HUHTAMÄKI OYJ STOCK EXCHANGE RELEASE 15.2.2007 AT 8:00
RESULTS 2006
Huhtamaki full year result stable in 2006 Board proposes
increased dividend of EUR 0.42 per share (+11%)
* Net sales were EUR 2,275.6 million (+2%)
* The underlying EBIT* was EUR 157.6 million (EUR 160.2 million)
* Significant improvement in profitability in Americas
* Strong growth in Flexibles and Films as well as in Rigid Foodservice business
in the emerging markets
* Margin erosion in Rigid businesses in Europe and Oceania
* Bulk of restructuring programs in Europe completed
* In 2007, the underlying EBIT is expected to be around the level of 2006
Key figures
Q4 Q4 Change, Change,
EUR million 2006 2005 % 2006 2005 %
Net sales 557.2 558.4 0% 2,275.6 2,226.6 2%
EBIT
underlying* 23.7 35.0 -32% 157.6 160.2 -2%
EBIT margin % 4.3 6.3 - 6.9 7.2 -
EBIT
reported 20.4 25.1 -19% 145.5 57.7 152%
EPS**
reported 0.12 0.12 0% 0.94 0.07 -
Free cash flow -35.7 5.3 - -8.4 65.5 -
* The underlying earnings before interest and taxes (EBIT) excludes restructuring
and goodwill impairment charges
** Earnings per share (EPS)
CEO Heikki Takanen: "Year 2006 was eventful for Huhtamaki. We are pleased
with the growth achieved in strategic growth markets and segments. We are
especially satisfied with the significant improvement in profitability in
the Americas. Progress has been made in the implementation of our change
programs with the bulk of the restructuring program in Europe being completed.
Margin erosion in the Rigid businesses in Europe and Oceania was more severe
than expected, further accelerated by a clear increase in raw material and
energy costs. Also, the changing market dynamics in the UK was unexpected
resulting in volume decline."
"We will remain focused on operational efficiency. The emphasis will be on
finalizing the change programs and developing attractive growth platforms
while sharpening our strategy. In 2007, we expect the underlying EBIT to be
around the level of 2006."
For further information, please contact:
Mr. Heikki Takanen, CEO, tel. +358-10-686 7801
Mr. Sakari Ahdekivi, CFO, tel. +358-10-686 7853
Invitation to join Huhtamaki's 2006 Results presentation
At 11:00 Finnish time a conference for investors, analysts and media will
be held at our head office, address Länsituulentie 7, Espoo. CEO Heikki
Takanen and CFO Sakari Ahdekivi will present the results. After the
results presentation, a buffet lunch is served.
At 16:00 Finnish time / 14:00 UK time / 09:00 New York time a conference
call for investors and analysts will start with a management
presentation, followed by a question and answer session. The dial-in
number for participants is +44 20 7162 0125 and the reference code is
Huhtamaki.
The results presentation will be available at our website
www.huhtamaki.com approximately 11:00 Finnish time. A replay of the
conference call in the form of an audio webcast will be
available during the same evening after the event.
All materials will be available at www.huhtamaki.com.
Welcome!
RESULTS 2006
Huhtamaki full year result stable in 2006 Board proposes
increased dividend of EUR 0.42 per share (+11%)
* Net sales were EUR 2,275.6 million (+2%)
* The underlying EBIT* was EUR 157.6 million (EUR 160.2 million)
* Significant improvement in profitability in Americas
* Strong growth in Flexibles and Films as well as in Rigid Foodservice
business in the emerging markets
* Margin erosion in Rigid businesses in Europe and Oceania
* Bulk of restructuring programs in Europe completed
* In 2007, the underlying EBIT is expected to be around the level of 2006
Key figures
Q4 Q4 Change, Change,
EUR million 2006 2005 % 2006 2005 %
Net sales 557.2 558.4 0% 2,275.6 2,226.6 2%
EBIT
underlying* 23.7 35.0 -32% 157.6 160.2 -2%
EBIT margin % 4.3 6.3 - 6.9 7.2 -
EBIT
reported 20.4 25.1 -19% 145.5 57.7 152%
EPS**
reported 0.12 0.12 0% 0.94 0.07 -
Free cash flow -35.7 5.3 - -8.4 65.5 -
* The underlying earnings before interest and taxes (EBIT) excludes restructuring
and goodwill impairment charges
** Earnings per share (EPS)
CEO Heikki Takanen: "Year 2006 was eventful for Huhtamaki. We are pleased
with the growth achieved in strategic growth markets and segments. We are
especially satisfied with the significant improvement in profitability in
the Americas. Progress has been made in the implementation of our change
programs with the bulk of the restructuring program in Europe being completed.
Margin erosion in the Rigid businesses in Europe and Oceania was more severe
than expected, further accelerated by a clear increase in raw material and
energy costs. Also, the changing market dynamics in the UK was unexpected
resulting in volume decline."
"We will remain focused on operational efficiency. The emphasis will be
on finalizing the change programs and developing attractive growth
platforms while sharpening our strategy. In 2007, we expect the
underlying EBIT to be around the level of 2006."
