HUHTAMÄKI OYJ INTERIM REPORT. January 1 September 30, 2014

Transcription

1 HUHTAMÄKI OYJ INTERIM REPORT January 1 September 30, 2014 Q1-

2 Huhtamäki Oyj, Interim Report January 1 September 30, 2014 Solid net sales growth in brief Net sales were EUR 613 million (EUR 587 million) EBIT was EUR 45 million (EUR 42 million, excluding NRI of EUR -5 million) EPS was EUR 0.29 (EUR 0.31, excluding NRI) Comparable net sales growth was 6% in total and 9% in emerging markets Significant profitability improvement in the Foodservice Europe-Asia-Oceania, Molded Fiber and Films business segments While net sales growth was satisfactory, the North America business segment did not deliver profitability according to expectations Currency movements had no impact on the Group s net sales Acquisition of Positive Packaging, a flexible packaging company operating in India, United Arab Emirates and Africa, was announced in the beginning of the quarter Q1- in brief Net sales were EUR 1,805 million (EUR 1,774 million) EBIT was EUR 141 million (EUR 129 million, excluding NRI of EUR -13 million) EPS was EUR 0.93 (EUR 0.89, excluding NRI) Comparable net sales growth was 6% in total and 11% in emerging markets Currency movements had a significant negative impact of EUR 58 million on the Group s net sales Key figures EUR million Q Change Q1- Q1-Q Change FY 2013 Net sales % 1, , % 2,342.2 EBITDA* % % EBITDA margin* 11.1% 10.9% 11.5% 11.0% 10.9% EBIT** % % EBIT margin** 7.3% 7.2% 7.8% 7.3% 7.1% EPS**, EUR % % 1.21 ROI** 12.3% 12.1% 12.1% ROE** 16.0% 15.0% 15.8% Capital expenditure % % Free cash flow % % 56.0 * Excluding non-recurring items (NRI) of EUR -3.5 million in Q3 2013, EUR -6.7 million in Q1-Q and EUR million in FY ** Excluding NRI of EUR -5.2 million in Q3 2013, EUR million in Q1-Q and EUR million in FY Unless otherwise stated, all comparisons in this report are compared to the corresponding period in ROI, ROE and RONA figures presented in this report are calculated on a 12-month rolling basis. 2

3 Jukka Moisio, CEO: The 6% comparable net sales growth that was achieved is a satisfactory result in the current economic climate and shows that we are making steady progress towards our growth targets. General economic uncertainty is reflected particularly in the emerging markets with the pace of growth slowing down to 9% (12% in the previous quarter), but there is a big variation from country to country. Our profitability for the quarter, however, did not meet our expectations and particularly the performance in the North America segment should have been better. The growth pace of the segment is good, but we need to work to get the profitability back on track. We are taking action to improve these results. At the same time, distribution costs and raw material prices are putting pressure on the segment s margins. The results of the restructuring actions taken in the Foodservice Europe-Asia-Oceania segment during 2013 are visible in the segment s profitability. Strong performance continued also in the Molded Fiber segment, while the profitability of the Flexible Packaging segment was negatively impacted by increased raw material costs and continued strong competition in emerging markets. It is pleasing to see the strong net sales growth and profitability improvement in the Films segment, even though the segment s future as part of Huhtamaki is being evaluated as a result of our growing focus on consumer food packaging. Our financial position remains solid. While we invest heavily to support our customers growth in emerging markets, we also continue to focus on working capital management in order to optimize our cash flows. This combined with the actions we are taking to improve the performance of our North America segment, allows us to progress well towards our strategic targets and mid-term financial ambitions. 3

4 Financial review The Group s comparable net sales growth was 6% during the quarter. The growth was strongest in Molded Fiber, Films and Flexible Packaging business segments. Comparable growth in the emerging markets was 9%. The growth in emerging markets was driven by good volume development especially in Eastern Europe and South Asia, whereas net sales development in China turned negative. The Group s reported net sales were EUR 613 million (EUR 587 million). There was no impact on the Group s net sales from foreign currency translations compared to the 2013 exchange rates. NET SALES BY BUSINESS SEGMENT EUR million Q Change Of Group in Foodservice Europe-Asia-Oceania % 26% North America % 31% Flexible Packaging % 25% Molded Fiber % 10% Films % 8% Excluding internal sales eliminations of EUR -6.2 million in and EUR -5.7 million in Q COMPARABLE GROWTH BY BUSINESS SEGMENT Q Q Q Foodservice Europe-Asia-Oceania 4% 5% 3% 3% North America 4% 10% 3% 6% Flexible Packaging 6% 4% 7% 9% Molded Fiber 9% 10% 10% 10% Films 9% 10% 9% 2% Group 6% 7% 5% 6% The Group s earnings development in constant currencies continued strong, with particularly strong performance by the Foodservice Europe-Asia-Oceania and Films business segments. In the North America business segment earnings developed negatively. In constant currencies the earnings before interest and taxes (EBIT) grew by 7%. The Group s EBIT was EUR 45 million (EUR 42 million, excluding NRI of EUR -5 million). EBIT BY BUSINESS SEGMENT EUR million Q Change Of Group in Foodservice Europe-Asia-Oceania % 34% North America % 17% Flexible Packaging % 23% Molded Fiber % 16% Films % 10% Excluding Other activities EBIT EUR -1.8 million in and EUR 0.6 million in Q Foodservice Europe-Asia-Oceania EBIT excluding NRI of EUR -5.2 million in Q Net financial expenses were EUR 8 million (EUR 7 million). Tax expense was EUR 6 million (EUR 3 million). 4

