Huhtamaki roadshow presentation. Investor Relations Q4 2008

Transcription

1 Huhtamaki roadshow presentation Investor Relations Q4

2 Huhtamaki in brief A leading consumer and specialty packaging company with head office in Espoo, Finland Net sales EUR 2.3 billion in 65 manufacturing units and several sales offices in 35 countries worldwide 14,600 employees Share listed on the NASDAQ OMX Helsinki Ltd on the Nordic Mid Cap list under the Materials sector Market capitalization EUR 464 million at year-end 2

3 Strategic direction Huhtamäki Oyj focuses on packaging operations where it has a competitive advantage, good market positions and which create value for the company and its customers. Huhtamaki has a good position in smooth and rough molded fiber products, release films, flexible packaging, foodservice paper cups and other products based on paper forming technology. In these operations Huhtamaki has strong know-how, technology platforms and business concepts that allow continued competitive advantage. 3

4 Products Flexibles Global Films Global North America Rough Molded Fiber Global Foodservice Europe-Asia-Oceania Rigid Consumer Goods Plastics* Food and pet food packaging Non-food consumer packaging Technical applications Chinet Disposable tableware Frozen dessert packaging Egg and fruit packaging Protective packaging Packaging including hot and cold beverage cups, food containers, lids Disposable tableware Packaging for: Dairy Fresh food Ice cream BioWare Edible fats * Under strategic review 4

5 Customers Flexibles Global Films Global North America Rough Molded Fiber Global Foodservice Europe-Asia-Oceania Rigid Consumer Goods Plastics* Food and pet food manufacturers, hygiene & health care industry Label-, graphic arts-, adhesive tapes-, hygiene & health care, building & construction and automotive industries Retail, foodservice operators, fast food restaurants and food manufacturers Fresh product manufacturers Foodservice operators, fast food restaurants and retail Food and other consumer goods manufacturers * Under strategic review 5

6 Raw materials Flexibles Global Films Global North America Rough Molded Fiber Global Foodservice Europe-Asia-Oceania Rigid Consumer Goods Plastics* Films, alufoil, polymers, paper Polymers, biopolymers, paper Post-industrial recycled fiber, cartonboard, paper, polymers Post-industrial recycled paper, postconsumer recycled paper Cartonboard, paper, post-industrial recycled paper, biopolymers and polymers Cartonboard, paper, polymers and biopolymers Other, 14% Recycled paper, 4% Alufoil, 4% Polymers, 35% Utilities, 11% Films, 14% Carton board and other paper, 18% Total annual spend approximately EUR 1 billion * Under strategic review 6

7 Financial frame Huhtamaki s main financial targets: Return on investment (ROI) at 15% Average dividend payout ratio of 40% Balance sheet structure maintained; long-term gearing target of around 100% is close to the optimal cost of capital Targeted capital expenditure with priority on strongholds Strong free cash flow generation Gearing = net debt to equity 7

8 Group Executive Team Jukka Moisio (Chairman), Chief Executive Officer Timo Salonen, Chief Financial Officer Juha Salonen, SVP, Administration and General Counsel Clay Dunn, EVP, Americas and Rough Molded Fiber Global Suresh Gupta, EVP, Flexibles Global Eric Le Lay, EVP, Foodservice Europe-Asia-Oceania Peter Wahsner, EVP, Films Global 8

9 Shareholders Largest registered shareholders, December 31, Shareholder distribution by sector 1. The Finnish Cultural Foundation 15.3% 2. Huhtamäki Oyj 4.8% 3. Society of Swedish Literature in Finland 4.5% Foreign ownership incl. nominee registered shares 23.8% Non-profit organizations 27.6% 4. Varma Mutual Pension Insurance Company 2.2% 5. Association for the Finnish Cultural 2.0% Foundation 6. OP-Delta Fund 2.0% Other 0.1% Public-sector organizations 8.3% 7. Odin Norden 1.8% 8. The State Pension Fund 1.0% 9. Odin Förvaltning As 1.0% 10. Ilmarinen Mutual Pension Insurance Company 0.8% Financial & insurance companies 10.2% Private companies 10.6% Households 19.4% Total 10 largest shareholders 35% Others 65% Total 100% There were 22,089 registered shareholders at the end of December. The total number of outstanding shares was 105,487,550 including 5,061,089 Company s own shares. 9

