June, 30, 2017

A peek into Huhtamaki's business in the U.S.

Huhtamaki is a global specialist in packaging for food and drink. Majority of our net sales comes from foodservice packaging, in which we are a leading global player. In net sales terms the U.S. is clearly our largest operating country, making approx. 35% of the Group’s net sales. The U.S. represents about half of the global foodservice packaging market, and is expected to grow above GDP growth in the coming years. Growth in the U.S. is supported by current market trends, including growing number of deliveries, easier online ordering and more sustainable menu items. Packaging plays an important role in responding to these trends.

 

With the above growth opportunities in mind, we have made significant investments in the U.S. during the past years. Since 2011, we have invested approx. USD 385 million to grow our foodservice packaging and retail store brand tableware business (see details in the table below).

 

Table: Major growth actions in North America since 2011

 

By expanding our product range and manufacturing capabilities with the above investments, we have been able to expand our addressable market 4-folded to USD 6+ billion, capture our share of growth, and improve profitability. The fastest growing categories – foodservice packaging and retail disposable tableware – today cover approx. 75% (60%) of the segment’s net sales (see the graphs below).

 

Graph: Net sales development of the North America business segment in 2011-2016

This year, we are building a world class manufacturing and distribution unit in Goodyear, Arizona, close to Phoenix. The project has proceeded according to our plans and the team has been able to utilize knowhow gained in our previous major expansion project in Ohio in 2013-14. The distribution center in Goodyear was taken into use in Q1 17 and we will start to ramp up manufacturing in the final quarter of 2017. The unit is set to serve the southwest and west coast foodservice packaging and retail tableware markets with a full product range. The total investment is expected to exceed USD 100 million, half of which was already used in 2016. In the long-term, the North America business segment has an annual organic growth ambition of 2-5%, and the Goodyear project plays an important part in achieving it.

 

You will find more information on the strengths and challenges as well as focus areas of our North America business segment in the 2016 Capital Markets Day presentation, pp. 17-33.

 

Kaisa Uurasmaa

Investor Relations