October-December 2006
Net sales were flat at EUR 557.2 million. Sales were positively impacted
by price/mix changes (+2%) with minor effect from volume (-1%) and
currency translations (-1%).
In Europe-region, net sales increased to EUR 288.4 million (+5%) driven by
volume growth (+5%) with minor effect from price/mix changes and currency
translations. The region's underlying EBIT decreased by 71% to EUR 3.4 million
(EUR 11.7 million) in the quarter, corresponding to an EBIT margin of 1.2%
(4.2%). The reported EBIT, EUR 0.4 million (EUR 7.7 million), includes
restructuring charges of EUR 3.0 million (EUR 4.0 million).
In the Americas, the reported net sales figure of EUR 170.3 million (-6%)
was impacted by currency translations (-7%). The positive effect from
price/mix changes (+3%) was offset by volume decline (-2%). On a comparable
basis, volume development was flat. The region's underlying EBIT was
EUR 13.9 million (EUR 14.9 million), corresponding to an EBIT margin of
8.2% (8.1%). The reported and underlying EBIT are the same in both years.
In Asia-Oceania-Africa, the net sales figure of EUR 98.5 million (-2%)
was impacted by currency translations (-7%). Sales were positively
impacted by price/mix changes (+4%) and volume growth (+2%). The region's
underlying EBIT increased by 11% to EUR 6.9 million (EUR 6.2 million) in
the quarter, corresponding to an EBIT margin of 7.0% (6.2%). The reported
EBIT, EUR 6.6 million (EUR 0.2 million), includes restructuring charges
of EUR 0.2 million (EUR 6.0 million).
In the fourth quarter, the Group's underlying EBIT before corporate items
decreased by 26% to EUR 24.2 million (EUR 32.7 million), corresponding to
an EBIT margin of 4.3% (5.9%). Corporate net in the quarter was
EUR -0.5 million (EUR 2.3 million) reflecting the expiry of a major royalty
income. Hence, the underlying EBIT decreased by 32% to EUR 23.7 million
(EUR 35.0 million), corresponding to an EBIT margin of 4.3% (6.3%). The
reported EBIT, EUR 20.4 million (EUR 25.1 million), includes restructuring
charges of EUR 3.3 million (EUR 9.9 million).
Net financial items were EUR 9.4 million (EUR 11.5 million) in the quarter.
The reported result for the period was EUR 12.5 million (EUR 12.0 million).
The reported EPS remained unchanged at 12 cents.
In the fourth quarter, free cash flow was EUR -35.7 million (EUR 5.3 million)
including capital expenditure of EUR 80.7 million (EUR 58.3 million).
January-December 2006
In 2006, market demand for Huhtamaki's consumer packaging remained stable
in the mature markets and continued robust in the emerging markets, which
represented approximately 17% of Group net sales.
The underlying EBIT was largely in line with expectations, excluding
weaker than anticipated profitability within the Rigid businesses in
Europe and Oceania. In the Americas net sales were sustained on a good
level, while profitability improved significantly. The strong growth in
net sales in the Flexibles and Films businesses and in the emerging
markets as a whole had a positive result.
The implementation of change programs continued in 2006. Towards the end
of the year the emphasis shifted to developing attractive growth
platforms and accelerating profitable growth.
Business review by region
Net sales were EUR 2,275.6 million (+2% compared to year 2005). Sales
were positively impacted by volume growth (+2%) with minor effect from
price/mix changes and currency translations. The geographical
distribution of sales was the following: Europe 52%, Americas 31% and
Asia-Oceania-Africa 17%.
Raw material prices remained on a high level in 2006. The prices showed a
clear increase compared to the average level of the previous year and
peaked in October. Energy costs also increased from the previous year's
level.
Europe
In Europe, net sales for the full year remained flat at EUR 1,188.7 million
(+1%). Sales were positively impacted by volume growth (+2%) with minor effect
from price/mix changes and currency translations.
Net sales development in Europe was varied. Within Consumer Goods, sales
growth in the Flexibles and Films businesses was strong in product groups
such as confectionary and beverages, and was further accelerated by new
product introductions. Sales in the Rigid business remained subdued in
certain units. Volume decline was strongest in the UK due to the changing
market dynamics. Sales development in the Molded Fiber business was
stable. Within Foodservice, the business maintained its solid footing
throughout the year with growth accelerating towards the end of the year.
In Eastern Europe, which represented approximately 11% of the region's
sales, sales growth was robust as a whole and especially in Russia and
Poland.
In 2006 the region's underlying EBIT decreased by 28% to EUR 52.1 million
(EUR 71.9 million), corresponding to an EBIT margin of 4.4% (6.1%). The
positive impact from cost savings related to the restructuring program
was more than offset by margin erosion experienced in the Rigid business,
further accelerated by higher raw material and energy prices. Operational
inefficiencies in units with major change programs had a negative effect
with a weaker than anticipated closing of the year. In order to address
the situation in the Rigid business, the reinforcement of price management
and the alignment of the UK business to match market development were started.
