March 6, 2017
Solid progress - FAQ on Results 2016
We published our FY 2016 results about 2 weeks ago. 2016 was a record-year for Huhtamaki with basically all the main KPIs improving. Our net sales grew to € 2.9 billion, Adjusted EBIT margin strengthened to 9.4% and Adjusted EPS improved to EUR 1.83.
The most discussed topics in the investor meetings after the results were:
Good performance of the North America business segment and expectations for 2017:
The segment was on a sweet spot in 2016 with the internal and external key indicators pointing to the right direction. 2017 will be a year of new capacity building, as the new site project in Goodyear, Arizona proceeds. About half of the total M$ 100 investment will take place in 2017 (half was already spent in 2016) and we will gradually start to ramp-up manufacturing towards the end of the year. We operate – source, manufacture and sell – locally in the U.S., just like we typically do everywhere, and do not expect any major changes in our operating environment in the U.S.
Negative growth of the Flexible Packaging business segment:
Main reasons were the challenging market conditions in many African countries and the impact of the demonetization action executed by the government in November in India. Despite these temporary challenges we continue to believe that there are good growth opportunities in flexible packaging, especially in emerging markets, and are therefore to investing in new capacity both in Egypt and in India.
Demand for foodservice packaging in Europe, Asia and Oceania:
In 2016, Foodservice Europe-Asia-Oceania business segment’s net sales growth in Eastern Europe was strong, while the demand development was more stable in Western Europe, especially in the post-Brexit atmosphere. We have been successful in strengthening our positions in Europe’s leading coffee-to-go market, the UK, and remain optimistic for further business opportunities within foodservice packaging.
2017 will be a year of building new capacity and developing new capabilities across Huhtamaki. We expect our capital expenditure to remain at the 2016 level, when it was M€ 199. This corresponds with 52% of Adjusted EBITDA, which is markedly above our long-term ambition level of 40%. Taking into account our eagerness to grow, the Board of Directors proposes a dividend of EUR 0.73 per share, which gives a payout ratio of 40%.