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Huhtamaki Half-yearly Report Q2 2024
Beskrivning
| Land | Finland |
|---|---|
| Lista | Large Cap Helsinki |
| Sektor | Industri |
| Industri | Industriprodukter |
HUHTAMÄKI OYJ HALF-YEARLY REPORT 25.7.2024 AT 8.30 EEST
Q2 2024 in brief
- Net sales decreased 1% to EUR 1,038 million (EUR 1,052 million)
- Comparable net sales growth at Group level was -1%
- Reported EBIT was EUR 105 million (EUR 55 million); adjusted EBIT was EUR 106 million (EUR 93 million)
- Reported EPS was EUR 0.62 (EUR 0.24); adjusted EPS was EUR 0.63 (EUR 0.55)
- The impact of currency movements on the Group’s net sales was EUR -6 million and EUR -1 million on EBIT
H1 2024 in brief
- Net sales decreased 3% to EUR 2,041 million (EUR 2,099 million)
- Comparable net sales growth at Group level was -2%
- Reported EBIT was EUR 182 million (EUR 142 million); adjusted EBIT was EUR 204 million (EUR 185 million)
- Reported EPS was EUR 0.97 (EUR 0.72); adjusted EPS was EUR 1.17 (EUR 1.06)
- The impact of currency movements on the Group’s net sales was EUR -23 million and EUR -2 million on EBIT
- Capital expenditure was EUR 85 million (EUR 134 million)
- Free cash flow was EUR 92 million (EUR 71 million)
Key figures
| EUR million | Q2 2024 | Q2 2023 | Change | H1 2024 | H1 2023 | Change | 2023 | ||||||
| Net sales | 1,037.5 | 1,051.7 | -1% | 2,041.4 | 2,098.8 | -3% | 4,168.9 | ||||||
| Comparable net sales growth | -1% | -2% | -2% | 0% | -2% | ||||||||
| Adjusted EBITDA1 | 156.4 | 141.2 | 11% | 305.4 | 281.7 | 8% | 590.1 | ||||||
| Margin1 | 15.1% | 13.4% | 15.0% | 13.4% | 14.2% | ||||||||
| EBITDA | 158.2 | 132.1 | 20% | 295.8 | 270.1 | 10% | 621.2 | ||||||
| Adjusted EBIT2 | 105.5 | 92.7 | 14% | 204.3 | 184.8 | 11% | 392.6 | ||||||
| Margin2 | 10.2% | 8.8% | 10.0% | 8.8% | 9.4% | ||||||||
| EBIT | 104.6 | 54.7 | 91% | 182.2 | 142.1 | 28% | 380.9 | ||||||
| Adjusted EPS, EUR3 | 0.63 | 0.55 | 14% | 1.17 | 1.06 | 10% | 2.32 | ||||||
| EPS, EUR | 0.62 | 0.24 | >100% | 0.97 | 0.72 | 35% | 1.97 | ||||||
| Adjusted ROI2 | 11.9% | 10.4% | 11.2% | ||||||||||
| Adjusted ROE3 | 13.6% | 13.1% | 13.2% | ||||||||||
| ROI | 12.2% | 9.8% | 10.9% | ||||||||||
| ROE | 13.0% | 12.3% | 11.8% | ||||||||||
| Capital expenditure | 48.1 | 69.0 | -30% | 84.7 | 134.2 | -37% | 318.7 | ||||||
| Free Cash Flow | 53.6 | 28.3 | 89% | 91.8 | 70.9 | 30% | 321.4 | ||||||
| 1 Excluding IAC of | 1.8 | -9.1 | -9.5 | -11.5 | 31.1 | ||||||||
| 2 Excluding IAC of | -0.9 | -38.0 | -22.1 | -42.7 | -11.7 | ||||||||
| 3 Excluding IAC of | -0.7 | -32.3 | -21.6 | -36.2 | -35.9 |
Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2023. 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.
IAC includes, but is not limited to, material restructuring costs and acquisition related costs (gains and losses on business combinations, professional and legal fees, material purchase price accounting adjustments for inventory, material purchase price amortization of intangible assets and changes in contingent considerations) as well as material impairment losses and reversals, gains and losses relating to sale of intangible and tangible assets, implementation costs concerning large projects with SaaS cloud computing technology, fines and penalties imposed by authorities and extraordinary taxes.
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
During the second quarter, the business context remained largely consistent with the first quarter. We saw some signs of increasing demand, particularly for prepacked on-the-shelf products, with differences between geographies and categories. However, the pricing pressure in the value chain increased. The slow easing of inflation and unchanged interest rates continued to have an impact on demand during the second quarter. The on-going Israel-Hamas war still affects global brands in some markets in the Middle East and Asia. International trade remains impacted by logistic disruptions linked to the Red Sea crisis. The cost environment remained overall favorable, with the exception of some raw materials costs and continued high labor inflation.