The reported EBIT, EUR 40.3 million (EUR 8.1 million), includes restructuring
charges of EUR 11.8 million (EUR 63.9 million). On a rolling 12-month basis,
the region's underlying RONA was 6.7% (9.2%).
Americas
In the Americas, net sales for the full year were EUR 711.5 million
(+3%). On a comparable basis, sales were flat with a minor impact by
price/mix changes (+1%). After a stronger first quarter of the year,
volume growth leveled off in the remaining quarters. The impact from
currency translations was positive in the first half of the year;
annualized the effect was neutral.
Within Foodservice, performance was driven by the Retail Division
especially following the successful extension of the product offering of
the Chinet® brand with the Chinet Casuals® product line. In the remaining
Foodservice categories the change of product assortment in the second
half of the year had a negative sales impact before new product introductions
from year-end. Within Consumer Goods, the Frozen desserts category benefited
from a strong start to the year while the Flexibles and Films businesses
enjoyed favorable sales development throughout the year. In South America,
which represented approximately 14% of the region's sales, the Dairy category
posted good sales growth.
In 2006 the region's underlying EBIT showed a significant increase of 33% to
EUR 61.3 million (EUR 46.0 million), corresponding to an EBIT margin of 8.6%
(6.7%). This reflects continued improvements in operational efficiency along
with a successful supply chain and price management. The pace of result
improvement stabilized towards year-end. The reported EBIT was EUR 61.3 million.
In the previous year the reported EBIT of EUR 14.8 million included goodwill
impairment charges of EUR 31.2 million. On a rolling 12month basis, underlying
RONA was 11.0% (8.0%).
Asia-Oceania-Africa
In Asia-Oceania-Africa, net sales for the full year were EUR 375.4 million (+3%).
The positive impact of volume growth (+6%) was partially offset by currency
translations (-3%). Growth was led by the Flexibles business in India. Sales
development was favorable in South Africa while a reverse trend prevailed in
Oceania. The emerging markets represent approximately 43% of the region's sales.
In 2006 the region's underlying EBIT remained flat at EUR 24.7 million
(EUR 24.3 million), corresponding to an EBIT margin of 6.6% (6.7%). The
overall progress in profitability posted by the emerging markets was
largely offset by margin erosion in the Rigid business in Oceania due to
an increasingly competitive environment further accelerated by higher raw
material and energy prices. The reported full year EBIT of EUR 24.4 million
includes restructuring charges of EUR 0.3 million. The previous year's reported
EBIT of EUR 16.8 million included restructuring charges of EUR 6.0 million and
goodwill impairment charges of EUR 1.5 million. On a rolling 12-month basis,
underlying RONA was 8.1% (8.2%).
Financial review
In 2006 the underlying EBIT before corporate items decreased by 3% to EUR
138.1 million (EUR 142.2 million), corresponding to an EBIT margin of
6.1% (6.4%). This reflects weak development in certain Rigid units in
Europe and Oceania partly compensated for by improved profitability in
the Americas and sustained growth in the Flexibles and Films businesses,
as well as in the emerging markets.
Corporate net for the year was slightly higher at EUR 19.5 million
(EUR 18.0 million). Hence the underlying group EBIT remained flat at
EUR 157.6 million (EUR 160.2 million), corresponding to an EBIT margin of
6.9% (7.2%). The reported EBIT of EUR 145.5 million includes restructuring
charges of EUR 12.1 million. The previous year's reported EBIT of
EUR 57.7 million included restructuring charges of EUR 69.8 million and
goodwill impairment charges of EUR 32.7 million.
Net financial items for the year were EUR 36.8 million, virtually
unchanged from the previous year's EUR 36.9 million. The reported result
for the period was EUR 96.6 million (EUR 9.4 million). The reported EPS
was 94 cents (7 cents).
The average number of outstanding shares used in the EPS calculation was
99,169,003 (98,501,625) excluding 5,061,089 (unchanged) company's own
shares.
On a rolling 12-month basis, the return on investment (ROI) was 9.4% (4.0%)
and return on equity (ROE) was 11.7% (1.3%).
Balance sheet and cash flow
At the end of December 2006, net debt remained flat at EUR 710.7 million
(EUR 711.5 million). This corresponds to a gearing ratio of 0.83 (0.87).
Free cash flow was EUR -8.4 million (EUR 65.5 million) burdened by an
increase in capital expenditure and cash outflow relating to
restructuring. Working capital increased mainly due to higher inventories
in units with major change programs.
Total capital expenditure in 2006 amounted to EUR 154.0 million
(EUR 113.4 million), corresponding to an investment rate of 162% (113%)
of depreciation. The increase in capital expenditure is mainly explained by
the capacity expansion in China, India and Vietnam, as well as the continued
implementation of a common European enterprise resource planning (ERP) platform.
Direct expenditure on research and development amounted to EUR 19.3 million
(EUR 18.7 million).
