Huhtamäki Interim Report
October 30, 2018Huhtamäki Oyj’s Interim Report January 1-September 30, 2018: Good net sales development, margins impacted by increased costs
Q3 2018 in brief
- Net sales were EUR 780 million (EUR 732 million)
- Adjusted EBIT was EUR 56.5 million (EUR 64.3 million); EBIT EUR 56.4 million (EUR 64.3 million)
- Adjusted EPS was EUR 0.38 (EUR 0.44); EPS EUR 0.38 (EUR 0.44)
- Comparable net sales growth was 4% in total and 5% in emerging markets
- Currency movements had a negative impact of EUR 9 million on the Group’s net sales but no significant impact on the Group’s profitability
Q1-Q3 2018 in brief
- Net sales were EUR 2,291 million (EUR 2,243 million)
- Adjusted EBIT was EUR 186.7 million (EUR 202.7 million); EBIT EUR 196.1 million (EUR 202.7 million)
- Adjusted EPS was EUR 1.25 (EUR 1.39); EPS EUR 1.33 (EUR 1.39)
- Comparable net sales growth was 5% in total and 8% in emerging markets
- Currency movements had a negative impact of EUR 117 million on the Group’s net sales and EUR 9 million on EBIT
- Capital expenditure decreased to EUR 127 million (EUR 144 million) and free cash flow was EUR 24 million (EUR 5 million)
Key figures
| EUR million | Q3 2018 | Q3 2017 | Change | Q1-Q3 2018 | Q1-Q3 2017 | Change | FY 2017 |
| Net sales | 779.8 | 732.0 | 7% | 2,290.9 | 2,243.3 | 2% | 2,988.7 |
| Adjusted EBITDA1 | 87.6 | 94.0 | -7% | 278.4 | 294.4 | -5% | 389.7 |
| Margin1 | 11.2% | 12.8% | 12.2% | 13.1% | 13.0% | ||
| EBITDA | 87.5 | 94.0 | -7% | 289.9 | 294.4 | -2% | 386.3 |
| Adjusted EBIT2 | 56.5 | 64.3 | -12% | 186.7 | 202.7 | -8% | 267.7 |
| Margin2 | 7.3% | 8.8% | 8.2% | 9.0% | 9.0% | ||
| EBIT | 56.4 | 64.3 | -12% | 196.1 | 202.7 | -3% | 264.3 |
| Adjusted EPS, EUR3 | 0.38 | 0.44 | -12% | 1.25 | 1.39 | -10% | 1.90 |
| EPS, EUR | 0.38 | 0.44 | -12% | 1.33 | 1.39 | -5% | 1.86 |
| ROI2 | 12.2% | 13.9% | 13.6% | ||||
| ROE3 | 15.4% | 16.4% | 17.0% | ||||
| Capital expenditure | 45.6 | 48.7 | -6% | 126.5 | 144.1 | -12% | 214.8 |
| Free cash flow | -3.3 | 17.0 | 23.5 | 5.2 | 55.5 |
1 Excluding IAC of EUR -0.1 million in Q3 2018 and EUR 11.5 million Q1-Q3 2018. FY 2017 excluding IAC of EUR -3.4 million.
2 Excluding IAC of EUR -0.1 million in Q3 2018 and EUR 9.4 million Q1-Q3 2018. FY 2017 excluding IAC of EUR -3.4 million.
3 Excluding IAC of EUR -0.0 million in Q3 2018 and EUR 7.6 million Q1-Q3 2018. FY 2017 excluding IAC of EUR -4.8 million.
Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2017. 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.
All figures in the tables have been rounded to the nearest whole number and consequently the sum of individual figures may deviate from the sum presented. Key figures have been calculated using exact figures.
Jukka Moisio, CEO:
“Our reported third quarter net sales grew 7% including a minor currency headwind impact of -1%. Comparable growth for the Group was 4% and in emerging markets 5%. Acquisitions added EUR 30 million to reported net sales accounting for 4% growth. During the quarter a number of important emerging market currencies devalued significantly.
Our profitability weakened because price and mix improvement actions were not enough to offset the increase in input costs. We will continue the price and mix improvement actions. In addition, we announced in early October plans to close down non-competitive production lines and invest further in automation to improve our productivity and efficiency. Executing the plan would generate an item affecting comparability (IAC) of EUR -30 million, to be recognized in Q4, and it is expected to improve our profitability by EUR 15-18 million annually, with full impact in 2020.
Net sales with global key accounts developed well and we made good progress on many innovation projects. I am pleased to see the project Fresh progressing to a second, larger consumer test phase in the UK. This compostable ready meal tray is made from renewable fibers and it can replace black plastic trays. Fresh is a good example of the work we do in developing solutions to pack and serve food safely and conveniently with less negative impact on the environment.
The ramp-up of our new facility in Arizona, the U.S., is on track supporting the sales growth of paperboard-based products. The building of the new flexible packaging manufacturing unit in Egypt is also progressing as planned and we expect to start early trials towards the end of 2018 and commercial deliveries in early 2019. Both units will help us address the growth opportunities we continue to see in food and drink packaging.”
