Huhtamäki Oyj’s Results January 1-December 31, 2022: Strong performance in a volatile environment
HUHTAMÄKI OYJ FINANCIAL STATEMENT RELEASE 9.2.2023 AT 8:30
Huhtamäki Oyj’s Results January 1-December 31, 2022: Strong performance in a volatile environment
Q4 2022 in brief
- Net sales increased 10% to EUR 1,104 million (EUR 999 million)
- Adjusted EBIT was EUR 93 million (EUR 82 million); reported EBIT was EUR 78 million (EUR 84 million)
- Adjusted EPS was EUR 0.65 (EUR 0.54); reported EPS was EUR 0.54 (EUR 0.56)
- Comparable net sales growth at Group level was 9% and 6% in emerging markets
- The impact of currency movements on the Group's net sales was EUR 46 million and EUR 5 million on EBIT
Q1-Q4 2022 in brief
- Net sales increased 25% to EUR 4,479 million (EUR 3,575 million)
- Adjusted EBIT was EUR 395 million (EUR 315 million); reported EBIT was EUR 405 million (EUR 296 million)
- Adjusted EPS was EUR 2.49 (EUR 2.07); reported EPS was EUR 2.65 (EUR 1.91)
- Comparable net sales growth at Group level was 15 % and 16% in emerging markets
- The impact of currency movements on the Group's net sales was EUR 234 million and EUR 22 million on EBIT
- Capital expenditure was EUR 318 million (EUR 259 million)
- Free cash flow was EUR 11 million (EUR -26 million)
- The Board of Directors proposes a dividend of EUR 1.00 (0.94) per share
Key figures
| EUR million | Q4 2022 | Q4 2021 | Change | 2022 | 2021 | Change |
| Net sales | 1,103.6 | 999.5 | 10% | 4,479.0 | 3,574.9 | 25% |
| Comparable net sales growth | 9% | 12% | 15% | 7% | ||
| Adjusted EBITDA1 | 143.3 | 130.3 | 10% | 596.9 | 488.4 | 22% |
| Margin1 | 13.0% | 13.0% | 13.3% | 13.7% | ||
| EBITDA | 130.5 | 132.5 | -2% | 614.9 | 469.6 | 31% |
| Adjusted EBIT2 | 93.3 | 82.2 | 14% | 395.1 | 315.3 | 25% |
| Margin2 | 8.5% | 8.2% | 8.8% | 8.8% | ||
| EBIT | 78.1 | 84.5 | -8% | 405.3 | 296.0 | 37% |
| Adjusted EPS, EUR3 | 0.65 | 0.54 | 20% | 2.49 | 2.07 | 20% |
| EPS, EUR | 0.54 | 0.56 | -3% | 2.65 | 1.91 | 39% |
| Adjusted ROI2 | 11.0% | 11.3% | ||||
| Adjusted ROE3 | 14.9% | 15.1% | ||||
| ROI | 11.4% | 10.6% | ||||
| ROE | 15.7% | 13.9% | ||||
| Capital expenditure | 133.2 | 112.2 | 19% | 318.5 | 259.4 | 23% |
| Free Cash Flow | 71.3 | -54.1 | >100% | 11.1 | -26.1 | >100% |
| 1 Excluding IAC of | -12.7 | 2.2 | 18.0 | -18.7 | ||
| 2 Excluding IAC of | -15.3 | 2.3 | 10.2 | -19.3 | ||
| 3 Excluding IAC of | -11.6 | 1.1 | 16.0 | -17.1 |
Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2021. 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 and fines and penalties imposed by authorities.
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.
President and CEO’s review
We continued to successfully execute the Huhtamaki 2030 growth strategy and despite facing a challenging operational environment, delivered a strong performance in 2022. Complexity, volatility, and uncertainty affected the business environment during the year, with geopolitical disruption and high inflation across the value chain. Whilst demand remained overall solid, the pressure of inflation on consumers started to erode the consumption growth across categories and geographies during the second half of the year. The year 2022 was most importantly marked by the war in Ukraine, which led to the decision to divest our operations in Russia. This was successfully completed in September.
In the fourth quarter, our business performance remained consistent with previous quarters, delivering solid revenue and profit growth. Our comparable net sales increased by 9% and adjusted EBIT by 14%. Free cash flow generated reached EUR 71.3 million, representing a significant improvement compared to previous quarters and last year. The positive cash flow was driven by a release of working capital, while we have continued to invest for growth and innovation.
For the full year 2022, our net sales increased to EUR 4.5 billion with comparable net sales growth of 15%. Despite continued high inflation, market headwinds and decreased sales volumes in the latter part of the year, adjusted EBIT improved by 25%. While the cash flow remained low, it improved during the second half of the year. Our solid performance in 2022 reflects the scale and strength of our global footprint, our key technologies and diverse portfolio, and importantly the resilience, agility and commitment of our people.
