Huhtamaki Oyj ((FI:HUH1V)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Huhtamaki Oyj exuded a generally positive sentiment, highlighting significant achievements in efficiency improvements, sustainability, and growth within the fiber segment. Despite these accomplishments, the company acknowledged ongoing challenges in markets such as India and Turkey, alongside the persistent impact of inflationary pressures in certain segments.
Strong Earnings Performance
Huhtamaki Oyj reported a solid financial quarter and year, with comparable net sales turning positive in Q4, showing a 3% growth. The company celebrated an adjusted EBIT margin of 10.4% for the quarter, marking the first time it concludes the year with a double-digit EBIT margin.
Efficiency Program Success
The efficiency program initiated in late 2023 is ahead of schedule, achieving €76 million in savings. The company expects to surpass the €100 million target earlier than planned and at a lower cost, underlining its commitment to operational excellence.
Sustainability Achievements
Huhtamaki made remarkable strides in sustainability, achieving a 28% improvement in the total recordable incident rate. The company also reported significant progress in reducing Scope 1 and Scope 2 greenhouse gas emissions, reinforcing its commitment to environmental responsibility.
Fiber Segment Growth
The fiber segment experienced robust performance, with a 12% increase in net sales driven by seasonality and higher pricing for recyclable fiber. This growth underscores the segment’s vital role in the company’s overall strategy.
Dividend Increase
The Board of Directors proposed a 5% increase in the dividend, marking the 16th consecutive year of growth and offering a yield of 3.2%. This move reflects the company’s confidence in its financial health and future prospects.
Challenges in India and Turkey
Huhtamaki’s flexible packaging segment faced difficulties in India and Turkey, highlighting a need to enhance top-line sales and competitiveness in these regions. Addressing these challenges remains a priority for the company.
Impact of Inflationary Pressures
Inflationary pressures continued to affect the market, impacting pricing and consumer spending, particularly within the foodservice segment. This trend posed challenges to maintaining margins and sales growth.
Negative Impact of FX
The full-year FX impact was negative, reducing comparable net sales by 1% or €37 million. Currency fluctuations remain a concern for the company’s financial performance.
Foodservice Segment Decline
The foodservice segment ended the year with a 5% decline in sales, influenced by inflationary pressures and boycotts in the Middle East. This decline highlights areas requiring strategic adjustments.
Forward-Looking Guidance
Looking ahead, Huhtamaki aims to maintain disciplined capital expenditure, which was significantly reduced in 2024, while prioritizing safety and sustainability. The company also announced a potential 5% increase in dividend yield, continuing its growth streak. Furthermore, the separation of the fiber packaging and food service segments into distinct entities is expected to enhance accountability and streamline decision-making.
In summary, Huhtamaki Oyj’s earnings call conveyed a positive outlook amidst some challenges. The company’s strong financial performance, efficiency gains, and commitment to sustainability were standout themes. However, ongoing challenges in certain markets and inflationary pressures need to be addressed to sustain growth.
