EUR 108 million (EUR 79 million).
Rigid and Molded Fiber Americas segment EBIT includes tangible asset
impairment charges EUR 3 million (EUR 12 million) and restructuring
charges EUR 2 million, additionally Q4 2007 included goodwill
impairment charges EUR 5 million, total amount EUR 5 million (EUR 17
million).
Rigid and Molded Fiber Asia-Oceania-Africa EBIT includes tangible
asset impairment charges EUR 3 million, goodwill impairment charges
EUR 30 million (EUR 2 million) and restructuring charges EUR 1
million (EUR 2 million), total amount EUR 35 million (EUR 4 million).
The full year Group EBIT excluding non-recurring charges was EUR 91
million (EUR 136 million), corresponding to an EBIT margin of 4.0%
(5.9%).
The net financial items were EUR -46 million (EUR -43 million), with
the fourth quarter amounting to EUR -12 million (unchanged). Tax
income was EUR 10 million (EUR -6 million) with the fourth quarter
accounting for EUR 16 million (EUR 7 million).
The 2008 result was EUR -110 million (EUR -20 million) and the
earnings per share (EPS) were EUR -1.12 (EUR -0.22). Correspondingly,
in the fourth quarter the result was EUR -143 million (EUR -83
million) and EPS were EUR -1.43 (EUR -0.83). The average number of
outstanding shares used in the EPS calculations was 100,426,461
(unchanged) excluding 5,061,089 (unchanged) of the Company's own
shares.
Balance sheet and cash flow
Free cash flow in 2008 amounted to EUR 104 million (EUR -28 million)
and in the fourth quarter to EUR 37 million (EUR 17 million). The
strong improvement was due to emphasis on more efficient working
capital management especially on the inventory side, as well as lower
capital expenditure with focus on earlier made investments in new
flexible and foodservice packaging production in Asia. Capital
expenditure in 2008 was EUR 74 million (EUR 148 million), with the
fourth quarter spending at EUR 27 million (EUR 56 million).
A EUR 75 million hybrid bond was issued in November 2008 in order to
strengthen the Group's capital structure. The bond has no maturity
but the Company may call the bond after three years. The bond is
treated as equity in the Group's IFRS financial statements. The cash
amount received from the transaction was used to pay down debt.
Net debt was EUR 587 million (EUR 749 million) at the end of December
2008. This corresponds to a gearing ratio of 0.84 (0.94).
Total assets on the balance sheet were EUR 1,952 million (EUR 2,191
million).
Strategic direction
During the second half of 2008 it was decided that the Group will
focus on packaging operations in which it has a competitive
advantage, a good market position and which create value for the
Group and its customers. The smooth and rough molded fiber products,
release films, flexible packaging, foodservice paper cups and other
products based on paper forming technology were identified as
stronghold areas.
Different strategic alternatives will be reviewed for the Rigid
plastic consumer goods operations as it, for the most part, does not
meet the criteria for financial performance and its profitability has
been below the Group average. This operation has annual sales of
approximately EUR 400 million.
Huhtamaki's main financial targets, return on investment (ROI) at 15%
and dividend payout ratio of 40%, remain unchanged. The commitment to
deliver good positive cash flow continues to be a priority.
During 2008, actions to reduce costs were implemented and loss-making
units in Europe and North America were addressed. The Group's
organizational structure was revised and is now more strongly based
on product and service offerings instead of a traditional regional
emphasis.
The current reporting segments adopted from the beginning of 2008
were decided to be modified further to reflect the new stronghold
areas. As of January 1, 2009 the new reporting segments are:
Flexibles Global, Films Global, North America, Rough Molded Fiber
Global, Foodservice Europe-Asia-Oceania and Rigid Consumer Goods
Plastics.
Group structure
The Group structure was clarified by separating the Foodservice and
Consumer Goods businesses in the production unit in Hämeenlinna,
Finland and transferring the businesses into wholly owned
subsidiaries of Huhtamäki Oyj. As of December 31, 2008 the
Foodservice business in Finland will be conducted by Huhtamäki
Foodservice Finland Oy and Consumer Goods business by Huhtamäki
Consumer Goods Finland Oy.
