2017-07-21 07:30:31 CEST
2017-07-21 07:30:31 CEST
REGULATED INFORMATION
Huhtamäki Oyj - Half Year financial report
Huhtamäki Oyj's Half-yearly Report January 1-June 30, 2017: Net sales grew and profitability was at a good level
HUHTAMÄKI OYJ HALF-YEARLY REPORT 21.7.2017 AT 8.30
Huhtamäki Oyj's Half-yearly Report January 1-June 30, 2017: Net sales grew and
profitability was at a good level
Q2 2017 in brief
* Net sales grew to EUR 772 million (EUR 742 million)
* Adjusted EBIT was EUR 75.6 million (EUR 77.8 million); EBIT EUR 75.6 million
(EUR 77.6 million)
* Adjusted EPS was EUR 0.52 (EUR 0.54); EPS EUR 0.52 (EUR 0.53)
* Comparable net sales growth was 1% in total and -1% in emerging markets;
Soft growth was due to significant net sales decline in India, where the
Goods and Services Tax (GST) reform had a temporary adverse impact on demand
* Currency movements had a positive impact of EUR 17 million on the Group's
net sales and EUR 2 million on EBIT
H1 2017 in brief
* Net sales grew to EUR 1,511 million (EUR 1,414 million)
* Adjusted EBIT was EUR 138.4 million (EUR 135.6 million); EBIT EUR 138.4
million (EUR 135.4 million)
* Adjusted EPS was EUR 0.95 (EUR 0.94); EPS EUR 0.95 (EUR 0.93)
* Comparable net sales growth was 2% in total and 1% in emerging markets
* Currency movements had a positive impact of EUR 36 million on the Group's
net sales and EUR 4 million on EBIT
* Capital expenditure increased to EUR 95 million (EUR 56 million) and free
cash flow weakened to EUR -12 million (EUR 38 million)
Key figures
EUR million Q2 2017 Q2 2016 Change H1 2017 H1 2016 Change FY 2016
Net sales 771.9 742.0 4% 1,511.3 1,414.3 7% 2,865.0
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Adjusted EBITDA(1) 106.4 105.9 0% 200.4 190.5 5% 381.8
Margin(1) 13.8% 14.3% 13.3% 13.5% 13.3%
EBITDA 106.4 105.7 1% 200.4 190.3 5% 380.1
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Adjusted EBIT(1) 75.6 77.8 -3% 138.4 135.6 2% 267.9
Margin(1) 9.8% 10.5% 9.2% 9.6% 9.4%
EBIT 75.6 77.6 -3% 138.4 135.4 2% 266.2
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Adjusted EPS, EUR(1) 0.52 0.54 -4% 0.95 0.94 1% 1.83
EPS, EUR 0.52 0.53 -2% 0.95 0.93 2% 1.81
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ROI(1) 14.2% 14.9% 14.7%
ROE(1) 16.9% 18.3% 17.7%
Capital expenditure 48.4 31.7 53% 95.4 56.0 70% 199.1
Free cash flow -3.0 12.0 -125% -11.8 37.6 -131% 100.3
1Excluding IAC of EUR -0.2 million in Q2 2016 and H1 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.
In this report, Huhtamaki uses alternative performance measures in accordance
with the guidelines issued by the European Securities and Markets Authority
(ESMA). Alternative performance measures are derived from performance measures
reported in accordance to International Financial Reporting Standards (IFRS) by
adding or deducting the Items affecting comparability (IAC) and they are called
Adjusted. Alternative performance measures are used to better reflect the
operational business performance and to enhance comparability between financial
periods. They are reported in addition to, but not substituting, the performance
measures reported in accordance with IFRS.
Jukka Moisio, CEO:
"Our second quarter comparable net sales growth was 1%. In Europe our business
grew well, driven by healthy demand. Quarterly growth in North America was
modest due to capacity constraints, which we are addressing with on-going
investments. The Flexible Packaging segment's net sales development was negative
due to significant net sales decline in India, where the GST reform weakened
demand temporarily. The Group's comparable growth in emerging markets was
negative 1%, and without the Indian impact it would have been approx. 5%.
Our profitability was good and we had the second best quarter in the company
history although we did not break the record achieved in Q2 2016. Profitability
improved in the Foodservice Europe-Asia-Oceania segment and remained at the
previous year level in the Fiber Packaging segment. The North America segment's
earnings were good, even if not reaching the high of the second quarter in
2016. The Flexible Packaging segment's earnings were impacted by net sales
decline in India.
In 2017, we pursue our growth strategy by building new capabilities to serve our
customers better in 2018 and beyond. Our project in building a new manufacturing
unit in Goodyear, Arizona, the U.S., is proceeding as planned. We will start to
ramp up manufacturing of a full range of paper packaging products to the
southwest and west coast markets towards the end of 2017. In addition, we expand
in China by investing in our foodservice packaging operations in South China,
and by acquiring two foodservice packaging units in Shanghai and Tianjin from
International Paper. Despite temporary headwinds, particularly in India, we see
good growth opportunities in food and drink packaging."
