Hartmann Corporate presentation 1
Q2 2019 highlights Revenue DKK 553m Volume growth in all markets Maintaining solid profitability DKK 542m Higher volumes across markets Higher efficiency and selling prices • • Profit margin Particularly strong developments in Negative impact of raw materials 8.5% • • Europe and North America and lower technology sales 11.1% CAPEX DKK 49m Stepping up investments Normalised technology sales DKK 28m New capacity commissioned in Low sales in Q2 against strong • • Europe and Argentina comparison period Currency movements, primarily related to the Argentine peso (ARS), Additional capacity in Europe in H2 Unchanged expectations for 2019 • • reduced revenue by DKK 29 million and operating profit by DKK 1 million Further expansion in Brazil, US • in Q2 2019. and Europe in 2020 References to operating profit and profit margin are before special items, unless otherwise stated. Operating profit, profit margin, ROIC and CAPEX are stated before hyperinflation (IAS 29) restatement. 2 IAS 29 was implemented in the Q3 2018 interim report, and comparative figures for Q2 and H1 2018 are not restated.
Business overview – Q2 2019 Americas Revenue: DKK 237m (+7%) Profit margin: 12.6% (2018: 13.2%) Growth strong in North America and moderate in South America Stable profitability despite higher costs in South America Europe Revenue: DKK 317m (-1%) Profit margin: 7.5% (2018: 12.6%) Strong volume and revenue growth in core business Low contribution from machinery sales as expected 3
Strategy Think ahead … Leverage positive trends and drivers • Invest to accomodate growing demand • Focus Capacity Efficiency Marketing Enhance utilisation of production capacity • improvements Improve efficiency through automation and • technology development Strengths Intensify marketing efforts • Explore potential for attractive acquisitions • Expertise Platform Products Technology …to strengthen Hartmann’s positions Trends World leader in egg packaging • Demographics Sustainability Consumer Leader in fruit packaging in selected markets • behaviour Preferred supplier of machinery and technology • 4
Trends and initiatives Europe North America South America Relatively mature markets Solid demographics and Long-term growth from • • • growing egg sales demographics Strong demographics in • Eastern Europe Increased share of Positive development in • • premium eggs egg category Conversion from plastics • in selected markets On-going conversion • expected to accelerate Initiatives + + Capacity Efficiency improvements Marketing 5
The longer perspective Solid earnings Attractive returns Strong cash flow Profit margin (%) ROIC (%) Cash flow - operating 15 30 450 DKK 265m 10.2% 2% 17.2% 10 20 300 5 10 150 0 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Favourable market trends + + Demographics Sustainability Consumer behaviour 6
Guidance 2019 and financial ambitions Guidance 2019 Ambitions Continual growth in packaging sales Revenue Volume growth and higher average • DKK 2.2-2.4bn selling prices in core business Normalised, lower technology sales • Year-on-year revenue growth Profit margin* Improved capacity utilisation and efficiency • 9-11% Higher raw material costs • CAPEX expected around DKK 300m after • CAPEX* Profit margin* of at least decision to expand capacity in the US DKK ~300m 14% *Before restatement for hyperinflation 7
Contact information Brødrene Hartmann A/S Ørnegårdsvej 18 DK-2820 Gentofte Tel. (+45) 45 97 00 00 investor@hartmann-packaging.com Torben Rosenkrantz-Theil Upcoming events CEO Q3 interim report 13 November 2019 Flemming Steen CFO 8
Appendix: Financials Q2 2019 Revenue grew based on progress in core business • Volumes increased and average selling price improved Revenue (DKKm) – Inclu ludin ing IAS 29 Machinery and technology sales declined to DKK 6m against DKK 35m – 800 Earnings were lower despite strong performance in core business • 600 Low contribution from machinery and technology sales – Higher raw material prices – 400 Currency impacted revenue by DKK -29m and operating profit by DKK -1m • 200 Significant impact from development in ARS – 0 Q2-17 Q4-17 Q2-18 Q4-18 Q2-19 DKKm Q2 2019 Q2 2019 Q2 2018 Americas Europe, packaging Europe, machinery and technology excl. IAS 29 Profit margin excl. IAS 29 (%) Revenue 553 547 542 20 Operating profit 45 47 60 15 Special items 0 0 (16) 10 Profit 26 30 10 5 Free cash flows (operating and investing) (31) (31) 38 0 Invested capital 1,512 1,468 1,289 Q2-17 Q4-17 Q2-18 Q4-18 Q2-19 Profit margin, % (rolling 12 months) 8.1 8.5 11.1 Profit margin (rolling 12 months) ROIC, % 12.3 13.4 21.7 9
Appendix: Key figures and financial ratios Q2 H1 DKKm 2019 2019 2018 2019 2019 2018 excl. IAS 29 excl. IAS 29 Revenue 553 547 542 1,150 1,145 1,166 Europe, packaging 311 311 286 655 655 601 Europe, machinery and technology 6 6 35 10 10 104 Americas 237 230 222 485 480 461 Operating profit 45 47 60 103 108 152 Europe 24 24 40 58 58 102 Americas 27 29 29 58 63 64 Special items 0 0 (16) 0 0 (21) Net financials (7) (8) (30) (13) (14) (40) Profit 26 30 10 62 71 68 Free cash flows (31) (31) 38 (14) (14) 99 Profit margin, % 8.1 8.5 11.1 9.0 9.4 13.0 10
Appendix: Balance sheet DKKm 30.06.19 30.06.19 30.06.18 excl. IAS 29 Assets 2,014 1,973 1,756 Net working capital (NWC) 357 357 332 Invested capital (IC) 1,512 1,468 1,289 Net interest-bearing debt 735 735 614 Equity 791 760 697 ROIC, % (rolling 12 months) 12.3 13.4 21.7 Equity ratio, % 39.3 38.5 39.7 Gearing, % 92.9 96.7 88.0 11
Appendix: Hyperinflation Read ad mo more e in the Q2 2019 9 interim report ort on page e 10 12
Forward-looking statements Disclaimer This presentation contains forward- looking statements reflecting management’s expectations of future events and must be viewed in the context of among other things the business environments and currency markets, which may cause actual results to deviate materially from those projected by Hartmann. 13
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