Personnel
The Group had 14,644 (15,092) employees at the end of December 2008.
The number of employees by segment was the following: Flexibles and
Films Global 4,515 (4,502), Rigid Europe 3,604 (3,822), Molded Fiber
Europe 922 (unchanged), Rigid and Molded Fiber Americas 3,512
(3,608), Rigid and Molded Fiber Asia-Oceania-Africa 2,034 (2,174) and
other 57 (64). The average number of employees was 15,044 (14,986).
Huhtamäki Oyj employed 52 (794) people at year-end. The decrease in
the figure is due to the aforementioned separation of the Foodservice
and Consumer Goods businesses from the parent company into its wholly
owned subsidiaries. The annual average was 723 (825).
Changes in Group Executive Team
Mr. Jukka Moisio was appointed by the Board of Directors as Huhtamäki
Oyj's Chief Executive Officer on February 28, 2008 and effective from
April 1, 2008. Mr. Eric Le Lay was appointed Executive Vice
President, Europe Rigid, effective from March 12, 2008, following the
retirement of Mr. Walter Günter. During the year Eric Le Lay's
responsibilities were aligned with the updated strategy. Following
the resignation of Mr. Maurice Petitjean, Executive Vice President,
Flexibles and Films Global, as from May 22, 2008, the segment was
headed by Jukka Moisio for an interim period. Mr. Suresh Gupta was
appointed as Executive Vice President, Flexibles Global and Mr. Peter
Wahsner, as Executive Vice President, Films Global; both starting on
January 1, 2009. Mr. George Lai, Executive Vice President, Rigid and
Molded Fiber Asia-Oceania-Africa, resigned as of December 31, 2008.
Ms. Pii Kotilainen, Senior Vice President, Human Resources resigned
as from March 31, 2008. Mr. Juha Salonen was appointed as Senior Vice
President, Administration and General Counsel starting on April 22,
2008.
As a continuum to the strategy update and the revised organizational
layout, the members of the Group Executive Team are: Jukka Moisio
(Chairman), Chief Executive Officer; Timo Salonen, Chief Financial
Officer; Juha Salonen, Senior Vice President, Administration and
General Counsel; Clay Dunn, Executive Vice President, Americas and
Rough Molded Fiber Global; Suresh Gupta, Executive Vice President,
Flexibles Global; Eric Le Lay, Executive Vice President, Foodservice
Europe-Asia-Oceania; and Peter Wahsner, Executive Vice President,
Films Global.
Resolutions of Huhtamäki Oyj's Annual General Meeting in 2008
Huhtamäki Oyj's Annual General Meeting of Shareholders was held in
Helsinki on March 31, 2008. The meeting adopted the Company's
Financial Statements and the Consolidated Financial Statements for
2007 and discharged the Company's Board of Directors and the CEO from
liability. The dividend for 2007 was set at EUR 0.42 per share,
unchanged from the previous year.
Seven members of the Board of Directors were elected for a term which
lasts until the end of the Annual General Meeting of Shareholders
following the election. Ms. Eija Ailasmaa, Mr. George V. Bayly, Mr.
Robertus van Gestel, Mr. Mikael Lilius, Mr. Anthony J.B. Simon and
Mr. Jukka Suominen were re-elected to the Board of Directors. Mr.
Rolf Börjesson was elected as a new member. The Board of Directors
subsequently elected Mikael Lilius as Chairman of the Board and Jukka
Suominen as Vice-Chairman of the Board.
Short-term risks and uncertainties
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. Material
changes in general economic conditions or in the financial markets
could have an adverse effect on the implementation of the Group's
strategy and on its business performance and earnings.
Outlook for 2009
The year has started with uncertainty about the severity of the
economic downturn, as well as the timing and scope of a potential
recovery in the global economy. However, as the majority of the
Group's segments are considered to be of a defensive nature, with
food and personal care related packaging products, relatively stable
market development is expected in 2009. At the beginning of the year,
the costs for polymer based raw materials are expected to be lower
than the average in 2008.
