Debt investors
As of December 31, 2023
Bond EUR 300 million
On November 16, 2023, Huhtamäki Oyj issued a EUR 300 million senior unsecured bond. The 5-year bond matures on November 24, 2028 and bears interest at the rate of 5.125 per cent per annum.
The prospectus relating to the listing of the bond on Nasdaq Helsinki Ltd can be accessed through the link below:
Listing prospectus of the Bond
Sustainability-linked term loan facility EUR 125
On May 22, 2023, Huhtamäki Oyj has signed a EUR 125 million bilateral term loan facility agreement with a maturity of two (2) years. The term loan will be used for refinancing and general corporate purposes of the Group. The facility has a one-year extension option at the discretion of the Lender, and the interest margin is tied to three sustainability indicators:
- Absolute scope 1 and 2 greenhouse gas emissions amount
- Share of non-hazardous waste recycled
- Ecovadis Rating
Sustainability-linked bond EUR 500 million
On June 1, 2022, Huhtamäki Oyj issued a EUR 500 million senior unsecured sustainability-linked bond. The sustainability-linked 5-year bond matures on June 9, 2027 and bears interest at the rate of 4.25 per cent per annum, which is subject to an increased rate upon the failure to satisfy certain sustainability performance targets.
The Registration document and Securities note can be accessed through the links below.
Revolving Credit Facilty EUR 400 million
On January 7, 2021, Huhtamaki signed a EUR 400 million syndicated multicurrency revolving credit facility loan agreement (“RCF”) with a maturity of three (3) years. The RCF refinances an existing EUR 400 million credit facility signed in January 2015 and will be used for general corporate purposes of the Group.
On December 16, 2022, Huhtamaki announced that the maturity of the RCF has been extended until January 7, 2026, in accordance with the extension option. The interest margin is tied to three sustainability indicators: Absolute scope 1 and 2 greenhouse gas emissions amount, share of non-hazardous waste recycled and EcoVadis rating.
Schuldschein EUR 150 million
On June 26, 2020 Huhtamäki Oyj signed a EUR 150 million freely transferable loan agreement (Schuldschein). The loan is targeted to institutional investors. It is divided into two floating rate and two fixed rate tranches with maturities of 3 and 5 years.
Bond EUR 175 million
On November 13, 2019 Huhtamäki Oyj issued a EUR 175 million fixed rate unsecured bond. The bond matures in seven (7) years and pays a coupon of 1.125 percent.
The prospectus relating to the listing of the bond on Nasdaq Helsinki Ltd can be accessed through the link below.
Listing prospectus of the Bond
Bond EUR 150 million
On October 4, 2017 Huhtamäki Oyj issued a EUR 150 million fixed rate unsecured bond. The bond matures in seven (7) years and pays a coupon of 1.625 percent.
The prospectus relating to the listing of the bond on Nasdaq Helsinki Ltd can be accessed through the link below.
Listing prospectus of the Bond
Huhtamäki Oyj purchased an aggregate nominal amount of EUR 50,316,000 of the bond on November 24, 2023 pursuant to the Tender Offer. More information can be found from the stock exchange release published on November 21, 2023.
Schuldschein EUR 117 million and USD 35 million
On April 25, 2017 Huhtamäki Oyj signed a freely transferable loan agreement (Schuldschein) of EUR 117 million and USD 35 million (approx. EUR 33 million). The loan is targeted to institutional investors. It includes several floating and fixed rate tranches with maturities of 5, 7 and 10 years.
Issuer credit rating
S&P Global Ratings has assigned a long-term issuer credit rating of BB+ to Huhtamäki Oyj, with a stable outlook. It is the first debt rating for Huhtamaki. The full report can be found here: S&P Credit Rating
Sustainability-Linked Bond Framework
Huhtamaki has launched a Sustainability-Linked Bond Framework and incorporated sustainability in the company’s financing.
The Sustainability-Linked Bond Framework (the “SLB Framework”) is issued in accordance with the International Capital Markets Association’s (ICMA) Sustainability-Linked Bond Principles 2020. The SLB Framework is designed to support the future issuance of sustainability-linked securities by Huhtamaki. For the securities issued under the SLB Framework, the interest rate, or other financial characteristics, of a security will change if Huhtamaki fails to meet the predefined sustainability performance target at an agreed testing date for a designated sustainability performance indicator.