10 Corporate responsibility Signatory of the ICC Business Charter for Sustainable Development. International Chamber of Commerce Share included in the Kempen/SNS Smaller Europe SRI Index since Huhtamaki was the first to launch a complete range of compostable tableware in Europe. The BioWare family was launched in

11 Results

12 Group overview Full year and Q4 EUR million 2007 Q4 Q Net sales 2,260 2, EBIT excl. non-recurring charges EBIT % EBIT EPS ROI % (12m roll.) Growth achieved in constant currencies Raw material, energy and distribution costs remained high with a rapid drop at year-end Reported earnings negative due to non-recurring charges; weak operational performance especially in Flexibles and Films Global Strong cash flow improvement and significant net debt reduction

13 Group overview Highlights in Key focus areas for were: Price management Actions / achievements: Favorable price/mix development Cash generation and net debt reduction Free cash flow MEUR 104, net debt reduced by MEUR 162 Capitalize on earlier made investments Targeted allocation with capital expenditure at MEUR 74; work will continue in 2009 Progress with strategic review and actions Stronghold areas identified, loss-making units addressed, new organizational layout, new reporting segments for

14 Group overview Strategic actions in Closure of rigid plastic facility in Phoenix, USA One-time charge in Q4 ~ MEUR 5 Closure by end of first half 2009 Discontinuation of UK Consumer Goods rigid plastic production in Portadown and in Gosport Closure of rigid packaging site in Karlholmsbruk, Sweden Completed year-end Reconstruction of flexible packaging facility in Thane, India Partially operational at year-end New rigid packaging facility to Guangzhou, China Completed Q2 Discontinuation of flexible packaging operations in Malvern, USA One-time charge in Q4 ~ MEUR 18 Malvern facility focus on Films Closure by end of Q New flexible packaging facility to Bangkok, Thailand Completed Q3 Strategic review of rigid plastic consumer goods Annual revenue ~ MEUR 400 Separate reporting segment as of January 1,

15 Business review 15

16 Flexibles and Films Global Full year and Q4 EUR million Net sales EBIT excl. non-recurring charges EBIT % EBIT RONA % (12m roll.) Q Flexibles sales weak in Europe and North America all year; robust growth in Asia-Oceania until Q4 Films sales recovered in Q2 but declined again at year-end Profitability reflects margin pressure due to higher raw material costs, adverse currency translation impact and unabsorbed manufacturing costs due to inventory reduction Malvern Flexibles operational losses significant in Q

17 Rigid Europe Full year and Q4 EUR million Net sales EBIT excl. non-recurring charges EBIT % EBIT RONA % (12m roll.) Q Q Growth in Foodservice driven by strong performance in Eastern Europe, market softness towards year-end In Consumer Goods market softness continued in Germany and negative impact from discontinued operations in the UK Profitability reflects the benefits from earlier pricing efforts offset by operational inefficiency, adverse currency translation impact, unabsorbed manufacturing costs due to inventory reduction and inventory revaluation in Q4 17

18 Molded Fiber Europe Full year and Q4 EUR million 2007 Q4 Q Net sales EBIT EBIT % RONA % (12m roll.) Sales and earnings remained stable in the reporting period, despite a weaker Q4 Continued favorable development in Eastern Europe Adverse currency translation impact at year-end Decline in machine and waste paper trade businesses 18

19 Rigid and Molded Fiber Americas Full year and Q4 EUR million Net sales EBIT excl. non-recurring charges EBIT % EBIT RONA % (12m roll.) Q Q In Retail positive volume development through promotional activity in H2, in Consumer Goods sales recovery in H2 and in South America good momentum all year; in Foodservice soft demand all year Profitability reflects higher input costs and adverse currency translation impact partially offset by price increases implemented Benefits from reversed trend in raw material prices and currency in Q4 eroded by inventory revaluation and unabsorbed manufacturing costs due to inventory reduction 19

20 Rigid and Molded Fiber Asia-Oceania-Africa Full year and Q4 EUR million Net sales EBIT excl. non-recurring charges EBIT % EBIT RONA % (12m roll.) Q Sales development also in constant currencies unfavorable in the reporting period, despite small growth in Q4 53 Q Sales decline in Oceania and in South Africa due to continued general market softness In Asia, disappointing sales performance as a result of slower than planned generation of new business Profitability reflects low sales, operational inefficiency and adverse currency translation impact

21 Operating cash flow by segment Full year Flexibles & Films Global Rigid Europe Molded Fiber Europe Rigid and MF Americas Rigid and MF AOA Segments total Reduced capital expenditure Working capital optimization, especially inventories 21

22 Financial review 22

23 Income statement Full year and Q4 MEUR 2007 Q4 Q Net sales 2,260 2, EBITDA % 7.6% 10.0% 4.7% 9.1% EBIT *-74.5 *28.1 * *-78.5 % -3.3% 1.2% -26.9% -14.1% Net financial items Income on assoc. co s Result before taxes Taxes Result for the period * *-20.2 * *-82.7 EPS (EUR) Minority interest * Q4 includes non-recurring charges MEUR (MEUR 108.0) and MEUR (MEUR 108.0) All figures at actual currency rates 23

24 Sales development by segment Flexibles & Films Global Rigid Europe Molded Fiber Europe Rigid and MF Americas Rigid and MF AOA Reported net sales growth MEUR (-2.4%) -7.9 MEUR (-1.2%) -1.2 EUR (-0.9%) -1.0 MEUR (-0.2%) MEUR (-10.1%) Comparable net sales growth * +3.4 MEUR (+0.5%) +1.7 MEUR (+0.3%) +3.1 MEUR (+2.3%) MEUR (+6.0%) -3.0 MEUR (-1.3%) * Excluding currency movements & ancillary activities 24

25 Sales development by segment Q4 Q4 Flexibles & Films Global Rigid Europe Molded Fiber Europe Rigid and MF Americas Rigid and MF AOA Reported net sales growth MEUR (-6.3%) MEUR (-6.9%) -3.1 MEUR (-8.4%) MEUR (15.2%) -7.8 MEUR (-12.8%) Comparable net sales growth * -5.8 MEUR (-3.5%) -4.3 MEUR (-2.9%) +0.7 MEUR (+1.9%) MEUR (+9.0%) +1.2 MEUR (+2.0%) * Excluding currency movements & ancillary activities 25

26 Volume growth by segment Full year and Q Q4 Q3 Q2 Q1 Flexibles & Films Global -1.2% 6.5% -4.8% -5.8% 2.0% 3.3% Rigid Europe 0.9% 0.8% 3.4% -2.1% 0.0% 2.8% Molded Fiber Europe 1.2% 0.3% -0.9% 4.5% -1.1% 2.3% Rigid and MF Americas -2.4% -4.2% -0.8% -2.2% -3.6% -3.0% Rigid and MF AOA -2.5% 3.2% -2.9% 1.2% -4.0% -4.1% Group total -1.0% 1.3% -1.1% -2.7% -0.8% 0.8% 26

27 Polymer-based raw material prices January 2005 December Q PS PP PE Including polystyrene (PS), polypropylene (PP), polyethylene (PE); source: ICIS, Huhtamaki 27

28 Balance sheet December 31, MEUR Balance sheet total Operating working capital Net debt Equity + minority Gearing ROI % (12m roll.)* ROE % (12m roll.)* December 1, December , * Includes non-recurring charges; All figures at actual currency rates 28