In the short-term, pricing and supply chain initiatives, control over
costs and capital spending, positive cash flow generation and net
debt reduction continue as key focus areas within the Group. Capital
expenditure in 2009 is expected to be below EUR 100 million.
Dividend proposal
The Board of Directors will propose to the Annual General Meeting
that a dividend of EUR 0.34 (EUR 0.42) per share be paid.
Annual General Meeting 2009
The Annual General Meeting of Shareholders will be held on Friday,
April 3, 2009, at 3.00 pm (Finnish time), at Finlandia Hall,
Mannerheimintie 13 e, in Helsinki, Finland.
Financial reporting in 2009
Huhtamaki will publish the interim report for January-March on April
23, January-June on July 23 and January-September on October 22.
Espoo, February 9, 2009
Huhtamäki Oyj's Board of Directors
For further information, please contact:
Mr. Jukka Moisio, CEO, tel. +358-10-686 7801
Mr. Timo Salonen, CFO, tel. +358-10-686 7880
Ms. Kia Aejmelaeus, Head of Investor Relations, tel. +358-10-686 7819
or mobile +358-40-765 4616
Ms. Minna Staffans, Head of Group Communications, tel. +358-10-686
7863
A news conference for analysts and media will be held at 11:00
Finnish time at the head office, address Keilaranta 10, Espoo,
Finland. CEO Jukka Moisio and CFO Timo Salonen will present the
results, after which a buffet lunch is served. A conference call for
analysts and investors will start at 15:00 Finnish / 13:00 UK / 08:00
New York time with a management presentation, followed by a question
and answer session. To participate, please dial one of the following
numbers 5-10 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: 82918064
All results materials will be available 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 1 - December 31, 2008
Group Income statement (IFRS)
Q1-Q4 Q1-Q4 Q4 Q4
EUR million 2008 2007 2008 2007
Net sales 2,260.0 2,311.0 548.8 557.8
Cost of goods sold -2,043.2 -2,028.0 -564.0 -543.8
Gross profit 216.8 283.0 -15.2 14.0
Other operating income 21.6 31.9 7.4 15.5
Sales and marketing -84.8 -83.6 -21.3 -20.6
Research and development -16.2 -17.8 -4.2 -3.6
Administration costs -117.2 -122.6 -30.1 -31.9
Other operating expenses -94.7 -62.8 -84.3 -51.9
-291.3 -254.9 -132.5 -92.5
Earnings before interest and taxes -74.5 28.1 -147.7 -78.5
Financial income 10.0 9.2 2.5 2.8
Financial expenses -55.7 -51.7 -14.1 -14.4
Income of associated companies 0.5 0.4 0.1 0.1
Result before taxes -119.7 -14.0 -159.2 -90.0
Income taxes 9.5 -6.2 16.4 7.3
Result for the period -110.2 -20.2 -142.8 -82.7
Attributable to:
Equity holders of the parent company -111.9 -22.5 -142.9 -83.7
Minority interest 1.7 2.3 0.1 1.0
Basic earnings per share (EUR)
for the shareholders of parent -1.12 -0.22 -1.43 -0.83
company
Diluted earnings per share (EUR)
for the shareholders of parent -1.12 -0.22 -1.43 -0.83
company
Group balance sheet (IFRS)
Dec 31 Dec 31
EUR million 2008 2007
ASSETS
Non-current assets
Goodwill 402.4 471.9
Other intangible assets 34.5 41.4
Tangible assets 676.3 799.3
Investments in associated companies 1.9 1.5
Available for sale investments 1.9 1.9
Interest bearing receivables 0.1 0.9
Deferred tax assets 15.1 13.7
Employee benefit assets 62.5 59.2
Other non-current assets 3.7 4.8
