Huhtamäki (HUH1V) Q2 2024 earnings summary

Executive summary

• Q2 2024 operational profitability improved, with adjusted EBIT up 14% to a 10.2% margin, driven by efficiency and cost-saving programs despite a 1% sales decline and muted demand.

• H1 2024 net sales decreased 3% year-over-year, with volumes stable and pricing slightly negative due to competitive pressure.

• Free cash flow increased, supported by higher profitability, lower capital expenditure, and asset sales.

• Ongoing EUR 100 million efficiency program contributed positively, with restructuring in China, Malaysia, and UAE.

• Early signs of demand recovery in on-the-shelf categories, while on-the-go categories remain soft due to inflation and consumer behavior.

Financial highlights

• Q2 2024 net sales: EUR 1,037.5 million (-1% YoY); H1 2024 net sales: EUR 2,041.4 million (-3% YoY).

• Q2 2024 adjusted EBIT: EUR 105.5 million (+14% YoY, margin 10.2%); H1: EUR 204.3 million (+11% YoY, margin 10.0%).

• Q2 2024 adjusted EPS: EUR 0.63 (+14% YoY); H1: EUR 1.17 (+10% YoY).

• Adjusted EBITDA margin: 15.1% in Q2 (up from 13.4%); 15.0% in H1 (up from 13.4%).

• CapEx reduced 37% in H1 to EUR 85 million; free cash flow reached EUR 92 million in H1.

Outlook and guidance

• No changes to outlook; management aims to maintain a 10% EBIT margin in H2 and is optimistic about volume recovery.

• Trading conditions expected to improve versus 2023, but volatility and uncertainty to persist.

• Efficiency and savings initiatives to support performance; diversified product portfolio and strong financial position enable pursuit of growth opportunities.

• Recovery in demand expected, but timing remains uncertain; some growth may start in H2 2024, with full recovery possibly extending into 2025.