2017-10-26 07:30:24 CEST
2017-10-26 07:30:24 CEST
REGULATED INFORMATION
Huhtamäki Oyj - Interim report (Q1 and Q3)
Huhtamäki Oyj's Interim Report January 1-September 30, 2017: Continued comparable growth
HUHTAMÄKI OYJ INTERIM REPORT 26.10.2017 AT 8.30
Huhtamäki Oyj's Interim Report January 1-September 30, 2017: Continued
comparable growth
Q3 2017 in brief
* Net sales grew to EUR 732 million (EUR 719 million)
* EBIT was EUR 64.3 million (EUR 66.9 million)
* EPS was EUR 0.44 (EUR 0.46)
* Comparable net sales growth was 4% in total and 5% in emerging markets
* Currency movements had a negative impact of EUR 21 million on the Group's
net sales and EUR 2 million on EBIT
Q1-Q3 2017 in brief
* Net sales grew to EUR 2,243 million (EUR 2,134 million)
* Adjusted EBIT was EUR 202.7 million (EUR 202.5 million); EBIT EUR 202.7
million (EUR 202.3 million)
* Adjusted EPS was EUR 1.39 (EUR 1.39); EPS EUR 1.39 (EUR 1.39)
* Comparable net sales growth was 3% in total and 2% in emerging markets
* Currency movements had a positive impact of EUR 16 million on the Group's
net sales and EUR 2 million on EBIT
* Capital expenditure increased to EUR 144 million (EUR 95 million) and free
cash flow reduced to EUR 5 million (EUR 79 million)
Key figures
EUR million Q3 2017 Q3 2016 Change Q1-Q3 2017 Q1-Q3 2016 Change FY 2016
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Net sales 732.0 719.2 2% 2,243.3 2,133.5 5% 2,865.0
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Adjusted EBITDA(1) 94.0 96.1 -2% 294.4 286.6 3% 381.8
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Margin(1) 12.8% 13.4% 13.1% 13.4% 13.3%
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EBITDA 94.0 96.1 -2% 294.4 286.4 3% 380.1
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Adjusted EBIT(1) 64.3 66.9 -4% 202.7 202.5 0% 267.9
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Margin(1) 8.8% 9.3% 9.0% 9.5% 9.4%
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EBIT 64.3 66.9 -4% 202.7 202.3 0% 266.2
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Adjusted EPS, 0.44 0.46 -4% 1.39 1.39 0% 1.83
EUR(1)
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EPS, EUR 0.44 0.46 -4% 1.39 1.39 0% 1.81
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ROI(1) 13.9% 14.7% 14.7%
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ROE(1) 16.4% 18.0% 17.7%
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Capital 48.7 39.2 24% 144.1 95.2 51% 199.1
expenditure
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Free cash flow 17.0 41.0 -59% 5.2 78.6 -93% 100.3
(1) Excluding IAC of EUR -0.2 million in Q1-Q3 2016, and EUR -1.7 million in FY
2016.
Unless otherwise stated, all comparisons in this report are compared to the
corresponding period in 2016. 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.
As announced on April 24, 2017, Huhtamaki has changed the name of its Molded
Fiber business segment to Fiber Packaging. The new name is taken into use as of
April 27, 2017 and is used in this report.
Jukka Moisio, CEO:
"Our comparable net sales growth returned to 4% during the third quarter. In
emerging markets comparable growth was 5% despite net sales still declining in
India. At the end of the quarter our net sales in India started to grow again as
the demand for flexible packaging began to recover from the impact of Goods and
Services Tax (GST) implementation.
Our profitability remained at a solid level but was affected by higher costs
especially in the North America segment. In addition to costs related to major
on-going investments the segment's distribution and resin costs were higher due
to hurricane impact. The Foodservice Europe-Asia-Oceania segment's profitability
held up well despite adverse product mix and the impact of weaker pound sterling
on our UK business. The Flexible Packaging segment's net sales growth
accelerated at the end of the quarter.
Three major quick-service restaurant customers recognized our North America
segment with special awards for delivering outstanding service and design. This
is a great credit to our North American foodservice team, reflecting our
continued investment in our people and capabilities and gives us confidence our
decision to invest in new capacity is well-timed. Setting up the new
manufacturing unit in Goodyear, Arizona, is progressing as planned and we expect
manufacturing activities to begin initial ramp-up in the fourth quarter. In
China the acquisition of International Paper's foodservice packaging operations
was closed during the quarter and the integration activities have started. This
together with the modernization of our South China manufacturing operations
makes us well positioned to serve the Greater China market.
