2018-07-20 13:25:00 CEST
2018-07-20 13:25:50 CEST
REGULATED INFORMATION
Huhtamäki Oyj - Half Year financial report
CORRECTION: Huhtamäki Oyj's Half-yearly Report January 1-June 30, 2018: Good comparable net sales growth, negative currency impact
HUHTAMÄKI OYJ HALF-YEARLY REPORT 20.7.2018 AT 14.25
This is a correction to Huhtamäki Oyj's stock exchange release issued on July
20, 2018 at 8.30 EEST on Huhtamäki Oyj Half-yearly Review.
In the Finnish version of the stock exchange release and the Half-yearly Review,
an incorrect net sales comparison figure for Q2 2017 was presented under the
headline Q2 2018 in brief. The presented incorrect figure was EUR 722 million.
The correct figure is EUR 772 million. The English version of the release and
the Half-yearly Report were correct.
No changes have been made to the English version of the release or the report.
HUHTAMÄKI OYJ
Global Communications
--------------------------------
Huhtamäki Oyj's Half-yearly Report January 1-June 30, 2018: Good comparable net
sales growth, negative currency impact
Q2 2018 in brief
* Net sales were EUR 786 million (EUR 772 million)
* Adjusted EBIT was EUR 70.2 million (EUR 75.6 million); EBIT EUR 79.7 million
(EUR 75.6 million)
* Adjusted EPS was EUR 0.47 (EUR 0.52); EPS EUR 0.54 (EUR 0.52)
* Comparable net sales growth was 6% in total and 10% in emerging markets
* Currency movements had a negative impact of EUR 48 million on the Group's
net sales and EUR 4 million on EBIT
* The North America segment's earnings declined due to high price level of
distribution services and costs related to the start-up of the Goodyear
plant
H1 2018 in brief
* Net sales were EUR 1,511 million (EUR 1,511 million)
* Adjusted EBIT was EUR 130.2 million (EUR 138.4 million); EBIT EUR 139.7
million (EUR 138.4 million)
* Adjusted EPS was EUR 0.87 (EUR 0.95); EPS EUR 0.94 (EUR 0.95)
* Comparable net sales growth was 6% in total and 9% in emerging markets
* Currency movements had a negative impact of EUR 107 million on the Group's
net sales and EUR 8 million on EBIT
* The North America segment's earnings declined due to high distribution costs
and costs related to the start-up of the Goodyear plant
* Capital expenditure decreased to EUR 81 million (EUR 95 million) and free
cash flow improved to EUR 27 million (EUR -12 million)
Key figures
EUR million Q2 2018 Q2 2017 Change H1 2018 H1 2017 Change FY 2017
Net sales 785.9 771.9 2% 1,511.1 1,511.3 -0% 2,988.7
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Adjusted EBITDA(1) 100.7 106.4 -5% 190.8 200.4 -5% 389.7
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Margin(1) 12.8% 13.8% 12.6% 13.3% 13.0%
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EBITDA 112.3 106.4 5% 202.4 200.4 1% 386.3
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Adjusted EBIT(2) 70.2 75.6 -7% 130.2 138.4 -6% 267.7
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Margin(2) 8.9% 9.8% 8.6% 9.2% 9.0%
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EBIT 79.7 75.6 5% 139.7 138.4 1% 264.3
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Adjusted EPS, EUR(3) 0.47 0.52 -10% 0.87 0.95 -9% 1.90
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EPS, EUR 0.54 0.52 4% 0.94 0.95 -1% 1.86
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ROI(2) 12.7% 14.2% 13.6%
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ROE(2) 16.3% 16.9% 17.0%
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Capital expenditure 47.7 48.4 -2% 80.9 95.4 -15% 214.8
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Free cash flow 44.8 -3.0 26.8 -11.8 55.5
(1) Excluding IAC of EUR 11.6 million in Q2 and H1 2018. FY 2017 excluding IAC
of EUR -3.4 million.
(2) Excluding IAC of EUR 9.5 million in Q2 and H1 2018. FY 2017 excluding IAC of
EUR -3.4 million.
(3) Excluding IAC of EUR 7.6 million in Q2 and H1 2018. FY 2017 excluding IAC of
EUR -4.8 million.
Unless otherwise stated, all comparisons in this report are compared to the
corresponding period in 2017. Figures of return on investment (ROI), return on
equity (ROE) and return on net assets (RONA) presented in this report are
calculated on a 12-month rolling basis.
All figures in the tables have been rounded to the nearest whole number and
consequently the sum of individual figures may deviate from the sum presented.
Key figures have been calculated using exact figures.