5 Profit for the period was EUR 31 million (EUR 27 million). There were no NRI reported during the quarter, whereas profit for the third quarter of 2013 includes NRI of EUR -5 million. Earnings per share (EPS) were EUR 0.29 (EUR 0.31 excluding NRI or EUR 0.26 reported). 5

6 Financial review Q1- The Group s comparable net sales growth was 6% during the period. In the emerging markets comparable growth was 11%, with Eastern European markets continuing to show fastest growth. The Group s reported net sales were EUR 1,805 million (EUR 1,774 million). The negative foreign currency translation impact on Group s net sales, related to currency movements during the first half of the year, was EUR 58 million compared to the 2013 exchange rates. The largest negative impact came from the US dollar, Russian ruble and Indian rupee. NET SALES BY BUSINESS SEGMENT EUR million Q1- Q1-Q Change Of Group in Q1- Foodservice Europe-Asia-Oceania % 26% North America % 31% Flexible Packaging % 25% Molded Fiber % 10% Films % 8% Excluding internal sales eliminations of EUR million in Q1- and EUR million in Q1-Q The Group s earnings development in constant currencies was strong, with all business segments except North America contributing to the earnings growth. Earnings growth was strongest in the Foodservice Europe-Asia-Oceania, Films and Molded Fiber business segments. Main reasons for the positive development were volume growth, disciplined cost containment and the positive effect of successful restructuring activities taken during EBIT in constant currencies grew by 10%. The Group s EBIT was EUR 141 million (EUR 129 million, excluding NRI of EUR -13 million). Negative foreign currency translation impact on Group s EBIT, resulting from currency movements during the first half of the year, was EUR 4 million. EBIT BY BUSINESS SEGMENT EUR million Q1- Q1-Q Change Of Group in Q1- Foodservice Europe-Asia-Oceania % 31% North America % 21% Flexible Packaging % 23% Molded Fiber % 17% Films % 8% Excluding Other activities EBIT EUR -2.7 million in Q1- and EUR -0.2 million in Q1-Q Foodservice Europe-Asia- Oceania EBIT excluding NRI of EUR million in Q1-Q Net financial expenses increased and were EUR 23 million (EUR 21 million). The increase was due to a higher amount of external debt compared to the previous year as a result of the fixed rate unsecured bond issued in the second quarter of Tax expense was EUR 19 million (EUR 13 million). The corresponding tax rate was 16% (14%). Profit for the period was EUR 99 million (EUR 82 million). There were no NRI reported during the period, whereas the profit for the corresponding period in 2013 includes NRI of EUR -13 million. EPS was EUR 0.93 (EUR 0.89 excluding NRI or EUR 0.77 reported). 6

7 STATEMENT OF FINANCIAL POSITION AND CASH FLOW The Group s net debt was EUR 471 million (EUR 421 million) at the end of the period. This corresponds to a gearing ratio of 0.53 (0.53). Net debt to EBITDA ratio (excl. NRI) was 1.8 (1.7). Average maturity of external committed credit facilities and loans was 2.7 (3.6) years. Cash and cash equivalents were EUR 191 million (EUR 220 million) at the end of the period and the Group had EUR 320 million (EUR 310 million) of unused committed credit facilities available. The Group s liquidity position remained strong. Total assets on the statement of financial position were EUR 2,282 million (EUR 2,157 million). Capital expenditure was EUR 77 million (EUR 82 million). Significant business expansion investments were made in Eastern Europe, South Asia and South America. The Group s free cash flow was EUR 11 million (EUR 38 million). Working capital management has been in focus especially during the latter part of the period. Improvements in inventory levels accelerated towards the end of the period, but were not sufficient to offset the negative impact of increased receivables on cash flow. Acquisitions and divestments On August 29, 2014 Huhtamaki acquired a folded carton packaging manufacturer Interpac Packaging Limited based in Auckland, New Zealand. The acquired unit became part of the Foodservice Europe- Asia-Oceania business segment and has been consolidated in the Group s financial statements as of September 1, On July 18, 2014 it was announced that as a result of Huhtamaki s growing strategic focus on food packaging the options regarding the Group s Films business are being evaluated. One possible outcome of this evaluation is the divestment of the Films business segment. The evaluation is in process. On July 8, 2014 Huhtamaki entered into an agreement to acquire Positive Packaging, a privately owned flexible packaging company with nine manufacturing facilities in India and the United Arab Emirates as well as significant business in Africa and other export markets. With the acquisition Huhtamaki continued to implement its strategy of quality growth and strengthen its position in the fast-growing emerging markets. The transaction is subject to the approval of competition authorities and other regulators and it is expected to be finalized during The business will become part of the Group s Flexible Packaging business segment. On February 21, 2014, Huhtamäki Oyj s fully owned subsidiary increased its shareholding in the Indian subsidiary Huhtamaki PPL Limited from 60.8% to 63.9% by acquiring the remaining shares of the former promoter family. Subsequently the joint venture agreement between Huhtamaki and the former promoter family was terminated. In August 2014, the shareholding in Huhtamaki PPL Limited was further increased to 68.8% subsequent to a directed share issue. 7