The full report can be found here: SLB framework
A second-party opinion on the SLB Framework can be found here: Second-party Opinion
The objective of financial risk management is to ensure that the Group has access to sufficient funding in the most cost efficient way and to minimize the impact on the Group from adverse movements in the financial markets. As defined in the Group Treasury Policy, management of financial risks is guided and controlled by a Finance Committee, led by the CFO. The Finance Committee reviews risk reports on the Group's interest bearing balance sheet items, commercial flows, derivatives and foreign exchange exposures and approves required measures on a monthly basis.
The Group Treasury Department at the Espoo headquarters is responsible for the Group's funding and risk management and serves the business units in daily financing, foreign exchange transactions and cash management co-ordination.
Currency risk
The Group is exposed to exchange rate risk through cross-border trade within the Group, exports and imports, funding of foreign subsidiaries and currency denominated equities.
Transaction risk: The largest transaction exposures derive from capital flows, imports, exports and royalty receivables. The objective of currency transaction risk management is to protect the Group from negative exchange rate movements. Business units are responsible for actively managing their currency risks related to future commercial cash flows, in accordance with policies and limits defined by the business unit and approved by the Finance Committee. As a rule, commercial receivables and payables recorded on the balance sheet are always fully hedged, as well as 25% of probable flows over a minimum 12-month horizon. Eligible hedging instruments are currency forwards and in authorized subsidiaries also currency options. Business units' counterpart in hedging transactions is mainly Huhtamäki Oyj.
Translation risk: As a main rule individual subsidiaries do not carry translation risk as they are financed in local currencies. As an exception, the Finance Committee has approved the use of foreign currency borrowing in countries with high local interest rates. The main translation exposures derive from equities and permanent loans, which in substance form a part of the net investment in the US, India and UK subsidiaries. The Group hedges its translation risks selectively by using foreign currency loans and derivatives. Equity hedging decisions are made by the Finance Committee, who in its decision-making considers the hedge's estimated impact on the Group's key indicators, long-term cash flows and hedging cost.
Interest rate risk
The interest bearing debt exposes the Group to interest rate risk, namely re-pricing- and price risk caused by interest rate movements. Management of interest rate risk is centralized to the Group Treasury.
The Group's policy is to maintain in the main currency debt portfolios a duration that matches a benchmark duration range based on the Group's estimated cash flow, selected balance sheet ratios and also the shape of the yield curve. The objective of interest rate risk management is to reduce the fluctuation of the interest charge, enabling a more stable net income.
The Group manages interest rate risk by selection of debt interest periods and by using derivatives such as futures, forward rate agreements, interest rate swaps and options.
Liquidity and re-financing risk
The Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools, concentration accounts and overdraft financing facilities.
To mitigate the re-financing risk, the Group diversifies funding sources as well as the maturity structure of loans and debt facilities. The Group utilizes a Finnish commercial paper program and uncommitted credit facilities with relationship banks for short-term financing purposes. Undrawn committed long term debt facilities are sufficient to ensure adequate financing resources in all foreseeable circumstances.
Credit risk
The Group is exposed to credit risk from its commercial receivables and receivables from financial institutions based on short-term investment of liquid funds as well as derivatives transactions.
The business units are responsible for the management of commercial credit risk in accordance with policies defined by the business units and approved by the Finance Committee. A Group policy sets out certain minimum requirements as to credit quality, sales terms and collection. The commercial credit risk is considered low for the group as a whole as the receivable portfolio is diversified and historical credit loss frequency is low.
Liquid funds are from time to time invested in short-term bank deposits at relationship banks with a solid credit rating, in government bonds, treasury bills or in commercial papers issued by corporate borrowers with an investment grade rating. Credit risk stemming from receivables from financial institutions, including derivative transaction settlements, is considered small and is managed centrally by the Group Treasury Department and in accordance with limits set by the Finance Committee.
Capital management
The Group's objective is to maintain an efficient capital structure. Consequently, the Group aims to maintain in the long term the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio in a range between 2- 3. Net debt is defined as interest bearing liabilities less interest bearing receivables, cash and cash equivalents.
The Group is subject to a restriction on its net debt to EBITDA ratio through a clause in a key financing agreement. This restriction is not seen hindering the Group's ability to carry out its business or its strategy.
Changes in the capital structure are resulting from capital investments in the business and cash returns to shareholders, which are funded by the stable cash flow.