Towards the end of the year we are completing the major expansions in the US and
China. At the same time our major market India has started to recover from
implemented reforms. We have work to do but the foundation for future progress
is good."
Financial review Q3 2017
The Group's comparable net sales growth was 4% during the quarter, with all
segments reporting positive comparable growth. Solid growth continued in the
Foodservice Europe-Asia-Oceania and Fiber Packaging business segments. Despite
negative development in India during the quarter the Flexible Packaging business
segment reported 7% comparable net sales growth. Comparable growth in emerging
markets was 5%. Growth was strong particularly in Eastern Europe, and Southeast
Asia, but also Africa and Middle East developed well. The Group's net sales grew
to EUR 732 million (EUR 719 million). Foreign currency translation impact on the
Group's net sales was EUR -21 million (EUR -10 million) compared to 2016
exchange rates. Majority of the negative impact came from the US dollar, Chinese
Yuan Renminbi, UK pound sterling and Egyptian pound.
Net sales by business segment
EUR million Q3 2017 Q3 2016 Change Of Group in
Q3 2017
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Foodservice Europe-Asia-Oceania 202.6 195.2 4% 28%
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North America 235.3 244.4 -4% 32%
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Flexible Packaging 229.7 216.5 6% 31%
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Fiber Packaging 68.6 67.1 2% 9%
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Elimination of internal sales -4.2 -4.0
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Group 732.0 719.2 2%
Comparable growth by business segment
Q3 2017 Q2 2017 Q1 2017 Q4 2016
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Foodservice Europe-Asia-Oceania 4% 2% 3% 3%
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North America 2% 1% 2% 5%
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Flexible Packaging 7% -2% 3% -3%
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Fiber Packaging 5% 8% 4% 6%
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Group 4% 1% 3% 3%
The Group's earnings declined, but remained at a solid level. Earnings of the
Foodservice Europe-Asia-Oceania business segment remained at the previous year's
level, whereas all the other business segments' earnings declined. The positive
earnings impact of Other activities is mostly related to changes in the Group's
long-term incentive plan expenses. The Group's earnings before interest and
taxes (EBIT) were EUR 64.3 million (EUR 66.9 million). Foreign currency
translation impacted the Group's profitability by EUR -2 million (EUR
-1 million).
EBIT by business segment
EUR million Q3 2017 Q3 2016 Change Of Group in
Q3 2017
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Foodservice Europe-Asia-Oceania 18.4 18.3 1% 29%
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North America 20.2 24.5 -18% 32%
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Flexible Packaging 17.7 18.2 -3% 28%
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Fiber Packaging 7.3 8.3 -12% 11%
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Other activities 0.7 -2.4
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Group 64.3 66.9 -4%
Net financial expenses decreased to EUR 5 million (EUR 7 million). Tax expense
was EUR 13 million (EUR 12 million).
Profit for the quarter was EUR 46 million (EUR 48 million). Earnings per share
(EPS) were EUR 0.44 (EUR 0.46).
Financial review Q1-Q3 2017
The Group's comparable net sales growth was 3% during the reporting period with
a positive contribution from all business segments. Comparable growth in
emerging markets was 2%. Growth was strongest in Eastern Europe and Southeast
Asia, while net sales declined in India. The Group's net sales grew to
EUR 2,243 million (EUR 2,134 million). Foreign currency translation impact on
the Group's net sales was EUR 16 million (EUR -49 million) compared to 2016
exchange rates. The majority of the positive impact came from the Russian ruble,
Indian rupee and US dollar, while the impact from pound sterling and certain
emerging market currencies was negative.