29 Cash flow Full year and Q4 MEUR 2007 Q4 Q Result for the period* Adjustments* Change in working capital* Net financial items* Taxes* CASH FLOWS FROM OPERATING ACT Capital expenditure* Proceeds from selling fixed and other assets* Change in deposits CASH FLOWS FROM INVESTING Change in loans Dividends paid Hybrid equity CASH FLOWS FROM FINANCING Change in liquid assets FREE CASH FLOW* All figures at actual currency rates 29

30 Net debt development January 2005 December MEUR Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 All figures at actual currency rates 30

31 Financial policies Liquidity and refinancing risk Debt maturity structure, EUR million Aiming to maintain sufficient liquidity reserves as well as diversified debt maturity structure and funding sources Short-term funding backed up by committed facilities Net debt to EBITDA key financing restriction 31

32 Financial policies Interest rate risk Interest rate risk management aims to reduce fluctuation of the interest charge by adjusting debt interest periods in the main borrowing currencies Net debt, MEUR Average interest fixing period, Currency as of December 31, years EUR USD AUD GBP Other Total Average cost of debt was 5.6% as of December (5.7% in December 2007) A 1%-point rise in market interest rates would increase net interest expenses over the following 12 months with approximately EUR 3 million 32

33 Financial policies Currency risk Huhtamaki is exposed to currency translation risk, deriving mainly from the translation of the US operations A 10% appreciation of the EUR vs. the USD would decrease net result before taxes with approximately EUR 2 million Translation risk is hedged selectively by using foreign currency loans and derivatives Currency transaction risk totaling EUR 150 million yearly in various currency pairs Transactional balance sheet exposure, i.e. commercial receivables and payables, is always fully hedged as well as at least 25% of probable flows over a minimum 12-month horizon Transaction risk is hedged by currency forwards and selectively by currency options Currency volatility has increased Note: average EUR/USD rate in ; and in Q1 33

34 Short term use of cash priorities Payment of dividends Debt reduction Possible divestment proceeds also applied to debt reduction Net debt to EBITDA development NET DEBT/EBITDA TARGET CORRIDOR 2.0 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Short-term 34

35 Dividend proposal The Board proposes to the Annual General Meeting that a dividend of EUR 0.34* (EUR 0.42) per share be paid for Dividend per share (EUR) * 35

36 Outlook 36

37 Outlook for 2009 Relatively stable market development expected in 2009 as majority of the Group s segments considered to be of defensive nature, with food and personal care related packaging products At the beginning of the year, costs for polymer based raw materials expected to be lower than the average in Capital expenditure expected to be below MEUR 100 Short-term risks and uncertainties: Volatile raw material and energy prices as well as movements in currency translations are considered to be relevant short-term business risks and uncertainties in the Group s operations Material changes in general economic conditions or in the financial markets could have an adverse effect on the implementation of the Group s strategy and on its business performance and earnings 37

38 Key focus areas in the short-term Pricing and supply chain initiatives Control over costs and capital allocation Continue capitalization of earlier made investments Industrial operations improvement (Six Sigma, lean) Cash generation and net debt reduction Progress with strategic review and actions 38

39 Changes to external reporting in 2009 Current reporting segments adopted from the beginning of modified further to reflect the new stronghold areas New operating segments as of January 1, 2009: Flexibles Global Films Global North America Rough Molded Fiber Global Foodservice Europe-Asia-Oceania Rigid Consumer Goods Plastics First reporting according to new structure in Q published on April 23, 2009 Quarterly proforma report published in early April

40 Scheduled events in 2009 February 10 Results Week 11 Annual Report published on website April 3 Annual General Meeting April 23 Interim Report Q July 23 Interim Report Q October 22 Interim Report Q Updates on the schedule: Investors» Calendar 40

41 Thank you for your attention! Investors