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Huhtamäki Oyj’s Interim Report January 1–March 31, 2021: Improved profitability with a gradual recovery in demand

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HUHTAMÄKI OYJ INTERIM REPORT 22.4.2021 AT 8:30

Huhtamäki Oyj’s Interim Report January 1–March 31, 2021: Improved profitability with a gradual recovery in demand

Q1 2021 in brief

  •      Net sales decreased 5% to EUR 802 million (EUR 845 million)
  •      Adjusted EBIT was EUR 77 million (EUR 74 million); reported EBIT was EUR 72 million (EUR 83 million)
  •      Adjusted EPS was EUR 0.49 (EUR 0.46); reported EPS was EUR 0.45 (EUR 0.53)
  •      Comparable net sales growth was -0% at Group level and 4% in emerging markets
  •      The impact of currency movements was EUR -46 million on the Group’s net sales and EUR -5 million on EBIT

Key  figures

EUR millionQ1 2021Q1 2020Change2020
Net sales801.9844.6-5%3,301.8
Comparable net sales growth-0%3%-2%
Adjusted EBITDA1117.8117.01%473.1
Margin114.7%13.9%14.3%
EBITDA114.8130.1-12%464.5
Adjusted EBIT277.073.65%302.1
Margin29.6%8.7%9.1%
EBIT71.682.6-13%265.3
Adjusted EPS30.490.467%1.95
EPS, EUR0.450.53-14%1.69
Adjusted ROI211.7%12.1%11.7%
Adjusted ROE314.9%15.0%14.8%
ROI9.8%12.1%10.3%
ROE12.3%15.1%12.9%
Capital expenditure33.039.4-16%223.5
Free Cash Flow7.6-24.5>100%207.1
1Excluding IAC of-3.013.1-8.6
2Excluding IAC of-5.38.9-36.8
3Excluding IAC of-4.16.9-26.2

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

"The COVID-19 pandemic continued to affect the global food packaging market and the uncertainty around the pandemic remains visible in most markets. Huhtamaki’s business has remained resilient with solid demand for food on-the-shelf products, however food on-to-go has continued to be burdened by restrictions and lockdowns. The ongoing vaccination roll-out and easing of some of the restrictions has led to visible improvement.

In this context, the first quarter of 2021 was satisfactory for Huhtamaki. Despite the uncertainty in the global economy, demand for foodservice, though still below normal, has continued to gradually recover. Our net sales amounted to EUR 802 million for the quarter, with comparable net sales growth flat versus last year. The adjusted EBIT margin increased by 0.9 p.p. to 9.6% in the first quarter, particularly driven by favorable sales mix and continued focus on operational efficiency. Movement in currencies had a negative impact on net sales during the quarter. Our balance sheet position remained strong supporting our growth strategy.

We remain focused on the execution of our 2030 Strategy. Throughout the crisis Huhtamaki has been preparing for the new post-pandemic normal, including the implementation of actions to improve our competitiveness as well as investments for expansion and innovation in sustainable products and solutions. We recently launched our award-winning Future Smart fiber lids, replacing plastic lids. These new fiber lids made of renewable material are recyclable and compostable. We are also accelerating our focus on digitalization as an enabler and connector of our strategic priorities. Digitalization will create value in our internal operations and external value chain – including driving the necessary efficiency in circularity systems."

Financial review Q1 2021 

Net sales by business segment

EUR millionQ1 2021Q1 2020Change
Foodservice Europe-Asia-Oceania207.4217.6-5%
North America256.0286.2-11%
Flexible Packaging267.1271.0-1%
Fiber Packaging78.674.55%
Elimination of internal sales-7.1-4.6
Group801.9844.6-5%

Comparable net sales growth by business segment

Q1 2021Q4 2020Q3 2020Q2 2020Q1 2020
Foodservice Europe-Asia-Oceania-2%-7%-1%-28%-4%
North America-2%-2%4%-5%9%
Flexible Packaging0%0%1%2%2%
Fiber Packaging4%8%7%10%9%
Group-0%-2%2%-8%3%


The Group’s net sales decreased 5% to EUR 802 million (EUR 845 million) during the quarter. Comparable net sales growth was -0%. Demand for foodservice products was negatively impacted by the COVID-19 pandemic, whereas demand for food on-the-shelf products continued to be solid. Growth was strongest in the Fiber Packaging segment, following COVID-19 driven boost in the in-house consumption trend. Strong demand continued in retail tableware in North America. Comparable sales growth in emerging markets was 4%. Foreign currency translation impact on the Group’s net sales was EUR -46 million (EUR 10 million) compared to 2020 exchange rates.

