HUHTAMÄKI OYJ INTERIM REPORT 21.4.2015 at 8.30
Huhtamäki Oyj's Interim Report January 1 - March 31, 2015: Solid profitability improvement
Q1 2015 in brief
- Net sales were EUR 630 million (EUR 514 million)
- EBIT excluding non-recurring items (NRI) was EUR 50 million (EUR 38 million)
- EPS excluding NRI was EUR 0.33 (EUR 0.25)
- Comparable net sales growth was 5% in total and 6% in emerging markets
- Currency movements had a positive impact of EUR 53 million on the Group's net sales
- Acquisition of Positive Packaging, a flexible packaging company operating in India, United Arab Emirates and Africa, was closed at the end of January and the business was consolidated into the Flexible Packaging business segment as of February 1, 2015
Key figures
| EUR million | Q1 2015 | Q1 2014 | Change | FY 2014 | |
| Net sales | 630.1 | 513.6 | 23% | 2,235.7 | |
| EBITDA* | 74.8 | 58.7 | 27% | 259.0 | |
| EBITDA margin* | 11.9% | 11.4% | 11.6% | ||
| EBIT* | 49.7 | 38.4 | 29% | 174.9 | |
| EBIT margin* | 7.9% | 7.5% | 7.8% | ||
| EPS*, EUR | 0.33 | 0.25 | 32% | 1.24 | |
| ROI** | 12.8% | 12.1% | 12.6% | ||
| ROE** | 16.2% | 16.1% | 16.1% | ||
| Capital expenditure | 24.7 | 21.5 | 15% | 127.0 | |
| Free cash flow | -19.4 | -11.3 | -72% | 64.6 | |
| Including discontinued operations for 2014 | |||||
| EPS**, EUR | 0.33 | 0.27 | 22% | 1.28 | |
| EPS, reported, EUR | 0.29 | 0.27 | 7% | 1.33 | |
* Excluding NRI of EUR -4.1 million in Q1 2015.
** Excluding NRI of EUR -4.1 million in Q1 2015 and EUR 5.1 million in FY 2014.
Unless otherwise stated, all figures presented in this report, including corresponding periods in 2014, cover continuing operations only. Continuing operations include the Foodservice Europe-Asia-Oceania, North America, Flexible Packaging and Molded Fiber business segments. Discontinued operations for 2014 include the Films business segment, which was sold at the end of December 2014. Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2014. ROI, ROE and RONA figures presented in this report are calculated on a 12-month rolling basis.
Jukka Moisio, CEO:
"We had a good start to the year. All our business segments achieved organic growth and improved profitability. Our comparable net sales growth during the quarter was 5%. Net sales and earnings in North America and Flexible Packaging developed strongly. It is rewarding to see that the actions taken by our team in North America are bearing fruit. We are pleased with our net sales development in Europe, which was positive across business segments. On the other hand, growth in emerging markets at 6% did not entirely meet our expectations. The weakness was primarily due to China, whereas our businesses in Southeast Asia, Russia and South America continued to grow.
The acquisition of Positive Packaging was finalized at the end of January and it contributed to net sales growth for two months. The integration is still in early stages, but we're happy to report positive earnings from the business already for the first two months.
We sharpened our strategy and launched a renewed brand identity at the end of 2014. It's been delightful to note that the new Huhtamaki has been well received amongst our customers, employees, investors and other stakeholder groups. We'll continue to implement our new strategy and aim to achieve net sales and profitability growth."
Financial review Q1 2015
The Group's comparable net sales growth was 5% during the quarter. All business segments contributed to the net sales growth. Growth was strongest in the North America business segment. Comparable growth in emerging markets was 6%. The growth in emerging markets was driven by continued good development especially in Russia, Southeast Asia and South America, whereas negative net sales development in China continued. The Group's net sales grew to EUR 630 million (EUR 514 million). In addition to organic growth, there was a significant positive impact on net sales from the Positive Packaging acquisition as well as the foreign currency translation, which was EUR 53 million compared to the 2014 exchange rates. The majority of the currency impact came from the strengthening of the US dollar versus euro.
