Huhtamäki Oyj’s Half-yearly Report January 1–June 30, 2021: Strong comparable net sales growth with improved profitability

HUHTAMÄKI OYJ HALF-YEARLY REPORT 22.7.2021 AT 8:30

Huhtamäki Oyj’s Half-yearly Report January 1–June 30, 2021: Strong comparable net sales growth with improved profitability

Q2 2021 in brief

• Net sales increased 10% to EUR 877 million (EUR 797 million)
• Adjusted EBIT was EUR 80 million (EUR 70 million); reported EBIT was EUR 75 million (EUR 70 million)
• Adjusted EPS was EUR 0.53 (EUR 0.44); reported EPS was EUR 0.50 (EUR 0.44)
• Comparable net sales growth was 14% at Group level and 20% in emerging markets
• The impact of currency movements was EUR -35 million on the Group’s net sales and EUR -4 million on EBIT
  
  

H1 2021 in brief

• Net sales increased 2% to EUR 1,679 million (EUR 1,642 million)
• Adjusted EBIT was EUR 157 million (EUR 144 million); reported EBIT was EUR 147 million (EUR 153 million)
• Adjusted EPS was EUR 1.02 (EUR 0.90) reported EPS was EUR 0.95 (EUR 0.97)
• Comparable net sales growth was 6% at Group level and 13% in emerging markets
• The impact of currency movements was EUR -81 million on the Group’s net sales and EUR -8 million on EBIT
  
  

Key figures

Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2020. Figures of return on investment (ROI), return on equity (ROE) and return on net assets (RONA) as well as net debt to EBITDA presented in this report are calculated on a 12-month rolling basis.

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.

Charles Héaulmé, President and CEO

"We are pleased to deliver further net sales growth, beyond pre-COVID pandemic levels, and improved profitability while continuing to face a very challenging cost environment. Overall demand has supported growth. The global progress of vaccinations and removal of social mobility restrictions has benefited food on-the-go which has continued to gradually recover. However, the global food packaging market remains volatile with significant challenges in many countries still heavily impacted by the pandemic. This volatility is also evident in the supply chain with significant Inflation in the prices of raw materials, especially polymers and recycled fiber.

Altogether our second quarter results were strong although with mixed performance across the different regions and businesses. Net sales increased 10%, amounting to EUR 877 million, reflecting the improved demand for foodservice packaging. Comparable net sales growth was 14%. This strong growth should be contextualized versus a depressed comparable period in 2020. Net sales for the first half of 2021 increased 2%, and 6% in comparable terms. The adjusted EBIT margin improved 0.3 p.p. to 9.1% in the second quarter and reached 9.3% in the first half of 2021. This was supported by a continued focus on operational efficiency and pricing actions to mitigate input cost inflation.

Huhtamaki’s robust performance supports investments for long-term sustainable growth. We continue to leverage our strong balance sheet to execute on our growth strategy. In May, we announced an investment in a new fiber packaging factory in South Africa. Our most recent acquisition, the asset purchase of the Chinese Jiangsu Hihio-Art Packaging, was completed in June. These strategic initiatives, together with investments announced in new manufacturing facilities in both Malaysia and Russia, strengthen our global manufacturing footprint and provide us with great opportunities to better serve both existing and new customers. We have also recently launched new products which further help plastic substitution in targeted markets. Our sustained innovation, our continued focus on operational efficiencies, with the support of our resilient business model, strong balance sheet and skilled employee base give me confidence that we face a bright perspective in terms of sustainable profitable growth.”

Financial review Q2 2021  

Net sales by business segment

Comparable net sales growth by business segment

The Group’s net sales increased 10% to EUR 877 million (EUR 797 million) during the quarter. Comparable net sales growth was 14%. Net sales growth was supported by improved demand for foodservice packaging, following the lifting of restrictions imposed due to COVID-19. Growth in retail tableware in North America continued to be strong while the solid demand for food on-the-shelf products continued. Comparable sales growth in emerging markets was 20%. Foreign currency translation impact on the Group’s net sales was EUR -35 million (EUR -8 million) compared to 2020 exchange rates.

Adjusted EBIT by business segment

Adjusted EBIT margin by business segment

The Group’s adjusted EBIT increased to EUR 80 million (EUR 70 million) and reported EBIT was EUR 75 million (EUR 70 million). Adjusted EBIT improved following improved operational efficiency and pricing actions. Increased input costs partly offset the improvement in earnings. Earnings increased especially in the Foodservice Europe-Asia-Oceania segment. The Group’s adjusted EBIT margin improved and was 9.1% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR -4 million (EUR 0 million).

Adjusted EBIT excludes EUR -4.9 million (EUR 0.1 million) of items affecting comparability (IAC).

