- Huhtamäki reported Q3 21A results this morning: Sales increased by 6% y/y (+2% q/q), while EBITDA declined by 10% y/y (-6% q/q). This resulted in EBITDA margin of 12% (-217 bps y/y and -100bps q/q). Encouragingly, the YTD margin is stable, highlighting the company’s ability to manage cost inflation. Net debt/EBITDA increased to 3x (net debt +57% y/y) on the back of recent M&A.
- All segments contributed to solid top-line growth, particularly in emerging markets: Demand for food on-the-shelf packaging, constituting of mainly flexible packaging and fibre packaging, has remained resilient. There was a continued recovery of on-the-go consumption, with double-digit growth in Foodservice Europe-Asia-Oceania (Q3 sales returned to pre-pandemic levels).
- Foodservice Europe-Asia-Oceania (33% of EBITDA): The demand for foodservice packaging continued to improve. Net sales increased by 6% y/y (+3% q/q), while adjusted EBIT declined by 4% y/y (+8% q/q). Adjusted EBIT margin of 8.5% was down 90 bps y/y, impacted by higher polymer prices. The margin for Q1-Q3 of 8.5%, is up 90bps y/y.
- North America (47% of EBITDA): Demand for retail tableware was strong during the quarter. Demand for foodservice school lunch trays improved and ice cream packaging sales decreased. Net sales increased by 4% y/y (flat q/q), while adjusted EBIT declined by 1% y/y (-5% q/q). Adjusted EBIT margin of 12.2% was down 50 bps y/y. The margin for Q1-Q3 of 12.4%, is up 30bps y/y.
- Flexible Packaging (16% of EBITDA): Overall demand for flexible packaging was good. Net sales increased in most markets, especially in the Middle East and Africa, and Europe. The recovery in demand in emerging markets was slow, for example with lockdowns in Southeast Asia. The competitive situation in Southeast Asia remained tight. Net sales increased by 7% y/y (+5% q/q), while adjusted EBIT declined by 25% y/y (-55% q/q). Adjusted EBIT margin of 6% was down 250 bps y/y. The margin for Q1-Q3 of 8.1%, down 220bps y/y.
- Fibre Packaging (13% of EBITDA): Demand for fibre-based packaging normalized on the back of very strong growth in consumption in 2020. Net sales increased by 15% y/y (-2% q/q), while adjusted EBIT declined by 1% y/y. (flat q/q). Adjusted EBIT margin of 9.5% was down 160 bps y/y. The margin for Q1-Q3 was 10.6%, down 50bps y/y.
- Innovation during the quarter: Push Tab® paper was launched, an industry-first sustainable renewable paper-based blister solution for the global healthcare industry. Next generation tube laminates with renewable content for use in cosmetics and food sectors was also launched.
- Elif acquisition completed: Operating out of Turkey and Egypt, a major supplier of sustainable flexible packaging to global FMCG brand owners. The deal strengthens HUH’s position as a leading flexible packaging company in emerging markets.
- Outlook guidance remains unchanged: Trading conditions are expected to improve y/y.
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