Net sales by business segment
| EUR million | Q1 2015 | Q1 2014 | Change | Of Group in Q1 2015 |
| Foodservice Europe-Asia-Oceania | 153.9 | 142.0 | 8% | 24% |
| North America | 210.7 | 164.2 | 28% | 33% |
| Flexible Packaging | 206.0 | 150.8 | 37% | 33% |
| Molded Fiber | 65.2 | 61.5 | 6% | 10% |
| Elimination of internal sales | -5.7 | -4.9 | ||
| Group | 630.1 | 513.6 | 23% |
Comparable growth by business segment
| Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | |
| Foodservice Europe-Asia-Oceania | 3% | 2% | 4% | 5% |
| North America | 7% | 5% | 4% | 10% |
| Flexible Packaging | 5% | 12% | 6% | 4% |
| Molded Fiber | 5% | 7% | 9% | 10% |
| Group | 5% | 6% | 5% | 7% |
The Group's earnings development was good, with all business segments contributing to the earnings growth. Earnings improvement was strongest in the North America business segment. The Group's earnings before interest and taxes (EBIT) were EUR 50 million, excluding NRI of EUR -4 million (EUR 38 million). The acquired Positive Packaging also contributed positively to earnings. Positive foreign currency translation impact on Group's EBIT was EUR 4 million.
EBIT by business segment
| EUR million | Q1 2015 | Q1 2014 | Change | Of Group in Q1 2015 |
| Foodservice Europe-Asia-Oceania | 11.9 | 11.0 | 8% | 23% |
| North America | 13.8 | 8.8 | 57% | 27% |
| Flexible Packaging | 17.0 | 11.0 | 55% | 33% |
| Molded Fiber | 8.6 | 7.6 | 13% | 17% |
| Other activities | -1.6 | 0.0 | ||
| Group | 49.7 | 38.4 | 29% |
Other activities EBIT excluding NRI of EUR -4.1 million in Q1 2015.
Net financial expenses increased to EUR 9 million (EUR 7 million). The payment of purchase price for Positive Packaging at the end of January led to a higher amount of net debt and thus higher financial expenses. Tax expense was EUR 6 million (EUR 5 million). The corresponding tax rate was 16% (16%). Profit for the period was EUR 31 million, including NRI of EUR -4 million (EUR 26 million). Earnings per share (EPS) excluding NRI were EUR 0.33 (EUR 0.25). Reported EPS were EUR 0.29 (EUR 0.25 for continuing operations and EUR 0.27 including discontinued operations).
Outlook for 2015
The Group's trading conditions are expected to remain relatively stable during 2015. 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 2014. Majority of the investments are expected to be directed to enhance growth in the emerging markets.
Annual General Meeting 2015
The Annual General Meeting of Shareholders will be held on Tuesday, April 21, 2015 at 11 am (EET) at Finlandia Hall, Mannerheimintie 13e, in Helsinki, Finland.
Financial reporting in 2015
Huhtamaki will publish the following interim reports during the course of the year:
Interim Report January 1 - June 30, 2015 July 24, 2015
Interim Report January 1 - September 30, 2015 October 22, 2015
This is a summary of Huhtamäki Oyj's Interim Report January 1 - March 31, 2015. 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:
Jukka Moisio, CEO, tel. +358 10 686 7801
Thomas Geust, CFO, tel. +358 10 686 7880
HUHTAMÄKI OYJ
Group Communications
Huhtamaki is a global specialist in packaging for food and drink. With our network of 68 manufacturing units and 23 sales offices in 34 countries, we're well placed to support our customers' growth wherever they operate. Mastering three distinctive packaging technologies, approximately 16,000 employees develop and make packaging that helps great products reach more people, more easily. In 2014 our net sales totaled EUR 2.2 billion. The Group has its head office in Espoo, Finland and the parent company Huhtamäki Oyj is listed on NASDAQ OMX Helsinki Ltd. Additional information is available at www.huhtamaki.com.
Huhtamäki Oyj Interim Report January 1 - March 31,2015 http://hugin.info/3006/R/1912509/682643.pdf
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