The proceeds from the divestments conducted during the year amounted to
EUR 22.9 million. The Molded Fiber unit in Mexico was sold in March. It
had annual net sales of around EUR 12 million with approximately 100 employees.
As a result of the transaction the North American molded fiber operations are
more focused on foodservice and retail markets. The sale of Huhtamaki's expanded
polystyrene (EPS) packaging businesses in France and Portugal was finalized in
June. The sold units had annual net sales of around EUR 21 million with
approximately 130 employees. In the future serving the European fresh food
markets will continue by growing capacity in alternative technologies.
Strategic direction and financial targets
Several change programs have been launched to secure the long-term
competitiveness of the core businesses, including the restructuring
program announced in two phases. The first phase was completed in 2005.
During the reporting period the headline of efforts was operational
efficiency. In addition to the implementation of the second phase, the
focus was on getting the continuous improvement programs up to speed and
identifying ways to leverage group synergies. Towards the end of the
year, the emphasis was shifted to developing attractive growth platforms
in order to accelerate profitable growth in markets and segments where
the biggest competitive advantages can be achieved.
Progress was made in the key change program activities during the year.
In Europe, the relocation of the rigid packaging site from Göttingen in
Germany to Spain was completed during the first quarter of 2006, while
the relocation to Poland was completed by mid 2006. Over 400 employees
were affected in Göttingen. The final exit of the site in Göttingen is
planned to take place by mid 2007. The downsizing of the rigid packaging
site in Portadown, UK, was completed by the end of the first quarter of
2006, resulting in an employee reduction of close to 90.
In Asia-Oceania-Africa the construction of the new rigid packaging
facility in Guangzhou, China, started during the third quarter of 2006.
Once the larger facility in Guangzhou is in operation, the existing site
in Hong Kong will be relocated there by the end of 2007. Over 100 employees
will be affected in Hong Kong. The new flexible packaging facility in the
state of Uttaranchal in India was in operation at year-end 2006. The new
capacity added to the existing flexible packaging facility in Vietnam was
in operation during the third quarter of 2006.
In total, the activities from the first and second phases of the
restructuring program are estimated to result in annualized savings of
EUR 40 million by 2008.
The company's long term financial targets were updated in 2006. The
objective is for the earnings before interest and taxes (EBIT) margin to
reach 9%. The return on investment (ROI) is targeted at 15%. The long
term gearing target is around 100%. The target remains to keep an average
dividend payout ratio of 40% of the profit for the period.
Risk management
Risk management is an essential part of the Group's control system
purporting to ensure that the risks related to the business operations
are identified and monitored. During the year special emphasis has been
laid on the effectiveness of various risk management activities.
Huhtamaki's risk management comprises the organization participating in
risk management, a risk management process and related reporting, as well
as the Group Enterprise Risk Management (ERM) Policy. All Group functions
and business units participate in a regular risk survey and the survey is
performed annually for all relevant units. The key risks are divided into
strategic risks, financial risks and operational risks. Huhtamaki takes
measures to manage and limit the possible effects of risks.
Regarding strategic risks, special focus has been laid on shifts in
technologies and materials. Increasing attention has also been paid to
risks attached to major change programs. Raw material and energy price
fluctuations as well as changes in clientele are challenging factors in
price management and profitability. Strategic risks also include
environmental risks.
Financial risks are risks attached to credit, liquidity and interest
rates as well as foreign exchange risks.
Operational risks are managed by creating procedures, systems and models
in order to secure compliance with best practices. The most significant
operational risks are destruction of production facilities, product
safety and quality risks, disruptions in raw material supply, contractual
risks and human resources risks. Also Group-wide insurance programs have
been established to govern insurable operational risks. The programs
cover risks relating to property damage, business interruption, various
liability exposures, cargo and business travel in the Group.
Environmental review
Huhtamaki adheres to its Group Environmental Policy in order to ensure
globally consistent operating principles. This is complemented by more
detailed corporate policies and guidelines such as the code of conduct
for suppliers. In addition, the Group has committed to following the
Business Charter for Sustainable Development by the International Chamber
of Commerce (ICC). Environmental management systems and tools have been
created to support implementation and monitor progress. All manufacturing
sites regularly report on their environmental performance through
environmental key performance indicators. From the total number of
manufacturing sites, 51% (49%) follow externally certified environmental
management systems such as ISO 14001 and the EcoManagement and Audit
Scheme (EMAS) or internally audited programs such as the US Environmental
Care Program. The significant direct environmental aspects of operations
are energy use, emissions into the air and solid waste.
The Group is pursuing the environmental targets set in 2003 and the cycle
for their renewal calls for an update in 2007. Progress towards reaching
these goals has been made in energy efficiency and waste to recovery.
While the level of volatile organic compounds (VOC) emissions has
reduced, there is still room for improvement. The new Regulation of the
European Union concerning the Registration, Evaluation, Authorization and
Restriction of Chemicals (REACH) is initially assessed to have rather
insignificant direct impacts on a downstream user like Huhtamaki.