Net sales by business segment
EUR million Q1-Q3 2017 Q1-Q3 2016 Change Of Group in
Q1-Q3 2017
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Foodservice Europe-Asia-Oceania 600.5 548.0 10% 27%
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North America 756.9 745.3 2% 33%
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Flexible Packaging 686.0 654.7 5% 31%
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Fiber Packaging 212.7 198.8 7% 9%
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Elimination of internal sales -12.8 -13.3
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Group 2,243.3 2,133.5 5%
The Group's earnings were at the same level as previous year. Good earnings
improvement in the Foodservice Europe-Asia-Oceania business segment supported
the Group's earnings while the other business segments' earnings declined. The
positive earnings impact of Other activities is mostly related to changes in the
Group's long-term incentive plan expenses. The Group's Adjusted EBIT were
EUR 202.7 million (EUR 202.5 million) and reported EBIT EUR 202.7 million
(EUR 202.3 million). Foreign currency translation impacted the Group's
profitability by EUR 2 million (EUR -5 million).
Adjusted EBIT by business segment
EUR million Q1-Q3 2017 Q1-Q3 2016 Change Of Group in
Q1-Q3 2017
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Foodservice Europe-Asia-Oceania(1) 52.2 47.9 9% 26%
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North America 75.3 82.5 -9% 38%
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Flexible Packaging 50.6 56.2 -10% 25%
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Fiber Packaging 22.7 24.7 -8% 11%
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Other activities 1.9 -8.8
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Group(1) 202.7 202.5 0%
(1) Excluding IAC of EUR -0.2 million in Q1-Q3 2016; reported EBIT for Q1-Q3
2016 EUR 202.3 million for the Group and EUR 47.7 million for the Foodservice
Europe-Asia-Oceania business segment.
Net financial expenses decreased to EUR 16 million (EUR 20 million). Tax expense
increased and was EUR 41 million (EUR 35 million). The corresponding effective
tax rate was 22% (19%).
Profit for the period was EUR 146 million (EUR 148 million). Adjusted EPS were
EUR 1.39 (EUR 1.39) and reported EPS were EUR 1.39 (EUR 1.39).
Significant events during the reporting period
On March 3, 2017 Huhtamaki announced that it will set up a greenfield paper cup
manufacturing unit in Kiev, Ukraine. The new unit will manufacture a full range
of paper cups for cold and hot drinks. Manufacturing operations are expected to
begin during 2018 and the unit is expected to employ approx. 50 employees. The
unit will become part of the Foodservice Europe-Asia-Oceania business segment.
On April 21, 2017 Huhtamaki announced that it has agreed to sell one of its
manufacturing facilities and the related land usage rights in Guangzhou, China,
to Guangzhou Yashao Investment Co. Ltd. The sale is part of the ongoing
consolidation of Huhtamaki's foodservice packaging manufacturing operations in
South China. The selling price is approx. EUR 14 million. As a result of the
sale, a gain of approx. EUR 6 million will be booked as an item affecting
comparability (IAC) in the Foodservice Europe-Asia-Oceania business segment once
the transaction is closed.
On April 25, 2017 Huhtamaki announced that is has signed a freely transferable
loan agreement (Schuldschein) of EUR 117 million and USD 35 million (approx.
EUR 33 million). The loan is targeted to institutional investors. It includes
several floating and fixed rate tranches with maturities of 5, 7 and 10 years.
Huhtamaki will use the funds for refinancing and general corporate purposes of
the Group.
Significant events after the reporting period
On October 3, 2017 an aggregate nominal amount of EUR 135,008,000 of EUR 200
million Notes issued by Huhtamaki in 2013, due on May 14, 2020 and with a coupon
of 3.375 percent, were accepted to be purchased back and cancelled. All Notes
that were not purchased remained outstanding.
On October 4, 2017 Huhtamaki issued a EUR 150 million fixed rate unsecured bond
that matures in seven (7) years and pays a coupon of 1.625 percent.
Outlook for 2017
The Group's trading conditions are expected to remain relatively stable during
2017. 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 2016 with
the majority of the investments directed to business expansion.
Financial reporting in 2018
In 2018, Huhtamaki will publish financial information as follows:
Results 2017
February 14
Interim Report, January 1-March 31, 2018 April 25
Half-yearly Report, January 1-June 30, 2018 July 20
Interim Report, January 1-September 30, 2018 October 25
Annual Accounts 2017 will be published on week 8.
Huhtamäki Oyj's Annual General Meeting is planned to be held on Wednesday, April
25, 2018.
This is a summary of Huhtamäki Oyj's Results January 1 - September 30, 2017. 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
Group 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 17,600 employees develop and make packaging that helps great
products reach more people, more easily. In 2016 our net sales totaled EUR 2.9
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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