Huhtamaki posts solid returns on emerging market growth

By Rory Harrington

- Last updated on GMT

Related tags Investment Huhtamaki

Accelerated demand from emerging markets, shrewd management of raw material price hikes and favourable currency translations all contributed to a “solid” performance in 2010, said Huhtamaki.

The Finland-based company announced today that EBIT for the full year jumped 20 per cent year-on-year to €134m while sales rose 6 per cent to €1952m. Profitability was boosted by a strong Q4 performance - which contributed €28m to group EBIT.

Asked why the Q4 figure was noteworthy when it accounted for only 21 per cent of annual EBIT, a company spokeswoman told FoodProductionDaily.com: “There is an element of seasonality in our business, so doing year-on-year comparisons is more relevant than looking at figures between different quarters in the same year.”

She explained that the Q4 figure for 2010 was more than double the same period in the previous year.

The firm said it expected the positive trend, which emerged in the second half of the year, to continue into 2011. But it cautioned that it expected further raw material price increases – particularly in plastics – to put pressure on profit margins.

Growth targeted

While its flexible packaging, films and molded fiber divisions posted good growth, its North American operations suffered from “weak demand and challenging market conditions” ​through out 2010.

Huhtamaki CEO Jukka Moisio said he was “pleased”​ to have off-loaded its rigid packaging business in December for €52m and highlighted the company’s desire for growth.

“We will now concentrate on our core businesses and seek to grow them through well-targeted investments, innovations and acquisitions,”​ he said. “The positive development of all the business segments during the final quarter of 2010 strengthens our belief in an ongoing good momentum and our team is determined to pursue new growth opportunities."

The group said it had also significantly cut is debt by €98m to €270m during the year.

Asian powerhouse

Outlining segment performance, Huhtamaki said growth in flexible packaging had been driven by strong demand in Asia.

“Our operations in India, Vietnam and Thailand all saw growth in excess of 20 per cent in 2010,”​ said the spokeswoman. “While we can’t outline any figure, we expect growth from this region to continue.”

Volumes also developed positively in Europe as market consolidation created growth opportunities but Huhtamaki said development in Oceania had been “unsatisfactory”.

A good H2 performance saw sales reach €525m and EBIT hit €34m, a year-on-year rise of 21 per cent, despite “significant increases in raw material costs”,​ added the firm.

Molded fiber, used to make fresh produce packaging for sectors such as eggs and fruit, had a “steady​” year with profits coming not through increased sales but because of successful pricing and favourable currency transactions.

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