Personnel
Huhtamaki had 14,792 (14,935) employees at year-end. The number employees
in Europe-region was 6,731 (7,022); the corresponding figure for the
Americas was 3,728 (3,867) and for Asia-OceaniaAfrica 4,333 (4,046). The
average number of employees was 14,749 (15,294).
The parent company employed 839 (762) people at year-end, comprising the
Espoo head office 75 (80) and the Finnish packaging operations 764 (682).
The annual average was 850 (783).
Changes in Group Executive Team
A number of key appointments took place in the Group Executive Team
during the year. Pii Kotilainen started as Senior Vice President, Human
Resources on January 2, 2006. Timo Salonen was appointed Executive Vice
President, Strategy Development, and Walter Günter started as Executive
Vice President, Europe Rigid Packaging; both appointments became
effective from September 1, 2006. Simultaneously, Maurice Petitjean was
appointed Executive Vice President, Flexibles, Films and Molded Fiber
Europe. He assumed global leadership of the Flexibles and Films
businesses from the beginning of 2007. George T. Lai was appointed
Executive Vice President to the Asia-Oceania-Africa region, responsible
for the Rigid and Molded Fiber businesses, with effect from January 1,
2007. He succeeded Henk Koekoek, who retired as planned at the end of
2006.
Decisions taken by the Annual General Meeting in 2006
The Annual General Meeting of Shareholders (AGM) was held in Helsinki on
March 27, 2006. The meeting approved the company's and consolidated
accounts for 2005 and discharged the company's Board of Directors and the
CEO from liability. The dividend was set at EUR 0.38 per share, unchanged
from the previous year. Furthermore, the AGM approved the option rights
2006 plan directed at certain members of the management of Huhtamäki Oyj
and its subsidiaries. The option rights will entitle subscription for a
total of 3,300,000 shares during 2008-2014. The Board of Directors was
granted authorization to decide on the conveyance of the company's own
shares within one year's time. The authorization was not exercised during
the year.
Eija Ailasmaa, George V. Bayly, Robertus van Gestel, Paavo Hohti, Mikael
Lilius, Anthony J.B. Simon and Jukka Suominen were reelected to the Board
of Directors for the term lasting until the next AGM. The Board of
Directors subsequently elected Mikael Lilius as its Chairman and Paavo
Hohti as Vice Chairman.
Share capital and shareholders
At year-end, the company's registered share capital was EUR 358,657,670.00
(EUR 353,053,864.80) corresponding to a total number of outstanding shares
of 105,487,550 (103,839,372) including 5,061,089 (unchanged) company's own
shares. The company's own shares represent 4.8% of the total number of shares.
The net figure of outstanding shares was 100,426,461 (98,778,283). In
January-December, a total of 1,648,178 new shares were issued following share
subscriptions based on option rights 2000 A, B and C as well as 2003 A and B.
The option rights 2000 plan expired on October 31, 2006.
The ownership structure relating to the largest registered shareholders
saw some adjustments but was not subject to major changes over the year.
At the end of December there were 21,582 (20,268) registered shareholders.
Foreign ownership accounted for 23.7% (21.3%), of which 19.2% (17.8%) was
under nominee registration within financial institutions.
Share developments
Huhtamaki's share is quoted on the Helsinki Stock Exchange on the Nordic
Large Cap list under the Materials sector. At the end of December, the
company's market capitalization was EUR 1,569.7 million (EUR 1,444.4 million)
and EUR 1,494.3 million (EUR 1,374.0 million) excluding company's own shares.
With a closing price of EUR 14.88 (EUR 13.91) the share price increased by 7%
(17%) from the beginning of the year, while the OMX Helsinki CAP PI Index
increased by 25% (30%). In January-December, the highest price paid for the
Huhtamaki share was EUR 16.73 on April 7, 2006 (EUR 14.88 on July 14, 2005),
and the lowest price paid was EUR 12.21 on June 13, 2006 (EUR 11.37 on April 18,
2005). The volume weighted average price was EUR 14.35 (EUR 12.84).
The cumulative value of the Huhtamaki share turnover was virtually unchanged
from the previous year at EUR 1,085.6 million. The trading volume of
75.6 million (84.4 million) shares equaled an average daily turnover of
EUR 4.3 million (unchanged) or, correspondingly 301,371 (333,665) shares.
Trading in the Huhtamaki share was particularly strong in October with a volume
turnover of EUR 126.4 million and weakest in July with EUR 62.7 million.
In total, turnover of the company's 2000 A, B and C as well as 2003 A and
B option rights was EUR 14.6 million (EUR 9.4 million), corresponding to
a trading volume of 1,252,614 (738,916). The company's 2003 B option
rights were listed on the Helsinki Stock Exchange on May 2, 2006.
Outlook for 2007
Organic growth will continue to be a priority. The positive impact from
sales growth and cost savings should balance out the significant reduction
in unallocated corporate income. Volatile polymer-based raw material and
energy prices may put pressure on margins.
Capital expenditure is estimated to be somewhat lower in 2007 compared to
2006.