1,198.4 1,394.6
Current assets
Inventory 296.7 348.5
Interest bearing receivables 2.1 4.6
Current tax assets 9.4 17.9
Trade and other current receivables 377.9 394.8
Cash and cash equivalents 67.8 30.8
753.9 796.6
Total assets 1,952.3 2,191.2
EQUITY AND LIABILITIES
Share capital 358.7 358.7
Premium fund 104.7 104.7
Treasury shares -46.5 -46.5
Translation differencies -130.5 -121.1
Fair value and other reserves -5.0 1.4
Retained earnings 327.5 475.7
Total equity attributable to equity
holders of the parent company 608.9 772.9
Minority interest 18.4 20.5
Hybrid bond 75.0 -
Total equity 702.3 793.4
Non-current liabilities
Interest bearing liabilities 474.7 401.1
Deferred tax liabilities 29.8 38.8
Employee benefit liabilities 103.8 108.8
Provisions 58.4 60.3
Other non-current liabilities 6.5 4.3
673.2 613.3
Current liabilities
Interest bearing liabilities
- Current portion of long term loans 25.2 17.9
- Short term loans 157.3 365.7
Provisions 10.1 8.0
Current tax liabilities 9.8 21.1
Trade and other current liabilities 374.4 371.8
576.8 784.5
Total liabilities 1,250.0 1,397.8
Total equity and liabilities 1,952.3 2,191.2 Dec 31 Dec 31
2008 2007
Net debt 587.2 748.5
Net debt to equity (gearing) 0.84 0.94
Changes in
shareholders'
equity
Attributable to equity holders of Mino- Hybrid
the parent company rity
EUR million Share Share Trea- Trans- Fair Retai- Total inte- bond Total
capi- issue sury lation value ned equity rest
tal pre- sha- diff. and earn-
mium res other ings
reser-
ves
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 -22.5 -22.5 2.3 -20.2
period
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
Balance at
Dec 31, 2007 358.7 104.7 -46.5 -121.1 1.4 475.7 772.9 20.5 - 793.4
Balance at
Dec 31, 2007 358.7 104.7 -46.5 -121.1 1.4 475.7 772.9 20.5 - 793.4
Cash flow
hedges
Hedge
result
deferred to -5.5 -5.5 -5.5
equity
Hedge
result
recognized
in income
statement -2.9 -2.9 -2.9
Hedge result
transferred to
carrying amount
of hedged items -0.7 -0.7 -0.7
Translation
differences -9.4 -9.4 -3.8 -13.2
Deferred tax
in equity 2.7 2.7 2.7
Other changes 4.7 4.7 4.7
Income and
expense
recognized
directly
in equity -9.4 -6.4 4.7 -11.1 -3.8 -14.9
Result
for the -111.9 -111.9 1.7 -110.2
period
Total
recognized
income and
expense for
the period -9.4 -6.4 -107.2 -123.0 -2.1 -125.1
Dividend -42.2 -42.2 -42.2
Share-based
payments 1.2 1.2 1.2
Hybrid
bond 75.0 75.0
Balance at
Dec 31, 2008 358.7 104.7 -46.5 -130.5 -5.0 327.5 608.9 18.4 75.0 702.3
Group cash flow statement (IFRS)
Q1-Q4 Q1-Q4 Q4 Q4
EUR million 2008 2007 2008 2007
Result for the period* -110.2 -20.2 -142.8 -82.7
Adjustments* 280.0 243.2 170.2 126.5
- Depreciation, amortization and 245.9 203.3 173.4 129.2
impairment*
- Gain on equity of minorities* -0.5 -0.4 -0.1 -0.2
- Gain/loss from disposal of -4.3 -8.1 -0.4 -8.6
assets*
- Financial expense/-income* 45.7 42.5 11.6 11.6
- Income tax expense* -9.5 6.2 -16.4 -7.3
- Other adjustments, operational* 2.7 -0.3 2.1 1.9
Change in inventory* 38.2 -14.8 56.6 15.1
Change in non-interest bearing 8.2 -3.7 17.4 27.3
receivables*
Change in non-interest bearing 2.8 -38.5 -30.0 -5.3
payables*
Dividends received* 0.5 0.9 0.3 0.5
Interest received* 1.7 1.3 0.3 0.0
Interest paid* -43.2 -42.7 -9.5 -10.7
