Huhtamäki Oyj’s Half-yearly Report January 1–June 30, 2020

Q2 2020 in brief
•Net sales decreased 8% to EUR 797 million (EUR 867 million)
•Adjusted EBIT was EUR 70 million (EUR 78 million); reported EBIT was EUR 70 million (EUR 78 million)
•Adjusted EPS was EUR 0.44 (EUR 0.51); reported EPS was EUR 0.44 (EUR 0.51)
•Comparable net sales growth was -8% at Group level and -12% in emerging markets
•The impact of currency movements was EUR -8 million on the Group’s net sales and EUR 0 million on EBIT

H1 2020 in brief
•Net sales decreased 2% to EUR 1,642 million (EUR 1,669 million)
•Adjusted EBIT was EUR 144 million (EUR 146 million); reported EBIT was EUR 153 million (EUR 145 million)
•Adjusted EPS was EUR 0.90 (EUR 0.95) reported EPS was EUR 0.97 (EUR 0.95)
•Comparable net sales growth was -3% at Group level and -8% in emerging markets
•The impact of currency movements was EUR 2 million on the Group’s net sales and EUR 1 million on EBIT
•Huhtamaki announces its outlook for 2020 in which disturbance from the COVID-19 pandemic on Huhtamaki’s operating environment is expected to continue

Charles Héaulmé, President and CEO
“The first half of 2020 has been marked by the COVID-19 outbreak. Throughout the crisis our primary focus has been to safeguard the health and safety of our employees and to maintain business continuity. We have taken necessary measures to carefully manage our financial situation, contain cost and prioritize investments, whilst planning ahead for a gradual recovery and a renewed growth trajectory.

Restrictions and lockdowns related to the pandemic negatively impacted the demand for food on-the-go products but conversely boosted consumption of food on-the-shelf products. Towards the end of the second quarter the demand for food on-the-go products improved as countries were easing restrictions. Demand however remained lower than 2019. As a result, for the first half of the year, we were able to deliver a solid performance in the face of the COVID-19 crisis.

The negative impact of COVID-19 is visible in our foodservice sales globally. In North America, where the lockdown period was shorter, sales of foodservice products decreased less and were partly compensated by growing food delivery and drive-thru channels. Increase in home consumption also supported retail tableware and consumer goods sales. In the Fiber Packaging segment comparable net sales growth was strong driven by high demand for eggs and continued plastic substitution. In Flexible Packaging, despite the strong demand for pre-packed food and hygiene products, growth was held back by supply chain disruptions in India and the United Arab Emirates. At Group level, after a first quarter of solid growth, net sales declined by 8% during the second quarter and overall, by 2% for the first half of the year. This is a solid performance reflecting the resilience of our diversified portfolio.

With on-going improvements and further measures implemented, we have delivered solid profitability. The adjusted EBIT margin reached 8.8% in the quarter and the first half of 2020. We also delivered a strong cash flow, ending the quarter with a stronger balance sheet, reflected in a net debt to adjusted EBITDA ratio of 2.0.

During the crisis, we leveraged our core capabilities to make a difference where it matters most. We used idle manufacturing capacity because of the COVID-19 crisis, to produce protective face shields for health care workers and launched a range of high-quality affordable and reusable consumer face masks for everyday use. 2020 also marks our 100-year anniversary and we have built a EUR 3 million donation plan giving back towards the future of life. We have responded to the immediate COVID-19 crisis needs with a donation to the International Red Cross and have launched three projects in partnership with several nonprofit organizations to have an impact on the circular economy at different levels: acting today, educating for tomorrow, innovating for the future. Whilst we are continuing to focus on our sustainability ambition and scaling up our capabilities, we have demonstrated through these unprecedented times our commitment to protecting people, food and the planet, offering well-being, convenience and a responsible lifestyle to billions of people everywhere.”
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