North American rebound drives Q1 growth for Huhtamaki
The Finland-based company said nets sales rose 7% to €550m and EBIT (earnings before interest and taxes) fell just short of €34m. However, the latter figure excluded €7m one-off costs incurred in 2011. Taking this amount into account, EBIT dropped below the €27m recorded 12 month ago.
The firm highlighted increasing raw material prices as an issue throughout the quarter to the end of March and forecast these would remain volatile for the rest of the year.
Segment performance
Volume driven increases in net sales and “strong growth” in Europe underpinned steady performance in Huhtamaki’s flexible packaging division, it said.
Sales rose 4% to €153m, while EBIT grew 17% to €12m compared to 12 months earlier. However this figure excluded costs of €7.8m relating to a plant closure in New Zealand, which the firm announced last August, leading to the loss of 135 jobs. This figure was slightly offset by the firm’s food service division posting a non-recurring item (NRI) credit of €0.8m.
The company had estimated the New Zealand shut-down would cost around €8m as a one-off charge, but that it was likely to have been booked in the third quarter 2011, rather than Q1 2012.
Huhtamaki said it was shuttering the facility in New Lynn, near Auckland over concerns about its efficiency and competition in the local market. The company said it intended to transfer manufacturing capacity from the North Island site to its other flexible plants Asia, from where it would be able to serve its customers in the Oceania region.
It has one facility in India, two in Thailand and one in Vietnam.
In films, Q1 year-on-year net sales jumped €7.5m to €50m, although EBIT dropped 30% to €2.1m. The company said performance had seen an upswing compared to the end of 2011 and been strongest in North America and industrial markets.
The firm said earnings development in this region had been “particularly strong ” – with food service ice-cream packaging highlighted.
“A warm spring in the US led to strong ice-cream sales which increased demand for packaging,” Kaisa Marttinen, company investor relations manager told FoodProductionDaily.com.
The 11% year-on year growth in North America was only matched by outlook molded fiber division and more than twice that of flexible packaging and films, said the company.
Outlook
Huhtamaki forecast performance would stay “relatively stable during 2012” and that raw material costs would remain volatile. It is expected a growth in net sales and indicated that more acquisitions were possible as it said its strong financial position would allow it to “address profitable growth opportunities”.
Capital expenditure was likely to be below €100m in 2012.
