Huhtamäki Oyj - Interim report (Q1 and Q3)

Huhtamäki Oyj's Interim Report January 1 - June 30, 2015: Profitability improvement continued

HUHTAMÄKI OYJ INTERIM REPORT 24.7.2015 AT 8:30

Huhtamäki Oyj's Interim Report January 1 - June 30, 2015: Profitability
improvement continued

Q2 2015 in brief

  * Net sales were EUR 714 million (EUR 579 million)

  * EBIT excluding non-recurring items (NRI) was EUR 70 million (EUR 51 million)

  * EPS excluding NRI was EUR 0.52 (EUR 0.34)

  * Comparable net sales growth was 1% in total and 5% in emerging markets

  * Currency movements had a positive impact of EUR 67 million on the Group's
    net sales, and EUR 6 million on EBIT

  * The European Commission imposed a fine of EUR 15.6 million on Huhtamaki
    based on infringements of EU's competition regulation in 2002-2006.
    Huhtamaki has examined the Commission's decision and has decided to launch
    an appeal.

H1 2015 in brief

  * Net sales were EUR 1,344 million (EUR 1,093 million)

  * EBIT excluding NRI was EUR 119 million (EUR 89 million)

  * EPS excluding NRI was EUR 0.85 (EUR 0.59)

  * Comparable net sales growth was 3% in total and 5% in emerging markets

  * Currency movements had a positive impact of EUR 120 million on the Group's
    net sales, and EUR 10 million on EBIT

  * Acquisition of Positive Packaging, a flexible packaging company operating in
    India, United Arab Emirates and Africa, was closed at the end of January and
    the business was consolidated into the Flexible Packaging business segment
    as of February 1, 2015

Key figures

 EUR million         Q2 2015 Q2 2014 Change H1 2015 H1 2014 Change FY 2014

 Net sales           713.6   578.9   23%    1,343.7 1,092.5 23%    2,235.7

 EBITDA*             96.2    71.5    35%    171.0   130.2   31%    259.0

 EBITDA margin*      13.5%   12.4%          12.7%   11.9%          11.6%

 EBIT*               69.7    51.0    37%    119.4   89.4    34%    174.9

 EBIT margin*        9.8%    8.8%           8.9%    8.2%           7.8%

 EPS*, EUR           0.52    0.34    53%    0.85    0.59    44%    1.24

 ROI**                                      13.4%   12.3%          12.6%

 ROE**                                      17.5%   16.6%          16.1%

 Capital expenditure 36.9    23.6    56%    61.6    45.6    35%    127.0

 Free cash flow      30.4    7.1     328%   11.0    -4.2    362%   64.6



 Including discontinued operations

 EPS**, EUR          0.52    0.37    41%    0.85    0.64    33%    1.28

 EPS, reported, EUR  0.32    0.37    -14%   0.61    0.64    -5%    1.33



* Excluding NRI of EUR -18.5 million in Q2 2015 and EUR -22.6 million in H1
2015.
** Excluding NRI of EUR -19.8 million in Q2 2015, EUR -23.9 million in H1 2015
and EUR 5.1 million in FY 2014.

Unless otherwise stated, all figures presented in this report, including
corresponding periods in 2014, cover continuing operations only. Continuing
operations include the Foodservice Europe-Asia-Oceania, North America, Flexible
Packaging and Molded Fiber business segments. Discontinued operations for 2014
and 2015 include the Films business segment, which was sold at the end of
December 2014. Unless otherwise stated, all comparisons in this report are
compared to the corresponding period in 2014. ROI, ROE and RONA figures
presented in this report are calculated on a 12-month rolling basis.

Jukka Moisio, CEO:"We remain satisfied with the continued strong profitability improvement as we
recorded the highest ever second quarter results.  The profitability improvement
was strongly driven by the North America segment that executed planned actions
to bring its operating profitability to a more normalized level. Also the
Flexible Packaging segment achieved a solid profitability improvement helped by
the Positive Packaging business that performed according to our expectations in
the second quarter. We are five months into the acquisition and will continue to
execute our business plan to achieve the targeted synergies.

The comparable net sales growth was more subdued in this quarter. As part of the
profit normalization actions, the North America segment discontinued low
profitability products, bringing its comparable net sales development
temporarily to negative territory. Prices for plastic resins reached their low
point during the first quarter and due to lag effect in net selling prices, the
lower raw material prices of the first quarter resulted in lower selling prices
and reduced comparable growth in the second quarter. This concerns especially
the Flexible Packaging segment, which is the primary user of plastic raw
materials in the Group. The resin prices have increased significantly in the
second quarter and we expect the topline impact to even out during coming
quarters.

