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2024-04-25 07:30:00 CEST 2024-04-25 07:30:03 CEST BIRTINGARSKYLDAR UPPLÝSNINGAR Huhtamäki Oyj - Interim report (Q1 and Q3)Huhtamäki Oyj's Interim Report January 1-March 31, 2024: Improved operational profitabilityHUHTAMÄKI OYJ INTERIM REPORT 25.4.2024 AT 8:30 EEST Q1 2024 in brief
Key figures
IAC includes, but is not limited to, material restructuring costs and acquisition related costs (gains and losses on business combinations, professional and legal fees, material purchase price accounting adjustments for inventory, material purchase price amortization of intangible assets and changes in contingent considerations) as well as material impairment losses and reversals, gains and losses relating to sale of intangible and tangible assets, implementation costs concerning large projects with SaaS cloud computing technology, fines and penalties imposed by authorities and extraordinary taxes. The figures in the tables are exact figures and consequently the sum of individual figures may deviate from the sum presented. Key figures have been calculated using exact figures. President and CEO’s review During the first quarter of 2024, consumption remained sensitive to unchanged interest rates and slow easing of inflation. While we saw signs of increasing demand, with differences between geographies and categories, the pricing pressure in the value chain increased. Raw materials and energy costs remained favorable while labor costs continued to increase. First quarter sales volumes remained at the previous year's level, and improved from the second half of 2023. Though consumption is still sensitive to inflation, the demand trend is encouraging, further reflecting the benefits of our continued investments in new innovative products and capacity. Volumes were affected by the Israel-Hamas war and Red Sea crisis, impacting both the Foodservice E-A-O and Flexible Packaging segments. Net sales decreased by 4%, due to the negative currency development and pricing pressure. Adjusted EBIT increased from the previous year by 7%, and the adjusted EBIT margin improved to 9.8% compared to 8.8% in Q1 2023. We have made progress on the efficiency program launched in 2023. The announced 100 MEUR cost savings over three years will accelerate reaching our profitability ambition. We are completing the closure of our flexible packaging site in Prague, Czech Republic, announced in 2023. In March, we announced the consolidation of our footprint in China, closing two manufacturing sites while maintaining our capability to serve our customers from our two remaining Chinese factories. In April, we announced the project to close our factory in Klang, Malaysia, to optimize our foodservice production footprint in Asia. We have also accelerated process improvements to reduce input costs, including sourcing, material usage and labor efficiency. All activities executed thus far generated a positive impact on our profit in Q1 2024. We are encouraged by the improving operational profitability in Q1 and signs of increasing demand. Trading conditions are expected to improve compared to 2023, despite continued volatility. Our deployment of innovation and capacity, our competitiveness improvement and our solid financial position support the execution of our growth strategy. Charles Héaulmé, Financial review Q1 2024 Net sales by business segment
Comparable net sales growth by business segment
Adjusted EBIT by business segment
Adjusted EBIT excludes EUR -21.2 million (EUR -4.7 million) of items affecting comparability (IAC), including costs of implementing operational efficiency measures.
Net financial expenses were EUR 21 million (EUR 19 million). The increase was due to higher interest rates and other financing costs, partly related to the devaluation of the Egyptian pound. Tax expense was EUR 18 million (EUR 16 million). The corresponding tax rate was 32% (24%). The increase was due to certain non-deductible costs related to the restructuring program. Profit for the first quarter was EUR 39 million (EUR 52 million). Adjusted earnings per share (EPS) was EUR 0.55 (EUR 0.51) and reported EPS EUR 0.35 (EUR 0.47). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -20.9 million (EUR -3.9 million) of IAC.
On November 30, 2023, Huhtamaki announced that the company is accelerating the strategy implementation by starting a program which is expected to materially support the profitability with efficiency improvements leading to savings of approximately EUR 100 million over the next three years. All cost levers will be addressed including potential restructuring to a more optimal manufacturing footprint, reducing input costs at an accelerated pace, and improving productivity globally. The costs of the program are expected to be approximately EUR 80 million, which upon materialization will be treated as items affecting comparability. Savings initiatives have been launched in all four areas of focus; sourcing, waste reduction, labor productivity and manufacturing footprint. The savings are expected to accumulate gradually over 3 years. All activities executed thus far have generated a positive impact on the company’s profit in Q1 2024, above the linear savings trajectory of the program. The savings contributed to the Group’s adjusted EBIT expansion of EUR 7 million, including compensating for inflation and adverse currency impacts. Program-related costs accounted for EUR 16 million in Q1 2024.
The Group’s trading conditions are expected to improve compared to 2023. Volatility in the operating environment is expected to continue, while Huhtamaki's diversified product portfolio provides resilience. The company’s initiatives, which include the ongoing savings and efficiency program are expected to support the company’s performance. The Group’s good financial position enables addressing profitable growth opportunities.
The Annual General Meeting of Shareholders (AGM) will be held on Thursday, April 24, 2024 at 11:00 (EEST) at Scandic Marina Congress Center, Katajanokanlaituri 6, Helsinki, Finland.
Huhtamaki will arrange a combined audiocast and teleconference on April 25, 2024 at 9:00 (please note the exceptional time). Huhtamaki’s CEO & President Charles Héaulmé and CFO Thomas Geust will present the results, followed by a Q&A session. The event will be held in English and it can be followed in real-time. A link to the audiocast is available at: https://huhtamaki.videosync.fi/q1-2024 A link to the teleconference is available at: https://palvelu.flik.fi/teleconference/?id=50048357. Registration is required for the teleconference. After the registration you will be provided with phone numbers and a conference ID to access the conference. An on-demand replay of the audiocast will be available shortly after the end of the call at www.huhtamaki.com/investors.
In 2024, Huhtamaki will publish financial information as follows: Half-yearly Report, January 1 - June 30, 2024 July 25 Interim Report, January 1 - September 30, 2024 October 24
For further information, please contact: HUHTAMÄKI OYJ
Huhtamaki is a leading global provider of sustainable packaging solutions for consumers around the world. Our innovative products protect on-the-go and on-the-shelf food and beverages, and personal care products, ensuring hygiene and safety, driving accessibility and affordability, and helping prevent food waste. We embed sustainability in everything we do. We are committed to achieving carbon neutral production and designing all our products to be recyclable, compostable or reusable by 2030. Our blueloopTM sustainable packaging solutions are world-leading and designed for circularity. We are a participant in the UN Global Compact, Huhtamaki is rated ‘A’ on the MSCI ESG Ratings assessment and EcoVadis has awarded Huhtamaki with the Gold medal for performance in sustainability. To play our part in managing climate change, we have set science-based targets that have been approved and validated by the Science-Based Targets initiative. With 100 years of history and a strong Nordic heritage we operate in 37 countries and 107 operating locations around the world. Our values Care Dare Deliver guide our decisions and help our team of around 18 000 employees make a difference where it matters. Our 2023 net sales totalled EUR 4.2 billion. Huhtamaki Group is headquartered in Espoo, Finland and our parent company, Huhtamäki Oyj, is listed on Nasdaq Helsinki Ltd. Find out more about how we are protecting food, people and the planet at www.huhtamaki.com. Attachment |
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