Our comparable net sales decreased by 1% in the second quarter and by 2% during the first half of the year. Sales volumes remained in line with the previous year’s level and sales prices decreased. Adjusted EBIT increased by 14% in the second quarter and 11% during the first half of the year with an improving adjusted EBIT margin. The profitability development was mainly supported by our actions to improve efficiency.
During the second quarter, North America continued to deliver profit growth with a strong margin. In Flexible Packaging, the adjusted EBIT increased with the support of higher sales volumes, compared to a soft performance in the comparison period. The Fiber Packaging segment delivered a solid performance, with growing volumes and improved profitability. The Foodservice E-A-O segment continued to face market headwinds, leading to lower adjusted EBIT. Across most categories and geographies, the high inflation on food products still impacted the overall demand. This was particularly visible in quick service restaurants.
We have continued to make progress on the three-year EUR 100 million efficiency program launched in 2023. During the second quarter, we announced the project to close our factory in Klang, Malaysia, to optimize our foodservice production footprint in Asia. We also announced our plan to consolidate our production footprint of Flexible Packaging in the United Arab Emirates. Previously initiated actions to reduce input costs, including sourcing, material usage, and labor efficiency are also ongoing. All activities executed thus far have positively impacted our profit during the first half of 2024.
In summary, we are pleased with our performance in a market environment, where the consumption recovery has remained slow. We continue to drive our strategy by investing into our profitable core and rolling out our new innovative sustainable solutions, while improving steadily our competitiveness.
Financial review Q2 2024
Net sales by business segment
| EUR million | Q2 2024 | Q2 2023 | Change | |
| Foodservice Europe-Asia-Oceania | 252.3 | 270.9 | -7% | |
| North America | 370.2 | 373.2 | -1% | |
| Flexible Packaging | 325.9 | 327.9 | -1% | |
| Fiber Packaging | 91.7 | 86.1 | 7% | |
| Elimination of internal sales | -2.7 | -6.5 | ||
| Group | 1,037.5 | 1,051.7 | -1% |
Comparable net sales growth by business segment
| Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | |
| Foodservice Europe-Asia-Oceania | -6% | -5% | -5% | -3% | 5% |
| North America | -2% | -3% | 4% | 1% | 1% |
| Flexible Packaging | 2% | -1% | -9% | -11% | -11% |
| Fiber Packaging | 3% | 1% | 2% | 4% | 7% |
| Group | -1% | -2% | -3% | -4% | -2% |
The Group’s net sales decreased by 1% to EUR 1,038 million (EUR 1,052 million) during the quarter and comparable net sales growth was -1%. Demand continued to be muted by the impact of inflation and boycotts of global brands in certain markets. Net sales were weighed on by a slight decrease in sales volumes, changes in currencies and pricing. Comparable sales growth in emerging markets was -2%. Foreign currency translation impact on the Group’s net sales was EUR -6 million (EUR -38 million) compared to 2023 exchange rates.
Adjusted EBIT by business segment
| Items affecting comparability | |||||
| EUR million | Q2 2024 | Q2 2023 | Change | Q2 2024 | Q2 2023 |
| Foodservice Europe-Asia-Oceania | 23.2 | 25.0 | -7% | 4.9 | -0.5 |
| North America | 53.0 | 45.4 | 17% | -2.5 | -0.0 |
| Flexible Packaging | 20.9 | 16.0 | 31% | -2.9 | -36.5 |
| Fiber Packaging | 11.9 | 9.3 | 27% | -0.3 | -0.8 |
| Other activities | -3.5 | -3.0 | -0.1 | -0.1 | |
| Group | 105.5 | 92.7 | 14% | -0.9 | -38.0 |
Adjusted EBIT margin by business segment
| Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | |
| Foodservice Europe-Asia-Oceania | 9.2% | 9.1% | 10.0% | 10.3% | 9.2% |
| North America | 14.3% | 13.9% | 14.3% | 13.2% | 12.2% |
| Flexible Packaging | 6.4% | 6.4% | 8.1% | 7.2% | 4.9% |
| Fiber Packaging | 12.9% | 10.1% | 10.9% | 12.5% | 10.8% |
| Group | 10.2% | 9.8% | 10.4% | 9.7% | 8.8% |
The Group’s adjusted EBIT increased to EUR 106 million (EUR 93 million) and reported EBIT was EUR 105 million (EUR 55 million) in the quarter. Adjusted EBIT increased supported by lower raw material, transportation and energy costs and the company’s actions to improve profitability. On the other hand, lower sales prices and the increase in labor costs had a negative impact on profitability. The Group’s adjusted EBIT margin increased and was 10.2% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR -1 million (EUR -3 million).