As we consistently execute our 2030 strategy with the ambition to be the first choice for our customers in sustainable packaging solutions, we are accelerating the development of our technology capabilities for differentiated innovation. In November, we announced our collaboration with Nespresso to create paper-based coffee capsules which are fully home compostable. This innovation in paper-based coffee capsules is born as a continued development of our fiber high-precision technology, which was previously illustrated by the launch of Fiber Lids for the foodservice sector, replacing plastics. In addition, we launched products such as the ICON recyclable ice cream packaging solution in North America and expanded the product range of recyclable flexible packaging.
Innovation in new product alternatives supports our ambitious sustainability agenda. We continuously develop it to take a comprehensive systems-thinking approach, by setting a framework to drive net positive impact of our products. Our goal is to design all our products to be recyclable, compostable, or reusable. During the year, we signed our second virtual power purchase agreement, created water management plans for all our manufacturing sites and launched a sustainability-linked bond. We also invested in scalable recycling pilots, as we launched a plastic recycling plant in India through the Huhtamaki Foundation and started The Cup Collective initiative, focused on recycling paper cups. In 2022 we have taken important steps with our sustainability agenda, with our performance being recognized externally with improved sustainability ratings.
We have made good progress in 2022 on our journey to transform our company to address mega trends. We have a solid core business with underlying market growth and opportunities. Our scale, technology capabilities and customer innovation partnerships allow us to take a leading role in designing sustainable packaging solutions. This makes me confident of the bright future of our company. I would like to thank our customers and stakeholders for their continued trust in us as well as our employees for their dedication and hard work.
Charles Héaulmé
President and CEO
Financial review Q4 2022
Net sales by business segment
| EUR million | Q4 2022 | Q4 2021 | Change | |
| Foodservice Europe-Asia-Oceania | 266.7 | 254.0 | 5% | |
| North America | 383.6 | 314.7 | 22% | |
| Flexible Packaging | 369.1 | 344.8 | 7% | |
| Fiber Packaging | 87.4 | 91.5 | -4% | |
| Elimination of internal sales | -3.2 | -5.5 | ||
| Group | 1,103.6 | 999.5 | 10% |
Comparable net sales growth by business segment
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |
| Foodservice Europe-Asia-Oceania | 15% | 22% | 18% | 18% | 12% |
| North America | 10% | 10% | 14% | 24% | 11% |
| Flexible Packaging | 1% | 20% | 19% | 18% | 12% |
| Fiber Packaging | 17% | 19% | 16% | 8% | 2% |
| Group | 9% | 17% | 17% | 19% | 12% |
The Group’s net sales increased 10% to EUR 1,104 million (EUR 999 million) during the quarter and comparable net sales growth was 9%. Overall, demand softened in many categories and geographies. Net sales growth was mainly driven by pricing and supported by changes in currencies. The divestment of the operations in Russia had a negative impact. Comparable sales growth in emerging markets was 6%. Foreign currency translation impact on the Group’s net sales was EUR 46 million (EUR 24 million) compared to 2021 exchange rates.
Adjusted EBIT by business segment
| Items affecting comparability | |||||
| EUR million | Q4 2022 | Q4 2021 | Change | Q4 2022 | Q4 2021 |
| Foodservice Europe-Asia-Oceania | 24.2 | 19.5 | 24% | -4.9 | 7.1 |
| North America | 49.0 | 33.9 | 45% | -5.6 | -1.1 |
| Flexible Packaging | 15.5 | 24.5 | -37% | -6.0 | -3.1 |
| Fiber Packaging | 11.1 | 10.7 | 4% | 1.7 | -0.5 |
| Other activities | -6.5 | -6.4 | -0.4 | -0.1 | |
| Group | 93.3 | 82.2 | 14% | -15.3 | 2.3 |
Adjusted EBIT margin by business segment
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |
| Foodservice Europe-Asia-Oceania | 9.1% | 10.2% | 8.7% | 10.0% | 7.7% |
| North America | 12.8% | 11.2% | 11.2% | 11.5% | 10.8% |
| Flexible Packaging | 4.2% | 6.2% | 6.9% | 7.8% | 7.1% |
| Fiber Packaging | 12.7% | 9.6% | 13.4% | 8.2% | 11.7% |
| Group | 8.5% | 8.6% | 9.0% | 9.3% | 8.2% |
The Group’s adjusted EBIT increased to EUR 93 million (EUR 82 million) and reported EBIT was EUR 78 million (EUR 84 million) in the quarter. Adjusted EBIT improved driven by sales growth and continued focus on operational efficiency. The divestment of the operations in Russia had a negative impact. The Group’s adjusted EBIT margin increased and was 8.5% (8.2%). Foreign currency translation impact on the Group’s earnings was EUR 5 million (EUR 2 million).