Our key markets of Southeast Asia, North America, and Europe are expected to
offer good growth opportunities going forward. Main softness in emerging markets
is in China and although the growth has slowed down in Eastern Europe it still
remains at a good level. In summary, we are reasonably optimistic about net
sales development during the second half of 2015 and we should see good
contributions both from organic growth actions as well as our recent
acquisitions.

At the end of June, the European Commission gave its decision on the cartel case
related to our former rigid plastic consumer goods business in Europe, and
imposed a EUR 16 million fine on Huhtamaki. After having studied the
Commission's decision we've decided to launch an appeal. We do not tolerate
unethical behavior and continue to do our utmost to prevent it from happening."
Financial review Q2 2015

The Group's comparable net sales growth was 1% during the quarter. Stable growth
in Molded Fiber, Flexible Packaging and Foodservice Europe-Asia-Oceania business
segments continued. The North America business segment's reported net sales
grew, whereas in constant currencies net sales development was negatively
affected by the segment's successful focus on actions to normalize its margins.
Comparable growth in emerging markets was 5%. Good net sales growth in South
America, Russia and Southeast Asia continued. Net sales grew also in India, but
declined in China. The Group's net sales grew to EUR 714 million (EUR 579
million). There was a significant positive impact on net sales from the Positive
Packaging acquisition as well as foreign currency translation, which was EUR 67
million compared to the 2014 exchange rates. Majority of the currency impact
came from the strengthening of the US dollar versus euro.

Net sales by business segment

 EUR million                     Q2 2015 Q2 2014 Change Of Group in Q2 2015

 Foodservice Europe-Asia-Oceania 175.4   162.7   8%     24%

 North America                   252.5   208.3   21%    35%

 Flexible Packaging              224.8   152.1   48%    32%

 Molded Fiber                    66.2    61.8    7%     9%

 Elimination of internal sales   -5.3    -6.0

 Group                           713.6   578.9   23%


Comparable growth by business segment

                                 Q2 2015 Q1 2015 Q4 2014 Q3 2014

 Foodservice Europe-Asia-Oceania 2%      3%      2%      4%

 North America                   -2%     7%      5%      4%

 Flexible Packaging              4%      5%      12%     6%

 Molded Fiber                    5%      5%      7%      9%

 Group                           1%      5%      6%      5%


The Group's earnings development was solid.  Strong earnings growth in the North
America business segment continued. In addition, earnings growth was good in the
Flexible Packaging business segment with a significant positive contribution
from Positive Packaging. The Group's earnings before interest and taxes (EBIT)
were EUR 70 million, excluding NRI of EUR -19 million (EUR 51 million). Positive
foreign currency translation impact on Group's EBIT was EUR 6 million.

EBIT by business segment

 EUR million                     Q2 2015 Q2 2014 Change Of Group in Q2 2015

 Foodservice Europe-Asia-Oceania 16.4    17.4    -6%    23%

 North America                   26.2    13.2    98%    38%

 Flexible Packaging              17.8    11.3    58%    26%

 Molded Fiber                    9.0     10.0    -10%   13%

 Other activities                0.3     -0.9

 Group                           69.7    51.0    37%

Other activities EBIT excluding NRI of EUR -18.5 million in Q2 2015.

Net financial expenses increased to EUR 9 million (EUR 7 million). Tax expense
was EUR 7 million (EUR 8 million).

Profit for the period was EUR 36 million, including NRI of EUR -19 million (EUR
37 million). The NRI is related to the fine of EUR 16 million imposed on
Huhtamaki by the European Commission based on infringements of EU's competition
regulation in 2002-2006 as well as legal costs of EUR 3 million related to the
investigation and the appeal process.

