Restructuring insulates Huhtamaki’s profits from market weakness
For the full year, net sales fell almost 10 per cent to €2,037.7m as a result of lower, volumes, divestments, and discontinued operations.
But cost of goods sold declined faster than net sales, to €1,699.1m in 2009 from €2,043.2m in the previous year, bolstering margins and delivering an improvement in profits. Gross profits rose from €216.8m to €338.6m and an earnings loss (EBIT) of €74.5m in 2008 was turned into a profit of €119.1m last year.
Behind this improvement were efforts to streamline the group. The Consumer Goods and Foodservice businesses in Europe were segregated and four units in Australia and four in South America were divested during the year. The Consumer Goods segment now operates in Europe only, and a strategic review of these operations is ongoing.
Other restructuring moves in 2009 included the closure of a rigid plastics site in Phoenix, US, and the discontinuation of flexibles manufacturing in Malvern, US.
Business performance among the different segments of the Huhtamaki group varied in 2009. In Flexibles Global, which accounts for 22 per cent of total sales, volumes remained stable but price reductions applied as a result of lower raw material costs had a negative impact on net sales, which fell from €498m in 2008 to €464m last year.
In North America, which is the biggest segment accounting for 25 per cent of sales, growth was strong in the first part of the year but fell off slightly in the second half. Overall sales were €529m compared to €536m the year before. Within the segment, retail sales grew driven by new products while food service sales suffered as a result of market weakness and restructuring of the plastics operations. And, in the frozen desserts business, market positions were strengthened and sales grew slightly.
Meanwhile, in Food Service Europe-Asia-Oceania, net sales stood at €450m in 2009 (€490 in 2008). Huhtamaki said the decline was due to market softness that was especially pronounced in Europe.
As for smaller segments, sales in Films Global fell to €154m from €201m, in Rough Molded Fiber Global net sales were relatively stable at €208 (€214 in 2008), and Rigid Consumer Plastics saw sales trimmed from €390m to €282m.
Looking forward to 2010 Huhtamaki said conditions look uncertain but insisted that the business is in a good financial position to address market opportunities. Capital expenditure is expected to be higher than in 2009 but below €100m.