Despite a slow start in the first half of the year, the underlying EBIT
for the full year is expected to be around the level of 2006.
Annual General Meeting 2007
The Annual General Meeting of Shareholders will be held on Thursday,
April 12, 2007, at 15.00 pm (Finnish time), at Finlandia Hall,
Mannerheimintie 13 e, Helsinki.
Dividend proposal
The Board of Directors will propose to the AGM that a dividend of EUR
0.42 (EUR 0.38) per share be paid.
Espoo, February 14, 2007
Huhtamäki Oyj
Board of Directors
In 2007, Huhtamaki will publish three Interim Reports: the January March
on May 10, January June on July 19 and January September on October 25.
NOTE: CHANGES TO ACCOUNTING PRINCIPLES
The Group has adopted the following IFRS standards and interpretations
considered applicable to Huhtamaki, with effect from January 1, 2006:
IFRS 7 Financial Instruments: Disclosures
Following amendments to IAS 39 Financial Instruments: Recognition and
Measurement
Fair value option
Cash flow hedge accounting of forecast intra-group transactions
Financial guarantee contracts and credit insurance
Amendment to IAS 21 The effects of Changes in Foreign Exchange Rates
Foreign operations
The effect of these newly adopted standards has not had a material impact
on the reported results.
In the Americas segment, the price reduction type item has been
transferred from sales and marketing costs to amend net sales.
In the business segment the whole item fell on the Foodservice segment.
The effect of this restatement on net sales was EUR -13.8 million in
January-September 2006 and EUR -17.1 million in 2005. The restatement did
not have material impact on net sales based key ratios.
Income statement
Q1-Q4 Q1-Q4 Change Q4 Q4 Change
EUR million 2006 2005 % 2006 2005 %
Net sales 2,275.6 2,226.6 2.2% 557.2 558.4 -0.2%
EBITDA 240.4 190.2 26.4% 44.7 51.0 -12.4%
EBIT 145.5 57.7 152.2% 20.4 25.1 -18.7%
% of net sales 6.4% 2.6% - 3.7% 4.5% -
Net financial
items -36.8 -36.9 -0.3% -9.4 -11.5 -18.3%
Income of
associated
companies 0.5 0.6 -16.7% 0.2 0.3 -33.3%
Result before
taxes 109.2 21.4 410.3% 11.2 13.9 -19.4%
Taxes -12.6 -12.0 5.0% 1.3 -1.9 -168.4%
Result for the
period 96.6 9.4 927.7% 12.5 12.0 4.2%
Attributable to:
Equity holders
of the parent 93.3 6.9 11.8 11.3 4.4%
Minority interest 3.3 2.5 32.0% 0.7 0.7 0.0%
96.6 9.4 - 12.5 12.0 4.2%
Earnings per
share (EUR) 0.94 0.07 - 0.12 0.12 0.0%
Earnings per
share (EUR) -
diluted 0.93 0.07 - 0.12 0.11 9.1%
Regions
Net sales
Q1-Q4 Q1-Q4 Change Q4 Q4 Change
EUR million 2006 2005 % 2006 2005 %
Europe 1,188.7 1,172.1 1.4% 288.4 276.1 4.5%
Americas 711.5 690.0 3.1% 170.3 181.7 -6.3%
Asia-Oceania
Africa 375.4 364.5 3.0% 98.5 100.6 -2.1%
Total 2,275.6 2,226.6 2.2% 557.2 558.4 -0.2%
Interregional sales are not
significant.
EBIT
Q1-Q4 Q1-Q4 Change Q4 Q4 Change
EUR million 2006 2005 % 2006 2005 %
Europe 40.3 8.1 397.5% 0.4 7.7 -94.8%
% of net sales 3.4% 0.7% - 0.1% 2.8% -
Americas 61.3 14.8 314.2% 13.9 14.9 -6.7%
% of net sales 8.6% 2.1% - 8.2% 8.2% -
Asia-Oceania
Africa 24.4 16.8 45.2% 6.6 0.2 -
% of net sales 6.5% 4.6% - 6.7% 0.2% -
EBIT before
corporate items 126.0 39.7 217.4% 20.9 22.8 -8.3%
% of net sales 5.5% 1.8% - 3.8% 4.1% -
Corporate net 19.5 18.0 8.3% -0.5 2.3 -121.7%
Total 145.5 57.7 152.2% 20.4 25.1 -18.7%
% of net sales 6.4% 2.6% 3.7% 4.5%
Net assets and RONA % (12m roll.)
Dec 31 Dec 31 Change
EUR million 2006 2005 %
Europe 782.7 781.9 0.1%
RONA-% underlying 6.7% 9.2% -
RONA-% reported 5.1% 1.0% -
Americas 558.1 575.6 -3.0%
RONA-% underlying 11.0% 8.0% -
RONA-% reported 11.0% 2.6% -
Asia-Oceania-Africa 301.0 296.3 1.6%
RONA-% underlying 8.1% 8.2% -
RONA-% reported 8.1% 5.7% -
Business segments
Net sales
Q1-Q4 Q1-Q4 Change Q4 Q4 Change
EUR million 2006 2005 % 2006 2005 %
Consumer Goods 1,495.3 1,470.2 1.7% 359.0 360.3 -0.4%
Foodservice 780.3 756.4 3.2% 198.2 198.1 0.1%
Total 2,275.6 2,226.6 2.2% 557.2 558.4 -0.2%
Intersegment sales are not
significant.
