17.8.2022 15:10:15 CEST | Brødrene Hartmann A/S | Half Year financial report

Hartmann demonstrated resilience in Q2 2022 lifting revenue and maintaining market share with decent earnings and profitability despite significant input price increases and challenging external conditions. The effects of continued pricing actions mitigated the severe negative impact of increasing and historically high energy and recycled paper prices combined with rising inflation. The 2022 guidance is maintained.

Revenue continued to grow driven by successful efforts to increase average selling prices across Hartmann's markets to offset cost inflation. The progress was supported by strong sales volume growth in North America largely outweighing a slight decline in the group's other markets as demand for egg packaging remained subdued.

Hartmann protected earnings and profitability by countering cost inflation and increasing energy and recycled paper prices through continued measures to increase selling prices and reduce costs in Q2 2022. While earnings and profitability improved in the Americas segment, the Eurasia segment saw a decline due to a more severe impact by cost inflation as well as lower machinery sales compared to the relatively high level in Q2 2021.

Hartmann maintained a reduced investment level in Q2 2022 following a period of higher investments. A sales process for the Russian factory was initiated and progressed in Q2 2022 focusing on complex legal and practical clarifications.

Q2 2022*

• Group revenue increased to DKK 794 million (2021: DKK 639 million)
• Operating profit declined to DKK 56 million (2021: DKK 72 million) corresponding to a profit margin of 7.1% (2021: 11.3%).
• Investments declined to DKK 45 million (2021: DKK 137 million)

CEO Torben Rosenkrantz-Theil says: "Our teams navigated through another quarter marked by challenging external conditions mainatining market share and securing decent profitability in Q2 2022. Based on the solid performance in the first half of the year and our resilience to headwinds, we are maintaining our 2022 guidance while remaining very aware that a reduction of the gas supply in Europe may change the situation in an instant."

2022 outlook

Based on the development in the first half of the year and the effect of pricing actions, Hartmann maintains expectations of growing reported revenue to DKK 2.9-3.3 billion and generating a profit margin of 2-7%.

Guidance is maintained despite the reclassification of the group's Russian activities as discontinued operations and under the assumption that the supply of natural gas to all factories is sustained throughout the year.

While earnings and profit margin are expected to be negatively impacted by continued high prices of recycled paper and energy as well as rising inflation, Hartmann will continue to alleviate these effects through efforts to adjust selling prices, improve the overall price and product mix, and reduce the cost level. Price adjustments will, however, continue to be implemented at a certain time lag.

The historically high volatility of energy and recycled paper prices continues to cause significantly reduced visibility and increased uncertainty about developments in the group’s cost levels.

Investments are still expected at around DKK 225 million in 2022. In addition to these ordinary investments, Hartmann will re-establish operations at the group’s Indian factory following the fire in Q2 entailing investments expected to be compensated by insurance coverage.

* In order to provide a more accurate view of Hartmann’s underlying operations and performance, operating profit and profit margin are presented before special items and restatement for hyperinflation (IAS 29). Due to the ongoing sales process for Hartmann's Russian factory, the group's Russian activities have been reclassified as discontinuing operations, cf. note 6 in the interim report. Actual and comparative figures have therefore been restated to present continuing operations, unless it is explicitly stated that discontinuing operations are included.

Contacts

• Torben Rosenkrantz-Theil, CEO, (+45) 45 97 00 57

About Brødrene Hartmann A/S

Hartmann is the world’s leading manufacturer of moulded-fibre egg packaging and a market-leading manufacturer of fruit packaging in South America and India. The group is also the world’s largest manufacturer of technology for the production of moulded-fibre packaging. Founded in 1917, Hartmann’s market position builds on its strong technology know-how and extensive experience of sustainable moulded-fibre production dating back to 1936. Hartmann sells egg and fruit packaging to manufacturers, distributors and retail chains, which are increasingly demanding sustainable packaging solutions and specialised marketing expertise. Our versatile product portfolio is customised to accommodate customer and consumer needs in each individual market. Hartmann sells machinery and technology to manufacturers of moulded-fibre packaging in selected markets. Headquartered in Gentofte, Denmark, with a production platform consisting of 15 factories in Europe and Israel, North and South America, and India and Russia (discontinuing).

Attachments

• Hartmann interim report Q2 2022.pdf