8 Business review by segment FOODSERVICE EUROPE-ASIA-OCEANIA Foodservice paper and plastic disposable tableware, such as cups, is supplied to foodservice operators, fast food restaurants and coffee shops. The segment has production in Europe, South Africa, Middle East, Asia and Oceania. EUR million Q Change Q1- Q1-Q Change FY 2013 Net sales % % EBIT* % % 46.9 EBIT margin* 10.0% 7.2% 9.6% 7.3% 7.5% RONA* 17.6% 13.3% 13.9% Capital expenditure % % 16.8 Operating cash flow % % 55.9 * Excluding NRI of EUR -2.7 million in Q3 2013, EUR million in Q1-Q and EUR million in FY Demand for foodservice packaging across all markets was relatively stable and accelerated towards the end of the quarter. Strong demand for double-wall hot cups continued in all markets. Despite the fragile economic situation in Russia, demand for foodservice packaging products in Eastern Europe was good, led by the very strong quick service restaurant (QSR) sector. The demand for QSR packaging was solid also in Southern and Western Europe. The Foodservice Europe-Asia-Oceania segment s net sales continued to develop positively. Comparable growth was 4%. Net sales growth was strongest in Eastern Europe and the positive momentum in Oceania continued. Net sales development in North Asia was negative, primarily due to certain planned changes in the customer portfolio, with a target to improve overall profitability, as well as soft demand in China. For the third quarter of 2013 the segment s net sales included EUR 11 million sales of the plastics unit in Italy that was divested during the fourth quarter of The negative effect of the divestment on the segment s net sales was partially offset by the positive contribution of the unit acquired in the UK during the fourth quarter of 2013 as well as the unit acquired in New Zealand during the quarter. There was no foreign currency translation impact on the segment s reported net sales. The segment s earnings grew significantly. Strong earnings growth was a result of favorable product and geographic mix as well as good control of input and operational costs combined with the effect of the successful restructuring actions taken in Germany and the Nordic countries during In addition, the unit acquired in the UK and divestment of the loss-making plastics unit in Italy during the fourth quarter of 2013 had a positive contribution on earnings. Q1- Demand for foodservice packaging remained stable across markets throughout the period. In Eastern Europe demand continued strong despite the increasingly fragile economic situation in Russia. Strongest performing product categories were hot cups and matching lids. The Foodservice Europe-Asia-Oceania segment s net sales developed positively with comparable growth being 4%. Net sales growth was strongest in Eastern Europe, whereas in Central Europe net sales declined as a result of declining volumes of plastic containers. In the first nine months of 2013 the segment s net sales included EUR 33 million sales of the plastics unit in Italy that was divested during the fourth quarter of The negative effect of the divestment on the 8

9 segment s net sales was partially offset by the positive contribution of the unit acquired in the UK during the fourth quarter of 2013 as well as the unit acquired in New Zealand during the third quarter of The segment s reported net sales were negatively affected by adverse currency movements during the first half of the year. The translation impact was EUR -15 million. The segment s earnings grew significantly. The positive earnings development was due to volume growth, favorable product mix, overall operational efficiency and the effect of the successful restructuring actions taken during 2013, as well as the positive contribution of the unit acquired in the UK during the fourth quarter of Favorable product mix development is a result of the continued growth of the core product range volumes, systematic extension of product portfolio and the lower share of low-margin plastic items. 9

