Huhtamäki Oyj’s Interim Report January 1–September 30, 2023: Good operational profitability in a challenging market

Q1-Q3 2023 in brief

• Net sales decreased 7% to EUR 3,136 million (EUR 3,375 million)
• Adjusted EBIT was EUR 285 million (EUR 302 million); reported EBIT was EUR 235 million (EUR 327 million)
• Adjusted EPS was EUR 1.64 (EUR 1.84); reported EPS was EUR 1.14 (EUR 2.11)
• Comparable net sales growth at Group level was -1% and -3% in emerging markets
• The impact of currency movements on the Group’s net sales was EUR -108 million and EUR -9 million on EBIT
• Capital expenditure was EUR 204 million (EUR 185 million)
• Free cash flow was EUR 193 million (EUR -60 million)

Charles Héaulmé, President and CEO:
“The market environment improved slightly during the third quarter of 2023, compared to the first half of the year. The significant destocking that impacted the previous two quarters faded during the third quarter. Overall, inflation continued to affect consumption negatively across categories and geographies.

Our profitability and cash generation in the third quarter improved significantly compared to the first half of the year, despite continued soft volumes and lower support from pricing. Comparable net sales decreased by 4% compared to the third quarter of 2022. For the first nine months of the year, comparable net sales decreased by 1%. Currency translation continued to have a negative impact, further accelerating in the third quarter. Adjusted EBIT decreased by 1% in the third quarter and by 6% during the first nine months of the year, including the negative impact from the divestment of our Russian operations. Throughout the year, we have taken actions to address productivity, and the results are starting to materialize. Free cash flow was strong, reaching EUR 122 million during the third quarter and EUR 193 million during the first nine months of the year, supported by reduced working capital.

All our business segments delivered an improved profitability level compared to the first half of 2023 and the third quarter of 2022. The improving trend in profitability during the third quarter was primarily driven by a strong performance in the Fiber and North America segments. The Flexible Packaging segment performance also improved during the third quarter, compared to the same period 2022. The profitability of Foodservice Europe-Asia-Oceania remained at same level as last year.

We continue to drive the execution of our 2030 strategy. We are making consistent progress on delivering on our sustainability commitments, particularly on operational health and safety, renewable energy and absolute greenhouse gas emissions. We are also investing in growth and innovation. At the end of the third quarter, we started ramping up commercial production at our expanded molded fiber factory in Hammond, US, entering the growing egg carton packaging market. This will allow us to leverage the rapid conversion into fiber egg carton packaging in several US states where foam packaging has been banned. In Europe, the acceleration of the fiber lids deployment in replacement of the traditional plastic lids allows a significant volume increase from our recently installed capacity in Alf, Germany. Our investments in technology and capacity will increasingly support our performance going forward.”