Adjusted EBIT by business segment

Items affecting comparability
EUR millionQ1 2021Q1 2020ChangeQ1 2021Q1 2020
Foodservice Europe-Asia-Oceania17.617.51%-4.2-1.6
North America31.230.42%--3.4
Flexible Packaging21.720.94%-1.1-4.7
Fiber Packaging9.58.215%0.0-0.7
Other activities-3.0-3.4-0.019.3
Group77.073.65%-5.38.9


Adjusted EBIT margin by business segment

Q1 2021Q4 2020Q3 2020Q2 2020Q1 2020
Foodservice Europe-Asia-Oceania8.5%7.3%9.4%3.7%8.0%
North America12.2%11.8%12.7%12.8%10.6%
Flexible Packaging8.1%7.2%8.5%7.3%7.7%
Fiber Packaging12.1%14.8%11.1%11.2%11.0%
Group9.6%9.0%10.1%8.8%8.7%


The Group’s adjusted EBIT increased to EUR 77 million (EUR 74 million) and reported EBIT was EUR 72 million (EUR 83 million). Adjusted EBIT improved following favorable sales mix and continued focus on operational efficiency. The Group’s adjusted EBIT margin improved and was 9.6% (8.7%). Foreign currency translation impact on the Group’s earnings was EUR -5 million (EUR 1 million).

Adjusted EBIT excludes EUR -5.3 million (EUR 8.9 million) of items affecting comparability (IAC).

Adjusted EBIT and IAC

EUR millionQ1 2021Q1 2020
Adjusted EBIT77.073.6
Acquisitions-0.3-0.2
Restructuring costs including write-downs of related assets-5.0-11.1
Settlement of industrial dispute-0.0-
One-time gain from acquisition of Laminor-20.2
EBIT71.682.6


Net financial expenses were EUR 8 million (EUR 9 million). Tax expense was EUR 15 million (EUR 16 million). The corresponding tax rate was 23% (23%). Profit for the first quarter was EUR 48 million (EUR 57 million). Adjusted earnings per share (EPS) was EUR 0.49 (EUR 0.46) and reported EPS EUR 0.45 (EUR 0.53). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -4.1 million (EUR 6.9 million) of IAC.

Adjusted profit and IAC

EUR millionQ1 2021Q1 2020
Adjusted profit for the period attributable to equity holders of the parent company51.147.9
IAC in EBIT-5.38.9
Taxes relating to IAC1.2-2.0
Profit for the period attributable to equity holders of the parent company47.054.9


Significant events after the reporting period

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 currently 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 is EUR 27 million. The acquisition is expected to be completed by the end of the third quarter 2021, following the fulfillment of certain customary closing conditions, after which the business will be reported as part of the Foodservice Europe-Asia-Oceania reporting segment.

Outlook for 2021

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.

Annual General Meeting 2021

The Annual General Meeting of Shareholders (AGM) will be held on Thursday, April 22, 2021 with exceptional meeting procedures based on the Finnish temporary legislative act to limit the spread of the COVID-19 pandemic (677/2020). The AGM will be held without the presence of shareholders or their representatives in order to ensure the health and safety of the Company‘s shareholders, personnel and other stakeholders. After the AGM, shareholders will be provided with an opportunity to follow a webcast where the Chairman of the Board and the President & CEO will address topical themes of the Company.

Financial reporting in 2021

In 2021, Huhtamaki will publish financial information as follows:

Half-yearly Report, January 1 − June 30, 2021                   July 22
Interim Report, January 1 − September 30, 2021               October 21

This is a summary of Huhtamäki Oyj's Interim Report January 1 - March 31, 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:
Thomas Geust, CFO, +358 10 686 7880

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 Silver 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 18,100 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.

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