Other financial expense and income* -2.1 -1.1 -1.8 -1.5
Taxes paid* -5.0 -18.6 1.5 -8.9
Net cash flows from operating 170.9 105.8 62.2 60.3
activities
Capital expenditure* -74.3 -147.9 -26.6 -55.5
Proceeds from selling fixed assets* 7.1 14.3 1.2 12.0
Proceeds from long-term deposits 3.3 7.2 0.3 0.1
Payment of long-term deposits -2.5 -6.1 0.0 -4.5
Proceeds from short-term deposits 33.4 11.5 3.8 7.1
Payment of short-term deposits -31.4 -11.0 -3.1 -7.1
Net cash flows from investing -64.4 -132.0 -24.4 -47.9
Proceeds from long-term borrowings 489.3 520.2 171.7 188.5
Repayment of long-term borrowings -415.9 -434.4 -131.9 -153.9
Proceeds from short-term borrowings 2,446.3 2,987.4 328.6 820.4
Repayment of short-term borrowings -2,620.5 -2,995.0 -456.6 -857.9
Dividends paid -42.2 -42.2 - -
Hybrid equity 75.0 - 75.0 -
Net cash flows from financing -68.0 36.0 -13.2 -2.9
Change in liquid assets 37.0 8.5 23.4 8.7
Cash flow based 38.5 9.8 24.6 9.5
Translation difference -1.5 -1.3 -1.2 -0.8
Liquid assets period start 30.8 22.3 44.4 22.1
Liquid assets period end 67.8 30.8 67.8 30.8
Free cash flow (including figures 103.7 -27.8 36.8 16.8
marked with *)
NOTES FOR THE RESULT REPORT
Except for accounting policy changes listed below, the same
accounting policies have been applied in the interim financial
statements as in annual financial statements for 2007.
Changes in accounting principles
The Group has adopted the following IFRS standards and
interpretations considered applicable to Huhtamaki, with effect from
January 1, 2008:
* IFRS 8 Operating segments. IFRS 8 assumes that segment reporting
reflects the Group's management and internal reporting structure.
The five new segments
are in line with Huhtamaki's internal management structure and will
replace the former geographical segments.
* IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum
Funding requirements and their Interaction. The interpretation
provides guidance on assessing
the amount of the surplus that can be recognized as defined benefit
asset. It also explains how the pension asset or liability may be
affected by a statutory or
contractual minimum funding requirement.
These newly adopted standards have not had a material impact on the
reported results.
Segments
Segment information is presented according to the IFRS standards.
Items below EBIT - financial items and taxes - are not allocated to
the segments.
Net sales
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007
Flexibles 158.9 174.6 176.2 178.4 688.1 167.9 176.3 175.1 185.7 705.0
and Films
Global
- -0.9 1.7 1.7 0.9 3.4 0.8 1.2 1.0 1.2 4.2
Intersegment
net sales
Rigid Europe 138.5 159.1 173.5 149.9 621.0 148.7 161.7 172.1 146.0 628.5
- 1.4 1.0 1.5 1.1 5.0 1.5 1.6 1.2 1.1 5.4
Intersegment
net sales
Molded Fiber 33.4 34.0 34.9 35.4 137.7 36.5 33.5 34.2 34.3 138.5
Europe
- 0.2 0.2 0.1 0.0 0.5 0.2 0.0 0.4 0.3 0.9
Intersegment
net sales
Rigid and
Molded Fiber
Americas 165.0 151.3 154.7 132.5 603.6 143.6 153.5 166.5 142.2 605.8
- 1.5 0.9 1.3 0.8 4.4 0.9 0.9 0.7 0.7 3.2
Intersegment
net sales
Rigid and
Molded Fiber
AOA 53.0 53.0 51.1 52.5 209.6 61.1 57.4 58.2 56.5 233.2
- 0.1 0.1 0.0 0.0 0.2 -0.2 0.1 0.1 0.1 0.1
Intersegment
net sales
Elimination
of
intersegment -2.3 -3.8 -4.5 -2.9 -13.5 -3.2 -3.8 -3.4 -3.4 -13.8