10 NORTH AMERICA The North America segment serves local markets with Chinet disposable tableware products, foodservice packaging products, as well as ice-cream containers and other consumer goods packaging products. The segment has production in the United States and Mexico. EUR million Q Change Q1- Q1-Q Change FY 2013 Net sales % % EBIT % % 38.4 EBIT margin 4.1% 5.8% 5.3% 6.1% 5.3% RONA 6.7% 9.1% 8.0% Capital expenditure % % 66.7 Operating cash flow % % The U.S. economy moved towards more normal conditions during the quarter compared to the first half of the year. While the positive trend in the overall economy had a favorable impact on retail sales, it also increased pressure on raw material costs, especially for paperboard and smooth molded fiber products. Demand for private label tableware and foodservice packaging was solid. Ingredient costs for ice cream remained on a high level, resulting in low promotional activity for consumers and soft demand for frozen dessert packaging. The North America segment s net sales continued to grow, as the expansion of retail tableware and foodservice businesses progressed according to plan. Comparable growth was 4%. Net sales growth continued strongest in private label tableware for the retail trade, particularly in pressed paperboard plates. Sales to national foodservice operators also developed favorably with increased paper cup volumes. Sales of packaging for frozen desserts declined. There was no foreign currency translation impact on the segment s reported net sales. The segment s earnings declined reflecting margin compression arising from the ongoing raw material and distribution cost escalation together with lower sales of frozen dessert packaging. In addition, the impact of the longer-term shift in the segment s product portfolio is visible in earnings through increased costs related to commercialization of new business. Q1- After a weak start to the year the overall economic activity in the US normalized during the second and third quarters, having a positive effect on both retail trade as well as restaurant visits. Increasing costs and capacity pressures in both distribution and raw materials were common themes throughout the period. The North America segment s comparable net sales grew by 6%. Net sales growth was strongest in private label tableware for the retail trade and sales to national foodservice operators. Sales of Chinet branded tableware also continued favorably, whereas sales of packaging for frozen desserts declined. The segment s reported net sales were negatively affected by adverse currency movements during the first half of the year. The translation impact was EUR -17 million. The segment s earnings declined as a result of costs that increased throughout the period. In addition, the negative earnings impact of the longer-term shift in the segment s product portfolio is now visible through costs related to commercialization of new business and associated production optimization. Earnings were positively affected by a EUR 8 million one-time gain related to a redesign of a pension plan during the first half of the year. 10

11 FLEXIBLE PACKAGING Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Asia and South America. EUR million Q Change Q1- Q1-Q Change FY 2013 Net sales % % EBIT % % 44.0 EBIT margin 7.0% 7.4% 7.2% 7.6% 7.5% RONA 13.0% 13.2% 13.3% Capital expenditure % % 15.6 Operating cash flow % % 34.8 Overall demand for flexible packaging was relatively stable. In Asia demand for flexible packaging continued to be on a good level, whereas demand in Europe continued to be soft. Raw material prices were relatively stable in Europe, while in India the depreciation of Rupee led to moderate increase in raw material prices. Competition remained strong across the markets. The Flexible Packaging segment s comparable net sales grew by 6%. Net sales growth was strongest in Asia, driven by volume growth particularly in packaging for personal care as well as food and beverages. In Europe, net sales development was flat as the good development of beverage packaging was not sufficient to offset the sluggish development in the ice cream and confectionery packaging. Currency movements had a minor positive impact on the segment s reported net sales. The translation impact was EUR 1 million. In constant currencies the segment s earnings development was flat. Main reasons for the unsatisfactory profitability development were fierce competition in most markets as well as increasing raw material costs in emerging markets. Q1- Overall demand for flexible packaging was relatively stable. Good market sentiment in Asia continued while the markets in Europe softened during the period. Raw material prices were stable in Europe and Asia, but started to increase moderately in India towards the end of the period. Competitive activity was strong in all markets. The Flexible Packaging segment s comparable net sales grew by 6%, driven by healthy volume growth in Asia throughout the period. Strong volume growth in Europe in the first quarter also contributed to the net sales growth. Sales growth was strongest in personal care and beverage packaging. Adverse currency movements during the first half of the year had a negative impact on the segment s reported net sales. The translation impact was EUR -16 million. In constant currencies the segment s earnings development was slightly positive, mainly due to volume growth in Europe in the first quarter. Competitive pressure and increasing raw material costs in Asia had a negative effect on the segment s earnings. Earnings were somewhat negatively impacted by adverse currency movements during the first half of the year. 11

