Huhtamaki Q3 net income down 35.1% year-over-year to €19M influenced by one-time charge relating to its New Lynn unit closure; sales up 3.2% to €515.8M led by flexible packaging unit revenues

ESPOO, Finland , October 20, 2011 (press release) – - Healthy net sales growth continued, led by the Flexible Packaging segment
- Two strategic, growth enhancing acquisitions completed
- Positive sales and earnings development in the North America segment in the third quarter
- Foodservice Europe-Asia-Oceania segment's profitability disappointing

Key figures (continued operations)

EUR million Q1-Q3 2011 Q1-Q3 2010 Q3 2011 Q3 2010 2010
Net sales 1,521.8 1,470.0 515.8 499.8 1,951.8
EBIT reported 92.2 106.6 24.8 33.4 134.3
EBIT excl. NRI* 100.0 106.6 32.6 33.4 134.3
EBIT margin excl. NRI* % 6.6 7.3 6.3 6.7 6.9
EPS reported (EUR) 0.61 0.70 0.16 0.23 0.92
EPS excl. NRI* (EUR) 0.69 0.70 0.24 0.23 0.92
ROI % 10.2 10.1     12.0
Free cash flow 1.1 76.2 20.3 31.9 112.9
Net debt 351.3 345.2     269.9
Gearing 0.41 0.42     0.32

*EUR -7.8 million non-recurring items (NRI) in Q1-Q3 2011 and Q3 2011

Overview

The Group's trading conditions remained relatively stable during the reporting period, despite increased economic uncertainty towards the end of the period. Demand for consumer packaging remained robust within emerging markets. Raw material price levels stabilized but currencies moved adversely in the third quarter. The Group's outlook for 2011 has been modified regarding the tax rate.

The Group's net sales developed favorably in the reporting period compared to the corresponding period in 2010, led by the continued strong growth in the Flexible Packaging segment. Reported Group net sales growth for the reporting period was EUR 52 million, of which the businesses acquired during the third quarter accounted for EUR 6 million. Net sales development in the North America segment in constant currencies turned positive during the third quarter. Adverse currency translations, especially in North America, had a negative impact in reported net sales development during the reporting period.

The Group's earnings before interest and taxes (EBIT) for the reporting period were EUR 92 million, including a non-recurring charge of EUR 8 million related to the closure of the New Lynn unit in New Zealand. Successful price management and favorable product mix supported earnings development during the third quarter. Currency translations continued to have a negative impact on earnings during the third quarter.

The Group's free cash flow continued to develop positively during the third quarter, but free cash flow in the reporting period was lower than in the corresponding period in 2010. Return on investment (ROI) was 10.2% (10.1%).

Two strategic, growth enhancing acquisitions were completed during the reporting period. A hygienic films manufacturer was acquired in Brazil and a specialty folding carton business in the United States. The closure of a Flexible Packaging manufacturing unit in New Zealand was announced during the reporting period.

Outlook for 2011

The Group's trading conditions are expected to remain similar to the trading conditions experienced earlier in 2011. Raw material prices are not expected to increase from the third quarter levels. Financial charges are expected to increase from the exceptionally low level in 2010. Tax rate is estimated to be approximately at the level of 2010.

The good financial position and ability to generate a positive cash flow will enable the Group to further address profitable growth opportunities. Capital expenditure is expected to be around EUR 100 million.

Financial reporting schedule in 2012

The Results 2011 will be published on February 15, 2012. Additionally, the interim reports will be published as follows:
- Interim Report January 1 - March 31, 2012 April 24, 2012
- Interim Report January 1 - June 30, 2012 July 20, 2012
- Interim Report January 1 - September 30, 2012 October 19, 2012
Huhtamäki Oyj's Annual General Meeting is planned to be held on April 24, 2012.

This is a summary of Huhtamaki's interim report for January 1 - September 30, 2011. The complete report is attached to this release and is also available at the company website at www.huhtamaki.com.


HUHTAMÄKI OYJ
Group Communications

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 12,500 people in 58 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.

Industry Intelligence Editor's Note: In an omitted table Huhtamaki reported Q3 net income of €19 million. For the same period a year ago the company recorded net income of €25.5 million.

 

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