net sales
Total 548.8 572.1 590.5 548.6 2,260.0 557.8 582.4 606.1 564.7 2,311.0
EBIT
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007
Flexibles -16.4 7.6 9.1 6.6 6.9 -0.5 11.8 12.5 14.7 38.5
and Films
Global (1
Rigid Europe -103.8 3.0 0.7 1.5 -98.6 -74.3 3.5 3.3 0.2 -67.3
(2
Molded Fiber 2.3 2.6 2.5 2.9 10.3 3.5 2.5 2.3 2.4 10.7
Europe
Rigid and
Molded Fiber
Americas (3 3.2 12.0 15.7 9.2 40.1 -6.2 13.1 19.4 17.2 43.5
Rigid and
Molded Fiber
AOA (4 -34.9 1.1 -1.0 -0.2 -35.0 -1.3 1.8 2.7 3.3 6.5
Other 1.9 -0.1 0.0 0.0 1.8 0.3 0.5 -4.5 -0.1 -3.8
activities
Total (5 -147.7 26.2 27.0 20.0 -74.5 -78.5 33.2 35.7 37.7 28.1
1) Q4 2008 includes restructuring charges MEUR 1.7 (2007: MEUR 0.0),
goodwill impairment charges MEUR 7.4 (2007: MEUR 8.3) and tangible
asset impairment charges MEUR 8.8
(2007: MEUR 0.0).
2) Q4 2008 includes restructuring charges MEUR 4.4 (2007: MEUR 1.4),
goodwill impairment charges MEUR 34.5 (2007: MEUR 31.6) and tangible
asset impairment charges MEUR 61.8
(2007: MEUR 46.0), Q3 2008 includes restructuring charges MEUR 0.1
(2007: MEUR 0.0), Q2 2008 includes restructuring charges MEUR 6.8
(2007: MEUR 0.0).
3) Q4 2008 includes restructuring charges MEUR 2.0 (2007: MEUR 0.0)
and tangible asset impairment charges MEUR 3.2 (2007: MEUR 11.7), Q4
2007 includes goodwill impairment charges
MEUR 5.1.
4) Q4 2008 includes restructuring charges MEUR 1.2 (2007: MEUR 2.3),
goodwill impairment charges MEUR 30.4 (2007: MEUR 1.6) and tangible
asset impairment charges MEUR 3.2
(2007: MEUR 0.0).
5) Q4 2008 includes restructuring charges MEUR 9.3 (2007: MEUR 3.7),
goodwill impairment charges MEUR 72.3 (2007: MEUR 46.6) and tangible
asset impairment charges MEUR 77.0
(2007: MEUR 57.7), Q3 2008 includes restructuring charges MEUR 0.1
(2007: MEUR 0.0), Q2 2008 includes restructuring charges MEUR 6.8
(2007: MEUR 0.0), total amount MEUR 165.5
(2007: MEUR 108.0).
Depreciation and
amortization
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007
Flexibles and 6.4 6.8 6.1 5.9 25.2 6.3 5.7 5.8 5.2 23.0
Films Global
Rigid Europe 6.6 6.9 6.9 7.0 27.4 7.7 8.5 7.8 8.2 32.2
Molded Fiber 1.8 1.9 1.9 1.9 7.5 1.8 1.9 1.9 1.9 7.5
Europe
Rigid and Molded
Fiber
Americas 5.8 5.0 5.0 5.0 20.8 5.6 5.8 5.9 6.0 23.3
Rigid and Molded
Fiber
AOA 3.0 5.3 3.0 3.1 14.4 3.1 3.0 3.0 2.9 12.0
Other activities 0.6 0.3 0.2 0.2 1.3 0.2 0.2 0.2 0.3 0.9
Total 24.2 26.2 23.1 23.1 96.6 24.7 25.1 24.6 24.5 98.9
Net assets allocated to the segments (6
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
EUR million 2008 2008 2008 2008 2007 2007 2007 2007
Flexibles and Films 492.9 535.3 513.9 526.7 542.9 547.7 528.0 513.9
Global
Rigid Europe 251.7 381.1 378.2 399.9 407.6 494.0 502.9 494.4
Molded Fiber Europe 115.1 120.4 121.8 121.5 119.1 118.7 116.4 116.1
Rigid and Molded
Fiber
Americas 415.1 431.5 403.3 413.1 417.1 456.9 478.6 474.2
Rigid and Molded
Fiber
AOA 135.2 180.9 189.5 188.0 201.3 204.5 209.3 197.1
6) Net assets include the following balance sheet items: intangible
and tangible assets, other non-current assets, inventories, trade and
other current receivables
(excluding accrued interest income), other non-current liabilities
and trade and other current liabilities (excluding accrued interest
expense).