12 MOLDED FIBER Recycled molded fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production in Europe, Oceania, Africa and South America. EUR million Q Change Q1- Q1-Q Change FY 2013 Net sales % % EBIT % % 29.6 EBIT margin 12.2% 11.2% 13.6% 11.8% 12.5% RONA 20.1% 16.7% 18.2% Capital expenditure % % 18.9 Operating cash flow % % 21.0 In Europe, solid demand for molded fiber packaging continued, driven by customers decision to shift from plastics based egg packaging to molded fiber packaging especially in Eastern and Southern Europe. Demand for cup carriers was also good throughout the summer months across Europe. In Russia, egg prices stabilized after the decrease in the second quarter and supported the demand for egg cartons. Market conditions in Africa and South America were also favorable, whereas there was some market softness in Australia. The Molded Fiber segment s comparable net sales growth was strong being 9%. Growth was strongest in Central and Eastern Europe, including Russia. Customers preference for molded fiber egg packaging over plastics based packaging increased volumes in Southern Europe. The segment s long term focus on new product development continued to affect the top line development positively. There was no foreign currency translation impact on the segment s reported net sales. The segment s robust earnings development was driven by solid volume growth, good cost containment and strong operational performance. Q1- Positive demand development for molded fiber packaging in Europe was driven by customers moving from plastics based egg packaging to molded fiber packaging. During the first half of the year, a favorable apple season in New Zealand had a positive impact on the demand for molded fiber fruit packaging, whereas in Australia a hen disease impacted negatively the availability of eggs and consequently the demand for egg packaging. The Molded Fiber segment s capacity utilization remained high, even though competitive activity was strong during the period. The Molded Fiber segment s comparable net sales growth was strong being 9%, led by the Eastern European markets. In Southern Europe customers preference for molded fiber packaging increased the net sales. Favorable product mix also contributed to the net sales growth. The segment s reported net sales were negatively impacted by adverse currency movements during the first half of the year. The translation impact was EUR -7 million. The segment s strong earnings development continued throughout the period. Volume growth, operational efficiency across the segment and favorable product mix all contributed positively to earnings. In addition, the earnings were positively affected by a one-time gain related to a refund of historic energy costs in Brazil. The segment s earnings were somewhat negatively affected by adverse currency movements during the first half of the year. 12

13 FILMS Films are mainly used for technical applications in the label, adhesive tape, hygiene and health care industries, as well as building and construction, automotive, packaging and graphic arts industries. The segment serves global markets from production units in Europe, Asia, North America and South America. EUR million Q Change Q1- Q1-Q Change FY 2013 Net sales % % EBIT* % % 6.7 EBIT margin* 9.0% 5.4% 7.1% 4.3% 3.6% RONA* 8.3% 4.7% 4.6% Capital expenditure % % 2.7 Operating cash flow % % 13.5 * Excluding EUR -2.5 million NRI in Q3 2013, Q1-Q and FY Demand for films in all end user segments was good during the quarter. Demand growth for films for the building and construction industries in Europe and in the US continued. Also, demand for premium hygiene films in South America and disposable hygiene products in general in South-East Asia developed positively. The Films segment s strong net sales growth continued with all geographical markets contributing to the growth. Volume development was especially favorable for industrial and pressure sensitive films. There was no foreign currency translation impact on the segment s reported net sales. Net sales growth in all markets led to strong earnings development. In addition, improved operational efficiency in Thailand and Brazil as well as increased share of higher-margin products in the segment s product portfolio in Brazil contributed to earnings growth. Q1- Demand for films for the building and construction industries was good in Europe as well as in the US where positive signals from the housing market turned into strong demand. Demand development for hygiene films as well as for pressure sensitive films was also positive. The Films segment s strong net sales growth continued throughout the period and comparable net sales grew by 9%. Growth was strong in all business units. Good volume growth across all product segments and positive product mix development especially in Brazil contributed to the net sales growth. The segment s reported net sales were negatively affected by adverse currency movements during the first half of the year. The translation impact was EUR -3 million. Strong earnings development continued throughout the period driven by positive volume development especially in Europe and North America. Improved product mix with more value adding products, especially in Brazil, as well as good operational efficiency also contributed to earnings growth. 13

14 Personnel The Group had a total of 14,757 (14,320) employees at the end of September The number of employees by segment was the following: Foodservice Europe-Asia-Oceania 4,415 (4,396), North America 3,584 (3,314), Flexible Packaging 4,214 (4,142), Molded Fiber 1,562 (1,492), Films 927 (923), and Other activities 55 (53). Shares and shareholders SHARE CAPITAL AND SHAREHOLDERS At the end of the reporting period, Huhtamäki Oyj s ( the Company ) registered share capital was EUR 366 million (EUR 365 million) corresponding to a total number of shares of 107,760,385, including 4,206,064 Company s own shares. Own shares represent 3.9% (3.9%) of the total number of shares and votes. The number of outstanding shares excluding the Company s own shares was 103,554,321. The average number of outstanding shares used in EPS calculations was 103,488,805 (102,974,981), excluding the Company s own shares. Based on share subscriptions with option rights 2006 C under the Company s Option Rights 2006 Plan, a total of 151,634 new shares were issued during the reporting period. The corresponding increase in the Company s share capital was EUR 0.5 million. There were 24,413 (25,015) registered shareholders at the end of September Foreign ownership including nominee registered shares accounted for 43% (38%). SHARE TRADING At the end of September 2014, the Company s market capitalization was EUR 2,251 million (EUR 1,635 million) excluding the Company s own shares. With a closing price of EUR the share price increased by 17% from the beginning of the year. During the reporting period the volume weighted average price for the Company s share was EUR The highest price paid was EUR and the lowest price paid was EUR During the reporting period the cumulative value of the Company s share turnover on NASDAQ OMX Helsinki Ltd was EUR 706 million (EUR 425 million). The trading volume of 36 million (29 million) shares equaled an average daily turnover of 189,879 (154,832) shares. The cumulative value of the Company s share turnover including alternative trading venues, such as BATS Chi-X and Turquoise, was EUR 1,415 million (EUR 716 million). During the reporting period, 50% (41%) of all trading took place outside NASDAQ OMX Helsinki Ltd. (Source: Fidessa Fragmentation Index, During the reporting period the total turnover of the Company s option rights 2006 C was EUR 0.5 million corresponding to a trading volume of 37,573 option rights. The subscription period for shares based on the Company s option rights 2006 C ceased on April 30, 2014 and the Company s Option Rights 2006 Plan terminated. The Company has no ongoing option rights plans. Short term risks and uncertainties Volatile raw material and energy prices as well as movements in currency rates are considered to be relevant short-term business risks and uncertainties in the Group's operations. General political, economic and financial market conditions can also have an adverse effect on the implementation of the Group's strategy and on its business performance and earnings. In September 2012 Huhtamäki Oyj received the European Commission s statement of objections concerning alleged anticompetitive behavior during years Huhtamäki Oyj has responded to the statement of objections and is exercising its rights of defense in the process, which is expected to take several months. The final outcome of the process is uncertain. More information on the matter is available in the Results 2013 published on February 6,