Jukka Moisio, CEO:
"Our second quarter comparable net sales growth was good at 6%. In the emerging
markets growth was 10%. All segments contributed to positive development and
Flexible Packaging and Foodservice Europe-Asia-Oceania segments reported highest
growth. In reported sales, which includes the contribution from the three
acquisitions made during the quarter (Ajanta Packaging, Tailored Packaging and
Cup Print Unlimited), negative currency conversion reduced net sales by EUR 48
million (6%) resulting in 2% growth.
Our profitability remained solid despite a decline compared to 2017. Currency
conversion weakened our EBIT by EUR 4 million. Foodservice Europe-Asia-Oceania
and Flexible Packaging segments improved their profitability while North America
segment had negative margin development due to higher distribution costs and
start-up costs of the newly-invested Goodyear, Arizona, facility. While we are
pleased with the growth we will take additional actions to improve
profitability.
Our net sales with global key accounts have progressed well with growth rates
above our average growth. Organic investments and the three acquisitions made in
the second quarter are expected to deliver continued strong net sales momentum
in the coming quarters.
The Single Use Plastics (SUP) proposal was published by the European Commission
at the end of May. It proposes to ban single use plastics cutlery, plates,
stirrers and straws and introduce labelling requirements, to help reduce marine
pollution. The adoption of the proposal will follow the EU Ordinary Legislative
Procedure and will be the subject of negotiations between the Council of
Ministers, the European Parliament and the European Commission.
As the legislation stands, the products that are proposed to be banned make less
than 2% of our Foodservice business in Europe and can for the most part be
replaced with alternative paper-based products. As a converter with innovations
capabilities in many packaging materials and with the growing interest in
replacing plastic with alternative materials, we are well placed to continue to
work with our customers and their consumers to respond to their demands. Already
now, the majority of our products are fiber-based."
Financial review Q2 2018
The Group's comparable net sales growth was 6% during the quarter, with all
segments contributing. Net sales growth was strong in the Flexible Packaging and
Foodservice Europe-Asia-Oceania business segments. Comparable growth in emerging
markets was 10%. Strong growth in India, Eastern Europe, and Middle East and
Africa continued. The Group's net sales grew to EUR 786 million (EUR 772
million). Foreign currency translation impact on the Group's net sales was EUR
-48 million (EUR 17 million) compared to 2017 exchange rates. Majority of the
negative impact came from the US dollar, Indian rupee and Russian ruble.
Net sales by business segment
EUR million Q2 2018 Q2 2017 Change Of Group in Q2 2018
Foodservice Europe-Asia-Oceania 221.5 205.4 8% 28%
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North America 257.0 274.3 -6% 33%
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Flexible Packaging 240.3 224.0 7% 30%
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Fiber Packaging 71.3 71.8 -1% 9%
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Elimination of internal sales -4.2 -3.6
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Group 785.9 771.9 2%
Comparable growth by business segment
Q2 2018 Q1 2018 Q4 2017 Q3 2017
Foodservice Europe-Asia-Oceania 5% 5% 6% 4%
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North America 2% 5% 2% 2%
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Flexible Packaging 11% 6% 9% 7%
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Fiber Packaging 3% 5% 4% 5%
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Group 6% 5% 5% 4%
The Group's earnings declined. Solid earnings improvement continued in the
Foodservice Europe-Asia-Oceania and Flexible Packaging business segments.
Earnings declined in the North America segment due to higher distribution costs
and costs related to the start-up of the Goodyear plant. The Group's Adjusted
earnings before interests and taxes (EBIT) were EUR 70.2 million (EUR 75.6
million) and reported EBIT EUR 79.7 million (EUR 75.6 million). Foreign currency
translation impacted the Group's profitability by EUR -4 million (EUR 2
million).
Adjusted EBIT by business segment
EUR million Q2 2018 Q2 2017 Change Of Group in Q2 2018
Foodservice Europe-Asia-Oceania(1) 20.3 18.4 10% 30%
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North America 22.5 32.6 -31% 33%
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Flexible Packaging(2) 18.0 14.0 28% 26%
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Fiber Packaging(3) 7.3 8.1 -10% 11%
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Other activities(4) 2.1 2.5
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Group 70.2 75.6 -7%
(1) Excluding IACs of EUR -1.3 million in Q2 2018.
(2) Excluding IACs of EUR -1.5 million in Q2 2018.
(3) Excluding IACs of EUR -0.6 million in Q2 2018.
(4) Excluding IACs of EUR 12.9 million in Q2 2018.
Adjusted EBIT excludes EUR 9.5 million of IACs, which consist of EUR 3.5 million
restructuring costs including write-downs of related assets, EUR 1.2 million
acquisition related costs and a gain of EUR 14.2 million. The restructuring
costs are related to improvement actions in Foodservice Europe-Asia-Oceania,
Flexible Packaging and Fiber Packaging segments, as well as in Other activities.
The gain is related to the sale of the Group's confectionery trademark
portfolio, as announced on April 30, 2018. Huhtamaki's confectionery business
was divested in 1996.
