Flexible packaging helps drive Huhtamäki growth

Huhtamäki saw net sales top €2 billion in 2011, with flexible packaging contributing strong organic growth to the business.
 
Huhtamäki said trading conditions in 2011 remained relatively stable despite increased general economic uncertainty during the second half of the year. Demand for consumer packaging remained robust within emerging markets throughout the year.
 
Raw material price levels were high during the first half of the year but stabilized during the third quarter and declined during the fourth quarter. Currencies moved adversely in the second and third quarters.
 
Net sales developed favorably in 2011 compared to the previous year, led by the continued strong organic growth in the flexible packaging segment. Full-year net sales were €2,044 million, against € 1,952 million in 2010. Reported Huhtamäki Group net sales growth for the year was €92 million, of which the businesses acquired during the second half of the year accounted for €29 million.
 
Flexible packaging saw net sales up from €524.6 million to €578.3 million, with double digit growth in both Europe and Asia. During the fourth quarter robust growth continued especially in Europe, whilst the growth in Asia was dampened by the severe flooding in Thailand, where several customers were forced to temporarily close operations. The flooding caused no material damage to the Group’s fixed assets in Thailand.
 
The segment’s full-year earnings excluding non-recurring charges developed positively compared to the previous year. The reported full-year earnings were €31 million in 2011 (€34 million in 2010). The decline in the reported earnings was due to the non-recurring charges related to the closure of the New Lynn unit in New Zealand. Fourth quarter earnings were stable despite adverse currency translations in Asia.
 
The closure of a loss making manufacturing unit in New Lynn, New Zealand was announced during the third quarter. The closure, expected to be finalized by the end of July 2012, is estimated to have an approximately €5 million annualized positive impact on the segment’s earnings as of the second half of 2012. A non-recurring charge of €8 million related to the closure of the New Lynn unit was recognized in the third quarter.
 
Films also reported positive growth in 2011, with net sales up from €163.7 million to €177 million, as did the molded fiber, North America and Foodservice Europe-Asia-Oceania segments.
 
Looking ahead, Huhtamäki Group’s trading conditions are expected to remain relatively stable during 2012. The good financial position and ability to generate a positive cash flow will enable it to further address profitable growth opportunities. Growth in net sales is expected to continue and earnings per share are expected to increase. Capital expenditure is expected to be below €100 million.
 
Huhtamäki chief executive officer Jukka Moisio said: ‘Huhtamaki has returned to a growth track. Last year we focused on our core businesses and sought to grow them. We succeeded and we are pleased to report growth in all segments.
 
‘Organic growth was strongest in our flexible packaging segment whose sales advanced at double-digit rates not only in fast-growing Asian countries but also in Europe.
 
‘Our re-entry into acquisitive growth took place through three transactions during the second half of 2011 and the full impact of these steps will be visible in 2012. Fast-growing emerging markets grew at 14 percent in 2011 and now account for 24 percent of net sales.
 
‘Although there were no major changes in our business environment in 2011, the increased general economic uncertainty was reflected in customer cautiousness especially during the second half of the year. In these conditions we can be satisfied with the sustained level of profitability. Our solid financial position and well-timed refinancing activities during 2011 will allow us to continue implementing our strategy of quality growth during 2012.’