Adjusted EBIT and IAC

Net financial expenses were EUR 6 million (EUR 8 million). Tax expense was EUR 16 million (EUR 14 million). Profit for the second quarter was EUR 53 million (EUR 48 million). Adjusted earnings per share (EPS) was EUR 0.53 (EUR 0.44) and reported EPS EUR 0.50 (EUR 0.44). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -3.8 million (EUR 0.1 million) of IAC.

Adjusted profit and IAC

Financial review H1 2021

Net sales by business segment

Comparable net sales growth by business segment

The Group’s net sales increased 2% to EUR 1,679 million (EUR 1,642 million) during the review period. Comparable net sales growth was 6%. Net sales increased especially in the Foodservice Europe-Asia-Oceania segment, driven by continued recovery in demand for foodservice products. Sales of retail tableware and fiber products continued to grow throughout the period. Comparable sales growth in emerging markets was 13%. Foreign currency translation impact on the Group’s net sales was EUR -81 million (EUR 2 million) compared to 2020 exchange rates.

Adjusted EBIT by business segment

Adjusted EBIT margin by business segment

The Group’s adjusted EBIT increased to EUR 157 million (EUR 144 million) and reported EBIT was EUR 147 million (EUR 153 million). Adjusted EBIT improved following continued focus on operational efficiency and pricing actions and was partly offset by higher input costs. The increase in earnings was mainly supported by the Foodservice Europe-Asia-Oceania segment. The Group’s adjusted EBIT margin improved and was 9.3% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR -8 million (EUR 1 million).

Adjusted EBIT excludes EUR -10.3 million (EUR 9.0 million) of items affecting comparability (IAC).

Adjusted EBIT and IAC

Net financial expenses were EUR 14 million (EUR 18 million). Tax expense was EUR 31 million (EUR 30 million). The corresponding tax rate was 23% (23%). Profit for the period was EUR 101 million (EUR 105 million). Adjusted earnings per share (EPS) were EUR 1.02 (EUR 0.90) and reported EPS EUR 0.95 (EUR 0.97). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -7.9 million (EUR 7.0 million) of IAC.

Adjusted profit and IAC

Acquisitions and divestments

On April 21, 2021 Huhtamaki announced its agreement to acquire the assets of Jiangsu Hihio-Art Packaging Co. Ltd., a leading manufacturer of paper bags, wraps and folding carton packaging in China. With this acquisition, Huhtamaki continues to strengthen its position as the leading foodservice packaging provider in Asia and expands its product portfolio in China allowing it to better serve its existing and new customers in this exciting growth market. Jiangsu Hihio-Art Packaging employs approximately 200 people in its manufacturing unit in Xuzhou city, Jiangsu. In 2020 the annual net sales of the privately owned business were approximately EUR 20 million. The debt free purchase price was EUR 31 million. The acquisition was completed on June 11, 2021 and since then the business has been reported as part of the Foodservice Europe-Asia-Oceania reporting segment.

Outlook for 2021 (unchanged)

The Group’s trading conditions are expected to improve compared to 2020, however with continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable growth opportunities.

Teleconference

A combined audiocast and teleconference will be held on Thursday, July 22, 2021 at 9:30 Finnish time. At which, Huhtamaki´s President and CEO Charles Héaulmé and CFO Thomas Geust will present the results. The event will be followed by a question and answer session. The event will be held in English, and it can be followed real-time at: https://huhtamaki.videosync.fi/2021-q2/.

If you wish to ask questions, please dial one of the following numbers 5-10 minutes prior to the call start:

Finland: +358 981 710 310
Sweden: +46 85664 2651
UK: +44 333 300 08 04
US: +1 631 913 14 22

Confirmation code for the call is 53692046#

Financial reporting in 2021

In 2021, Huhtamaki will publish financial information as follows:

Interim Report, January 1 - September 30, 2021        October 21

This is a summary of Huhtamäki Oyj's Half-yearly Report January 1-June 30, 2021. ?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:
Calle Loikkanen, Head of Investor Relations and Financial Communications, tel. +358 10 686 7125

HUHTAMÄKI OYJ
Global Communications

About Huhtamaki
Huhtamaki is a key global provider of sustainable packaging solutions for consumers around the world, enabling wellbeing and convenience. Our innovative products protect on-the-go and on-the-shelf food and beverages, ensuring hygiene and safety, and help 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.  

We are a participant in the UN Global Compact and as of 2020, we received an MSCI ESG Rating of A, on a scale of AAA - CCC. To play our part in managing climate change, we have committed to set science-based targets through the Science Based Targets initiative. Huhtamaki has been awarded the Gold medal by EcoVadis for performance in sustainability. 

With 100 years of history and a strong Nordic heritage we operate in 36 countries and 81 sites around the world. Our values Care Dare Deliver guide our decisions and help our team of 18,200 employees make a difference where it matters. Our 2020 net sales totaled EUR 3.3 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 on www.huhtamaki.com. 

Attachment

• Huhtamäki Oyj Half-yearly Report 2021