Adjusted EBIT and IACs
EUR million Q2 2018 Q2 2017
Adjusted EBIT 70.2 75.6
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Restructuring costs including write-downs of related assets -3.5 -
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Acquisition related costs -1.2 -
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Gains relating to sale of trademark portfolio 14.2 -
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EBIT 79.7 75.6
Net financial expenses increased to EUR 7 million (EUR 6 million). Tax expense
was EUR 15 million (EUR 15 million).
Profit for the quarter was EUR 58 million (EUR 55 million). Adjusted earnings
per share (EPS) were EUR 0.47 (EUR 0.52) and reported EPS EUR 0.54 (EUR 0.52).
Adjusted EPS is calculated based on Adjusted profit for the quarter, which
excludes EUR 9.5 million of IAC's and EUR -1.9 million of taxes relating to IAC
items.
Adjusted EPS and IACs
EUR million Q2 2018 Q2 2017
Adjusted profit for the quarter 49.9 54.5
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IAC items included in adjusted EBIT 9.5 -
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Taxes relating to IAC items -1.9 -
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Profit for the quarter 57.5 54.5
Financial review H1 2018
The Group's comparable net sales growth was 6% during the first half of the year
with a positive contribution from all business segments. Comparable growth in
emerging markets was 9%. Growth was strongest in India, Eastern Europe and
Middle East and Africa. The Group's reported net sales were in line with prior
year at EUR 1,511 million (EUR 1,511 million). Foreign currency translation
impact on the Group's net sales was EUR -107 million (EUR 36 million) compared
to 2017 exchange rates. The majority of the negative impact came from the US
dollar, Indian rupee and Russian ruble.
Net sales by business segment
EUR million H1 2018 H1 2017 Change Of Group in H1 2018
Foodservice Europe-Asia-Oceania 420.3 397.9 6% 28%
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North America 483.8 521.6 -7% 32%
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Flexible Packaging 474.3 456.3 4% 31%
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Fiber Packaging 141.0 144.1 -2% 9%
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Elimination of internal sales -8.3 -8.6
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Group 1,511.1 1,511.3 -0%
The Group's earnings declined, mainly due to earning's decline in the North
America business segment. The Foodservice Europe-Asia-Oceania segment's earnings
improved significantly, mainly as a result of volume growth and favorable
product mix development. Earnings grew also in the Flexible Packaging segment
and were flat in the Fiber Packaging segment. The Group's Adjusted EBIT were EUR
130.2 million (EUR 138.4 million) and reported EBIT EUR 139.7 million (EUR
138.4 million). Foreign currency translation impacted the Group's profitability
by EUR 8 million (EUR 4 million).
Adjusted EBIT by business segment
EUR million H1 2018 H1 2017 Change Of Group in H1 2018
Foodservice Europe-Asia-Oceania(1) 39.5 33.8 17% 31%
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North America 38.8 55.1 -30% 30%
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Flexible Packaging(2) 35.5 32.9 8% 27%
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Fiber Packaging(3) 15.2 15.4 -1% 12%
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Other activities(4) 1.2 1.2
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Group 130.2 138.4 -6%
(1) Excluding IACs of EUR -1.3 million in H1 2018.
(2) Excluding IACs of EUR -1.5 million in H1 2018.
(3) Excluding IACs of EUR -0.6 million in H1 2018.
(4) Excluding IACs of EUR 12.9 million in H1 2018.
Adjusted EBIT excludes EUR 9.5 million of IACs, which consist of EUR 3.5 million
restructuring costs including write-downs of related assets, EUR 1.2 million
acquisition related costs and a gain of EUR 14.2 million. The restructuring
costs are related to improvement actions in Foodservice Europe-Asia-Oceania,
Flexible Packaging and Fiber Packaging segments, as well as in Other activities.
The gain is related to the sale of the Group's confectionery trademark
portfolio, as announced on April 30, 2018. Huhtamaki's confectionery business
was divested in 1996.
Adjusted EBIT and IACs
EUR million H1 2018 H1 2017
Adjusted EBIT 130.2 138.4
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Restructuring costs including write-downs of related assets -3.5 -
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Acquisition related costs -1.2 -
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Gains relating to sale of trademark portfolio 14.2 -
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EBIT 139.7 138.4
Net financial expenses increased to EUR 13 million (EUR 11 million). Tax expense
decreased and was EUR 27 million (EUR 28 million). The corresponding tax rate
was 21% (22%).
Profit for the period was EUR 100 million (EUR 100 million). Adjusted EPS were
EUR 0.87 (EUR 0.95) and reported EPS EUR 0.94 (EUR 0.95). Adjusted EPS is
calculated based on Adjusted profit for the period, which excludes EUR 9.5
million of IAC's and EUR -1.9 million of taxes relating to IAC items.
