Huhtamäki Oyj's Results 1.1.-31.12.2010: Improved profitability and strong cash flow
HUHTAMÄKI OYJ STOCK EXCHANGE RELEASE 11.2.2011 AT 08:30
- Group net sales increased due to currency translation and volume growth
- Profitability improved due to continued good cost control and successful management of increased raw material costs as well as positive volume development during the second half
- Strong cash flow; net debt reduced considerably
- Majority of the European Rigid Consumer Goods Plastics operations sold
- The Board of Directors proposes a dividend of EUR 0.44 (EUR 0.38 for 2009) per share
|EUR million||2010||2009||Q4 2010||Q4 2009|
|EBIT margin %||6.9||6.1||5.7||3.1|
|Including discontinued operations|
|Free cash flow||112.9||208.0||36.7||40.1|
* Including non-recurring charges of EUR 3.8 million.
CEO Jukka Moisio:
"Huhtamaki's performance in 2010 was solid and we are very pleased with the result. The financial numbers of our 90th anniversary year are among the best Huhtamaki has achieved as a dedicated packaging company leaving us with a strong financial position at the end of the year. We are also pleased to have concluded the strategic review of the Rigid Consumer Goods Plastics operations.
We will now concentrate on our core businesses and seek to grow them through well-targeted investments, innovations and acquisitions. The positive development of all the business segments during the final quarter of 2010 strengthens our belief in an ongoing good momentum and our team is determined to pursue new growth opportunities."
Demand for consumer packaging was stable during 2010. The demand accelerated towards the end of the year, particularly in emerging markets. However, the North American markets continued to be uncertain throughout the year. The Group's net sales increased with an accelerating pace towards the year end due to positive volume development especially within the Flexible Packaging and Films business segments. Currency translations also had a positive impact on the euro-denominated value of net sales. Full year net sales from continuing operations were EUR 1,952 million (EUR 1,832 million).
The Group's profitability improved markedly, particularly during the fourth quarter. The full year Group earnings before interest and taxes (EBIT) from continuing operations were EUR 134 million (EUR 112 million, including EUR 4 million non-recurring charges). The improvement in earnings was due to volume growth, successful management of fluctuating raw material costs, efficient cost containment and favorable currency translations. The impact of sales growth on profitability was strong during the fourth quarter, where the Group EBIT from continuing operations was EUR 28 million (EUR 13 million).
Continued improvements in working capital efficiency in all business segments supported strong cash flow generation throughout the year. This, together with the proceeds from the divestment of Rigid Consumer Goods Plastics operations in Europe, contributed to a considerable reduction of net debt. The Group's return on investment (ROI) was 12.0% (9.6%).
The sale of the majority of European Rigid Consumer Goods Plastics operations to Island Acquisitions S.à r.l., an affiliate of Sun European Partners, LLP, was completed during the fourth quarter 2010. The agreed value of the transaction was EUR 52 million. The rigid plastics business in Italy continues to be under strategic review and is reported under Other activities.
Outlook for 2011
The improvement in the Group's trading conditions, which was visible in the second half of 2010, is expected to continue during 2011. However, market conditions in North America remain uncertain. Pressure on profit margins is likely to continue due to increasing raw material costs, especially the price of plastics. Financial charges and tax expenses are expected to increase from the exceptionally low level in 2010.
The good financial position and ability to generate a positive cash flow will enable the Group to address profitable growth opportunities. Capital expenditure is expected to be around EUR 100 million.
Change in dividend policy
The Board of Directors decided to amend the Group's dividend policy in its meeting held on February 10, 2011. The Board decided to increase the payout ratio from the earlier approximately 40% of the EPS to a payout ratio of 40-50% of the EPS.
New disclosure procedure
Huhtamaki is now adopting the new disclosure procedure enabled by the Standard 5.2b issued by the Finnish Financial Supervisory Authority. This is a summary of Huhtamaki's Results 2010 report. The complete report is attached to this release as a pdf-file. The complete Results 2010 report is also available at the company website at www.huhtamaki.com.
Financial reporting schedule in 2011
Annual accounts for 2010 will be published during week 8 on the Company website at www.huhtamaki.com.
Huhtamaki will publish the following interim reports during the course of the year: January 1 - March 31, 2011 on April 20, January 1 - June 30, 2011 on July 21 and January 1 - September 30, 2011 on October 20.
For further information, please contact:
Timo Salonen, CFO, tel. +358 10 686 7880
Huhtamaki Group is a leading manufacturer of consumer and specialty packaging with 2010 net sales totaling EUR 2 billion. Foodservice and consumer goods markets are served by approximately 12,000 people in 53 manufacturing units and several sales offices in 31 countries. The parent company, Huhtamäki Oyj, has its head office in Espoo, Finland and its share is quoted on the NASDAQ OMX Helsinki Ltd. Additional information is available at www.huhtamaki.com.
get_app Huhtamäki Oyj Results 2010