Adjusted EBIT excludes EUR -15.3 million (EUR 2.3 million) of items affecting comparability (IAC).
Adjusted EBIT and IAC
| EUR million | Q4 2022 | Q4 2021 |
| Adjusted EBIT | 93.3 | 82.2 |
| Acquisition related costs | -1.5 | -0.3 |
| Restructuring gains and losses, including writedowns of related assets | -7.5 | 6.1 |
| PPA amortization | -3.1 | -2.0 |
| Settlement and legal fees of disputes | -1.5 | -1.1 |
| Property damage incidents | -0.1 | -0.4 |
| Divestment of subsidiaries | 7.0 | |
| Environmental case | -8.4 | - |
| EBIT | 78.1 | 84.5 |
Net financial expenses were EUR 16 million (EUR 9 million) in the quarter. The increase was due to higher interest rates. Tax expense was EUR 3 million (EUR 16 million), the change was driven by a one-off fixed asset revaluation in Turkey, decreasing deferred tax liability. Profit for the fourth quarter was EUR 59 million (EUR 59 million). Adjusted earnings per share (EPS) was EUR 0.65 (EUR 0.54) and reported EPS EUR 0.54 (EUR 0.56). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -11.6 million (EUR 1.1 million) of IAC.
Adjusted profit and IAC
| EUR million | Q4 2022 | Q4 2021 |
| Adjusted profit for the period attributable to equity holders of the parent company | 68.0 | 56.8 |
| IAC in EBIT | -15.3 | 2.3 |
| IAC in Financial items | 0.2 | -0.7 |
| Taxes relating to IAC | 3.4 | -0.5 |
| Profit for the period attributable to equity holders of the parent company | 56.3 | 57.9 |
Financial review 2022
Net sales by business segment
| EUR million | 2022 | 2021 | Change |
| Foodservice Europe-Asia-Oceania | 1,110.7 | 941.8 | 18% |
| North America | 1,468.3 | 1,160.3 | 27% |
| Flexible Packaging | 1,558.2 | 1,166.6 | 34% |
| Fiber Packaging | 363.0 | 333.6 | 9% |
| Elimination of internal sales | -21.1 | -27.4 | |
| Group | 4,479.0 | 3,574.9 | 25% |
Comparable net sales growth by business segment
| 2022 | 2021 | 2020 | |
| Foodservice Europe-Asia-Oceania | 18% | 11% | -10% |
| North America | 14% | 6% | 1% |
| Flexible Packaging | 14% | 7% | 1% |
| Fiber Packaging | 15% | 2% | 9% |
| Group | 15% | 7% | -2% |
The Group’s net sales increased 25% to EUR 4,479 million (EUR 3,575 million) during the reporting period, and comparable net sales growth was 15%. Net sales growth was mainly driven by pricing, changes in currencies and the Elif acquisition. The divestment of the operations in Russia had a negative impact on net sales. Comparable sales growth in emerging markets was 16%. Foreign currency translation impact on the Group’s net sales was EUR 234 million (EUR -54 million) compared to 2021 exchange rates.
Adjusted EBIT by business segment
| Items affecting comparability | |||||
| EUR million | 2022 | 2021 | Change | 2022 | 2021 |
| Foodservice Europe-Asia-Oceania | 105.7 | 77.8 | 36% | 16.0 | 0.8 |
| North America | 171.6 | 139.1 | 23% | -5.6 | -1.9 |
| Flexible Packaging | 98.1 | 79.8 | 23% | -15.9 | -16.1 |
| Fiber Packaging | 40.0 | 36.4 | 10% | 18.1 | -1.1 |
| Other activities | -20.3 | -17.8 | -2.4 | -1.0 | |
| Group | 395.1 | 315.3 | 25% | 10.2 | -19.3 |
Adjusted EBIT margin by business segment
| 2022 | 2021 | 2020 | |
| Foodservice Europe-Asia-Oceania | 9.5% | 8.3% | 7.3% |
| North America | 11.7% | 12.0% | 12.0% |
| Flexible Packaging | 6.3% | 6.8% | 7.7% |
| Fiber Packaging | 11.0% | 10.9% | 12.2% |
| Group Total | 8.8% | 8.8% | 9.1% |
The Group’s adjusted EBIT increased to EUR 395 million (EUR 315 million) and reported EBIT was EUR 405 million (EUR 296 million). Adjusted EBIT improved driven by sales growth and continued focus on operational efficiency as well as with the support from acquisitions. The Group’s adjusted EBIT margin remained unchanged and was 8.8% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR 22 million (EUR -6 million).