Financial review Q2 2017
The Group's comparable net sales growth was 1% during the quarter. Strong growth
in the Fiber Packaging business segment continued, and positive development in
the Foodservice Europe-Asia-Oceania and North America business segments
supported the Group's comparable growth. The Flexible Packaging business
segment's net sales development was negative due to significant net sales
decline in India, where the GST reform temporarily weakened demand for flexible
packaging. This drew the Group's comparable growth in emerging markets down to
-1%. Growth was solid in Eastern Europe, and at a good level also in Southeast
Asia. The Group's net sales grew to EUR 772 million (EUR 742 million). Foreign
currency translation impact on the Group's net sales was EUR 17 million (EUR -
28 million) compared to 2016 exchange rates. Majority of the positive impact
came from the US dollar and Indian rupee, while the impact from pound sterling
and certain emerging market currencies was negative.
Net sales by business segment
EUR million Q2 2017 Q2 2016 Change Of Group in
Q2 2017
Foodservice Europe-Asia-Oceania 205.4 193.9 6% 27%
North America 274.3 265.7 3% 35%
Flexible Packaging 224.0 220.5 2% 29%
Fiber Packaging 71.8 66.2 8% 9%
Elimination of internal sales -3.6 -4.3
Group 771.9 742.0 4%
Comparable growth by business segment
Q2 2017 Q1 2017 Q4 2016 Q3 2016
Foodservice Europe-Asia-Oceania 2% 3% 3% 5%
North America 1% 2% 5% 2%
Flexible Packaging -2% 3% -3% -3%
Fiber Packaging 8% 4% 6% 6%
Group 1% 3% 3% 2%
The Group's earnings declined, but remained at a good level. Earnings of the
Foodservice Europe-Asia-Oceania business segment developed favorably, whereas
the North America and Flexible Packaging 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 earnings
before interests and taxes (EBIT) were EUR 75.6 million (EUR 77.8 million) and
reported EBIT EUR 75.6 million (EUR 77.6 million). Foreign currency translation
impacted the Group's profitability by EUR 2 million (EUR -3 million).
Adjusted EBIT by business segment
EUR million Q2 2017 Q2 2016 Change Of Group in
Q2 2017
Foodservice Europe-Asia-Oceania(1) 18.4 17.6 5% 25%
North America 32.6 37.2 -12% 45%
Flexible Packaging 14.0 19.1 -27% 19%
Fiber Packaging 8.1 8.2 -1% 11%
Other activities 2.5 -4.3
Group(1) 75.6 77.8 -3%
1Excluding IACs of EUR -0.2 million in Q2 2016; reported EBIT for Q2 2016 EUR
77.6 million for the Group and EUR 17.4 million for the Foodservice Europe-Asia-
Oceania business segment.
Net financial expenses decreased to EUR 6 million (EUR 8 million). Tax expense
was EUR 15 million (EUR 14 million).
Profit for the quarter was EUR 55 million (EUR 57 million). Adjusted earnings
per share (EPS) were EUR 0.52 (EUR 0.54) and reported EPS EUR 0.52 (EUR 0.53).
Financial review H1 2017
The Group's comparable net sales growth was 2% during the first half of the year
with a positive contribution from all business segments. Comparable growth in
emerging markets was 1%. Growth was strongest in Eastern Europe and Southeast
Asia, while net sales declined significantly in India. The Group's net sales
grew to EUR 1,511 million (EUR 1,414 million). Foreign currency translation
impact on the Group's net sales was EUR 36 million (EUR -39 million) compared to
2016 exchange rates. The majority of the positive impact came from the US
dollar, Russian ruble and Indian rupee, while the impact from pound sterling and
certain emerging market currencies was negative.
Net sales by business segment
EUR million H1 2017 H1 2016 Change Of Group in
H1 2017
Foodservice Europe-Asia-Oceania 397.9 352.8 13% 26%
North America 521.6 500.9 4% 34%
Flexible Packaging 456.3 438.2 4% 30%
Fiber Packaging 144.1 131.7 9% 10%
Elimination of internal sales -8.6 -9.3
Group 1,511.3 1,414.3 7%
The Group's earnings grew. Good earnings improvement in the Foodservice Europe-
Asia-Oceania business segment was the main contributor to the earnings growth.
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 138.4 million (EUR 135.6 million) and reported EBIT EUR 138.4 million
(EUR 135.4 million). Foreign currency translation impacted the Group's
profitability by EUR 4 million (EUR -4 million).
Adjusted EBIT by business segment
EUR million H1 2017 H1 2016 Change Of Group in
H1 2017
Foodservice Europe-Asia-Oceania(1) 33.8 29.6 14% 25%
North America 55.1 58.0 -5% 40%
Flexible Packaging 32.9 38.0 -13% 24%
Fiber Packaging 15.4 16.4 -6% 11%
Other activities 1.2 -6.4
Group(1) 138.4 135.6 2%
(1)Excluding IACs of EUR -0.2 million in H1 2016; reported EBIT for H1 2016 EUR
135.4 million for the Group and EUR 29.4 million for the Foodservice Europe-
Asia-Oceania business segment.
Net financial expenses decreased to EUR 11 million (EUR 13 million). Tax expense
increased and was EUR 28 million (EUR 23 million). The corresponding tax rate
was 22% (19%).
Profit for the period was EUR 100 million (EUR 99 million). Adjusted EPS were
EUR 0.95 (EUR 0.94) and reported EPS EUR 0.95 (EUR 0.93).
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.
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 2017
In 2017, Huhtamaki will publish financial information as follows:
Interim Report, January 1-September 30, 2017 October 26
This is a summary of Huhtamäki Oyj's Half-yearly Report January 1 - June
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 76 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 17,400 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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