Adjusted EPS and IACs
EUR million H1 2018 H1 2017
Adjusted profit for the period 92.1 99.5
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IAC items included in adjusted EBIT 9.5 -
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Taxes relating to IAC items -1.9 -
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Profit for the period 99.7 99.5
Acquisitions and divestments
On March 23, 2018 Huhtamaki announced that it has entered into an agreement to
acquire the Indian business and related assets of Ajanta Packaging, a privately-
owned manufacturer of pressure sensitive labels. With the acquisition Huhtamaki
strengthened its labeling business in India by adding new printing technologies
into its offering as well as improving its innovation capability. The
acquisition is complementary to Huhtamaki's existing labeling product portfolio.
The annual net sales of the acquired business are approximately EUR 10 million.
It employs altogether 170 people and has two state-of-the-art manufacturing
facilities. The debt free purchase price was approximately EUR 13 million. The
transaction was closed at the end of May 2018. The business has been reported as
part of the Flexible Packaging business segment as of June 1, 2018.
On April 30, 2018 Huhtamaki announced the majority acquisition of Tailored
Packaging, an Australian foodservice packaging distribution and wholesale group.
With the acquisition Huhtamaki gains access to a national network of
distribution centers across Australia, allowing it to serve its customers even
better and with more agility. Tailored Packaging is one of the largest importers
and distributors of foodservice packaging in Australia with annualized net sales
of approximately EUR 85 million and app. 130 employees. The debt free purchase
price for 65% ownership of the joint venture was approximately EUR 35 million.
As the majority shareholder Huhtamaki will consolidate the joint venture company
as a subsidiary in the Group's financial reporting. The business has been
reported as part of the Foodservice Europe-Asia-Oceania business segment as of
May 1, 2018.
On April 30, 2018 Huhtamaki announced the sale of its confectionery trademark
portfolio to Highlander Partners, a US based investment firm. Related to the
sale, an after taxes gain of approximately USD 16 million was booked as an item
affecting comparability during the second quarter of 2018. The sold trademark
portfolio was related to Huhtamaki's confectionery business divested in 1996.
On May 31, 2018 Huhtamaki announced the majority acquisition of Cup Print
Unlimited Company, a privately-owned paper cup manufacturer based in the
Republic of Ireland. With the acquisition Huhtamaki improved its access to the
growing market of short run custom-printed cups and boosted its on-line
commercial activity. The short run capability allows Huhtamaki to even better
support its current customers' promotional activities. CupPrint's annual net
sales are approximately EUR 14 million and it employs altogether approximately
110 people. The debt free purchase price for 70% ownership of CupPrint was
approximately EUR 22 million. The business has been reported as part of the
Foodservice Europe-Asia-Oceania business segment as of June 1, 2018.
Significant events during the reporting period
On May 28, 2018 the European Commission published a proposal for a Directive of
the European Parliament and of the Council on the reduction of the impact of
certain plastic products on the environment (the Single Use Plastics proposal)
targeting items that have been identified as contributing to marine pollution.
The proposal is applicable to a part of Huhtamaki's product range and contains a
number of different measures ranging from banning certain plastic products
within the EU to introducing labelling requirements in order to reduce marine
pollution. Adoption of the proposal will follow the EU's Ordinary Legislative
Procedure and will be the subject of negotiations between the Council of
Ministers, the European Parliament and the European Commission (the Trialogue).
Once adopted by the EU, Member States will have two years to transpose the final
Directive before it becomes law. Currently the majority of Huhtamaki's products
are fiber-based.
Outlook for 2018
The Group's trading conditions are expected to remain relatively stable during
2018. The good financial position and ability to generate a positive cash flow
will enable the Group to address profitable growth opportunities. Capital
expenditure is expected to be approximately at the same level as in 2017 with
the majority of the investments directed to business expansion.
Financial reporting in 2018
In 2018, Huhtamaki will publish financial information as follows:
Interim Report, January 1-September 30, 2018 October 25
This is a summary of Huhtamäki Oyj's Half-yearly Report January 1-June
30, 2018. 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:
Jukka Moisio, CEO, tel. +358 10 686 7801
Thomas Geust, CFO, tel. +358 10 686 7880
HUHTAMÄKI OYJ
Global Communications
Huhtamaki is a global specialist in packaging for food and drink. With our
network of 78 manufacturing units and additional 24 sales only offices in
altogether 34 countries, we're well placed to support our customers' growth
wherever they operate. Mastering three distinctive packaging technologies,
approximately 18,200 employees develop and make packaging that helps great
products reach more people, more easily. In 2017 our net sales totaled EUR 3.0
billion. The Group has its head office in Espoo, Finland and the parent company
Huhtamäki Oyj is listed on Nasdaq Helsinki Ltd. Additional information is
available at www.huhtamaki.com.
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