Fiery Flash: Sustainable packaging from the happiest nation

 

Yesterday, shares of Finnish company Huhtamäki rose approximately 8% following a positive reaction to its third-quarter results, with management signaling a gradual improvement in outlook.

 

Huhtamäki, though headquartered in Finland, operates in 37 countries worldwide and has notably invested in emerging markets in recent years. The company’s annual sales reach around EUR 4.2 billion. The name “Huhtamäki” is derived from the Finnish words huhta (“woodland cleared for slash-and-burn cultivation”) and mäki (“hill”). Specializing in sustainable packaging solutions, Huhtamäki employs three main technologies: fiber (e.g., paper lids for cups), flexible (e.g., liquid food packaging, tubes), and paperboard technologies (e.g., egg packaging, paper cups).

 

Huhtamäki has positioned itself as a leader in sustainability, setting ambitious targets for 2030. By then, it aims for 100% of its products to be recyclable, compostable, or reusable. The goal is for all fiber to come from recycled or certified sources, over 80% of input materials to be renewable or recycled, 100% renewable energy use, and more than 90% of non-hazardous waste to be recycled or composted. Although packaging often has a negative connotation due to its association with plastic waste, it also plays a critical role in the food supply chain, promoting accessibility, affordability, hygiene, and food safety while helping reduce food loss and waste. The shift towards more sustainable packaging, including plastic replacement and mono-material solutions, is expected to be a key growth driver for Huhtamäki.

 

During the third quarter, sales remained nearly flat at -1%, while adjusted EBIT increased by 2%, resulting in an adjusted EBIT margin of 10.0%. Adjusted earnings per share rose by 9%, and return on investment (ROI) reached 12.0%. Free cash flow for the first nine months totaled EUR 160 million, down 17%, mainly due to restructuring costs. Net debt to adjusted EBITDA stood at 2.0. Looking ahead, management aims for 5-6% comparable sales growth, an adjusted operating margin of 10-12%, and an ROI of 13-15%. The target range for debt to adjusted EBITDA is between 2 and 3.