Huhtamaki highlights strong flexible and film growth, flags North American weakness

By Rory Harrington

- Last updated on GMT

Huhtamaki highlights strong flexible and film growth, flags North American weakness

Related tags North america

Huhtamaki today blamed the ongoing weak economic conditions in North America for a 5 per cent year-on-year drop in Q1 EBIT but hailed strong performance in its flexible and film operations as evidence that packaging demand remained robust.

The Finland-based company announced that EBIT dropped from EUR 28.9m to EUR 27.4m for the three-month period ending March 31, 2011. Improved performance in film and flexibles were not sufficient to offset continued high raw material costs and ongoing decline in the North American market, it said.

However, the firm was keen to stress that overall net sales had jumped 6 per cent on increased volumes in the flexible and film divisions.

Huhtamaki said it expected the upward trend that emerged in the second half of 2010 to continue throughout this year but conceded that economic headwinds in terms of raw material prices and “uncertain conditions”​ in the US and Canada would persist in putting margins under pressure.

Segment performance

Flexible packaging posted strongest performance, with net sales jumping by 15 per cent to EUR 146m, while EDIT edged up by 3 per cent to EUR 10.2m. Huhtamaki produces flexible packaging for the food, pet food, hygiene and health care products sectors from plants in Europe, Asia, Oceania and South America.

“Successful margin management and robust volume growth more than offset the continued raw material cost pressure,”​ said a company statement.

Films, used in packaging and a host of other applications, saw sales rise EUR 800K to EUR 42.4m while EBIT rose by EUR 500K.

Volume growth was in the health rather than food sector.

North America

Lower ice cream sales hit packaging performance, while higher raw material costs and lower volumes also contributed to a drop in North American returns. Sales fell by EUR 2m to EUR111m, while EBIT tumbled from EUR 8.4 in 2010 to EUR 6.6m.

Molded fibre, used to make fresh product packaging for eggs and fruit, saw sales increase EUR 3m to more than EUR 58m.

The company also post a free cash flow for the reporting period was EUR -32 million, compared to EUR 7 million because it had invested in high inventories in preparation for the upcoming peak season.

Capital expenditure for 2011 is expected to be around EUR 100 million.

Related topics Processing & Packaging

Related news

Show more