Adjusted EBIT excludes EUR -0.9 million (EUR -38.0 million) of items affecting comparability (IAC), including costs of implementing operational efficiency measures and positive impacts from divestment of real estate in China and India.
Adjusted EBIT and IAC
| EUR million | Q2 2024 | Q2 2023 |
| Adjusted EBIT | 105.5 | 92.7 |
| Acquisition related costs | -1.1 | -0.2 |
| Restructuring gains and losses, including writedowns of related assets | 4.2 | -3.0 |
| PPA amortization | -2.2 | -2.2 |
| Settlement and legal fees of disputes | -0.0 | -0.1 |
| Prague site closure-related costs | - | -32.5 |
| Property damage incidents | -0.3 | - |
| Implementation costs concerning large projects with SaaS cloud computing technology | -1.5 | - |
| EBIT | 104.6 | 54.7 |
Net financial expenses were EUR 16 million (EUR 15 million) in the quarter. The increase was due to higher interest rates. Tax expense was EUR 21 million (EUR 13 million). The increase was due to certain non-deductible costs related to the restructuring program. Profit for the quarter was EUR 68 million (EUR 27 million). Adjusted earnings per share (EPS) was EUR 0.63 (EUR 0.55) and reported EPS EUR 0.62 (EUR 0.24). Adjusted EPS is calculated based on adjusted profit for the period attributable to equity holders of parent company, which excludes EUR -0.7 million (EUR -32.3 million) of IAC.
Adjusted profit and IAC
| EUR million | Q2 2024 | Q2 2023 |
| Adjusted profit for the period attributable to equity holders of the parent company | 65.7 | 57.6 |
| IAC in EBIT | -0.9 | -38.0 |
| IAC in Financial items | 0.3 | 0.0 |
| IAC Tax | 0.7 | 5.7 |
| IAC attributable to non-controlling interest | -0.8 | - |
| Profit for the period attributable to equity holders of the parent company | 65.0 | 25.3 |
Financial review H1 2024
Net sales by business segment
| EUR million | H1 2024 | H1 2023 | Change | |
| Foodservice Europe-Asia-Oceania | 493.4 | 527.1 | -6% | |
| North America | 714.3 | 731.4 | -2% | |
| Flexible Packaging | 661.1 | 677.0 | -2% | |
| Fiber Packaging | 176.7 | 173.0 | 2% | |
| Elimination of internal sales | -4.2 | -9.6 | ||
| Group | 2,041.4 | 2,098.8 | -3% |
Comparable net sales growth by business segment
| H1 2024 | H1 2023 | H1 2022 | |
| Foodservice Europe-Asia-Oceania | -6% | 8% | 18% |
| North America | -2% | 1% | 19% |
| Flexible Packaging | 1% | -8% | 19% |
| Fiber Packaging | 2% | 11% | 12% |
| Group | -2% | 0% | 18% |
The Group’s net sales decreased by 3% to EUR 2,041 million (EUR 2,099 million) during the reporting period, and comparable net sales growth was -2%. Demand continued to be muted by the impact of inflation and boycotts of global brands in certain markets. Net sales were weighed on by changes in currencies and lower pricing. Comparable sales growth in emerging markets was -3%. Foreign currency translation impact on the Group’s net sales was EUR -23 million (EUR -39 million) compared to 2023 exchange rates.
Adjusted EBIT by business segment
| Items affecting comparability | |||||
| EUR million | H1 2024 | H1 2023 | Change | H1 2024 | H1 2023 |
| Foodservice Europe-Asia-Oceania | 45.3 | 46.2 | -2% | -11.4 | -2.0 |
| North America | 100.9 | 87.9 | 15% | -3.5 | -0.0 |
| Flexible Packaging | 42.5 | 37.3 | 14% | -5.3 | -39.4 |
| Fiber Packaging | 20.4 | 19.8 | 3% | -1.5 | -1.1 |
| Other activities | -4.8 | -6.5 | -0.4 | -0.2 | |
| Group | 204.3 | 184.8 | 11% | -22.1 | -42.7 |
Adjusted EBIT margin by business segment
| H1 2024 | H1 2023 | H1 2022 | |
| Foodservice Europe-Asia-Oceania | 9.2% | 8.8% | 9.4% |
| North America | 14.1% | 12.0% | 11.3% |
| Flexible Packaging | 6.4% | 5.5% | 7.3% |
| Fiber Packaging | 11.6% | 11.4% | 10.9% |
| Group Total | 10.0% | 8.8% | 9.1% |
The Group’s adjusted EBIT increased to EUR 204 million (EUR 185 million) and reported EBIT was EUR 182 million (EUR 142 million). Adjusted EBIT increased by 11% supported by lower raw material, transportation and energy costs and the company’s actions to improve profitability. On the other hand, lower sales prices and the increase in labor costs had a negative impact on profitability. The Group’s adjusted EBIT margin increased and was 10.0% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR -2 million (EUR -2 million).