Earnings per share (EPS) excluding NRI were EUR 0.52 (EUR 0.34). Reported EPS
were EUR 0.33 (EUR 0.34) and EUR 0.32 (EUR 0.37) including discontinued
operations.
Financial review H1 2015

The Group's comparable net sales growth was 3% during the period. All business
segments contributed to the net sales growth. Comparable growth in emerging
markets was 5%. The growth in emerging markets was driven by continued good
development in Russia, Southeast Asia and South America, whereas negative net
sales development in China continued. The Group's net sales grew to EUR 1,344
million (EUR 1,093 million). In addition to organic growth, there was a
significant positive impact on net sales from the Positive Packaging acquisition
as well as the foreign currency translation, which was EUR 120 million compared
to the 2014 exchange rates. The majority of the currency impact came from the
strengthening of the US dollar versus euro.
Net sales by business segment

 EUR million                     H1 2015 H1 2014 Change Of Group in H1 2015

 Foodservice Europe-Asia-Oceania 329.3   304.7   8%     24%

 North America                   463.2   372.5   24%    34%

 Flexible Packaging              430.8   302.9   42%    32%

 Molded Fiber                    131.4   123.3   7%     10%

 Elimination of internal sales   -11.0   -10.9

 Group                           1,343.7 1,092.5 23%


The Group's earnings development was good. Earnings improvement was strongest in
the North America business segment. The Group's EBIT were EUR 119 million,
excluding NRI of EUR -23 million (EUR 89 million). Positive Packaging also
contributed positively to earnings. Positive foreign currency translation impact
on Group's EBIT was EUR 10 million.

EBIT by business segment

 EUR million                     H1 2015 H1 2014 Change Of Group in H1 2015

 Foodservice Europe-Asia-Oceania 28.3    28.4    0%     23%

 North America                   40.0    22.0    82%    33%

 Flexible Packaging              34.8    22.3    56%    29%

 Molded Fiber                    17.6    17.6    0%     15%

 Other activities                -1.3    -0.9

 Group                           119.4   89.4    34%

Other activities EBIT excluding NRI of EUR -22.6 million in H1 2015.

Net financial expenses increased to EUR 18 million (EUR 14 million). The payment
of purchase price for Positive Packaging led to a higher amount of net debt and
thus higher financial expenses. Tax expense was EUR 13 million (EUR 13 million).
The corresponding tax rate was 16% (16%).

Profit for the period was EUR 67 million, including NRI of EUR -23 million (EUR
63 million). EPS excluding NRI were EUR 0.85 (EUR 0.59). Reported EPS were EUR
0.62 (EUR 0.59) and EUR 0.61 (EUR 0.64) including discontinued operations.
Significant events during the reporting period

On June 24, 2015 the European Commission announced the outcome of its
investigations on anticompetitive behavior in the markets of plastic trays used
for retail packaging. Huhtamäki Oyj had received in September 2012 the European
Commission's statement of objections concerning alleged anticompetitive behavior
in the markets of plastic trays used for retail packaging of fresh food during
years 2000-2008. The European Commission found certain of Huhtamaki's former
operations to have been involved in anticompetitive practices. The concerned
operations are no longer part of Huhtamaki as they were part of the Group's
rigid consumer goods business in Europe that was closed down or divested in
years 2006 and 2010. Based on infringements in North-West Europe and France
during years 2002-2006 the European Commission imposed a EUR 16 million fine on
Huhtamaki. The fine and legal costs of EUR 3 million related to the
investigation and the appeal process are recognized as a non-recurring expense
in the Group's Q2 2015 result. Huhtamaki has examined the European Commission's
decision and has decided to launch an appeal against the decision before the
General Court of the European Union.
Outlook for 2015

The Group's trading conditions are expected to remain relatively stable during
2015. The good financial position and ability to generate a positive cash flow
will enable the Group to continue to address profitable growth opportunities.
Capital expenditure is expected to be at the same level as in 2014. Majority of
the investments are expected to be directed to enhance growth in the emerging
markets.
Financial reporting in 2015

Huhtamaki will publish the following interim report during the course of the
year:
Interim Report January 1 - September 30, 2015               October 22, 2015

This is a summary of Huhtamäki Oyj's Interim Report January 1 - June 30, 2015.
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. +358 686 7880

HUHTAMÄKI OYJ
Group Communications

Huhtamaki is a global specialist in packaging for food and drink. With our
network of 69 manufacturing units and 23 sales offices in 34 countries, we're
well placed to support our customers' growth wherever they operate. Mastering
three distinctive packaging technologies, approximately 16,500 employees develop
and make packaging that helps great products reach more people, more easily. In
2014 our net sales totaled EUR 2.2 billion. The Group has its head office in
Espoo, Finland and the parent company Huhtamäki Oyj is listed on NASDAQ OMX
Helsinki Ltd. Additional information is available at www.huhtamaki.com.

[HUG#1940953]

Liitteet:

Huhtamäki Oyj Interim Report January 1- June 30, 2015.pdf