EBIT
Q1-Q4 Q1-Q4 Change Q4 Q4 Change
EUR million 2006 2005 % 2006 2005 %
Consumer Goods 74.7 26.8 178.7% 11.6 13.9 -16.5%
% of net sales 5.0% 1.8% - 3.2% 3.9% -
Foodservice 51.3 12.9 297.7% 9.3 8.9 4.5%
% of net sales 6.6% 1.7% - 4.7% 4.5% -
EBIT before
corporate items 126.0 39.7 217.4% 20.9 22.8 -8.3%
% of net sales 5.5% 1.8% - 3.8% 4.1% -
Corporate net 19.5 18.0 8.3% -0.5 2.3 -121.7%
Total 145.5 57.7 152.2% 20.4 25.1 -18.7%
% of net sales 6.4% 2.6% 3.7% 4.5%
Balance sheet
Dec 31 Dec 31
EUR million 2006 % 2005 %
ASSETS
Non-current assets
Intangible assets 560.3 24.7% 554.0 24.0%
Tangible assets 840.1 37.0% 849.2 36.8%
Investments 3.3 0.1% 3.5 0.2%
Interest bearing receivables 6.6 0.3% 4.3 0.2%
Deferred tax assets 14.1 0.6% 16.0 0.7%
Other non-current assets 69.0 3.0% 83.9 3.6%
1,493.4 65.8% 1,510.9 65.5%
Current assets
Inventory 341.8 15.1% 311.3 13.5%
Interest bearing receivables 0.5 0.0% 17.2 0.7%
Income tax receivables 9.9 0.4% 29.6 1.3%
Trade and other current receivables 400.7 17.7% 400.7 17.4%
Cash and cash equivalents 22.3 1.0% 37.6 1.6%
775.2 34.2% 796.4 34.5%
Total assets 2,268.6 100.0% 2,307.3 100.0%
EQUITY AND LIABILITIES
Shareholders' equity 841.1 37.1% 802.0 34.8%
Minority interest 19.3 0.9% 18.4 0.8%
860.4 37.9% 820.4 35.6%
Non-current liabilities
Interest bearing liabilities 314.7 13.9% 404.1 17.5%
Deferred tax liabilities 62.9 2.8% 81.5 3.5%
Provisions 46.8 2.1% 51.1 2.2%
Other non-current liabilities 115.3 5.1% 122.7 5.3%
539.7 23.8% 659.4 28.5%
Current liabilities
Interest bearing liabilities 425.4 18.8% 366.5 15.9%
Provisions 11.9 0.5% 24.2 1.0%
Income tax liabilities 19.7 0.9% 35.4 1.5%
Trade and other current liabilities 411.5 18.1% 401.4 17.4%
868.5 38.3% 827.5 35.9%
Total equity and liabilities 2,268.6 100.0% 2,307.3 100.0%
Dec 31 Change Dec 31
2006 % 2005
Net debt 710.7 -0.1% 711.5
Net debt to equity (gearing) 0.83 -4.6% 0.87
Cash flow statement
Q1-Q4 Q1-Q4 Q4 Q4
EUR million 2006 2005 2006 2005
Result for the period* 96.6 9.4 12.5 12.0
Adjustments* 126.9 225.4 21.8 44.4
Change in inventory* -44.1 -2.7 2.5 -0.7
Change in non-interest bear.