Adjusted EBIT excludes EUR 10.2 million (EUR -19.3 million) of items affecting comparability (IAC). The main change in IACs relates to the profit booked from the divestment of the operations in Russia.
Adjusted EBIT and IAC
| EUR million | 2022 | 2021 |
| Adjusted EBIT | 395.1 | 315.3 |
| Acquisition related costs | -2.2 | -8.8 |
| Restructuring gains and losses, including writedowns of related assets | -9.9 | -6.0 |
| PPA amortization | -8.2 | -2.0 |
| Settlement and legal fees of disputes | -4.5 | -1.5 |
| Property damage incidents | -1.1 | -0.9 |
| Divestment of subsidiaries | 44.5 | - |
| Environmental case | -8.4 | - |
| EBIT | 405.3 | 296.0 |
Net financial expenses were EUR 53 million (EUR 33 million). The increase was due to higher debt during the period as well as an increase in interest rates. Tax expense was EUR 67 million (EUR 60 million). The effective tax rate was 19% (23%), impacted by the tax-free gain related to the divestment of the operations in Russia as well as by a one-off fixed asset revaluation in Turkey, decreasing deferred tax liability. Profit for the period was EUR 285 million (EUR 203 million). Adjusted earnings per share (EPS) were EUR 2.49 (EUR 2.07) and reported EPS EUR 2.65 (EUR 1.91). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR 16.0 million (EUR -17.1 million) of IAC.
Adjusted profit and IAC
| EUR million | 2022 | 2021 |
| Adjusted profit for the period attributable to equity holders of the parent company | 260.2 | 216.0 |
| IAC in EBIT | 10.2 | -19.3 |
| IAC in Financial items | 0.0 | -2.9 |
| Taxes relating to IAC | 5.8 | 5.1 |
| Profit for the period attributable to equity holders of the parent company | 276.2 | 198.8 |
Impacts of the war in Ukraine and the divestment of operations in Russia
On September 2, 2022, Huhtamaki announced the divestment of its operations in Russia to Espetina Ltd. Espetina is a holding company owned by Alexander Govor and Iury Kushnerov. The transaction has been completed. The cash and debt free sales price was EUR 151 million. As a result of the sale, Huhtamaki booked a gain of EUR 44.5 million during the third and fourth quarter. The transaction included four manufacturing units in Russia, employing 724 people. Net sales in Russia amounted to EUR 99.5 million in 2021, representing less than 3% of the Group’s net sales. The factories in Russia mostly served the local market and only a minor part of production was exported. Following the divestment, Huhtamaki does not have any operations in Russia.
Huhtamaki has operations in Ukraine but does not operate in Belarus. In Ukraine, the company has one factory, which has mostly served the local market. It’s net sales prior to the war made only a minor contribution to the Group level net sales.
Outlook for 2023
The Group’s trading conditions are expected to remain relatively stable, despite the continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable long-term growth opportunities.
Dividend proposal
On December 31, 2022 Huhtamäki Oyj’s distributable funds were EUR 908 million (EUR 462 million). The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 1.00 (EUR 0.94) per share be paid.
Annual General Meeting 2023
The Annual General Meeting of Shareholders (AGM) will be held on Thursday, April 27, 2023 at 11:00 (EEST) at Scandic Marina Congress Center, Katajanokanlaituri 6, Helsinki, Finland.
Teleconference
Huhtamaki will arrange a combined audiocast and teleconference on February 9, 2023, at 9:30 EET. Huhtamaki’s CEO & President Charles Héaulmé and CFO Thomas Geust will present the results. The event will be followed by a question-and-answer 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/2022-results
A link to the teleconference is available at: https://palvelu.flik.fi/teleconference/?id=10010118. 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 2023
In 2023, Huhtamaki will publish financial information as follows:
Interim Report, January 1 - March 31, 2023 April 27
Half-yearly Report, January 1 - June 30, 2023 July 20
Interim Report, January 1 - September 30, 2023 October 20
The Annual Report 2022 will be published on the week commencing February 27, 2023.
This is a summary of Huhtamäki Oyj's Results January 1–December 31, 2022. 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:
Kristian Tammela, Vice President, Investor Relations, tel. +358 10 686 7058
HUHTAMÄKI OYJ
Corporate Communications
About Huhtamaki
Huhtamaki is a key 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 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 116 operating locations around the world. Our values Care Dare Deliver guide our decisions and help our team of around 19,000 employees make a difference where it matters. Our 2022 net sales totalled EUR 4.5 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.
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