15 Outlook for 2014 The Group s trading conditions are expected to remain relatively stable during The good financial position and ability to generate a positive cash flow will enable the Group to continue to address profitable growth opportunities. Capital expenditure is expected to be at the same level as in A significant part of the investments are expected to be directed to enhance growth in the emerging markets. Financial reporting in 2015 Results 2014 will be published on February 12, Additionally, Huhtamaki will publish the following interim reports during the course of the year: Interim Report January 1 March 31, 2015 April 21, 2015 Interim Report January 1 June 30, 2015 July 24, 2015 Interim Report January 1 September 30, 2015 October 22, 2015 Huhtamäki Oyj s Annual General Meeting is planned to be held on April 21, Espoo, October 22, 2014 Huhtamäki Oyj Board of Directors 15

16 Group income statement (IFRS) unaudited EUR million Q1- Q1-Q Q Q1-Q Net sales 1, , ,342.2 Cost of goods sold -1, , ,994.3 Gross profit Other operating income Sales and marketing Research and development Administration costs Other operating expenses Share of profit of equity-accounted investments Earnings before interest and taxes Financial income Financial expenses Profit before taxes Income tax expense Profit for the period Attributable to: Equity holders of the parent company Non-controlling interest EUR EPS attributable to equity holders of the parent company Diluted EPS attributable to equity holders of the parent company Group statement t t of comprehensive income (IFRS) unaudited d EUR million Q1- Q1-Q Q Q1-Q Profit for the period Other comprehensive income: Items that will not be reclassified to profit or loss Remeasurements on defined benefit plans Income taxes related to items that will not be reclassified Total Items that may be reclassified subsequently to profit or loss Translation differences Equity hedges Cash flow hedges Income taxes related to items that t may be reclassified Total Other comprehensive income, net of tax Total comprehensive income Attributable to: Equity holders of the parent company Non-controlling interest

17 Group statement of financial position (IFRS) unaudited EUR million Sept Dec Sept ASSETS Non-current assets Goodwill Other intangible assets Tangible assets Equity-accounted investments Available-for-sale investments Interest-bearing receivables Deferred tax assets Employee benefit assets Other non-current assets , , ,230.1 Current assets Inventory Interest-bearing receivables Current tax assets Trade and other current receivables Cash and cash equivalents Total assets 2, , ,156.6 EQUITY AND LIABILITIES Share capital Premium fund Treasury shares Translation differences Fair value and other reserves Retained earnings Total equity attributable to equity holders of the parent company Non-controlling interest Total equity Non-current liabilities Interest-bearing liabilities Deferred tax liabilities Employee benefit liabilities Provisions Other non-current liabilities Current liabilities Interest-bearing liabilities Current portion of long term loans Short-term loans Provisions Current tax liabilities Trade and other current liabilities Total liabilities 1, , ,355.5 Total equity and liabilities 2, , ,156.6 Sept Dec Sept Net debt Net debt to equity (gearing)

18 Statement of changes in equity (IFRS) unaudited Attributable to equity holders of the parent company EUR million tal _Share capit _Share issue _premium _Treasury shares _Translation n _differences _Fair value and _other reserv rves _Retained _earnings _Total _Non-contro olling _interest _Total equity Balance on Dec 31, Dividends paid Share-based payments Stock option exercised Total comprehensive income for the year Other changes Balance on Sept 30, Balance on Dec 31, Dividends paid Share-based payments Stock option exercised Total comprehensive income for the year Acquisition of non-controlling interest Other changes Balance on Sept 30,