receivables* -9.7 -59.5 34.0 -6.7
Change in non-interest bearing
payables* 19.3 52.7 -15.7 22.7
Dividends received* 1.0 0.9 0.7 0.5
Interest received* 2.7 3.8 0.0 1.0
Interest paid* -38.0 -43.6 -9.3 -9.3
Other financial expense and
income* 0.7 -2.5 0.9 -2.4
Paid taxes* -16.3 -15.4 -4.1 -1.0
CASH FLOWS FROM OPERATING
ACTIVITIES 139.1 168.5 43.3 60.5
Capital expenditure* -154.0 -113.4 -80.7 -58.3
Proceeds from selling tangible
assets* 6.5 10.4 1.7 3.1
Divested subsidiaries 22.9 - -0.4 -
Change in long-term deposits -2.3 15.7 -0.5 -0.1
Change in short-term deposits 16.7 -1.2 0.1 2.1
CASH FLOWS FROM INVESTING -110.2 -88.5 -79.8 -53.2
Proceeds from long-term borrowing 409.0 1045.0 16.0 404.9
Repayment of long-term borrowing -495.5 -1021.8 -49.3 -435.1
Proceeds from short-term
borrowing 2,612.7 2,343.1 655.2 713.7
Repayment of short-term borrowing -2,543.6 -2,405.7 -600.7 -697.5
Dividends paid -37.5 -37.4 - -
Proceeds from stock option
exercises 13.5 2.9 8.7 0.3
CASH FLOWS FROM FINANCING -41.4 -73.9 29.9 -13.7
CHANGE IN LIQUID ASSETS -15.3 9.0 -6.3 -6.0
Cash flow based -12.5 6.1 -6.6 -6.4
Translation difference -2.8 2.9 0.3 0.4
Liquid assets period start 37.6 28.6 28.6 43.6
Liquid assets period end 22.3 37.6 22.3 37.6
Free cash flow (including
figures marked with *) -8.4 65.5 -35.7 5.3
Changes in
shareholders'
equity
Minor-
ity
Attributable to equity inter-
holders of the parent est Total
Fair
value
Share and Retai-
Share issue Trea- Trans- other ned Total
capi- pre- sury lation reser- ear- equi-
EUR million tal mium shares diff. ves nings ty
TOTAL EQUITY AT
DEC 31, 2004 351.5 95.4 -46.5 -119.7 -2.9 504.0 781.8 14.7 796.5
Cash flow hedges
Hedge result
deferred to
equity -2.0 -2.0 -2.0
Hedge result
recognized in income
statement 4.6 4.6 4.6
Translation
differences 43.4 43.4 1.1 44.5
Deferred tax in
equity 0.1 0.1 0.1
Other changes 0.3 0.3 0.3
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY 43.4 2.7 0.3 46.4 1.1 47.5
Result for the
period 6.9 6.9 2.5 9.4
TOTAL RECOGNIZED INCOME AND EXPENSE
FOR THE PERIOD 43.4 2.7 7.2 53.3 3.6 56.9
Dividend -37.4 -37.4 -37.4
Share based
payments 1.4 1.4 1.4
Stock options
exercised 1.5 1.4 2.9 2.9
BALANCE AT DEC
31, 2005 353.0 96.8 -46.5 -76.3 -0.2 475.2 802.0 18.4 820.4
TOTAL EQUITY AT
DEC 31, 2005 353.0 96.8 -46.5 -76.3 -0.2 475.2 802.0 18.4 820.4
Cash flow hedges
Hedge result
deferred to
equity 1.7 1.7 1.7
Hedge result
recognized in income
statement 2.2 2.2 2.2
Translation
differences -30.4 -30.4 -2.4 -32.8
Deferred tax in
equity -1.7 -1.7 -1.7
Other changes -3.6 -3.6 -3.6
NET INCOME RECOGNIZED
DIRECTLY IN EQUITY -30.4 2.2 -3.6 -31.8 -2.4 -34.2
Result for the
period 93.3 93.3 3.3 96.6
TOTAL RECOGNIZED INCOME AND EXPENSE
FOR THE PERIOD -30.4 2.2 89.7 61.6 0.9 62.4
Dividend -37.5 -37.5 -37.5
Share based
payments 1.4 1.4 1.4
Stock options
exercised 5.7 7.9 13.6 13.6
BALANCE AT DEC
31, 2006 358.7 104.7 -46.5 -106.7 2.1 528.8 841.1 19.3 860.4
Other key information
Q1-Q4 Q1-Q4 Change
EUR million 2006 2005 %
Equity per share (EUR) 8.37 8.12 3.1%
ROE, % 11.7 1.3 800.0%
ROI, % 9.4 4.0 135.0%
Capital expenditure 154.0 113.4 35.8%
Personnel 14,792 14,935 -1.0%
Result before taxes (12m roll.) 109.2 21.4 410.3%
Depreciation 92.6 96.5 -4.0%
Amortization of other
intangible assets 2.7 36.0 -92.5%
Contingent liabilities Dec 31 Dec 31
2006 2005
EUR million Group Parent Group Parent
Mortgages 14.7 14.5 14.9 14.5
Guarantee obligations
For subsidiaries - 132.0 - 111.2
For others 3.8 3.8 5.5 5.5
Lease payments 59.3 0.3 66.6 0.4
Nominal values of derivative instruments
Dec 31 Dec 31
2006 2005
EUR million Group Group
Currency forwards, transaction risk hedges 54 91
Currency forwards, translation risk hedges 112 59
Currency swaps, financing hedges 107 121
Currency options 1 1
Interest rate swaps 139 258
Electricity forwards 2 1
The following EUR rates have been applied to GBP, INR, AUD and USD
Q4/06 Q4/05
Income statement, average: GBP 1 = 1.467 1.462
INR 1 = 0.018 0.018
AUD 1 = 0.600 0.612
USD 1 = 0.796 0.803
Q4/06 Q4/05
Balance sheet, month end: GBP 1 = 1.489 1.459
INR 1 = 0.017 0.019
AUD 1 = 0.599 0.621
USD 1 = 0.759 0.848
HUHTAMÄKI OYJ RESULTS 2006: Huhtamaki full year result stable in 2006 Board proposes
| Source: Huhtamäki Oyj