Adjusted EBIT excludes EUR -22.1 million (EUR -42.7 million) of items affecting comparability (IAC), including costs of implementing operational efficiency measures.
Adjusted EBIT and IAC
| EUR million | H1 2024 | H1 2023 |
| Adjusted EBIT | 204.3 | 184.8 |
| Acquisition related costs | -1.1 | -0.3 |
| Restructuring gains and losses, including writedowns of related assets | -13.0 | -5.3 |
| PPA amortization | -4.4 | -4.4 |
| Settlement and legal fees of disputes | -0.1 | -0.1 |
| Prague site closure-related costs | - | -32.5 |
| Property damage incidents | -0.8 | - |
| Implementation costs concerning large projects with SaaS cloud computing technology | -2.7 | - |
| EBIT | 182.2 | 142.1 |
Net financial expenses were EUR 37 million (EUR 34 million). The increase was due to higher interest rates and other financing costs. Tax expense was EUR 39 million (EUR 29 million). The effective tax rate was 27% (26%). The increase was due to certain non-deductible costs related to the restructuring program. Profit for the period was EUR 106 million (EUR 79 million). Adjusted earnings per share (EPS) were EUR 1.17 (EUR 1.06) and reported EPS EUR 0.97 (EUR 0.72). Adjusted EPS is calculated based on adjusted profit for the period attributable to equity holders of parent company, which excludes EUR -21.6 million (EUR -36.2 million) of IAC.
Adjusted profit and IAC
| EUR million | H1 2024 | H1 2023 |
| Adjusted profit for the period attributable to equity holders of the parent company | 122.9 | 111.0 |
| IAC in EBIT | -22.1 | -42.7 |
| IAC in Financial items | -0.2 | -0.4 |
| IAC Tax | 1.4 | 6.9 |
| IAC attributable to non-controlling interest | -0.8 | - |
| Profit for the period attributable to equity holders of the parent company | 101.2 | 74.8 |
Outlook for 2024 (unchanged)
The Group’s trading conditions are expected to improve compared to 2023. Volatility in the operating environment is expected to continue, while Huhtamaki's diversified product portfolio provides resilience. The company’s initiatives, which include the ongoing savings and efficiency program are expected to support the company’s performance. The Group’s good financial position enables addressing profitable growth opportunities.
Teleconference
Huhtamaki will arrange a combined audiocast and teleconference on July 25, 2024 at 9:30 EEST. Huhtamaki’s CEO & President Charles Héaulmé and CFO Thomas Geust will present the results, followed by a Q&A session. The event will be held in English, and it can be followed in real-time.
A link to the audiocast is available at: https://huhtamaki.videosync.fi/q2-2024/
A link to the teleconference is available at: https://palvelu.flik.fi/teleconference/?id=50048358. Registration is required for the teleconference. After the registration you will be provided with phone numbers and a conference ID to access the conference.
An on-demand replay of the audiocast will be available shortly after the end of the call at www.huhtamaki.com/investors
Financial reporting in 2024
In 2024, Huhtamaki will publish financial information as follows:
Interim Report, January 1 - September 30, 2024 - October 24
This is a summary of Huhtamäki Oyj's Half-yearly Report January 1-June 30, 2024. The complete report is attached to this release and is also available at the company website at: www.huhtamaki.com/investors
For further information, please contact:
Kristian Tammela, VP, Investor Relations, tel. +358 10 686 7058
HUHTAMÄKI OYJ
Global Communications
About Huhtamaki
Huhtamaki is a leading global provider of sustainable packaging solutions for consumers around the world. Our innovative products protect on-the-go and on-the-shelf food and beverages, and personal care products, ensuring hygiene and safety, driving accessibility and affordability, and helping 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. Our blueloopTM sustainable packaging solutions are world-leading and designed for circularity.
We are a participant in the UN Global Compact, Huhtamaki is rated ‘A’ on the MSCI ESG Ratings assessment and EcoVadis has awarded Huhtamaki with the Gold medal for performance in sustainability. To play our part in managing climate change, we have set science-based targets that have been approved and validated by the Science-Based Targets initiative.
With 100 years of history and a strong Nordic heritage we operate in 37 countries and 107 operating locations around the world. Our values Care Dare Deliver guide our decisions and help our team of around 18 000 employees make a difference where it matters. Our 2023 net sales totalled EUR 4.2 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 at www.huhtamaki.com.