19 Group statement of cash flows (IFRS) unaudited EUR million Q1- Q1-Q Q Q1-Q Profit for the period* Adjustments* Depreciation and amortization* Share of profit of equity-accounted ed investments* e s Gain/loss from disposal of assets* Financial expense/-income* Income tax expense* Other adjustments, operational* Change in inventory* Change in non-interest bearing receivables* Change in non-interest bearing payables* Dividends received* Interest received* Interest paid* Other financial expense and income* Taxes paid* Net cash flows from operating activities Capital expenditure* Proceeds from selling tangible assets* Divested subsidiaries Acquired subsidiaries Proceeds from long-term deposits Payment of long-term deposits Proceeds from short-term deposits Payment of short-term deposits Net cash flows from investing Proceeds from long-term borrowings Repayment of long-term borrowings Proceeds from short-term borrowings Repayment of short-term borrowings Dividends paid Proceeds from stock option exercises Acquisition of non-controlling interest Net cash flows from financing Change in liquid assets Cash flow based Translation difference Liquid assets period start Liquid assets period end Free cash flow (including figures marked with *)

20 Notes for the interim results report This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. Except for the accounting policy changes listed below, the same accounting policies have been applied in the interim financial statements as in the annual financial statements for The following amended standards and interpretations, which have been adopted with effect from January 1, 2014, had no impact on the interim financial statements: Revised IAS 32 Financial Instruments: Presentation. The amendments clarify the instructions on the right to offset financial assets and liabilities. Revised IAS 39 Financial Instruments: Recognition and measurement. The amendments provide an exception to the requirement to discontinue hedge accounting in certain circumstances in which the counterparty to a hedging instrument changes. IFRIC 21 Levies. The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, occurs. Segments Segment information is presented according to the IFRS standards. Items below EBIT - financial items and taxes - are not allocated to the segments. NET SALES EUR million Q1- Q Q Q1-Q Q Q Q Q Foodservice Europe-Asia-Oceania Intersegment net sales North America Intersegment net sales Flexible Packaging Intersegment net sales Molded Fiber Intersegment net sales Films Intersegment net sales Elimination of intersegment net sales Segments total 1, , EBIT EUR million Q1-Q3 Q Q Q1-Q4 Q Q Q Q Q Foodservice Europe-Asia-Oceania ( North America Flexible Packaging Molded Fiber Films ( Other activities Segments total ( ) Q1-Q includes non-recurring items MEUR -28.1, Q MEUR -18.1, Q MEUR -2.7 and Q MEUR ) Q1-Q4 and Q include non-recurring items MEUR ) Q1-Q includes non-recurring items MEUR -30.6, Q MEUR -18.1, Q MEUR -5.2 and Q MEUR EBITDA EUR million Q1- Q Q Q1-Q Q Q Q Q Foodservice Europe-Asia-Oceania ( North America Flexible Packaging Molded Fiber Films ( Other activities Segments total ( ) Q1-Q includes non-recurring items MEUR -21.3, Q MEUR -17.1, Q MEUR -1.0 and Q MEUR ) Q1-Q4 and Q include non-recurring items MEUR ) Q1-Q includes non-recurring items MEUR -23.8, Q MEUR -17.1, Q MEUR -3.5 and Q MEUR

21 Segments (continued) DEPRECIATION AND AMORTIZATION EUR million Q1- Q Q Q1-Q Q Q Q Q Foodservice Europe-Asia-Oceania North America Flexible Packaging Molded Fiber Films Other activities Segments total NET ASSETS ALLOCATED TO THE SEGMENTS (4 EUR million Q Q Q Q Q Q Foodservice Europe-Asia-Oceania North America Flexible Packaging Molded Fiber Films ) Following statement of financial position items are included in net assets: intangible and tangible assets, equity-accounted investments, other non-current assets, inventories, trade and other current receivables (excluding accrued interest income), other non-current liabilities and trade and other current liabilities (excluding accrued interest t expense). CAPITAL EXPENDITURE EUR million Q1- Q Q Q1-Q Q Q Q Q Foodservice Europe-Asia-Oceania North America Flexible Packaging Molded Fiber Films Other activities Segments total RONA (12m roll.) Q Q Q Q Q Q Foodservice Europe-Asia-Oceania 11.9% 9.7% 6.5% 5.6% 10.3% 10.4% 12.1% 1% North America 6.7% 7.5% 8.0% 8.0% 9.1% 9.7% 11.0% Flexible Packaging 13.0% 13.0% 13.2% 13.3% 13.2% 13.3% 13.3% Molded Fiber 20.1% 19.9% 18.4% 18.2% 16.7% 17.1% 16.4% Films 8.3% 5.0% 3.8% 2.9% 3.1% 4.6% 5.3% OPERATING CASH FLOW EUR million Q1- Q Q Q1-Q Q Q Q Q Foodservice Europe-Asia-Oceania North America Flexible Packaging Molded Fiber Films Reportable segments' net sales and EBIT forms Groups' total net sales and EBIT, so no reconciliations to corresponding amounts are presented. 21