Capital
expenditure
Q4 Q3 Q2 Q1 Q1-Q4 Q4 Q3 Q2 Q1 Q1-Q4
EUR million 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007
Flexibles and 5.3 3.8 9.6 6.8 25.5 15.3 15.1 12.6 8.6 51.6
Films Global
Rigid Europe 6.9 4.8 3.2 2.2 17.1 9.8 8.6 7.9 9.5 35.8
Molded Fiber 4.1 1.9 0.4 0.6 7.0 7.3 0.8 0.8 0.8 9.7
Europe
Rigid and Molded
Fiber
Americas 7.1 4.2 2.9 1.3 15.5 15.7 6.0 3.3 1.9 26.9
Rigid and Molded
Fiber
AOA 3.1 1.7 1.8 1.8 8.4 6.4 4.8 6.6 4.5 22.3
Other activities 0.1 0.0 0.0 0.7 0.8 0.9 0.1 0.3 0.3 1.6
Total 26.6 16.4 17.8 13.5 74.3 55.4 35.4 31.5 25.6 147.9
RONA, % (12m
roll.)
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2008 2008 2008 2008 2007 2007 2007 2007
Flexibles and 1.3% 4.3% 5.1% 5.7% 7.2% 10.2% 11.1% 11.5%
Films Global
Rigid Europe -27.9% -17.6% -16.3% -14.6% -14.2% -1.3% -3.5% -2.8%
Molded Fiber 8.6% 9.5% 9.4% 9.3% 9.0% 8.9% 9.6% 10.2%
Europe
Rigid and Molded
Fiber
Americas 9.6% 7.4% 7.5% 8.0% 9.5% 13.3% 13.5% 13.6%
Rigid and Molded
Fiber
AOA -20.2% -0.7% -0.3% 1.5% 3.2% 5.8% 6.6% 6.6%
Operating Cash
Flow
Q4 Q3 Q2 Q1 Q1-Q4 Q4 * Q3 * Q2 * Q1 * Q1-Q4 *
EUR million 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007
Flexibles and 26.8 -2.9 14.3 7.2 45.4 7.2 -18.9 9.6 -4.0 -6.1
Films Global
Rigid Europe 13.5 1.6 30.2 1.1 46.4 17.2 16.2 -7.7 -7.7 18.0
Molded Fiber 3.3 1.8 3.9 1.6 10.6 5.1 1.5 4.0 1.2 11.8
Europe
Rigid and
Molded Fiber
Americas 19.7 8.6 27.5 -2.5 53.3 25.6 21.9 9.7 -3.2 54.0
Rigid and
Molded Fiber
AOA -1.4 5.2 4.7 3.8 12.3 -0.8 0.5 -3.1 -5.8 -9.2
*) In 2007 operating cashflow calculations the FX translation has
been changed.
As net sales and EBIT of reportable segments form Groups' total net
sales and EBIT, reconciliations to corresponding amounts are not
presented.
Other information
Q1-Q4 Q1-Q4
EUR million 2008 2007
Equity per share (EUR) 6.81 7.70
ROE, % (12m roll.) -14.8 -2.4
ROI, % (12m roll.) -4.8 1.8
Personnel 14,644 15,092
Result before taxes (12m roll.) -119.7 -14.0
Depreciation 89.2 92.9
Amortization of other
intangible assets 7.4 6.0
Share capital and shareholders
At the end of the reporting period, 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 had the total accountable par value of EUR 17,207,702.60,
representing 4.8% of the total number of shares
and voting rights. The amount of outstanding shares net of Company's
own shares was 100,426,461 (unchanged).
In January-December 2008, no new shares were issued following share
subscriptions based on option rights 2003 A, B and C as well as 2006
A. The Company's 2006 A option rights were listed
on the NASDAQ OMX Helsinki Ltd on October 1, 2008.
There were 22,089 (21,424) registered shareholders at the end of
December 2008. Foreign ownership including nominee registered shares
accounted for 23.8% (26.1%).
Share developments
The Company's share is quoted on the NASDAQ OMX Helsinki Ltd on the
Nordic Mid Cap list under the Materials sector. At the end of
December 2008, the Company's market capitalization was EUR 464.1
million (EUR 856.6 million) and EUR 441.9 million (EUR 815.5 million)
excluding Company's own shares. With a closing price of EUR 4.40 (EUR
8.12) the share price decreased by 46% (-45%) from the beginning of
the year, while the OMX Helsinki Cap PI Index decreased by 50% (+4%)
and also the OMX Helsinki Materials PI Index decreased by 50% (-20%).
In January-December 2008, the volume
weighted average price for the Company's share was EUR 6.29 (EUR
11.33). The highest price paid was EUR 8.36 on January 2, 2008 and
the lowest price paid was EUR 4.16 on October 10, 2008.
During the reporting period the cumulative value of the Company's
share turnover was EUR 707.3 million (EUR 1,483.0 million). The
trading volume of 111.6 million (131.1 million) shares equaled an
average daily turnover of EUR 2.8 million (EUR 5.9 million) or,
correspondingly 441,220 (524,202) shares.
In total, turnover of the Company's 2003 A, B and C as well as 2006 A
option rights was EUR 497,634 corresponding to a trading volume of
607,919.
Contingent liabilities
Dec 31 Dec 31
2008 2007
EUR million
Mortgages 14.5 14.5
Guarantee obligations 2.9 2.8
Lease payments 49.8 55.6
Capital expenditure commitments 7.3 19.4
Nominal values of derivative instruments
Dec 31 Dec 31
2008 2007
EUR million
Currency forwards, transaction risk hedges 49 45
Currency forwards, translation risk hedges 34 101
Currency swaps, financing hedges 105 143
Currency options - -1
Interest rate swaps 160 164
Interest rate options 7 -
Electricity forwards 6 1
The following EUR rates have been applied to GBP, INR, AUD and USD
Q4/08 Q4/07
Income statement, average: GBP 1 = 1.258 1.461
INR 1 = 0.016 0.018
AUD 1 = 0.575 0.612
USD 1 = 0.679 0.729
Q4/08 Q4/07
Balance sheet, month end: GBP 1 = 1.050 1.364
INR 1 = 0.015 0.017
AUD 1 = 0.493 0.597
USD 1 = 0.719 0.679
Definitions for key indicators:
Earnings per share = Result before taxes - minority interest - hybrid
bond interest - taxes / Average number of shares outstanding
Earnings per share (diluted) = Diluted result before taxes - minority
interest - hybrid bond interest - taxes / Average fully diluted
number of shares outstanding
Net debt to equity (gearing) = Interest bearing net debt / Equity +
minority interest + hybrid bond (average)
RONA, % = 100 x Earnings before interest and taxes (12 m roll.) / Net
assets (12 m roll.)
Operating cash flow = Ebit + depreciation and amortization (including
impairment) - capital expenditures + disposals +/- change in
inventories, trade receivables and trade payables
Shareholders' equity per share = Equity / Issue-adjusted number of
shares at period end
Return on equity (ROE) = 100 x (Result for the period) (12 m roll.) /
Equity + minority interest (average) + hybrid bond (average)
Return on investment (ROI) = 100 x (Result before taxes + interest
expenses + net other financial expenses) (12 m roll.) / Balance sheet
total - Interest-free liabilities (average)
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