22 Business combinations On August 29 Huhtamäki Oyj s New Zealand based subsidiary Huhtamaki (NZ) Holdings Limited acquired all shares of the privately owned Interpac Packaging Limited based in Auckland. Interpac manufactures folded carton packaging for the fast-moving consumer goods and retail products as well as the foodservice market in New Zealand. Company also manufactures corrugated protective packaging for the local wine industry. With the acquisition Huhtamaki continued to implement its strategy of quality growth and expanded its product offering. The acquired business has been consolidated into Foodservice Europe-Asia-Oceania segment as of September 1, The goodwill is expected to be non-deductible for income tax purposes. The consideration of EUR 4.7 million was paid in cash. The cost relating to advice etc. services EUR 0.2 million are included in Group income statement in account Other operating expenses. The draft values of acquired assets and liabilities at time of acquisition were as follows: EUR million Customer relations 0.4 Tangible assets 3.9 Inventories 1.1 Trade and other receivables 1.6 Cash and cash equivalents 0.1 Total assets 7.1 Deferrred taxes -0.1 Interest-bearing loans -1.8 Trade and other payables -2.1 Total liabilities -4.0 Net assets total 3.1 Goodwill 1.6 Consideration 4.7 ANALYSIS OF CASH FLOWS OF ACQUISITION EUR million Purchase consideration, paid in cash -4.7 Cash and cash equivalents in acquired companies 0.1 Transaction costs of the acquisition -0.2 Net cash flow on acquisition -4.8 The net sales of the acquired business included in the Group income statement since acquisition date were EUR 1.1 million and profit for the period was EUR 0.1 million. The Group net sales would have been EUR 1,812.2 million and profit for the period EUR 98.8 million, if the acquired business had been consolidated from January 1,

23 Other information KEY INDICATORS Q1- Q1-Q Q1-Q Equity per share (EUR) ROE, % (12m roll.) ROI, % (12m roll.) Personnel 14,757 14,362 14,320 Profit before taxes (EUR million, 12m roll.) Depreciation of tangible assets (EUR million) Amortization of other intangible assets (EUR million) CONTINGENT LIABILITIES EUR million Sept Dec Sept Mortgages Guarantee obligations Lease payments Capital expenditure commitments FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE EUR million Sept Dec Sept Fair value through profit and loss - assets Currency forwards, transaction risk hedges Currency forwards, translation risk hedges Currency forwards, for financing purposes Currency options, transaction risk hedges Interest rate swaps Cross currency swaps Electricity forwards Available-for-sale investments Fair value through profit and loss - liabilities Currency forwards, transaction risk hedges Currency forwards, translation risk hedges Currency forwards, for financing purposes Currency options, transaction risk hedges Interest rate swaps Cross currency swaps Electricity forwards The fair values of the financial instruments measured at fair value have been indirectly derived from market prices. Only fair values of electricity forwards are based on quoted prices in active markets. INTEREST-BEARING LIABILITIES Sept Dec Sept Carrying Carrying Carrying EUR million amount Fair value amount Fair value amount Fair value Non-current Current Total

24 Other information (continued) EXCHANGE RATES Income statement, average: Q1- Q1-Q AUD 1 = GBP 1 = INR 1 = RUB 1 = THB 1 = USD 1 = Statement of financial position, month end: Sept Sept AUD 1 = GBP 1 = INR 1 = RUB 1 = THB 1 = USD 1 = DEFINITIONS FOR KEY INDICATORS EPS attributable to equity holders of the parent company = EPS attributable to equity holders of the parent company (diluted) = Net debt to equity (gearing) = Return on net assets (RONA) = Operating cash flow = Shareholders' equity per share = Return on equity (ROE) = Return on investment (ROI) = Profit for the period - non-controlling interest Average number of shares outstanding Diluted profit for the period - non-controlling interest Average fully diluted number of shares outstanding Interest-bearing net debt Equity + non-controlling interest 100 x Earnings before interest and taxes (12 m roll.) Net assets (12 m roll.) Ebit + depreciation and amortization (including impairment) - capital expenditure + disposals +/- change in inventories, trade receivables and trade payables Total equity attributable to equity holders of the parent company Issue-adjusted number of shares at period end 100 x (Profit for the period ) (12 m roll.) Equity + non-controlling interest (average) 100 x (Profit before taxes + interest expenses + net other financial expenses) (12 m roll.) Statement of financial position total - Interest-free liabilities (average) Huhtamäki Oyj, Miestentie 9, FI Espoo, Finland Tel +358 (0) , Fax +358 (0) , Domicile: Espoo, Finland Business Identity Code: