Directors’ Report and Financial Statements 2023 | 1
HUHTAMÄKI OYJ
DIRECTOR’S REPORT AND
FINANCIAL STATEMENTS
2023
BUSINESS ID: 0140879-6
This ESEF report is a translation and has been published voluntarily.
Directors’ Report and Financial Statements 2023 | 2
Contents
Directors’ report 2023
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3
Operating model
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33
Financial statements
.............................................................................................
34
Consolidated financial statements
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34
Consolidated statement of income (IFRS)
..........................................................................
34
Group statement of comprehensive income (IFRS)
..................................................................
35
Consolidated statement of financial position (IFRS)
.................................................................
36
Consolidated statement of changes in equity (IFRS)
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37
Consolidated statement of cash flows (IFRS)
.......................................................................
38
Notes to the consolidated financial statements
......................................................................
39
1. Basis of preparation
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39
1.1. CORPORATE INFORMATION
............................................................................
39
1.2. BASIS OF PREPARATION
................................................................................
39
1.3. ADOPTION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS
.................................
39
1.4. PRINCIPLES OF CONSOLIDATION
........................................................................
40
1.5. FOREIGN CURRENCY TRANSLATION
.....................................................................
41
1.6. USE OF ESTIMATES AND JUDGMENTS
...................................................................
41
2. Financial performance
........................................................................................
41
2.1. SEGMENT AND REVENUE
...............................................................................
41
2.2. EMPLOYEE BENEFITS
...................................................................................
44
2.3. DEPRECIATION AND IMPAIRMENT
.......................................................................
47
2.4. OTHER OPERATING INCOME
............................................................................
48
2.5. OTHER OPERATING EXPENSES
..........................................................................
48
2.6. INCOME TAXES
........................................................................................
49
2.7. EARNINGS AND DIVIDEND PER SHARE
...................................................................
51
3. Acquisitions and capital expenditure
...........................................................................
53
3.1. BUSINESS COMBINATIONS
..............................................................................
53
3.2. GOODWILL
............................................................................................
53
3.3. INTANGIBLE ASSETS
....................................................................................
55
3.4. TANGIBLE ASSETS
......................................................................................
56
4. Working capital
.............................................................................................
60
4.1. INVENTORIES
..........................................................................................
60
4.2. TRADE AND OTHER CURRENT RECEIVABLES
.............................................................
60
4.3. PROVISIONS
...........................................................................................
61
4.4. TRADE AND OTHER CURRENT LIABILITIES
................................................................
62
5. Capital structure and financial items
............................................................................
62
5.1. NET FINANCIAL ITEMS
..................................................................................
62
5.2. INTEREST-BEARING RECEIVABLES
.......................................................................
63
5.3. CASH AND CASH EQUIVALENTS
.........................................................................
63
5.4. SHAREHOLDERS’ EQUITY
...............................................................................
64
5.5. FAIR VALUE AND OTHER RESERVES
.....................................................................
65
5.6. INTEREST-BEARING LIABILITIES
..........................................................................
66
5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
.......................................................
68
5.8. MANAGEMENT OF FINANCIAL RISKS
....................................................................
70
6. Other disclosures
............................................................................................
74
6.1. CLIMATE RELATED MATTERS
............................................................................
74
6.2. RELATED PARTY TRANSACTIONS
........................................................................
74
6.3. SHARE-BASED PAYMENTS
..............................................................................
76
6.4. LEASES
................................................................................................
78
6.5. COMMITMENTS
........................................................................................
79
6.6. LITIGATIONS
...........................................................................................
80
6.7. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
....................................................
80
Subsidiaries
.....................................................................................................
81
Parent company financial statements
...............................................................................
83
Definitions for performance measures
..............................................................................
97
Key figures and financial development
..............................................................................
98
Directors’ Report and Financial Statements 2023 | 3
Directors’ report 2023
Operating environment
In 2023, the volatile market conditions continued as inflation had a negative impact on consumption.
Inflation started to affect consumption across categories and geographies already during the latter part of
2022 and continued throughout 2023. However, end market demand started to improve during the second
half of the year. Destocking in the value chain had a negative impact on sales volumes during the first half
of 2023, particularly in export markets in the Flexible Packaging segment.
There were significant variations in demand by product category and geography. Demand for foodservice
products increased in North America and held up well in many other markets. Within foodservice, the
demand for fiber lids saw a significant increase, as customers started to deploy the product in Europe. On
the other hand, the market situation in China remained difficult. In North America, consumer goods
continued to suffer from the impact of inflation on ice cream demand. For Flexible packaging products,
demand declined both in emerging markets as well as in Europe.
For input costs, there were significant variations throughout the year. Prices for plastics and fiber were on a
decreasing trend during the year, whereas paperboard prices, on average, only decreased slightly towards
the end of the year. Out of the other key cost components, labor costs saw meaningful increases globally
and transportation costs decreased.
Directors’ Report and Financial Statements 2023 | 4
Strategic development
Huhtamaki updated its 2030 Strategy in March 2023, and it builds on four priorities: scaling up its
profitable core businesses, developing its blueloop™ sustainable innovation in partnership with customers,
driving world-class competitiveness across its global footprint and investing in strategic capabilities to drive
its transformation journey.
Huhtamaki targets sustainable profitable growth based on its strong competitive position. Scaling up
profitable core business is one of the key elements in Huhtamaki’s 2030 strategy, leveraging the company’s
knowhow in the three key technologies, the existing global footprint and existing products. Huhtamaki’s
capital expenditure is focused accordingly, while also investing in innovation. Huhtamaki targets long-term
growth by both capturing the organic growth opportunities and via acquisitions.
Innovation plays an increasingly important role for Huhtamaki, as it is leveraging its proprietary technology.
The entire packaging industry is going through a transformation, driven by increasing requirements in the
fields of sustainability, functionality and convenience. The required technological solutions are increasingly
complex, and the market is evolving rapidly. blueloop™ is an enterprise-wide brand, that covers
Huhtamaki’s range of sustainable packaging products. The blueloop brand promise is that they are de-
signed for circularity and part of delivering on Huhtamaki’s 2030 Strategy to become the first choice in
sustainable packaging solutions.
Huhtamaki aims to achieve world-class operational performance across its footprint, where the key drivers
are structural performance and continuous operational improvements. These actions are expected to
contribute 1-2 percentage points to the overall profitability improvement, as stated in the long-term
financial ambitions. To achieve structural performance improvements, Huhtamaki is optimizing its
manufacturing footprint, and has taken decisions on site closures during 2023, including the Flexible
Packaging site in Prague, Czech Republic and several smaller sites in India.
In 2023, Huhtamaki made good progress implementing the strategic priorities.
Key figures
EUR million
2023
2022
2021
Net sales
4,168.9
4,479.0
3,574.9
Comparable net sales growth
-2%
15%
7%
Adjusted EBITDA
1
590.1
596.9
488.4
Margin
1
14.2%
13.3%
13.7%
EBITDA
621.2
614.9
469.6
Adjusted EBIT
2
392.6
395.1
315.3
Margin
2
9.4%
8.8%
8.8%
EBIT
380.9
405.3
296.0
Adjusted EPS, EUR
3
2.32
2.49
2.07
EPS, EUR
1.97
2.65
1.91
Adjusted ROI
2
11.2%
11.0%
11.3%
Adjusted ROE
3
13.2%
14.9%
15.1%
ROI
10.9%
11.4%
10.6%
ROE
11.8%
15.7%
13.9%
Capital expenditure
318.7
318.5
259.4
Free Cash Flow
321.4
11.1
-26.1
1
Excluding IAC of EUR 31.1 million in 2023 (EUR 18.0 million in 2022 and EUR -18.7 million in 2021).
2
Excluding IAC of EUR -11.7 million in 2023 (EUR 10.2 million in 2022 and EUR -19.3 million in 2021).
3
Excluding IAC of EUR -35.9 million in 2023 (EUR 16.0 million in 2022 and EUR -17.1 million in 2021).
Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2022. Figures of return on investment (ROI), return on equity (ROE)
and return on net assets (RONA) as well as net debt to EBITDA presented in this report are calculated on a 12-month rolling basis.
IAC includes, but is not limited to, material restructuring costs and acquisition related costs (gains and losses on business combinations, professional and legal fees, material
purchase price accounting adjustments for inventory, material purchase price amortization of intangible assets and changes in contingent considerations) as well as material
Directors’ Report and Financial Statements 2023 | 5
impairment losses and reversals, gains and losses relating to sale of intangible and tangible assets, implementation costs concerning large projects with SaaS cloud computing
technology, fines and penalties imposed by authorities and extraordinary taxes.
The figures in the tables are exact figures and consequently the sum of individual figures may deviate from the sum presented. Key figures have been calculated using
exact figures.
Financial review 2023
Net sales by business segment
EUR million
2023
2022
Change
Foodservice Europe-Asia-Oceania
1,037.2
1,110.7
-7%
North America
1,457.9
1,468.3
-1%
Flexible Packaging
1,341.0
1,558.2
-14%
Fiber Packaging
343.1
363.0
-5%
Elimination of internal sales
-10.3
-21.1
Group
4,168.9
4,479.0
-7%
Comparable net sales growth by business segment
2023
2022
2021
Foodservice Europe-Asia-Oceania
2%
18%
11%
North America
2%
14%
6%
Flexible Packaging
-9%
14%
7%
Fiber Packaging
7%
15%
2%
Group
-2%
15%
7%
The Group’s net sales decreased 7% to EUR 4,169 million (EUR 4,479 million) during the reporting period.
Comparable net sales growth was -2%. Overall, demand was muted by the impact of inflation. Net sales were
weighed on by a decrease in sales volumes and changes in currencies, whereas pricing had a positive impact.
The divestment of the operations in Russia in 2022 had a negative impact. Comparable sales growth in
emerging markets was -4%. Foreign currency translation impact on the Group’s net sales was EUR -153
million (EUR 234 million) compared to 2022 exchange rates.
Net sales by segment, 2023
Net sales by segment, 2022
Adjusted EBIT by business segment
Items affecting comparability
EUR million
2023
2022
Change
2023
2022
Foodservice Europe-Asia-Oceania
98.0
105.7
-7%
-9.9
16.0
North America
187.9
171.6
9%
-0.0
-5.6
Flexible Packaging
88.0
98.1
-10%
5.8
-15.9
Fiber Packaging
39.6
40.0
-1%
-6.2
18.1
Other activities
-20.9
-20.3
-1.4
-2.4
Group
392.6
395.1
-1%
-11.7
10.2
25%
35%
32%
8%
Foodservice E-A-O
North America
Flexible Packaging
Fiber Packaging
25%
33%
35%
8%
Foodservice E-A-O
North America
Flexible Packaging
Fiber Packaging
Directors’ Report and Financial Statements 2023 | 6
Adjusted EBIT by segment, 2023
Adjusted EBIT by segment, 2022
Adjusted EBIT margin by business segment
2023
2022
2021
Foodservice Europe-Asia-Oceania
9.4%
9.5%
8.3%
North America
12.9%
11.7%
12.0%
Flexible Packaging
6.6%
6.3%
6.8%
Fiber Packaging
11.6%
11.0%
10.9%
Group Total
9.4%
8.8%
8.8%
The Group’s adjusted EBIT decreased to EUR 393 million (EUR 395 million) and reported EBIT was EUR 381
million (EUR 405 million). Adjusted EBIT decreased only by 1% despite the lower sales volumes, divestment
of operations in Russia in 2022 and the negative foreign currency impact. It was supported by lower raw
material costs and the company’s actions to improve profitability. The Group’s adjusted EBIT margin
increased and was 9.4% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR -15
million (EUR 22 million).
Adjusted EBIT excludes EUR -11.7 million (EUR 10.2 million) of items affecting comparability (IAC). The main
changes in IACs relate to the sale of real estate in Thane, India and the planned closure of the Flexible
Packaging production facility in Prague, Czech Republic.
Adjusted EBIT and IAC
EUR million
2023
2022
Adjusted EBIT
392.6
395.1
Acquisition related costs
-0.5
-2.2
Restructuring gains and losses, including writedowns of related assets
17.3
-9.9
PPA amortization
-8.9
-8.2
Settlement and legal fees of disputes
-0.2
-4.5
Prague site closure
-related costs
-18.8
-
Property damage incidents
-0.1
-1.1
Implementation costs concerning large projects with SaaS cloud computing technology
-0.6
-
Divestment of subsidiaries
-
44.5
Environmental case
-
-8.4
EBIT
380.9
405.3
Net financial expenses were EUR 69 million (EUR 53 million). The increase was due to higher interest rates
and other financing costs. Tax expense was EUR 87 million (EUR 67 million). The effective tax rate was 28%
(19%). The increase was due to an impact from the business in Turkey, which has the US dollar as a functional
currency. As taxes are calculated in the significantly devalued Turkish lira, the current tax charge as well as
deferred tax liabilities increased significantly. The functional currency remeasurements related impact to
deferred tax liabilities (mainly Turkey) are a non-cash item and are treated as IAC. Additionally, the tax rate
was impacted by a non-deductible goodwill impairment related to the planned closure of the Flexible
24%
45%
21%
10%
Foodservice E-A-O
North America
Flexible Packaging
Fiber Packaging
25%
41%
24%
10%
Foodservice E-A-O
North America
Flexible Packaging
Fiber Packaging
Directors’ Report and Financial Statements 2023 | 7
Packaging site in Prague, Czech Republic. Profit for the period was EUR 225 million (EUR 285 million).
Adjusted earnings per share (EPS) were EUR 2.32 (EUR 2.49) and reported EPS EUR 1.97 (EUR 2.65).
Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -35.9 million
(EUR 16.0 million) of IAC.
Adjusted profit and IAC
EUR million
2023
2022
Adjusted profit for the period attributable to equity holders of the parent company
242.3
260.2
IAC in EBIT
-11.7
10.2
IAC in Financial items
-0.1
0.0
Taxes relating to IAC
-15.5
5.8
IAC attributable to non-controlling interest
-8.6
-
Profit for the period attributable to equity holders of the parent company
206.3
276.2
Statement of financial position and cash flow
The Group’s net debt decreased and was EUR 1,288 million (EUR 1,471 million) at the end of December.
The level of net debt corresponds to a gearing ratio of 0.67 (0.77). Net debt to EBITDA ratio (excluding IAC)
was 2.2 (2.5). Average maturity of external committed credit facilities and loans was 2.9 years (3.2 years).
On May 22, 2023, Huhtamäki Oyj signed a EUR 125 million bilateral term loan facility agreement with a
maturity of two years. The term loan will be used for refinancing and general corporate purposes of the
Group. The facility has a one-year extension option at the discretion of the Lender, and the interest margin
is tied to three sustainability indicators; absolute scope 1 and 2 greenhouse gas emissions amount, share of
non-hazardous waste recycled and Ecovadis Rating. On November 16, 2023, the company issued a EUR 300
million, 5-year senior unsecured bond bearing an interest rate of 5.125 per cent per annum. The net proceeds
from the issue of the bond were used for the partial repurchase of its existing notes due 2024 and for
refinancing and other general corporate purposes of the Group.
Capital expenditure was EUR 319 million (EUR 318 million). The largest investments for business expansion
were directed to increase capacity of fiber products in Europe and North America. The Group’s free cash
flow was EUR 321 million (EUR 11 million), driven by an improvement in working capital.
Cash and cash equivalents were EUR 348 million (EUR 309 million) at the end of December and the Group
had EUR 355 million (EUR 353 million) of unused committed credit facilities available.
Total assets on the statement of financial position were EUR 4,665 million (EUR 4,821 million).
Directors’ Report and Financial Statements 2023 | 8
Three-year program to accelerate strategy implementation and to bring MEUR
100 cost savings
On November 30, 2023, Huhtamaki announced that the company is accelerating the strategy
implementation by starting a program which is expected to materially support the profitability with
efficiency improvements leading to savings of approximately EUR 100 million over the next three years. All
cost levers will be addressed including potential restructuring to a more optimal manufacturing footprint,
reducing input costs at an accelerated pace, and improving productivity globally.
The costs of the program are expected to be approximately EUR 80 million, which upon materialization will
be treated as items affecting comparability.
Impacts of the war in Ukraine and the divestment of operations in Russia
On September 2, 2022, Huhtamaki announced the divestment of its operations in Russia to Espetina Ltd.
Espetina is a holding company owned by Alexander Govor and Iury Kushnerov. The transaction has been
completed. The cash and debt free sales price was EUR 151 million. As a result of the sale, Huhtamaki
booked a gain of EUR 44.5 million during the third and fourth quarter of 2022. The transaction included
four manufacturing units in Russia, employing 724 people. Net sales in Russia amounted to EUR 99.5
million in 2021, representing less than 3% of the Group’s net sales. The factories in Russia mostly served
the local market and only a minor part of production was exported. Following the divestment, Huhtamaki
does not have any operations in Russia.
Huhtamaki has operations in Ukraine but does not operate in Belarus. In Ukraine, the company has one
factory, which has mostly served the local market. It’s net sales prior to the war made only a minor
contribution to the Group level net sales.
Acquisitions and divestments
On February 20, 2023, Huhtamaki announced that it had acquired full ownership of Huhtamaki Tailored
Packaging Pty Ltd (HTP), the Australian foodservice packaging distribution and wholesale group.
HTP is one of the largest importers and distributors of foodservice packaging in Australia serving a wide
network of customers including metropolitan and regional packaging wholesalers, food wholesalers, club
and hospitality suppliers, and national quick service restaurant businesses.
Huhtamaki acquired a majority stake in the business in 2018 and held approximately 76% of the company
prior to this transaction. The debt free purchase price for the additional shares was approximately EUR 19
million. The business has been reported as part of the Foodservice Europe-Asia-Oceania business segment
since the beginning of operations in 2018.
Significant events after the reporting period
There were no significant events after the reporting period.
Directors’ Report and Financial Statements 2023 | 9
Business review by segment
Foodservice Europe-Asia-Oceania
EUR million
2023
2022
Change
Net sales
1,037.2
1,110.7
-7%
Comparable net sales growth
2%
18%
Adjusted EBIT
1
98.0
105.7
-7%
Margin
1
9.4%
9.5%
Adjusted RONA
1
10.4%
10.9%
Capital expenditure
64.0
118.9
-46%
Operating cash flow
1
130.6
28.3
>100%
Items affecting comparability (IAC)
-9.9
16.0
1
Excluding IAC.
The demand for foodservice packaging softened. With the exception of paperboard, most raw material prices
decreased compared to 2022.
Net sales in the Foodservice Europe-Asia-Oceania segment decreased. Comparable net sales growth was
2%. Pricing and mix supported net sales, whereas lower sales volumes had a negative impact. Net sales
increased in Middle East and Africa, but decreased in Europe and Asia-Oceania, including China. The business
in Russia was divested in September 2022.
The impact of currency movements on the segment’s reported net sales was EUR -32 million.
The segment’s adjusted EBIT decreased due to lower sales volumes as well as the divestment of the business
in Russia.
The impact of currency movements on the segment’s reported earnings was EUR -2 million.
North America
EUR million
2023
2022
Change
Net sales
1,457.9
1,468.3
-1%
Comparable net sales growth
2%
14%
Adjusted EBIT
1
187.9
171.6
9%
Margin
1
12.9%
11.7%
Adjusted RONA
1
18.4%
17.9%
Capital expenditure
121.4
99.8
22%
Operating cash flow
1
122.2
45.6
>100%
IAC in EBIT
-0.0
-5.6
1
Excluding IAC.
Overall, there were significant variations in demand across categories. In particular, demand in Foodservice
was solid whereas it was softer in Consumer Goods and Retail. With the exception of paperboard, prices in
many raw material categories decreased compared to 2022.
Net sales in the North America segment decreased slightly from the previous year’s level. Comparable net
sales growth was 2%, driven by pricing, whereas lower sales volumes and changes in currencies had a
negative impact. Comparable net sales was driven by Foodservice, remained at the previous years’ level in
Retail, but decreased in Consumer Goods.
The impact of currency movements on the segment’s reported net sales was EUR -37 million.
Directors’ Report and Financial Statements 2023 | 10
The segment’s adjusted EBIT increased, supported by increased operational efficiency and lower costs,
compensating for lower sales volumes.
The impact of currency movements on the segment’s reported earnings was EUR -5 million.
Flexible Packaging
EUR million
2023
2022
Change
Net sales
1,341.0
1,558.2
-14%
Comparable net sales growth
-9%
14%
Adjusted EBIT
1
88.0
98.1
-10%
Margin
1
6.6%
6.3%
Adjusted RONA
1
6.5%
6.9%
Capital expenditure
103.7
68.2
52%
Operating cash flow
1
103.9
51.5
>100%
IAC in EBIT
5.8
-15.9
1
Excluding IAC.
Overall demand for flexible packaging declined mainly due to inflationary pressure on consumption as well
as destocking in the value chain during the first half of the year. Most raw material prices decreased compared
to 2022.
Net sales in the Flexible Packaging segment decreased and comparable net sales growth was -9%. Net sales
were impacted by a decrease in sales volumes, due to soft demand and a destocking in the value chain. Net
sales decreased particularly in India and Europe but increased in South-East Asia and Oceania.
The impact of currency movements on the segment’s reported net sales was EUR -73 million.
The segment’s adjusted EBIT decreased, impacted by a decrease in sales volumes and a negative sales mix.
The segment clearly improved its performance during the second half of the year compared to the first half,
driven by actions to improve competitiveness and lower raw material prices. In the items affecting
comparability, the main change relates to the sale of real estate in Thane, India and the planned closure of
the production facility in Prague, Czech Republic.
The impact of currency movements on the segment’s reported earnings was EUR -6 million.
Fiber Packaging
EUR million
2023
2022
Change
Net sales
343.1
363.0
-5%
Comparable net sales growth
7%
15%
Adjusted EBIT
1
39.6
40.0
-1%
Margin
1
11.6%
11.0%
Adjusted RONA
1
13.7%
14.4%
Capital expenditure
29.3
31.2
-6%
Operating cash flow
1
31.8
20.9
52%
IAC in EBIT
-6.2
18.1
1
Excluding IAC.
Overall demand for fiber-based egg packaging and food-on-the-go products softened slightly. For egg
packaging, there was a negative impact on supply of egg due to avian flu in some markets. The prices of
recycled fiber were lower than during 2022.
Directors’ Report and Financial Statements 2023 | 11
Net sales in the Fiber Packaging segment decreased due to the divestment of the business in Russia in
September 2022. Comparable net sales growth was 7%. Comparable net sales increased in most markets,
driven by pricing and mix, whereas sales volumes decreased.
The impact of currency movements on the segment’s reported net sales was EUR -12 million.
The segment’s adjusted EBIT decreased due to lower sales volumes and the divestment of the business in
Russia.
The impact of currency movements on the segment’s reported earnings was EUR -1 million.
Non-Financial Review
Huhtamaki’s ambition is to become the first choice in sustainable packaging solutions, as defined in the
Group’s 2030 Strategy. Sustainability is at the core of the strategy and Huhtamaki has defined a set of
2030 sustainability ambitions to guide its sustainability work. Huhtamaki is committed to doing business in
a responsible and sustainable manner and expects the same commitment from its business partners and
suppliers globally. Huhtamaki is a participant in the UN Global Compact Initiative and is guided by the UN
Sustainable Development Goals (SDGs), enabling the company to embed sustainability in all operations.
Huhtamaki complies with local laws and regulations and acts in accordance with commonly accepted best
practices everywhere it operates. Huhtamaki does not accept violation of any laws or regulations or any
unethical business dealings.
This review represents an overview of the non-financial and sustainability matters material to Huhtamaki.
Also Huhtamaki’s index for the Task Force on Climate-Related Financial Disclosures (TCFD) and EU
Taxonomy related disclosures are presented as part of this review. More information on Huhtamaki’s
sustainability work and performance can be found in Huhtamaki’s Sustainability Report, which is part of this
Huhtamaki Annual Report 2023. Huhtamaki’s business model is described on page 33 of this Huhtamaki
Annual Report 2023 publication. Risks and risk management procedures related to the non-financial review
are described in a separate section within this Directors’ Report.
Sustainability governance and management
At Huhtamaki, sustainability is ultimately governed by the Board of Directors and at the operational level,
by the CEO, the Global Executive Team, the Sustainability Global function and other senior staff across the
different business units. The Sustainability Committee, presided by selected members of the Global
Executive Team, steers transformative sustainability initiatives.
The Board is the highest body to approve the guiding policies for sustainability and outline sustainability
principles regarding the Group’s strategy. It monitors and evaluates the risk management activities of the
Group, including the sustainability risks and impacts such as climate-related financial risks. It approves the
risk level that the Group is capable and prepared to accept and the extent to which risks have been
identified, addressed, and followed up.
The Group’s sustainability performance is tracked on an ongoing basis in its operations at the
manufacturing unit, business segment and Group levels. The results are collected and monitored at Group-
level in the sustainability dashboard which is reviewed and discussed in the Global Executive Team and
presented quarterly to the Board of Directors. More information on Huhtamaki’s sustainability work and
performance can be found in Huhtamaki’s Sustainability Report, which is part of this Huhtamaki Annual
Report 2023.
In 2023, Huhtamaki continued to further link remuneration to sustainability by rolling out sustainability and
safety-linked objectives to all employees who participate in the global short-term incentive plan. The
Directors’ Report and Financial Statements 2023 | 12
objectives are implemented through the Global Sustainability and Safety Index, the GSSI (previously the
Global Sustainability Index, GSI). KPIs within the index are linked to the sustainability dashboard and relate,
for example, to the share of renewable or recycled materials, renewable electricity, and the share of
recycled non-hazardous waste. The GSSI was revised in 2023 to include updated ambitions around
reducing water intensity and solvent use, as well as to underline the role of health and safety within the
index.
Material topics
To ensure that the Group’s sustainability work is focused on the most material issues, Huhtamaki
continuously follows the most recent developments and trends in the field of sustainability, changes in
legislation as well as input from stakeholders. Huhtamaki also updates its materiality assessment regularly,
although the material sustainability topics tend to stay the same over the years, with only slight variations
to their relative importance.
Huhtamaki last updated its materiality assessment in 2022. The assessment aimed to identify Huhtamaki’s
material topics, based on the Group’s most significant impacts on the economy, the environment and
people, including human rights. In the process, Huhtamaki’s actual and potential, negative and positive
impacts were mapped out throughout the value chain, and the perspectives of several different
stakeholders were included. In general, the updated assessment reaffirmed that Huhtamaki’s sustainability
ambitions cover the most material topics for the Group and its stakeholders. A complete list of the material
topics can be found in the Groups’ Sustainability Report.
In 2023, Huhtamaki began to update its materiality assessment to be in line with the double materiality
principle and the requirements of the upcoming European Sustainability Reporting Standards. The results of
the double materiality assessment will be published in 2024.
Environmental matters
Policies
• Huhtamaki Code of Conduct
• Code of Conduct for Huhtamaki Suppliers
• Global Environmental Policy
• ISO management systems 14001, 50001
Directors’ Report and Financial Statements 2023 | 13
Circularity and climate are key focus areas in Huhtamaki’s 2030 sustainability agenda. Like many
companies, the largest environmental impacts and the majority of Huhtamaki’s total greenhouse gas
emissions arise from its value chain. The largest impacts are related to purchased raw materials and the
end-of-life treatment of products. In terms of the Group’s own operations, greenhouse gas (GHG)
emissions and production waste are the main environmental impacts. Additionally, water usage is a material
topic in the Group’s molded fiber manufacturing operations.
The Group’s operating principles regarding environment are set out in the Huhtamaki Code of Conduct, the
Code of Conduct for Huhtamaki Suppliers and the Group Environmental Policy. The objective of the Group
Environmental Policy is to ensure a group-wide understanding of Huhtamaki’s environmental commitments.
It covers the topics of climate and energy, water and effluent, biodiversity and forests, waste, design for
circularity and proactive chemicals management.
These policies are supported by Total Productive Manufacturing trainings and ISO management systems
and are implemented on manufacturing unit level. At the end of 2023, 49 (53) manufacturing units,
representing 64% (66%) of all manufacturing units followed an externally certified environmental
management system such as ISO 14001, the Eco-Management and Audit Scheme (EMAS) or the internal
Environmental Care Program which is primarily implemented in North America.
Huhtamaki continuously looks for ways to improve resource efficiency, which is supported by a strong
environmental and financial rationale. The Group has defined internal management streams for
implementing the Group’s 2030 Strategy, which also outline how Huhtamaki measures, develops and
communicates sustainability performance against its commitments.
The main environmental KPIs and performance are:
2023
2022
Change
Share of renewable or recycled materials (%)
66.1
65.8
0.3pp
Share of non-hazardous waste recycled (%)
79.4
75.2
4.2pp
Share of total waste to landfill (%)
8.2
12.4
-4.2pp
Share of renewable electricity (%)
41.7
24.9
16.8pp
Greenhouse gas emissions,
incl. Scope 1 and Scope 2* (tCO2e)
563,000
678,000
-17.0%
Share of certified or recycled fiber (%)
98.7
98.0
0.7pp
*Scope 2 GHG emissions are calculated using the market-based calculation method. The figure has been updated
from the one reported in 2022 due to updates in available emission factors.
The Group’s share of renewable and recycled materials increased slightly. The share of non-hazardous waste recycled
increased while the share of waste to landfill decreased thanks to improved waste management practices at several of
the Group’s manufacturing units. Huhtamaki continues to identify and develop recycling solutions for non-hazardous
production waste.
Huhtamaki’s environmental operating costs totaled EUR 18 million (EUR 17 million). The costs consist mainly of
expenses related to waste and wastewater management as well as environmental management.
Huhtamaki’s ambition of becoming the first choice in sustainable packaging solutions puts high emphasis on the
environmental performance of the company, mainly related to mitigating climate change. Huhtamaki has set science-
based GHG emissions reduction targets for its Scope 1, 2 and 3 GHG emissions to support its climate change
mitigation ambitions stated in its environmental policy. The targets are approved and validated by the Science Based
Targets initiative based on the well-below 2°C scenario. Moreover, Huhtamaki’s commitment of using 100% green
Directors’ Report and Financial Statements 2023 | 14
electricity by 2030, enables Huhtamaki to exceed the SBTi validated Scope 1 and Scope 2 combined target by a
significant margin. These targets guide Huhtamaki’s low-carbon transition plan to ensure the resilience of its business
model with commonly applied European and international objectives of limiting global warming to 1.5°C compared to
pre-industrial levels. Year 2019 was selected as a baseline year because it was considered as a representative year of
the Group’s business activities (before Covid) than the most recent year 2020. Huhtamaki’s climate-related KPIs and
progress compared to the base year are presented in the table below.
The targets cover the main emission sources (90% of Scope 1, 2 and 3 base year emissions) of Huhtamaki´s own
operations as well as upstream and downstream value chain globally. In line with the Group’s 2030 strategy, a 5%
yearly net sales growth has been assumed when setting the targets. Additionally, Huhtamaki is committed to using
100% renewable electricity by 2030. By 2030, Huhtamaki also aims to reach carbon neutral production by switching
to low carbon fuels, through electrification of systems, improving energy efficiency and by offsetting the remaining
emissions with high-quality carbon credits. These goals focus on Huhtamaki´s own operations, covering both Scope 1
and Scope 2 emissions. During 2023, Huhtamaki continued to follow the global energy strategy launched in 2021.
The strategy outlines the main levers Huhtamaki works on to reduce its Scope 1 and 2 GHG emissions.
The main levers to reduce Scope 3 emissions from the value chain are supplier engagement and addressing product
end-of-life by driving systematic change and building efficient recycling systems. Huhtamaki has committed to
ensuring that 70% of suppliers, by spend, sign up to setting their own science-based targets by 2026. In the
downstream value chain, Huhtamaki is committed to reducing the GHG emissions from the end-of-life treatment of its
products by 13.5% by 2030 from a 2019 base year.
In 2023, the Group launched a supplier engagement campaign about setting targets to reduce climate emissions.
Huhtamaki targeted suppliers who had not publicly set targets, reaching 45% of raw material suppliers (by spend) and
increasing the number of suppliers who have committed to science-based targets by 55%. In addition, Huhtamaki
updated its supplier assessment questionnaire to include climate-related questions, which will be put into use in 2024.
The questionnaire supports Huhtamaki’s supplier assessment process, moving toward incorporating suppliers’
environmental efforts into its purchasing decisions. Huhtamaki also continued The Cup Collective, which is an open-
to-all initiative aimed at driving the collection and recycling of used paper cups launched by Huhtamaki and Stora Enso
in 2021.
In 2023, the absolute GHG emissions from the Group’s own operations (Scope 1 and 2) decreased by 17% (115.1
ktCO2e). Hence, the GHG intensity per sellable ton produced decreased by 9% compared to 2022. As a result, the
Group achieved a reduction of 58 ktCO2e metric tons CO2e in its GHG emissions when adjusted for the change in
the production volume in 2023. The decrease was made possible by increasing the share of renewable electricity in
our operations, resulting in a 201.1 ktCO2e (26.3%) overall reduction from the 2019 base year level. This means that
Huhtamaki is now close to reaching its science-based emission reduction target (-27.5%). The calculation of emissions
intensity and reduction covers Scope 1 and Scope 2 emissions.
Huhtamaki’s climate targets
Performance in 2023 compared to base
year
Science-based targets
•
27.5% reduction in absolute Scope 1 and 2
emissions by 2030 from a 2019 base year
•
13.5% reduction in absolute Scope 3
emissions from end-of life treatment of sold
products within the same timeframe
•
70% of suppliers, by spend, sign up to
setting their own science-based targets by
2026
Science-based targets:
•
We achieved a 26.3% reduction in
absolute Scope 1 and Scope 2 emissions
compared to the base year 2019
•
Our absolute Scope 3 emissions from
end-of-life treatment of sold products
decreased 9.7% from the base year
•
45% of our direct raw material suppliers
have committed to setting science-
based targets
100% renewable electricity
41.7% of total electricity consumed was
from renewable sources
Carbon neutral production
Combined Scope 1 and Scope 2 GHG
emissions were 563 ktCO2e in 2023
Directors’ Report and Financial Statements 2023 | 15
The Group’s absolute Scope 3 GHG emissions decreased by 11%, mainly due to the 10% decrease in our material
purchases when compared to 2022. The emissions related to purchased materials decreased by 12%. Emissions from
fuel- and energy related activities and emissions from waste generated in our own operations decreased compared to
the previous year. The amount of business travel recovered to the pre-covid levels, increasing the related air travel
emission. Also, emissions from capital goods increased from the previous year’s level.
The largest Scope 3 categories and their shares relative to the company’s Scope 3 inventory are: purchased goods and
services (57%) and the waste-treatment of our products at their end-of-life (31%). The remaining 12% consists of
other, various upstream and downstream activities (capital goods, fuel- and energy-related activities, upstream and
downstream transportation, waste generated in operations, business travel, employee commuting).
In 2023, Huhtamaki continued to align its reporting about climate-related impacts on its business with the Task Force
on Climate-Related Financial Disclosure (TCFD) recommendations. By using this framework, Huhtamaki supports
transparency, prepares for the upcoming European Sustainability Reporting Standards, and aims to increase
understanding of the impacts of climate change on its business environment and operations.
Huhtamaki conducted a climate scenario analysis of its operations and business environment in 2023. The analysis
assessed the potential long-term effects of climate change under two distinct scenarios: the first scenario involved
limiting global warming to 1.5°C, while the second scenario explored the potential impacts of global warming of up to
4°C. The scenarios are in line with TCFD recommendations. Huhtamaki benefits from its sustainability driven strategy
in both scenarios. Improving energy and material efficiency as well as switching to renewable electricity enable climate
change mitigation and adaptation. New product innovations, such as blueloopTM products, provide solutions for a
circular economy and therefore create opportunities to respond to changing customer preferences and climate
change.
In terms of risks, transition risks such as regulatory changes, market risks and changing customer preferences
dominate in the 1.5°C scenario. In the 4°C scenario, physical climate change risks including floods, storms, heat,
drought, and volatile forest yield dominate. For more detailed information on these risks and the measures being taken
to manage them, please refer to the Risk review section in this report and the Climate Change section in the
Sustainability Report, page 176. Changes in the business environment driven by regulation are among the most
significant sustainability-related financial risks and opportunities for Huhtamaki. Huhtamaki continues to develop the
assessment of the financial exposure that the physical and transition risks related to climate change pose.
TCFD recommended disclosures
Location of disclosures
Governance
The Board’s oversight of climate-related risks
and opportunities
Non-financial review,
Sustainability Report
Management’s role in assessing and managing
climate-related risks and opportunities.
Non-financial review,
Sustainability Report
Strategy
Climate-related risks and opportunities the
organization has identified over the short,
medium, and long term.
Risk review
The impact of climate-related risks and
opportunities on the organization’s
businesses, strategy, and financial planning.
Risk review,
Sustainability Report
The resilience of the organization’s strategy,
taking into consideration different climate-
related scenarios, including a 2°C or lower
scenario.
Non-financial review,
Risk review, describes how Huhtamaki has
piloted scenario analysis.
Sustainability Report
Risk
management
The organization’s processes for identifying
and assessing climate-related risks.
Risk review
The organization’s processes for managing
climate-related risks.
Risk review
Directors’ Report and Financial Statements 2023 | 16
How processes for identifying, assessing, and
managing climate-related risks are integrated
into the organization’s overall risk
management.
Risk review
Metrics and
targets
GHG emissions “cross-industry categories”
Metric: Absolute Scope 1, Scope 2, and Scope
3 GHG emissions
Target: Science-based targets (Scope 1+2,
and 3) Target: Science-based targets (Scope
1+2, and 3)
Non-financial review
Risk review,
Sustainability Report
Eligibility with EU Taxonomy regulation
The EU Taxonomy is a green classification system that translates the EU’s climate and environmental
objectives into criteria for specific economic activities for investment purposes. It recognizes as
environmentally sustainable those economic activities that make a substantial contribution to at least one of
the EU’s six environmental objectives, while at the same time not significantly harming any of these objectives
and meeting minimum social safeguards. The six environmental objectives that are published as a Delegated
Act address emission-intensive economic activities with an aim to guide development towards sustainable
production.
An economic activity is considered Taxonomy-eligible if it is referenced by the Taxonomy and has the
potential to enable achieving at least one of the six environmental objectives: 1) Climate change mitigation,
2) Climate change adaptation, 3) Sustainable use and protection of water and marine resources, 4) Transition
to a circular economy, 5) Pollution prevention and control, and 6) Protection and restoration of biodiversity
and ecosystems.
Building on the experience from the previous Taxonomy reporting, Huhtamaki has reassessed both eligibility
and alignment on objectives 1 and 2 against the guidance published by the European Commission to support
assessment. Due to the stringent conditions associated with the technical screening criteria to prove
alignment, Huhtamaki has decided to report no eligibility and no alignment on objectives 1 and 2.
The Commission approved the Delegated Act for economic activities substantially contributing to the
environment objectives 3 – 6 in June 2023. Of the new objectives, Transition to a circular economy, objective
4, was seen to be the most essential for Huhtamaki. After evaluating the technical screening criteria to prove
alignment, Huhtamaki has decided not to report eligibility on objective 4 until certitude of alignment can be
confirmed. Huhtamaki has set strong circularity ambitions as part of its 2030 strategy. However, Huhtamaki
is not able to deliver full circularity as described in the technical screening criteria, due to current EU
regulation.
Huhtamaki has thus decided to report no eligibility and no alignment on the Taxonomy for the financial year
2023. The mandatory reporting templates described in Annex II of the Article 8 Disclosure Delegated Act
are presented below.
Huhtamaki continues to develop its taxonomy-related reporting, reviewing the eligible economic activities
and assessing its alignment against further updated information from the European Commission. The EU
Taxonomy is work in progress and Huhtamaki supports the expansion of the framework for further evaluation
of its main business areas for Taxonomy eligibility and alignment.
Net sales
Directors’ Report and Financial Statements 2023 | 17
Capex
Directors’ Report and Financial Statements 2023 | 18
Opex
Directors’ Report and Financial Statements 2023 | 19
Personnel and social matters
Policies
• Huhtamaki Code of Conduct
• Group Human Rights Policy
• Global Employment Guidelines
• Global Working Conditions Requirements
• Group Occupational Health and Safety Policy
• Group Recruitment Policy
• Group Diversity, Equity & Inclusion Guiding Principles
Directors’ Report and Financial Statements 2023 | 20
Huhtamaki continuously strives to create a safe, engaging, and inclusive high-performance culture for its
employees. This is guided by the Group values – Care Dare Deliver. The Group’s established people
processes and solutions support the business in reaching its strategic and operational targets. Data analysis
and digital workplace tools help the Group make informed decisions and enables people to succeed in their
work and grow professionally.
At the end of the year, Huhtamaki had a total of 17,910 (18,927) employees, of which 71% (71%) worked
directly with production processes. On average in 2023, the headcount was 18,261 (19,550). Countries
with the largest number of employees were US, India and Germany, which accounted for 44% (45%) of the
Group’s personnel.
The Group policies, procedures and guidelines ensure consistency in employment, working conditions and
occupational health and safety matters. The business units adhere to the Global Working Conditions
Requirements that cover topics such as anti-corruption, work ergonomics, work contracts, working hours,
grievances, and supplier management. In 2023, complementing the Global Employment Guidelines,
Huhtamaki introduced guiding principles on Diversity, Equity and Inclusion to safeguard the wellbeing, fair
treatment and equal opportunities for its people. The Group’s new Global Recruitment Policy supports the
deployment of consistent processes when attracting new talent. During the reporting year, also the Group
Human Rights Policy was updated, outlining Huhtamaki’s position towards human rights.
Strategic targets are set to measure progress in value-creation for Huhtamaki employees. In 2023, the key
performance indicators were related to employee experience, engagement and retention, leadership,
inclusive culture and safety. Going forward, Huhtamaki’s employee engagement survey Connect will be
conducted annually to measure the development in the KPIs. The most recent survey in September 2023
had a record response rate at 84% (79%). Huhtamaki’s employee engagement index improved to 83%
(77%). The leadership index had 82% favorable responses, exceeding the 2021 results (72%). The positive
results of both indices exceed the results of Huhtamaki’s industry peer companies. In 2023, Huhtamaki
established a new inclusion index which measures how employees experience equal opportunity and
inclusion in the workplace. With an initial score of 83%, the new index also exceeds the manufacturing
norm.
Based on the 2023 Connect survey, career development and growth of our employees, collaboration
across businesses and functions, and a deeper understanding of the Huhtamaki strategy within the
organization were identified as global focus areas at Group level. In response to this, Huhtamaki continues
to offer various learning opportunities and investing in the development of strategic capabilities. After the
launch of the updated 2030 Strategy in March 2023, Huhtamaki leaders and employees have engaged in
discussing strategy through different activities such as regional strategy workshops, a new strategy e-
learning, the Leader’s Imprint program for all people leaders as well as new global initiative called Strategy
Dialogue. Continuous learning is supported through providing a variety of learning opportunities ranging
from structured training to on-the-job learning and learning from others. Other learning offerings consist of
mentoring programs, coaching, online seminars, and e-learning courses on strategically important focus
areas. The annual Global Week of Learning event is another platform for Huhtamaki employees to network
and learn more about strategically relevant topics such as sustainability, digitalization and world-class
operations from experts. Also, Huhtamaki’s strategic initiatives and projects provide excellent opportunities
for career development and collaboration across the global organization.
Continuous improvement of safety performance is a priority for Huhtamaki. The Group’s safety roadmap
focuses on leading for safety, engaging everyone in nurturing a safety culture, and improving safety
standards, processes and systems. The safety management systems are supported by an overarching
Global OHS policy and standards such as OHSAS 18001 and ISO 45001. Huhtamaki’s ambition is to
provide a workplace where nobody gets hurt and everyone goes home safe every day. As one important
measure to achieve this ambition, the Safety Pillar was launched as part of the World Class Operations
initiative at all global sites in 2023. The Safety Pillar focuses on continuously improving workplace safety by
Directors’ Report and Financial Statements 2023 | 21
providing a structured approach that involves all stakeholders at all levels of the organization. Lost Time
Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR) are monitored at Group
level. In 2023, In 2023, the TRIFR was reduced to 3.69 and the LTIFR was 1.78, with a total of 151 TRIs
and 73 LTIs. When calculating the injury frequency rates, Huhtamaki considers the injuries and actual
working hours of Huhtamaki employees and contractors.
Human rights
Policies
• Huhtamaki Code of Conduct
• Code of Conduct for Huhtamaki Suppliers
• Global Human Rights Policy
• Global Working Conditions Requirements
Directors’ Report and Financial Statements 2023 | 22
• Global Employment Guidelines
• Group Occupational Health and Safety Policy
Huhtamaki recognizes that, as a global company, its actions can have both positive and negative impacts on
people either directly through its own operations, or indirectly through its value chain. Ensuring that human
rights are respected throughout the value chain is a key element of Huhtamaki’s 2030 sustainability
agenda. Huhtamaki is committed to taking responsibility for the impact it can have on individuals and for
making sure that there is no harm to people as a result of its activities.
The Group Human Rights Policy was updated in 2023 and reflects Huhtamaki’s commitment to respect
human rights and states the Group’s support of internationally recognized principles and frameworks on
human rights, such as the International Bill of Human Rights and the ILO Declaration on Fundamental
Principles and Rights at Work. The Huhtamaki Code of Conduct sets out standards for ethical behavior for
all employees. Huhtamaki does not allow for example workplace violence or the use of child labor or forced
labor. All employees globally are expected to participate in the mandatory Code of Conduct training
annually.
In 2023, Huhtamaki revisited the global human rights risk assessment that was conducted in 2021. The
existing assessment was reviewed together with an external human rights expert and updated based on
further sources of information, such as audit reports and reports received through the Speak Up channel
and taking inherent risks for Huhtamaki’s industry, value chain and geographies into account. Based on the
updated risk assessment, Huhtamaki was able to confirm its salient human rights, which represent the key
priority areas that the Group will focus on in its human rights due diligence work going forward.
Huhtamaki’s key human rights risks and impacts relate to working conditions (including topics such as
working hours and wages), health and safety, forced and child labor in the supply chain as well as
environmental impacts from its operations and value chain. Going forward, Huhtamaki will continue to use
a combination of methods to better understand its human rights risks and impacts.
Human rights due diligence is built into several of the Group’s key processes, for instance, in its Global
Working Conditions Requirements, in its health and safety management systems, in supply chain
management and in its compliance system. In 2023, Huhtamaki took several steps to strengthen its
management of human rights. A steering group for social sustainability was created, with key members of
management, to oversee the development of Huhtamaki’s human rights due diligence process. The Group
developed its capabilities in human rights management by participating in the UN Global Compact’s
Accelerator Program on Business and Human Rights and continued raising awareness among all its
employees through Code of Conduct training as well as the Modern slavery e-training targeted to all
managers and experts in the supply chain and human resources functions globally.
Huhtamaki’s supply chain due diligence process has been built to identify risks in the supply chain. All key
suppliers, corresponding to approximately the top 80% in terms of procurement spend, are systematically
screened in the Group’s supplier monitoring tool against sanctions lists, watch lists and negative media
coverage, enabling Huhtamaki to identify and address risks related to human rights in the supply chain. In
addition, Huhtamaki requests additional information or assurances from suppliers based on their risk level,
mainly through questionnaires, self-assessments and third-party ethical audits.
Huhtamaki continued to
strengthen its supply chain due diligence approach in 2023 by expanding its tiered due diligence approach
to include more suppliers.
Huhtamaki maintains several different channels for voicing concerns when suspecting or observing human
rights-related issues. These channels include the Huhtamaki Speak Up channel, which allows for
anonymous reporting and is open to employees and external stakeholders.
Directors’ Report and Financial Statements 2023 | 23
Huhtamaki is committed to continuously improving its human rights due diligence work, in line with the
expectations of the UNGP and will continue to strengthen key processes, to better incorporate human
rights considerations.
Anti-corruption and anti-bribery
Policies
•
Huhtamaki Code of Conduct
•
Code of Conduct for Huhtamaki Suppliers
•
Group Anti-Corruption Policy
•
Huhtamaki Instruction for Gifts and Hospitality
•
Huhtamaki Instruction for Conflict of Interest
•
Group Speak Up and Investigations Policy
Huhtamaki’s Global Ethics and Compliance program focuses on Huhtamaki’s commitment to integrity and
legal compliance across our global organization. The program supports Huhtamaki in operating its business
in compliance with applicable laws and regulations as well as fulfilling its commitment to ethical business
conduct wherever the company operates, while ensuring that adequate procedures are in place to prevent
Huhtamaki from participating in any possible non-compliant or unethical business activities. At Huhtamaki,
all forms of corruption and bribery, including bribes, facilitation payments, kickbacks and any other forms of
corrupt acts are strictly prohibited, irrespective of the location the operations.
Anti-bribery and corruption provisions are an integral part of the Huhtamaki Code of Conduct, which is the
core element of Huhtamaki’s Global Ethics and Compliance program. The Code works as a compass,
enabling the company to navigate and use consistent legal and ethical judgment in its daily work and
decision-making. In addition, these anti-bribery and corruption provisions are included in the Code of
Conduct for Huhtamaki Suppliers to ensure compliance across Huhtamaki’s value chain. The Global Ethics
and Compliance team oversees the implementation of the company’s Anti-Corruption program by advising
and supporting the conduct of business with high integrity and in compliance with applicable local and
international anti-corruption laws and regulations.
In 2023, the company continued implementing its Anti-Corruption Program launched in 2022 by organizing
targeted trainings and communication to ensure that all Huhtamaki employees understands where
corruption risks may occur and how to behave in such situations. Huhtamaki strongly believes that through
its ethics and compliance efforts, it can counter negative impacts of corruption and other unethical
business practices on people, societies and the environment affected by Huhtamaki’s operations. At
Huhtamaki, integrity applies to every part of Huhtamaki’s business, and the company highlights the
importance of commitment at every level around the world.
One of the key elements of Huhtamaki’s Global Ethics and Compliance program framework is training and
communication. In 2023, the Global Ethics and Compliance team focused on raising awareness of
corruption risks and ethical business conduct to leadership teams and local management team members.
Additionally, employees in central positions, such as in sales, finance or procurement, were invited to
discuss and review case examples of selected compliance topics including ethical business culture, anti-
corruption, trade sanctions compliance, conflict of interest situations, and gifts and hospitality in face-to-
face compliance workshops in selected locations such as South Africa, the UAE, Australia, Italy,
Luxembourg, and Germany. The Global Ethics and Compliance team also continued to raise awareness of
topical compliance matters also in Huhtamaki’s other operating geographies during 2023 by providing
training and communication through various online channels. Huhtamaki’s compliance risk assessments
were considered when designing the training program and focus points.
Huhtamaki employees must complete the Huhtamaki Code of Conduct training, which is cascaded to all
employees as part of the Group’s annual mandatory Ethics and Compliance online training program. The
Directors’ Report and Financial Statements 2023 | 24
Code of Conduct training, which contains also an anti-corruption section with the commitment not to
tolerate corrupt practices of any kind and practical examples for ethical decision-making, was completed by
97.4% (2022: 94.5%) of Huhtamaki’s employees globally in 2023.
In addition to the Code of Conduct online training, in-depth e-learning courses on anti-trust and
competition compliance as well as data privacy and information security related topics are mandatory for
selected employees. These online trainings are part of the annual Ethics and Compliance training program.
All line managers are asked to confirm, as part of the year-end HR review process, that their team members
have completed all mandatory Ethics and Compliance trainings. The year-end HR review process is a
prerequisite for receiving a potential short-term incentive.
In accordance with Huhtamaki’s values, the Group promotes a culture of open discussion and encourages
everyone to raise their concerns and to report any suspected or observed violations of the Huhtamaki
Code of Conduct, any other Huhtamaki policies or laws and regulations.
To support the compliance with laws and regulations and ethical business conduct, the company offers
multiple channels for voicing concerns and speaking up when suspecting or observing non-compliance.
These channels include the Huhtamaki Speak Up channel, a web-based whistleblowing system, which
allows for anonymous reporting and is open to employees and external stakeholders if they want to report
concerns or suspected misconduct. The Huhtamaki Speak Up channel can be accessed by visiting the
website: https://report.whistleb.com/Huhtamaki. If an employee has concerns about potential misconduct
or is made aware of a violation, the employee is encouraged to report the violation primarily by contacting
his/her manager, legal counsels, human resources representatives, or the Global Ethics and Compliance
team directly. However, in cases where the employee prefers to report anonymously, the Huhtamaki Speak
Up channel can be used in all cases of reporting. Retaliation or any negative actions against an employee
reporting a suspected violation in good faith is explicitly prohibited and may result in disciplinary action.
The Global Ethics and Compliance team coordinates the channels for speaking up, including the online
Speak Up channel, and oversees the overall investigation process of alleged violations. All breaches and
suspected violations of the Huhtamaki Code of Conduct brought to the attention of Global Ethics and
Compliance are investigated and reported further according to the Group Speak Up and Investigation
Policy. The Huhtamaki Ethics and Compliance Committee, the Audit Committee of the Board of Directors
and members of the Global Executive Team follow up on the reported incidents and review the
implementation of mitigating activities regularly.
Directors’ Report and Financial Statements 2023 | 25
Risk review
Risk management
Risk management at Huhtamaki aims to identify potential events that may affect the achievement of the
Huhtamaki’s objectives as outlined in its 2030 Strategy. Its purpose is to manage risks to a level that the
Group is capable and prepared to accept, so that there is reasonable assurance and predictability regarding
the achievement of the Group’s objectives. The aim is also to enable the efficient allocation of resources
and risk management efforts.
The Group Enterprise Risk Management (ERM) Policy defines the objectives, scope and responsibilities of
risk management. Efficient risk management ensures timely identification and assessment of opportunities
and risks in the short, medium, and long term, as well as relevant measures to manage them. Detailed risk
management procedures are described in the Group’s ERM framework and process guidelines. Huhtamaki’s
risk management process is based on the Enterprise Risk Management framework of the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
To systematize and facilitate the identification of risks, they are categorized as strategic, operational and
financial risks. These categories are closely aligned with the objectives of Huhtamaki, with sustainability and
compliance embedded in all of them. Huhtamaki assesses risks in terms of their impact and the likelihood of
their occurrence. A risk impact is considered in terms of impact on the organization’s annual EBIT margin.
The likelihood of a risk occurring is generally considered in terms of the expected frequency of occurrence.
To further evaluate the residual risk level when risk controls are in place, Huhtamaki assesses the
effectiveness of those controls over the impact and likelihood of the risk.
Risk review process 2023
In 2023, businesses and Group functions identified and assessed strategic, operational and financial risks
and opportunities against the impact on the achievement of the strategic priorities and performance
objectives. These risk assessment results were consolidated to the Group level. Risk treatment actions were
defined to reach acceptable risk levels at each stage.
The acceptable risk levels associated with appropriate risk management efforts were first evaluated by the
Global Executive Team, then reviewed by the Audit Committee of the Board of Directors and finally
approved by the Board of Directors. Agreed risk management efforts will be conducted and monitored
during 2024.
During 2023, the key risks identified in the 2022 risk assessment process were monitored t
o assess their
existing and newly implemented controls and any changes in the risk level itself. Actions to manage those
risks were planned and executed at the Group and segment level and followed by the Global Risk
Management function, with a focus on each business segment’s most significant risks.
The most significant strategic risks
Changes in the business environment driven by regulation and sustainability present significant risk and
opportunity. The company’s future growth and success depend on its continued ability to predict and
respond to changes and its ability to innovate and develop new sustainable products and solutions in a
timely manner.
Regulatory changes may introduce material bans and other packaging related regulations including recycled
content requirements impacting packaging industry. Further, these regulatory changes include a level of
unpredictability, especially in certain geographics. To mitigate the threats, Huhtamaki is investing in new
Directors’ Report and Financial Statements 2023 | 26
innovative and sustainable solutions. Huhtamaki is also focused on driving an evidence-based discussion to
deliver data on the value of packaging in terms of hygiene, food safety, food availability and food waste
prevention. Furthermore, Huhtamaki actively tracks early stages of regulatory initiatives and potential
regulatory changes to reflect these in the development and commercialization of its products and solutions.
The key risks and opportunities to Huhtamaki’s competitiveness arise from changes in competitive
landscape. Further, capability to adapt to changes in consumer and customer preferences as well as to
changes in technologies and shifts in materials presents a risk and opportunity. Understanding consumers
enables Huhtamaki to realize business opportunities in building long-term sustainable growth in partnership
with its customers. Activities to manage the threats and seize the opportunities involve active dialogue with
the customers to develop ways to increase value and understand Huhtamaki´s competitive position as well
as cross-functional and cross-segment collaboration at Huhtamaki. To mitigate the risk of its technology
and machinery becoming outdated, inefficient or unfit for serving customer demand, the Group
continuously monitors and anticipates also long term needs and has focus on research and development
and also protection of intellectual property. Huhtamaki is also actively working on strategic partnerships
and M&A to secure a competitive advantage on new technology innovations.
Macro-level uncertainties include political risks, macroeconomic risks and recession risks. Unstable political
conditions and geopolitical instability increase the uncertainties in global trade and worsen business
conditions. Further, trade restrictions and trade wars may slow down investment and economic growth in
impacted geographies. Challenging economic conditions typically have impact on customer behaviour and
purchasing power. Wars in Ukraine and Israel-Gaza region, high inflation rates and high interest rates are
examples of recent events affecting the macro environment. Huhtamaki is actively monitoring the
developments so that it can react to changes relevant in its business environment.
In terms of human resources, the key risks and opportunities are identified to arise from availability of labor
and talent. The risk management actions include consistent talent review and succession planning, career
development programs, solid recruitment process as well as constant development of employee promise
and employer image.
Operational and financial risks
Risks and opportunities related to the ability to manage prices so that price changes are implemented in a
timely manner and with correct cost and market intelligence data as well as the ability to pass increases in
the cost of raw materials, energy and transportation to the price of the products are key for the Group. Risk
management actions include ongoing monitoring of raw material and energy costs and focus on contract
management with energy and material escalation clauses included in customer contracts when possible.
Risks related to property damage and IT infrastructure, syst
ems and applications are operational
risks potentially impacting the business continuity of Huhtamaki. The company performs a continuous
improvement program in property risk control, mitigating the impact and likelihood of hazards, such as fire,
explosion, flood or windstorm, that may lead to property damage and business interruption. To minimize
the impact of a potential business interruption, Huhtamaki further develops its disaster recovery and
business continuity plans and allocates manufacturing capacit
y to several locations. Huhtamaki is also
further developing its IT environment including ERP systems, to enhance productivity and mitigate cyber
and other business interruption risks.
Risk related to non-compliance with laws and sanctions include risk of penalties or claims for compensation,
or indictment due to a failure to comply with applicable legislation such as anti-bribery, competition,
product, environmental or other legislation or applicable sanctions. Key risk management actions include
policies and processes to identify and mitigate the non-compliances, and training on various compliance
topics.
Directors’ Report and Financial Statements 2023 | 27
None of the key risks identified in connection with the 2023 risk assessment is considered of a magnitude
that could not be managed or would endanger the implementation of Huhtamaki’s 2030 Strategy. When
considered necessary, appropriate risk treatment actions may also involve a risk transfer by means of
insurance. The Group maintains several global insurance programs. The need for insurance, including
the
adequacy of its scope and limits, is continuously evaluated by the Global Risk Management function.
Risks and risk management procedures related to non-
financial information
The Enterprise Risk Management (ERM) of Huhtamaki covers the
assessment of sustainability risks and
opportunities. Strategic sustainability risks relate to changes in the business environment or events that
may impact the Group’s reputation. Operational sustainability risks relate to production, human resources,
crime and fraud. Risks are assessed in terms of their impact and the likelihood of their occurrence. A risk
impact is considered in terms of impact on the organization’s annual EBIT. In 2023, Huhtamaki conducted a
climate scenario analysis on its operations and business environment. In addition, Huhtamaki conducted
several other risk assessments to support the Enterprise Risk Assessment.
Changes in business environment driven by regulation and sustainability are among the most significant
risks and opportunities for Huhtamaki. These changes can include bans on chemicals and materials used in
products as well as new laws and regulations affecting Huhtamaki’s products, manufacturing plants or
processes. Concerns regarding plastics, non-recyclable and non-renewable products as well as related
consumption reducing measures or bans can affect the business. Further, the business environment is
affected by changes in consumer and customer preferences. Thus, Huhtamaki is continuously evaluating
and developing its product portfolio and production capabilities to meet current and future market
expectations on sustainability. It monitors regulatory changes and drivers through several sources and
stakeholders. Changes in business environment can also bring significant business opportunities, which
Huhtamaki is well-placed to address with its current knowledge and expertise of different raw materials and
conversion technologies combined with an understanding of its customers and consumers.
In the medium to long term, climate change is likely to increase the frequency and severity of natural
disasters such as windstorms, droughts and floods that pose a threat to Huhtamaki’s manufacturing,
sourcing and distribution continuity. The physical damage that extreme weather conditions may cause to
manufacturing facilities or infrastructure could disrupt Huhtamaki’s own, its customers’, raw material,
energy or utilities suppliers’, or transportation suppliers’ business. The company manages these risks with
appropriate precautions in high-risk locations as well as with disaster recovery and business continuity
planning. The locations for proposed greenfield or acquisition targets are evaluated for exposure to natural
disasters, and risks must be considered acceptable, prior to proceeding with a project. Risks related to
existing manufacturing facilities are reduced by allocating capacity to several locations.
Medium to long term transitional climate change risks may impact the availability and cost of raw materials
and energy. Continuous product innovation, e.g., plastic mono-materials and plastic substitution with fiber-
based solutions, play an important role in transformation to circular economy. Huhtamaki’s ambition is to
increase the share of renewable and recycled raw materials to 80% and use only certified or recycled fiber
by 2030. Moreover, Huhtamaki is shifting to renewable energy sources with an aim to reach carbon neutral
production by 2030. The Group not only considers the risk of climate change to its business but to the
entire planet and its people. The Group sees that as an advanced packaging manufacturer it is responsible
for protecting the planet by offering and developing sustainable packaging solutions. More information on
the sustainability of the Group’s products can be found in the Business Overview section and in the
Sustainability supplement of this Annual Report 2023 publication.
Climate change related risks and opportunities are included and taken into account in risk assessment of
the ERM process. The ERM process is described in the Risk management section, page 25. In 2023,
Huhtamaki conducted climate-change scenario analysis to assess the impacts of the physical and transition
Directors’ Report and Financial Statements 2023 | 28
risks to the company. Huhtamaki recognizes the critical importance of threats and opportunities related to
climate change and will continue developing its climate related risk assessment to further improve its
governance, measurements and mitigations related to the topic. In 2023, Huhtamaki began conducting a
double materiality analysis of its operations and value chain. This included an assessment of environmental,
social and governance risks according to the new Corporate Sustainability Reporting Directive (CSRD) and
the related European Sustainability Reporting Standards (ESRS).
Short to medium term sustainability risks and opportunities relating to production involve occupational
health and safety, product safety and quality, and environmental impacts of Huhtamaki operations. Risk
management relating to environmental and occupational safety as well as social responsibility is integrated
in day-to-day business processes and standard practices and the way we work. These must comply not
only with applicable laws and regulations, but also with the ethical, societal and safety responsibilities set
out in the Group’s Code of Conduct and Huhtamaki Working Conditions Requirements. Risk prevention
also involves regular training and continuous improvement programs for all employees. The Group
measures its progress and monitors its compliance by regular audits. Regarding the environmental impacts
of the Group’s operations, more information on water risk and waste management can be found in the
Sustainability supplement of this Annual Report 2023 publication.
Short to medium term sustainability risks relating to human resources are assessed in terms of human
resources risks in general, as well as in terms of labor relations risks, and human rights risks. Sustainable
human resources management focuses on fostering a work culture built on the Group’s values, Code of
Conduct and Huhtamaki leadership competencies. The Group aims to provide all its employees a safe
workplace, development opportunities, as well as systematic performance and talent management and
succession planning. More information on the Group’s People strategy can be found in the Sustainability
supplement of this Annual Report 2023 publication.
In the 2023 ERM assessment, occupational health and safety, product safety and quality risks, non-
compliance with laws and sanctions, human rights and sustainability requirements affecting manufacturing
units or processes were considered medium or medium-low risks to the Group.
Sustainability is also considered in connection with reputational risks relating to products, employer image,
governance, and corporate citizenship. Reputational risks are considered to pose a medium-low risk to the
achievement of Huhtamaki’s objectives.
Corruption risk is included in the ERM assessment and considered as an operational as well as a
reputational risk. While the risk of corruption and bribery in general is considered medium-low in the 2023
ERM assessment, anti-corruption is seen as a key element of the company’s Global Ethics and Compliance
program. Ethics and business integrity requirements, including a strict proh
ibition on all forms of corruption
and bribery, are also an integral part of Huhtamaki Working Conditions Requirements. Key risk
management actions include policies and processes to identify and mitigate the non-compliances and
training on various compliance topics. More information on the Group’s Global Ethics and Compliance
program can be found in the Sustainability supplement of this Annual Report 2023 publication.
Personnel
Number of personnel
December 31, 2023
December 31, 2022
Change
Foodservice Europe-Asia-Oceania
4,248
4,465
-5%
North America
4,040
4,268
-5%
Flexible Packaging
7,681
8,316
-8%
Directors’ Report and Financial Statements 2023 | 29
Fiber Packaging
1,703
1,651
3%
Other activities
1
238
227
5%
Group
17,910
18,927
-5%
1
Including global functions in Finland
At the end of December 2023, the Group had a total of 17,910 (18,927) employees. The number of
employees was 5% lower than in the comparison period, driven by efficiency improvements to improve
competitiveness.
Personnel by segment on December 31, 2023
Personnel by segment on December 31, 2022
24%
23%
43%
10%
1%
Foodservice E-A-O
North America
Flexible Packaging
Fiber Packaging
Corporate
24%
23%
44%
9%
1%
Foodservice E-A-O
North America
Flexible Packaging
Fiber Packaging
Corporate
Directors’ Report and Financial Statements 2023 | 30
Changes in management
On May 4, 2023, Huhtamaki announced that Eric Le Lay, President, Fiber Foodservice Europe-Asia-Oceania,
and member of Huhtamaki’s Global Executive Team, decided to pursue a career opportunity outside of
Huhtamaki. Fredrik Davidsson, formerly EVP, Digital and Process Performance, was appointed President,
Fiber Foodservice Europe-Asia-Oceania.
On July 20, 2023, Huhtamaki announced the appointment of Johan Rabe as Executive Vice President, Digital
and Process Performance and a member of the Global Executive Team as of August 1, 2023. He reports to
President and CEO Charles Héaulmé and is based in Espoo, Finland.
On September 27, 2023, Huhtamaki announced that Thomasine Kamerling, Executive Vice President,
Sustainability and Communications, and a member of the Global Executive Team decided to leave Huhtamaki
to pursue other career opportunities. At the same time, Salla Ahonen was appointed as Executive Vice
President, Sustainability and Communications and a member of Global Executive Team as of January 1, 2024.
She reports to President and CEO Charles Héaulmé and is based in Espoo, Finland.
Share capital, shareholders and trading of shares
Share capital and share data
2023
2022
2021
Registered share capital
1
, EUR million
366
366
366
Total number of shares
1
107,760,385
107,760,385
107,760,385
Shares owned by the Company
1
3,222,204
3,395,709
3,395,709
% of total number of shares
3.0%
3.2%
3.2%
Number of outstanding shares
1, 2
104,538,181
104,364,676
104,364,676
Average number of outstanding shares
2, 3
104,497,300
104,364,676
104,360,114
Number of shares traded
4
, million
43.4
61.7
51.0
Closing price on final day of trading, EUR
36.73
32.00
38.89
Volume-weighted average price, EUR
32.64
34.30
40.12
High, EUR
37.20
39.94
45.93
Low, EUR
28.45
26.41
36.57
Market capitalization
1, 2
, EUR million
3,840
3,340
4,059
Earnings per share, EUR
1.97
2.65
1.91
Earnings per share, diluted, EUR
1.97
2.64
1.91
Dividend per share, EUR
1.05
5
1.00
0.94
Dividend to earnings
53%
5
38%
49%
Effective dividend yield
2.9
5
3.1
2.4
Price to earnings ratio
1
18.6
12.1
20.4
Equity per share
1
, EUR
17.59
17.65
14.57
1
At the end of period
2
Excluding shares owned by the Company
3
Average number of outstanding shares used in EPS calculations
4
Number of shares traded on Nasdaq Helsinki
5
2023: Board proposal
Directors’ Report and Financial Statements 2023 | 31
Shareholder structure as at December 31, 2023
The number of registered shareholders at the end of December 2023 was 53,834 (50,150). Foreign
ownership including nominee registered shares accounted for 42% (44%).
Trading of shares
During the reporting period, the Company’s shares were quoted on Nasdaq Helsinki Ltd on the Nordic Large
Cap list under the Industrials sector. It was a component of the Nasdaq Helsinki 25 Index.
At the end of December 2023, the Company’s market capitalization was EUR 3,840 million (EUR 3,340
million). With a closing price of EUR 36.73 (EUR 32.00) at the end of the reporting period, the share price
increased 15% from the beginning of the year. During the reporting period the volume weighted average
price for the Company’s shares was EUR 32.64 (EUR 34.30). The highest price paid was EUR 37.20 (EUR
39.94) and the lowest was EUR 28.45 (EUR 26.41).
During the reporting period, the cumulative value of the Company’s share turnover on Nasdaq Helsinki Ltd
was EUR 1,418 million (EUR 2,117 million). The trading volume of approximately 43 million (62 million) shares
equaled an average daily turnover of 173,069 (243,923) shares. The cumulative value of the Company’s
share turnover including alternative trading venues, such as BATS Chi-X and Turquoise, was EUR 6,345
million (EUR 7,665 million). During the reporting period, 78% (72%) of all trading took place outside Nasdaq
Helsinki Ltd. (source: Refinitiv Eikon).
Resolutions of the Annual General Meeting 2023
Huhtamäki Oyj's Annual General Meeting of Shareholders was held in Helsinki on April 27, 2023. The
meeting adopted the Annual Accounts including the Consolidated Annual Accounts for 2022, discharged the
members of the Company's Board of Directors, the CEO and the interim Deputy CEO from liability, and
approved all proposals made to the Annual General Meeting by the Board of Directors and the Shareholders’
Nomination Board. The Annual General Meeting also approved the Remuneration Report for the Company’s
Governing Bodies and the amended Remuneration Policy for the Governing Bodies presented to it.
The Annual General Meeting resolved that an aggregate dividend of EUR 1.00 per share be paid based on
the balance sheet adopted for the financial period ended on December 31, 2022. The dividend will be paid
in two instalments. The first dividend instalment, EUR 0.50 per share, was paid to shareholders registered in
the Company’s register of shareholders maintained by Euroclear Finland Ltd on the record date for the first
dividend instalment May 2, 2023. The payment date for the first dividend instalment was on May 9, 2023.
The second dividend instalment, EUR 0.50 per share, was paid to shareholders registered in the Company’s
register of shareholders maintained by Euroclear Finland Ltd on the record date for the second dividend
instalment October 2, 2023. The payment date for the second dividend instalment was on October 9, 2023.
43%
16%
42%
Finnish instuons
,
companies and organizaons
Households
Foreign and nominee-registered shareholders
Directors’ Report and Financial Statements 2023 | 32
The number of members of the Board of Directors was confirmed to as nine (9). Mr. Pekka Ala-Pietilä, Ms.
Mercedes Alonso, Mr. Doug Baillie, Mr. William R. Barker, Ms. Anja Korhonen, Ms. Kerttu Tuomas and Mr.
Ralf K. Wunderlich were re-elected and, as new members, Ms. Pauline Lindwall and Mr. Pekka Vauramo were
elected as members of the Board of Directors for a term ending at the end of the next Annual General
Meeting. The Annual General Meeting re-elected Mr. Pekka Ala-Pietilä as the Chair of the Board and Ms.
Kerttu Tuomas as the Vice-Chair of the Board.
The Annual General Meeting resolved that the annual remuneration to the members of the Board of
Directors will be paid as follows: to the Chair of the Board EUR 170,000, to the Vice-Chair EUR 80,000 and
to the other members EUR 65,000 each. In addition, the Annual General Meeting resolved that the annual
remuneration to the Chair and members of the Board Committees will be paid as follows: to the Chair of the
Audit Committee EUR 16,000 and to the other members of the Audit Committee EUR 5,500 as well as to
the Chair of the Human Resources Committee EUR 5,500 and to the other members of the Human Resources
Committee EUR 2,750. In addition, the Annual General Meeting resolved that EUR 1,500 will be paid for
each Board and Committee meeting attended. Traveling expenses of the Board members will be
compensated in accordance with the Company policy.
KPMG Oy Ab, a firm of authorized public accountants, was re-elected as Auditor of the Company for the
financial year January 1 – December 31, 2023. Mr. Henrik Holmbom, APA, will continue to act as the Auditor
with principal responsibility.
The Annual General Meeting authorized the Board of Directors to resolve on the repurchase of an aggregate
maximum of 10,776,038 of the Company’s own shares. Own shares may be repurchased at a price formed
in public trading on the date of the repurchase or otherwise at a price formed on the market. The
authorization covers also directed repurchases of the Company’s own shares. The authorization remains in
force until the end of the next Annual General Meeting, however, no later than June 30, 2024.
The Annual General Meeting authorized the Board of Directors to resolve on the issuance of shares and the
issuance of special rights entitling to shares. The aggregate number of new shares to be issued may not
exceed 10,000,000 shares which corresponds to approximately 9.3 percent of the current shares of the
Company, and the aggregate number of own treasury shares to be transferred may not exceed 4,000,000
shares which corresponds to approximately 3.7 percent of the current shares of the Company. The
authorization covers also directed issuances of shares. The authorization remains in force until the end of the
next Annual General Meeting, however, no later than June 30, 2024..
Short-term risks and uncertainties
Decline in consumer demand, inflation in key cost items (including raw materials, labor, distribution and
energy), availability of raw materials and movements in currency rates are considered to be relevant short-
term business risks and uncertainties in the Group's operations. Economic and financial market conditions,
as well as a potential geopolitical escalation and natural disasters can also have an adverse effect on the
implementation of the Group's strategy and on its business performance and earnings.
Outlook for 2024
The Group’s trading conditions are expected to improve compared to 2023. Volatility in the operating
environment is expected to continue, while Huhtamaki's diversified product portfolio provides resilience. The
company’s initiatives, which include the ongoing savings and efficiency program are expected to support the
company’s performance. The Group’s good financial position enables addressing profitable growth
opportunities.
Directors’ Report and Financial Statements 2023 | 33
Dividend proposal
On December 31, 2023, Huhtamäki Oyj’s distributable funds were EUR 836 million (EUR 908 million). The
Board of Directors will propose to the Annual General Meeting that a dividend of EUR 1.05 (EUR 1.00) per
share be paid.
Annual General Meeting 2024
The Annual General Meeting of Shareholders (AGM) will be held on Thursday, April 25, 2024 at 11:00 (EEST)
at Scandic Marina Congress Center, Katajanokanlaituri 6, Helsinki, Finland .
Corporate Governance Statement and Remuneration Report
The Corporate Governance Statement and Remuneration Report have been issued separately and are
presented in a section of this Huhtamaki Annual Report 2023 publication. The statements are also available
on the Group’s website www.huhtamaki.com.
Operating model
Directors’ Report and Financial Statements 2023 | 34
Financial statements
Consolidated financial statements
Consolidated statement of income (IFRS)
EUR million
Note
2023
2022
Net sales
2.1.
Cost of goods sold
-3,415.0
-3,746.6
Gross profit
Other operating income
2.4.
Sales and marketing
-101.6
-99.6
Research and development
-36.0
-30.6
Administration expenses
-295.3
-254.9
Other operating expenses
2.5.
-24.3
-16.8
Earnings before interest and taxes
2.2., 2.3.
Financial income
5.1.
Financial expenses
5.1.
-82.9
-64.2
Profit before taxes
Income tax expense
2.6.
-86.7
-66.7
Profit for the period
Attributable to:
Equity holders of the parent company
Non-controlling interest
EUR
EPS attributable to equity holders of the parent company
2.7.
Diluted EPS attributable to equity holders of the parent company
2.7.
Directors’ Report and Financial Statements 2023 | 35
Group statement of comprehensive income (IFRS)
EUR million
Note
2023
2022
Profit for the period
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit plans
2.2.
-18.2
Income taxes related to items that will not be reclassified
2.6.
-16.3
Total
-13.1
Items that may be reclassified subsequently to profit or loss
Translation differences
-105.1
Equity hedges
-14.7
Cash flow hedges
5.5.
-5.6
Income taxes related to items that may be reclassified
2.6.
-3.4
Total
-105.0
Other comprehensive income, net of tax
-118.1
Total comprehensive income
Attributable to:
Equity holders of the parent company
Non-controlling interest
Directors’ Report and Financial Statements 2023 | 36
Consolidated statement of financial position (IFRS)
Assets
EUR million
Note
2023
2022
Non-current assets
Goodwill
3.2.
Other intangible assets
3.3.
Tangible assets
3.4.
Other investments
5.7.
Interest-bearing receivables
5.2., 5.7.
Deferred tax assets
2.6.
Employee benefit assets
2.2.
Other non-current assets
Current assets
Inventory
4.1.
Interest-bearing receivables
5.2.
Current tax assets
Trade and other current receivables
4.2., 5.7.
Cash and cash equivalents
5.3., 5.7.
Assets held for sale
3.1.
Total assets
Equity and liabilities
EUR million
Note
2023
2022
Share capital
5.4.
Premium fund
5.4.
Treasury shares
5.4.
-29.6
-31.2
Translation differences
5.4.
-102.1
-7.1
Fair value and other reserves
5.5.
-48.1
-30.4
Retained earnings
Total equity attributable to equity holders of the parent company
Non-controlling interest
Total equity
Non-current liabilities
Interest-bearing liabilities
5.6., 5.7.
Deferred tax liabilities
2.6.
Employee benefit liabilities
2.2.
Provisions
4.3.
Other non-current liabilities
Current liabilities
Interest-bearing liabilities
Current portion of long term loans
5.6., 5.7.
Short-term loans
5.6., 5.7.
Provisions
4.3.
Current tax liabilities
Trade and other current liabilities
4.4., 5.7.
Total liabilities
Total equity and liabilities
Directors’ Report and Financial Statements 2023 | 37
Consolidated statement of changes in equity (IFRS)
Attributable to equity holders of the parent company
Share issue
Treasury
Translation
Fair value
Retained
Non-
Total
EUR million
Note
Share capital
premium
shares
differences
and other
earnings
Total
controlling
equity
reserves
interest
Balance on Jan 1, 2022
-31.2
-102.4
-72.4
Dividends paid
2.7.
-98.1
-98.1
-98.1
Share-based payments
6.3.
Total comprehensive income for the year
Acquisition of non-controlling interest
-2.0
-2.0
-0.3
-2.3
Other changes
-5.7
-5.7
-3.7
-9.4
Balance on Dec 31, 2022
-31.2
-7.1
-30.4
Dividends paid
2.7.
-104.5
-104.5
-104.5
Share-based payments
6.3.
Total comprehensive income for the year
-95.0
-17.7
Acquisition of non-controlling interest
-2.2
Other changes
-4.0
-4.0
-4.6
-8.6
Balance on Dec 31, 2023
-29.6
-102.1
-48.1
Directors’ Report and Financial Statements 2023 | 38
Consolidated statement of cash flows (IFRS)
EUR million
Note
2023
2022
Profit for the period
Adjustments
Depreciation, amortisation and impairments
2.3.
Gain/loss from disposal of assets
-50.8
Financial expense/-income
5.1.
Income tax expense
2.6.
Other adjustments
-38.9
Change in inventory
4.1.
-98.0
Change in non-interest bearing receivables
Change in non-interest bearing payables
-11.1
-83.6
Dividends received
Interest received
Interest paid
-58.8
-36.0
Other financial expense and income
-8.8
-8.2
Taxes paid
2.6.
-83.8
-71.3
Net cash flows from operating activities
Capital expenditure
3.3., 3.4.
-318.7
-318.5
Proceeds from selling tangible assets
3.4.
Disposed subsidiaries and business operations
Acquired subsidiaries and assets
3.1.
-1.9
-2.2
Change in other investment
Proceeds from long-term deposits
Payment of long-term deposits
-2.9
Proceeds from short-term deposits
Payment of short-term deposits
-183.5
-75.7
Net cash flows from investing activities
-260.3
-174.6
Proceeds from long-term borrowings
Repayment of long-term borrowings
-16.6
-623.8
Change in short-term loans
-572.3
-214.9
Acquisition of non-controlling interest
-18.2
-2.3
Dividends paid
-104.5
-98.1
Net cash flows from financing activities
5.6
-268.2
-21.6
Change in cash and cash equivalents
Cash flow based
Translation difference
-11.0
Cash and cash equivalents period start
Cash and cash equivalents period end
5.3.
The above Consolidated Statement of Cash Flow should be read in conjunction with the accompanying notes
Directors’ Report and Financial Statements 2023 | 39
Notes to the consolidated financial
statements
1. Basis of preparation
focus and expertise are in paperboard based foodservice packaging, smooth and rough molded fiber packaging as well
as flexible packaging. Huhtamaki offers standardized products, customized designs as well as total packaging systems
and solutions. Main customers are food and beverage companies, quick service and fast casual restaurants, foodservice
The parent company, Huhtamäki Oyj , is a public limited liability company domiciled in Espoo, Finland and listed on
NASDAQ OMX Helsinki Ltd. The address of its registered office is Revontulenkuja 1, 02100 Espoo, Finland . A copy of
consolidated financial statements is available at Group’s website
www.huhtamaki.com
.
2024. According to the Finnish Companies Act shareholders decide on the adoption of financial statements at the
Standards (IFRS) and the IAS and IFRS standards as well as SIC- and IFRIC- interpretations which were valid on
December 31, 2023. IFRS, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions
of said Act, refer to the standards and their interpretations adopted in accordance with the procedure laid down in
The consolidated financial statements have been prepared under the historical cost convention except for other
investments at fair value through other comprehensive income, financial instruments at fair value through profit or loss,
derivative instruments and cash-settled share-based payment arrangements that are measured at fair value. The
preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates.
The use of estimates and assumptions is described in more detail in Note 1.6. Use of significant estimates and
judgements. The consolidated financial statements are presented in millions of euros. Figures presented are exact figures
The following amended standards have been adopted as of January 1, 2023 and they did not have material impact on
the consolidated financial statements:
•
Revised IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2. The amendments clarify the application
of materiality to disclosure of accounting policies.
•
Revised IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify how companies
should distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the
definition of and clarifications on accounting estimates.
•
Revised IAS 12 Income Taxes. The amendments narrow the initial recognition exemption (IRE) and clarify that the exemption
does not apply to transactions such as leases and decommissioning obligations which give rise to equal and offsetting
temporary differences.
The Group has revised the recognition of deferred tax assets and liabilities on leases, which were
previously accounted under the net approach. The change does not have impact to the statement of financial position, since
most of the Group entities are offsetting the deferred tax assets and liabilities either on legal entity or tax consolidation
group level in accordance with IAS 12.
The change impacts the disclosure of deferred taxes assets and deferred tax liabilities
related to leases (Note 2.6 Income taxes).
•
Revised IAS 12 Income Taxes (International Tax Reform – Pillar Two Model Rules). The amendments give relief from
accounting for deferred taxes arising from the OECD’s (Organisation for Economic Co-operation and Development)
international tax reform and require new disclosures to compensate for the potential loss of information resulting from the
relief. The Group has adopted the amendments upon their release on 23 May 2023. For more information about the OECD
Pillar Two, see Note 2.6. Income taxes.
The Group plans to adopt the following amendments in 2024 and they are not expected to have material impact on the
consolidated financial statements:
•
Revised IAS 1 Presentation of Financial Statements. The amendments are to promote consistency in application and
clarify the requirements on determining if a liability is current or non-current. The amendments specify that covenants to
be complied with after the reporting date do not affect the classification of debt as current or non-current at the
reporting date. The amendments require to disclose information about these covenants in the notes to the financial
statements.
•
Revised IFRS 16 Leases. The amendments introduce a new accounting model for variable payments and will require seller-
lessees to reassess and potentially restate sale-and-leaseback transactions entered into since the implementation of IFRS
16 in 2019.
•
Revised IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments (amendments not yet endorsed by the European
Union): The amendments enhance the transparency of supplier finance arrangements and their effects on a company’s
liabilities, cash flows and exposure to liquidity risk. Amendments require to disclose quantitative and qualitative information
about supplier finance programs.
The Group plans to adopt the following amendments later than 2024 and they are not expected to have material impact
on the consolidated financial statements (amendments not yet endorsed by the European Union):
•
Revised IAS 21 The Effects of Changes in Foreign Exchange Rates: The amendments require to apply a consistent
approach in assessing whether a currency can be exchanged into another currency and, when it cannot, in determining
The consolidated financial statements include the parent company Huhtamäki Oyj and all its subsidiaries where over
50% of the subsidiary’s voting rights are controlled directly or indirectly by the parent company, or the parent company
is otherwise in control of the company for example based on Shareholder’s Agreement.
Acquired subsidiaries are accounted for using the acquisition method. Subsidiaries are fully consolidated from the date
on which the control is transferred to the Group. Divested subsidiaries are included up to the date the control ceases.
All intercompany transactions, receivables, liabilities and unrealized profits, as well as distribution of profits within the
Group, are eliminated.
Profit and loss for the period attributable to equity holders of the parent company and to non-controlling interest is
presented in the income statement. Comprehensive income attributable to equity holders of the parent company and
to non-controlling interest is presented in the statement of comprehensive income. Comprehensive income is attributed
to the owners of the parent company and to the non-controlling interest even if this results in the non-controlling
Associated companies, where the Group holds voting rights of between 20% and 50% and in which the Group has
significant influence, but not control, over the financial and operating policies, are consolidated using the equity method.
Joint arrangements are companies over whose activities the Group has joint control, established by contractual
agreement. The joint arrangements classified as joint ventures are consolidated using the equity method. When the
Group’s share of losses exceeds the carrying amount of the equity accounted investment, the carrying amount is
reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred
obligations in respect of the equity-accounted investments. The Group’s share of result of equity-accounted
investments is presented as a separate item above Earnings before interest and taxes. Correspondingly the Group’s
Directors’ Report and Financial Statements 2023 | 41
Foreign currency transactions are translated into functional currency at the rates of exchange prevailing at the date of
the transaction. The consolidated financial statements are presented in EUR, which is the Group’s presentation currency
and the parent company’s functional currency. Monetary assets and liabilities are translated at the rates of exchange at
the reporting period closing date. The exchange rate used at the reporting period closing date is the rate of the date
prior to the last working day of the reporting period closing date. Foreign exchange differences arising from translation
are recognized in the income statement. Foreign exchange gains and losses relating to operating activities are recognized
in the same account as the underlying transaction above Earnings before interest and taxes. Foreign exchange
differences relating to financial liability are recognized in financial income or expense except for those currency
differences that relate to loans designated as a hedge of the net investment in foreign operations. Those currency
differences are recognized as translation differences in other comprehensive income.
On consolidation the income statements of foreign entities are translated into euros at the average exchange rate for
the accounting period. The statements of financial position of foreign entities are translated at the exchange rate of
reporting period closing date. The exchange rate used at the reporting period closing date is the rate of the date prior
to the last working day of the reporting period closing date. Differences resulting from the translation of income
statement items at the average rate and items in the statement of financial position at the closing rate are recognized
as part of translation differences in other comprehensive income.
On consolidation, exchange differences arising on the translation of the net investments in foreign subsidiaries,
associated companies and joint ventures are recognized as translation differences in other comprehensive income. A
similar treatment is applied to intragroup permanent loans, which in substance are equity. On disposal of a foreign entity,
Preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates
and assumptions affecting the reported amounts of assets, liabilities, income and expenses, as well as the disclosure of
contingent assets and liabilities. The estimates and assumptions are based on historical experience and other factors
that are believed to be reasonable under the circumstances, which form the basis of making the judgments about
carrying values. These estimates and assumptions are reviewed on an ongoing basis. Possible effect of the changes in
estimates and assumptions are recognized during the period they are changed.
The following items and related notes include significant estimates that are subject to a risk of changes in the carrying
values within next financial year: impairment testing (Note 3.2 Goodwill), measurement of pension liabilities (Note 2.2
Employee benefits), litigation and tax risks (Notes 2.6 Income taxes and 6.6. Litigations), restructuring plans (Note 4.3
Provisions), provision for inventory obsolescence (Note 4.1 Inventories), probability of deferred tax assets being
recovered against future taxable profits (Note 2.6 Income taxes), business combinations related contingent
2. Financial performance
Information
The Group’s operating segments are strategic business units which produce different products and which are managed
as separate units. The Group’s segment information is based on internal management reporting. The Group has three
business areas which are organized into four reporting segments:
Foodservice Packaging:
•
Foodservice Europe-Asia-Oceania:
Foodservice paper and plastic disposable tableware is supplied to foodservice operators,
fast food restaurants, coffee shops and FMCG companies. The segment has production in Europe, Africa, Middle East, Asia
and Oceania.
•
North America:
The segment serves local markets in North America with Chinet® disposable tableware products,
foodservice packaging products, as well as ice cream containers and other consumer goods packaging products. The
segment has rigid paper, plastic and molded fiber manufacturing units in the United States and Mexico.
Flexible Packaging:
Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care
products. The segment serves global markets from production units in Europe, Middle East, Asia and South America.
Fiber Packaging:
Recycled fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production
in Europe, Oceania, Africa and South America.
ACCOUNTING PRINCIPLES
on a segment’s potential to generate earnings before interest and taxes (EBIT), operating cash flow and return on net
assets. In management’s opinion these are the most suitable key indicators for analyzing the segments’ performance.
The Chief Executive Officer is the highest decision maker regarding the above mentioned assessments and allocation
of resources.
Segment’s net assets include items directly attributable to a segment and items which can be allocated on a reasonable
basis. Net assets comprise intangible assets (including goodwill), tangible assets, equity-accounted investments,
inventories, trade and other receivables, accrued income and prepayments, trade payables, other payables and accrued
expense. Capital expenditure includes acquisition of tangible and intangible assets which will be used during more than
one reporting period. Intersegment pricing is based on fair market value.
Other activities include unallocated corporate costs and royalty income and related net assets. Unallocated assets and
Group income statement and balance sheet items 2023
Segments 2023
Foodservice Europe- | North | Flexible | Fiber | Segments | ||
EUR million | Note | Asia-Oceania | America | Packaging | Packaging | total |
Net sales | 1,033.7 | 1,456.4 | 1,337.7 | 341.1 | 4,168.9 | |
Intersegment net sales | 3.5 | 1.5 | 3.2 | 2.0 | -10.3 | |
EBIT | 88.0 | 187.9 | 93.9 | 33.4 | 403.2 | |
Net Assets | 3.1, 3.3, 3.4, 4 | 907.4 | 1,013.9 | 1,294.0 | 305.0 | 3,520.2 |
Capital Expenditure | 64.0 | 121.4 | 103.7 | 29.3 | 318.5 | |
Depreciation and amortization | 2.3 | 69.8 | 60.4 | 85.1 | 22.4 | 237.7 |
Segments 2022
Foodservice Europe- | North | Flexible | Fiber | Segments | ||
EUR million | Note | Asia-Oceania | America | Packaging | Packaging | total |
Net sales | 1,107.3 | 1,464.1 | 1,551.4 | 356.2 | 4,479.0 | |
Intersegment net sales | 3.4 | 4.2 | 6.7 | 6.8 | -21.1 | |
EBIT | 121.7 | 165.9 | 82.2 | 58.0 | 427.9 | |
Net Assets | 3.1, 3.3, 3.4, 4 | 965.4 | 1,013.2 | 1,407.1 | 294.4 | 3,680.1 |
Capital Expenditure | 118.9 | 99.8 | 68.2 | 31.2 | 318.1 | |
Depreciation and amortization | 2.3 | 60.6 | 58.4 | 64.6 | 23.3 | 206.8 |
Intersegment net sales are eliminated on consolidation.
ACCOUNTING PRINCIPLES
The revenue is recognized at an amount of consideration to which the Group expects to be entitled in exchange for
transferring promised goods or services to a customer. The transaction price is usually fixed but may also include variable
considerations such as volume or cash discounts. The variable considerations are estimated using the most likely value
method if not yet realized in the end of reporting period. The revenue further adjusted with indirect sales taxes and
exchange rate differences relating to sales in foreign currency is presented as net sales.
Typical contracts with customers include a sale of goods to a customer with only one performance obligation. The
revenue recognition occurs at a point in time, when the control of the goods is transferred to the customer according
to the delivery terms. Payment terms are typical to the business and contracts do not include significant financing
Earnings before interest and taxes consists of net sales less costs of goods sold, sales and marketing expenses, research
and development expenses, administration expenses, other operating expenses plus other operating income and share
of result of equity-accounted investments. Foreign exchange gains and losses and changes of fair value of the derivative
Reconciliation calculations
Result
EUR million | 2023 | 2022 |
Total EBIT for reportable segments | 403.2 | 427.9 |
EBIT for other activities | -22.3 | -22.7 |
Net financial items | -69.0 | -53.2 |
Profit before taxes | 312.0 | 352.1 |
Assets
EUR million | 2023 | 2022 |
Total assets for reportable segments | 4,140.9 | 4,323.4 |
Assets in other activities | 19.3 | 35.3 |
Unallocated assets | 504.7 | 462.5 |
Group's total assets | 4,664.9 | 4,821.3 |
Liabilities
EUR million | 2023 | 2022 |
Total liabilities for reportable segments | 657.3 | 683.9 |
Liabilities in other activities | 28.6 | 34.2 |
Unallocated liabilities | 2,054.1 | 2,181.0 |
Group's total liabilities | 2,739.9 | 2,899.1 |
Geographical information
In presenting information on geographical basis revenues are reported based on the selling entity’s location. Assets are
reported based on geographical location of the assets. Non-current assets are presented excluding financial instruments,
deferred tax assets and post-employment benefit assets.
2023
Non-current | ||
External net | assets | |
EUR million | sales | |
United States | 1454.7 | 641.8 |
Germany | 439.4 | 176.2 |
The United Kingdom | 325.1 | 48.9 |
India | 261.3 | 78.9 |
Turkey | 177.4 | 146.4 |
Australia | 174.7 | 43.5 |
Thailand | 158.4 | -10.4 |
Poland | 124.1 | 52.0 |
South Africa | 116.9 | 9.5 |
Czech Republic | 104.6 | 15.9 |
Finland | 73.4 | 83.3 |
Other countries | 758.9 | 522.5 |
Total | 4,168.9 | 1,808.4 |
2022
Non-current | ||
External net | assets | |
EUR million | sales | |
United States | 1460.7 | 604.9 |
Germany | 518.9 | 180.6 |
India | 336.2 | 87.0 |
The United Kingdom | 303.4 | 46.6 |
Australia | 204.7 | 44.9 |
Turkey | 203.7 | 393.7 |
Thailand | 158.9 | -20.6 |
South Africa | 133.0 | 8.8 |
China | 121.2 | 54.9 |
Poland | 108.9 | 54.1 |
Finland | 76.2 | 79.5 |
Other countries | 853.3 | 488.7 |
Total | 4,479.0 | 2,023.1 |
Personnel expenses
EUR million | Note | 2023 | 2022 |
Wages and Salaries | 684.1 | 659.7 | |
Compulsory social security contributions | 67.2 | 67.0 | |
Pensions | |||
Defined benefit plans | 5.8 | 7.1 | |
Defined contribution plans | 21.8 | 19.2 | |
Other defined benefit plans | 0.7 | 2.2 | |
Share-based payments | 6.3. | 13.9 | 13.8 |
Other personnel costs | 52.8 | 50.8 | |
Total | 846.3 | 819.9 |
Remuneration paid by the parent company to the members of the Board of Directors as well as the Chief Executive
Officer (CEO) of Huhtamäki Oyj (10 people) amounted to EUR 4.4 million (EUR 3.1 million).
Average number of personnel | 2023 | 2022 |
Group | 18,261 | 19,550 |
Huhtamäki Oyj | 153 | 138 |
See note 6.2 Related party transactions, 6.3 Share-based payments and Remuneration Statement.
Pension plans
The Group has established a number of defined benefit plans providing pensions and other post-employment benefits
for its personnel worldwide. The US, the UK, Germany and the Netherlands are the countries having major defined
benefit plans comprising approximately 90% of the Group consolidated defined benefit obligation.
The US and the UK de
fined benefit plans are organized through a pension fund and the German and Dutch defined
benefit plans through an insurance company. The major pension plans are funded and the assets of these plans are
segregated from the assets of the Group. The subsidiaries’ level of funding of the plans and asset allocation to asset
categories meet local authority requirements.
In the defined benefit pension plans the pensions payable are based on salary level before retirement and number of
service years. Some plans can in
clude early retirement. The calculations for defined benefit obligations at reporting
period closing date have been made by qualified actuaries.
The Group has also unfunded post-employment medical benefit plans, principally in the US. The method of accounting,
assumptions and the frequency of valuations are similar to those used for the defined benefit pension schemes.
These defined benefit plans expose the Group to actuarial risks, such as inflation risk, interest rate risk, life expectancy
and market risk.
ACCOUNTING PRINCIPLES
Employee benefits are all forms of consideration given in exchange for service rendered by employees or for the
termination of employment.
The Group companies have various pension and other postemployment benefit plans in accordance with local conditions
and practices worldwide. These plans are classified as either defined contribution plans or defined benefit plans.
In defined contribution plans, the Group pay fixed contributions into a separate entity such as an insurance company.
The Group has no legal or constructive obligations to pay further contributions. The contributions are recognized in the
income statement as personnel expenses in the period to which they relate.
In defined benefit plans, the Group is obligated for the current contributions, but also for sufficiency of the plan assets
to provide agreed benefits for employees. The liability recognized in the statement of financial position is the present
value of defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value
of defined benefit plan obligation is calculated annually by independent actuaries using projected unit credit method.
The present value is determined by discounting estimated future cash flows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid and that have maturity terms
approximating to the terms of the related obligation. The cost of providing defined benefit plans is recognized in the
income statement as personnel expense, when the service is rendered by employees or when a plan amendment or
curtailment takes place. The net interest expense is recognized in the income statement as financial expense.
Remeasurements, including actuarial gains or losses, are recognized through other comprehensive income in
Defined benefit | Fair value of | Effect from | Net defined | |||||
obligations | plan assets | asset ceiling | benefit liability | |||||
EUR million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Balance at January 1 | 422.4 | 569.6 | -344.7 | -444.3 | 1.2 | 4.1 | 78.9 | 129.5 |
Included in Income statement | ||||||||
Current service cost | 6.5 | 9.3 | 6.5 | 9.3 | ||||
Plan amendment and curtailment cost (+) / income (-) | 0.0 | 0.0 | 0.0 | - | ||||
Interest cost (+) / income (-) | 18.2 | 10.1 | -15.9 | -9.1 | 2.4 | 1.0 | ||
24.7 | 19.5 | -15.9 | -9.1 | 8.9 | 10.3 | |||
Included in Other comprehensive income | ||||||||
Remeasurements | ||||||||
Actuarial loss (+) / gain (-) arising from | ||||||||
Demographic assumptions | -2.7 | -1.5 | -2.7 | -1.5 | ||||
Financial assumptions | 15.8 | -144.7 | 15.8 | -144.7 | ||||
Experience adjustment | 6.8 | 14.5 | 6.8 | 14.5 | ||||
Actual return on plan assets less interest income | -0.5 | 90.6 | -0.5 | 90.6 | ||||
Changes in asset ceiling less interest | -1.3 | -3.0 | -1.3 | -3.0 | ||||
19.9 | -131.7 | -0.5 | 90.6 | -1.3 | -3.0 | 18.2 | -44.1 | |
Other movements | ||||||||
Benefits paid | -30.2 | -35.5 | 22.2 | 29.0 | -7.9 | -6.5 | ||
Contribution by employer | -4.6 | -4.1 | -4.6 | -4.1 | ||||
Contribution by employee | -0.2 | -0.2 | -0.2 | -0.2 | ||||
Obligations and assets assumed in business combinations | - | - | - | - | - | - | ||
Assets extinguished on plan amendment | - | 0.0 | - | 0.0 | ||||
Effect of movements in exchange rates | -6.0 | 0.5 | 5.4 | -6.7 | 0.0 | 0.1 | -0.6 | -6.1 |
Balance at December 31 | 430.8 | 422.4 | -338.1 | -344.7 | - | 1.2 | 92.7 | 78.9 |
Reflected to statement of financial position | 2023 | 2022 | ||||||
Employee benefit assets | 53.3 | 57.8 | ||||||
Employee benefit liabilities | 145.9 | 136.7 | ||||||
92.7 | 78.9 | |||||||
Amounts of funded and unfunded obligations | 2023 | 2022 | ||||||
Present value of funded obligations | 407.9 | 395.4 | ||||||
Present value of unfunded obligations | 22.9 | 27.0 | ||||||
430.8 | 422.4 | |||||||
Plan assets comprise: | 2023 | 2022 | ||||||
European equities | 4.7 | 8.9 | ||||||
North American equities | 35.3 | 26.4 | ||||||
European debt instruments | 5.4 | 2.7 | ||||||
North American debt instruments | 113.6 | 125.3 | ||||||
Property | 13.3 | 21.1 | ||||||
Insured plans | 85.3 | 87.6 | ||||||
Other | 80.6 | 72.8 | ||||||
338.1 | 344.7 | |||||||
All equity and debt instruments have quoted prices in active markets.
Expected contribution to defined benefit plans during 2024 is EUR 3.2 million.
The weighted average duration of defined benefit obligation was 11 years (12 years).
Significant actuarial assumptions | 2023 | 2022 | ||||
Discount rate % | ||||||
Europe | 3.2 | – | 4.5 | 1.9 | – | 4.8 |
Americas | 4.9 | – | 9.9 | 5.2 | – | 9.7 |
Asia,Oceania,Africa | 6.0 | – | 10.9 | 5.2 | – | 10.9 |
Annual increase in healthcare costs % | ||||||
Americas | 7.9 | 6.7 | ||||
Asia,Oceania,Africa | 6.9 | 6.9 |
EUR million | 2023 | 2022 |
1% p. increase in discount rate | -32.6 | -40.3 |
1% p. decrease in discount rate | 37.6 | 43.9 |
1% p. increase of estimated healthcare cost | 0.8 | 0.6 |
1% p. decrease of estimated healthcare cost | -0.7 | -0.6 |
EUR million | 2023 | 2022 |
Depreciation, amortization&impairments by function: | ||
Cost of Goods Sold | 189.4 | 180.8 |
Sales and marketing | 8.5 | 10.1 |
Research and development | 7.2 | 4.4 |
Administration | 19.6 | 14.3 |
Other | 15.7 | - |
Total | 240.3 | 209.7 |
Depreciation, amortization&impairments by asset type: | ||
Land | 0.8 | 0.7 |
Buildings | 39.7 | 39.4 |
Machinery and equipment | 153.7 | 142.3 |
Other tangible assets | 9.1 | 8.0 |
Intangible assets | 37.0 | 19.3 |
Total | 240.3 | 209.7 |
Impairments by asset type: | ||
Buildings | - | - |
Machinery and equipment | 5.2 | - |
Goodwill | 15.7 | - |
Other Intangible assets | 0.7 | - |
Total | 21.7 | - |
Depreciation and amortization
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the owned tangible
and intangible assets or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned tangible and intangible assets are (years):
Buildings and other structures | 20–40 |
Machinery and equipment | 5–15 |
Other tangible assets | 3–12 |
Intangible assets | 3–20 |
See notes 2.1., 3.3. and 3.4.
EUR million | 2023 | 2022 |
Grants | 1.7 | 1.2 |
Gain on disposal of tangible assets | 61.6 1 | 5.6 |
Insurance reimbursements for property damage incidents | 0.3 | 2.0 |
Sale of subsidiaries | - | 44.5 |
Royalty income | 0.1 | 0.1 |
Rental income | 1.0 | 1.3 |
Other | 19.6 | 20.0 |
Total | 84.2 | 74.8 |
1
Includes gain of EUR 51.6 million from assets held for sale
See also note 3.1. Business combinations.
Other operating income
Other operating income includes gains from disposal of assets and regular incomes, such as royalty income, rental
income and gains relating to business combinations, which have not been derived from primary activities.
Other operating income includes also grants. Government or other grants are recognized in the income statement on a
systematic basis in the same periods in which the expenses are incurred. Investment grants are presented in the
statement of financial position as deferred income and recognized as income on a systematic basis over the useful life
EUR million | 2023 | 2022 |
Goodwill impairment 1 | 15.7 | - |
Settlement of industrial dispute | - | 2.6 |
Environmental provision | - | 7.0 |
Loss on disposal of tangible assets | 4.4 | 4.0 |
Other | 4.2 | 3.2 |
Total | 24.3 | 16.8 |
1
See note 3.3. Intangible assets
EUR million | 2023 | 2022 |
Audit fees | 3.2 | 2.9 |
Audit-related services | 0.0 | 0.0 |
Tax services | - | 0.0 |
Other services | 0.2 | 0.8 |
Total | 3.4 | 3.7 |
KPMG is acting as the principal auditor for Huhtamaki Group. KPMG network has also provided other consultancy not
related to auditing worth of EUR 0.2 million (EUR 0.8 million) of which KPMG Oy Ab accounted for EUR 0.2 million
(EUR 0.7 million). Non-audit services are subject to separate review and approval process concerning the provision of
non-audit services by the Auditor and included e.g. advisory in connection with various tax, reporting and other local
ACCOUNTING PRINCIPLES
Other operating expenses include amortization of intangible assets, losses from disposal of assets and other costs not
EUR million | 2023 | 2022 |
Current period taxes | 83.0 | 90.1 |
Previous period taxes | -6.1 | -0.5 |
Deferred tax expense | 9.8 | -23.0 |
Total tax expense | 86.7 | 66.7 |
Profit before taxes | 312.0 | 352.1 |
Tax calculated at domestic rate (20%) | 62.4 | 70.4 |
Effect of different tax rates in foreign subsidiaries | -0.2 | 4.9 |
Non-deductible expenses and tax-exempt income | 4.1 | -7.2 |
Tax effect of unrecognized tax losses | 7.6 | -5.3 |
Previous period taxes | -6.1 | -0.5 |
Adjustments to prior year's deferred taxes | 4.6 | 0.2 |
Deferred tax liability on undistributed earnings | -1.7 | -0.4 |
Other items¹ | 16.0 | 4.4 |
Total tax expense | 86.7 | 66.7 |
1
Other items include functional currency remeasurements (2023: EUR 17 million) and changes in local tax rates.
Tax effects relating to components of other comprehensive income
2023 | 2022 | |||||
Before tax | Tax expense/ | Net of tax | Before tax | Tax expense/ | Net of tax | |
EUR million | amount | benefit | amount | amount | benefit | amount |
Cash flow hedges | -5.6 | 1.2 | -4.4 | 17.4 | -3.4 | 14.0 |
Remeasurements on defined benefit plans | -18.2 | 5.0 | -13.1 | 44.1 | -16.3 | 27.8 |
In 2023, income tax liabilities and assets include a net liability of EUR 39 million (EUR 41 million) relating to uncertain
tax positions with inherently uncertain timing of cash outflows.
Certain Huhtamaki Group companies' prior period income tax returns are under examination by local tax authorities,
and in 2023 Huhtamaki had ongoing tax investigations in various jurisdictions, including China, Finland, France,
Germany, Ghana, Hong Kong, India, Italy, Kenya, the Netherlands, Poland, the United States and Vietnam.
Huhtamaki’s business and investments, especially in emerging markets, may be subject to uncertainties, including
unpredictable tax treatment. Management judgment and a degree of estimation are required in determining the amount
of tax expense. Liabilities for uncertain tax positions are recorded based on estimates and assumptions of the amount
and likelihood of outflow of economic resources when it is more likely than not that certain filing positions may not be
fully sustained upon review by local tax authorities. Even though management does not expect that any significant
additional taxes in excess of those already provided for will arise as a result of these examinations, the outcome or actual
cost of settlement may vary materially from estimates.
The Group is within the scope of the OECD Pillar Two model rules. The Group operates in certain jurisdictions, where
Pillar Two legislation has been enacted and will come into effect from 1 January 2024. There is no current tax impact
for the financial year 2023. The Group has performed an assessment of the potential exposure to Pillar Two income
taxes. The assessment is based on the most recent information available regarding the financial performance of its
operations (mainly subsidiaries), including most recent tax filings, country-by-country reporting and financial statements.
Based on the assessment, the Group has identified that the Pillar Two effective tax rates in most of the jurisdictions in
which the Group operates are well above 15 %. The Group does not expect a material exposure to Pillar Two income
taxes.
Income taxes
The Group income statement includes current taxes of Group companies based on taxable profit for the financial period
according to local tax regulations as well as adjustments to prior year taxes and changes in deferred taxes. Tax effect
relating to items recognized directly in equity or in other comprehensive income is recognized in equity or in other
comprehensive income.
difference between the tax basis of assets and liabilities and their carrying values for IFRS reporting purposes. Deferred
tax is not recognized for non-deductible goodwill and for differences in investments in subsidiaries to the extent that
they probably will not reverse in the foreseeable future.
Deferred tax is not recognized in the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit. In the determination of deferred income tax the
enacted tax rate is used.
Principal temporary differences arise from tangible assets, untaxed reserves, tax losses carried forward, financial
instruments and defined benefit plans. Deferred tax assets are recognized only to the extent that it is probable that
In accordance with IFRIC 23 the Group recognizes provisions for uncertain tax positions when the Group has a
present obligation as a result of a past event and management judge that it is probable that there will be a future
outflow of economic benefits from the Group to settle the obligation. Uncertain tax positions are assessed and
measured on an issue by issue basis within the jurisdictions that we operate either using management’s estimate of
the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of
possible outcomes. The Group recognizes interest on late paid taxes as part of financing costs, and any penalties, if
Directors’ Report and Financial Statements 2023 | 51
EUR million | 2023 | 2022 |
Deferred tax assets | ||
Tangible assets¹ | 37.8 | 45.9 |
Employee benefit | 32.0 | 25.9 |
Provisions | 6.5 | 10.2 |
Unused tax losses | 27.9 | 20.7 |
Other temporary differences | 36.0 | 31.3 |
Total | 140.1 | 134.0 |
Deferred tax liabilities | ||
Tangible assets¹ | 143.5 | 130.3 |
Intangible assets | 27.7 | 29.8 |
Employee benefit | 17.7 | 19.2 |
Undistributed earnings | 23.9 | 25.9 |
Other temporary differences | 12.3 | 13.6 |
Total | 225.0 | 218.9 |
Net deferred tax liabilities | 84.9 | 84.9 |
Reflected in statement of financial position as follows: | ||
Deferred tax assets | 52.1 | 48.4 |
Deferred tax liabilities | 137.0 | 133.3 |
Total | 84.9 | 84.9 |
1
Deferred tax assets and liabilities on tangible assets for 2022 have been revised in accordance with IAS 12 amendment.
December 31, 2023 the Group had EUR 79 million (EUR 91 million) worth of deductible temporary differences, for
which no deferred tax asset was recognized. EUR 23 million of these temporary differences have unlimited expiry, EUR
11 million expire over five years and EUR 45 million in five years.
Movements in the net deferred tax balance during the year
EUR million | 2023 | 2022 |
Net deferred tax balance at January 1 | -84.9 | -76.8 |
Recognized in income statement | -9.8 | 23.0 |
Recognized in other comprehensive income | 6.2 | -19.7 |
Recognized in equity | -0.2 | - |
Acquisitions and disposals | - | -5.9 |
Translation differences | 3.8 | -5.4 |
Net deferred tax balance at December 31 | -84.9 | -84.9 |
2.7. EARNINGS AND DIVIDEND PER SHARE
EUR million | 2023 | 2022 |
Net income attributable to equity holders of the parent company (basic/diluted), EUR million | 206.3 | 276.2 |
Weighted average number of shares outstanding, in thousands | 104,497 | 104,365 |
Effect of share-based payments, in thousands | 417 | 308 |
Diluted weighted average number of shares outstanding, in thousands | 104,914 | 104,673 |
Earnings per share from the profit for the period attributable to equity holders of the parent | ||
company | ||
Basic earnings per share, EUR | 1.97 | 2.65 |
Diluted earnings per share, EUR | 1.97 | 2.64 |
Directors’ Report and Financial Statements 2023 | 52
The dividends paid in 2023 were EUR 1 per share, totaling EUR 104.5 million (EUR 0.94 per share, totaling EUR 98.1
million). A dividend of EUR 1.05 per share will be proposed at the Annual General Meeting on April 25, 2024. This
corresponds total dividends of EUR 109.8 million for 2023, calculated based on outstanding shares at December 31,
The basic earnings per share figure is calculated by dividing the net income attributable to the shareholders of the parent
company by the weighted average number of shares outstanding during the period. Diluted earnings per share is
calculated by adjusting the weighted average number of shares by the effect of diluting shares due to Performance
Dividends proposed by the Board of Directors are not recognized in the financial statements until they have been
Directors’ Report and Financial Statements 2023 | 53
3. Acquisitions and capital expenditure
Contingent considerations
In the beginning of the reporting period, Huhtamaki had EUR 20.6 million of financial liabilities for contingent
considerations. The payments are contingent mainly on the financial performance on the acquired businesses after the
acquisition. In the year 2023, Huhtamaki settled EUR 20.2 million of the liabilities. The net fair valuations through the
profit or loss were EUR -0.8 million. The impact from the change in exchange rates was EUR 0.3 million. In the end of
the period, there was no financial liabilities for contingent considerations.
As announced on June 8, 2023, Huhtamaki has made the decision to consolidate the production footprint of its
Flexible Packaging segment in Europe and will be closing its Flexible Packaging production facility in Prague, Czech
Republic. As a result, Group has reclassified certain assets consisting of machinery from property, plant and equipment
to Assets held for sale. Assets held for sale at December 31, 2023, included EUR 5.2 million and the Group expects to
ACCOUNTING PRINCIPLES
Business combinations are accounted for using the acquisition method. The identifiable assets and liabilities are
measured at their fair value at the date of acquisition, any non-controlling interest is measured either at fair value or at
the non-controlling interest’s proportionate share of the acquiree’s net assets. In a business combination achieved in
stages, the previously held equity interest in the acquiree is remeasured at its acquisition-date fair value and any resulting
gain or loss is recognized in profit or loss or other comprehensive income, as appropriate. The aggregate of consideration
transferred, any non-controlling interest and any previously held equity interest, less acquired net assets is recognized
as goodwill.
Any possible contingent consideration is recognized at fair value at the acquisition date and it is classified as a financial
liability or equity. Contingent consideration classified as a financial liability is remeasured at reporting period closing date
and the related profit or loss is recognized in the income statement. Contingent consideration classified as equity is not
remeasured.
Acquisition related costs are expensed as incurred.
Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather
than through continuing use. The assets must be available for immediate sale in their present condition subject only to
terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be
completed within one year from the date of classification. These assets are presented separately in the consolidated
statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell.
Goodwill allocation by groups of cash-generating units
Goodwill acquired through business combinations has been allocated to the level of groups of cash-generating units
(groups of CGUs) that are expected to benefit from the synergies of the acquisition, which represent the lowest level
at which the goodwill is monitored for internal management purposes. The group of CGU in which goodwill is allocated
represents operating segment. Goodwill allocation by segments, and the weighted average pre-tax discount interest
rates used in discounting the projected cash flows to their present value, are presented in the table below:
| 2023 | 2022 | |||
Discount interest | Discount interest | |||
rates used | rates used | |||
EUR million | Goodwill | (pre-tax), % | Goodwill | (pre-tax), % |
Flexible Packaging | 522.6 | 13.6 | 555.6 | 12.9 |
North America | 226.7 | 11.4 | 231.9 | 10.8 |
Foodservice Europe-Asia-Oceania | 181.6 | 10.1 | 183.7 | 10.2 |
Fiber Packaging | 63.7 | 11.4 | 63.7 | 10.8 |
Total goodwill | 994.6 | 1,035.0 | ||
Goodwill has been tested for impairment and since the recoverable value of the groups of the cash-generating units
(CGUs) has been higher than the carrying value, no impairment charges has been recognized.
In assessing whether goodwill has been impaired, the carrying value of the group of CGUs has been compared to the
recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using
a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on
business plans. The plans are based on experience as well as future expected market trends. The plans are approved by
management and are valid when impairment test is performed. Cash flows for future periods are extrapolated by using
0.8 (1.0) percent growth rate in developed countries, 1.3 (1.3) percent growth rate in developing countries and 2.3
(2.4) percent growth rate in high growth countries. The management views these growth rates as being appropriate for
the business, given the long time horizon of the testing period.
Sensitivity analysis
As part of the impairment testing a sensitivity analysis around the key assumptions is performed. The assumptions
used in the impairment testing, that are considered to be most sensitive for changes, are EBIT and discount rates.
Sensitivity analysis around these key assumptions have been performed, and management believes that any
reasonably possible change (decrease of 1.5 percentage points in EBIT margin, increase of 1.5 percentage points in
discount rates or combined effect of these changes) in the key assumptions would not cause carrying amount of
group of CGUs to exceed its recoverable amount in North America, Foodservice Europe-Asia-Oceania or Fiber
Packaging. Based on the sensitivity analysis for Flexible Packaging, the before mentioned changes in the key
ACCOUNTING PRINCIPLES
Goodwill arising from an acquisition represents the excess of the consideration transferred over the fair value of the
net identifiable assets acquired. Goodwill is allocated to groups of cash-generating units that are expected to benefit
from the synergies of the acquisition and is not amortized but tested annually for impairment. For associates and joint
ventures, the carrying amount of goodwill is included in the carrying amount of the investment. Goodwill is valued at
cost less impairment losses.
Goodwill is tested annually or more frequently if there are indications of impairment. In assessing whether goodwill has
been impaired, the carrying value of the group of cash generating units (group of CGUs) has been compared to the
recoverable amount of the group of CGUs. The recoverable amount is based on value-in-use, which is estimated using
a discounted cash flow model. The cash flows are determined using five-year cash flow forecasts, which are based on
business plans. Business plans are based on past experience as well as future expected market trends. Management
approves business plans for impairment testing purposes. Cash flows for future periods are extrapolated by using
defined growth rates for developed countries, developing countries and emerging countries. The discount rate used in
the calculation reflects the weighted average cost of capital (WACC) and risks to the asset under review.
A goodwill impairment loss is recognized immediately as an expense in the income statement and is not subsequently
Other | |||||
intangibles | |||||
(including | |||||
Customer | intangible | ||||
EUR million | Goodwill | relations | Software | rights) | Total 2023 |
Acquisition cost on January 1, 2023 | 1,151.4 | 119.0 | 98.5 | 79.3 | 1,448.3 |
Additions | - | - | 0.8 | 1.0 | 1.8 |
Disposals | - | - | -7.1 | -1.5 | -8.6 |
Intra-balance sheet transfer | - | - | 8.0 | 8.1 | 16.1 |
Business combinations | - | - | - | - | - |
Reclassification to assets held for sale | - | - | - | - | - |
Changes in exchange rates | -26.9 | -3.9 | -1.0 | -1.7 | -33.5 |
Acquisition cost on December 31, 2023 | 1,124.5 | 115.1 | 99.2 | 85.2 | 1,424.0 |
Accumulated amortization and impairment on January 1, 2023 | -116.4 | -49.6 | -86.8 | -42.7 | -295.4 |
Accumulated amortization on disposals and transfers | - | - | 1.8 | 0.1 | 1.9 |
Amortization during the financial year | - | -7.3 | -4.8 | -8.5 | -20.6 |
Impairments during the financial year | - 15.7 1 | - | - 0.7 | - | - 16.5 |
Reclassification to assets held for sale | - | - | - | - | - |
Changes in exchange rates | 2.2 | 1.4 | 0.8 | 0.6 | 5.0 |
Accumulated amortization and impairment on December 31, | |||||
2023 | - 129.9 | - 55.5 | - 89.6 | - 50.5 | - 325.5 |
Book value on December 31, 2023 | 994.6 | 59.6 | 9.6 | 34.8 | 1,098.5 |
1
Group announced on June 8, 2023, that it has made the decision to consolidate the production footprint of its Flexible Packaging segment in Europe and will close its
Flexible Packaging production facility in Prague, Czech Republic. All production and supporting activities at the facility are scaled down during the second half of the
year, with the closure of the operations completed by March 31, 2024. As result of this announcement Group has impaired the goodwill related to the Prague
operations.
Other | |||||
intangibles | |||||
(including | |||||
Customer | intangible | ||||
EUR million | Goodwill | relations | Software | rights) | Total 2022 |
Acquisition cost on January 1, 2022 | 1,115.7 | 114.1 | 92.7 | 74.9 | 1,397.4 |
Additions | - | - | 1.0 | 1.8 | 2.8 |
Disposals | - | -0.4 | -0.7 | -1.3 | -2.4 |
Intra-balance sheet transfer | - | - | 5.0 | 3.8 | 8.8 |
Business combinations | 3.0 | - | - | - | 3.0 |
Reclassification to assets held for sale | - | - | - | -0.8 | -0.8 |
Changes in exchange rates | 32.6 | 5.3 | 0.5 | 1.0 | 39.4 |
Acquisition cost on December 31, 2022 | 1,151.4 | 119.0 | 98.5 | 79.3 | 1,448.3 |
Accumulated amortization and impairment on January 1, 2022 | -114.8 | -39.9 | -82.5 | -37.8 | -275.0 |
Accumulated amortization on disposals and transfers | - | 0.4 | 0.5 | 0.1 | 1.0 |
Amortization during the financial year | - | -9.5 | -4.6 | -5.2 | -19.3 |
Impairments during the financial year | - | - | - | - | - |
Reclassification to assets held for sale | - | - | - | 0.1 | 0.1 |
Changes in exchange rates | -1.6 | -0.6 | -0.2 | 0.1 | -2.3 |
Accumulated amortization and impairment on December 31, | |||||
2022 | - 116.4 | - 49.6 | - 86.8 | - 42.7 | - 295.4 |
Book value on December 31, 2022 | 1,035.0 | 69.4 | 11.8 | 36.7 | 1,152.9 |
Goodwill
See note 3.2 Goodwill for the accounting principles relating to goodwill.
Other intangible asset
Other intangible assets include customer relations, patents, copyrights, trademarks, technologies, emission rights,
renewable energy certificates and software licenses. These are measured at cost and typically amortized on a straight-
line basis over the estimated useful lives, which may vary from 3 to 20 years. Other intangible assets with definite useful
lives are tested for impairment when there are indications of impairment, see more information on impairment of assets
in Note 3.4 Tangible assets.
Cloud computing arrangements that meet the definition of an intangible asset and comply with the recognition criteria
are capitalized on the balance sheet. Implementation costs (customization and configuration) relating to cloud computing
arrangements that don't meet the definition of an intangible asset and are distinct from the access to the software are
expensed when the services are received. If the customization and configuration services are not distinct from the
access to the software, the costs are recognized as prepayments and expensed over the software contract term.
Research costs are recognized in the income statement as incurred. Expenditure on development activities related to
new products and processes are capitalized in the statement of financial position from the moment they are expected
to bring future economic benefits and the Group has intention and resources to finalize the development. Previously
Emission rights and renewable energy certificates are measured at cost. Rights and certificates received free of charge
are recognized at their nominal value (nil). Emission rights are derecognized against actual emissions. A provision to
cover the obligation to return emission rights is recognized at the fair value in the end of the reporting period if the
emission allowances held by the Group do not cover actual emissions. Renewable energy certificates are derecognized
Intangible assets up to | 20 |
Software | 3–5 |
Customer relations | 7–15 |
Subsequent expenditure on capitalized other intangible assets is capitalized only when it increases the future economic
EUR million | 2023 | 2022 |
Owned property, plant and equipment | 1,645.8 | 1,588.4 |
Right-of-use assets | 149.1 | 147.4 |
Total tangible assets | 1,794.9 | 1,735.8 |
Owned assets | ||||||
Construction | ||||||
Buildings | Machinery | in progress | Other | |||
Land and land | and | and | and advance | tangible | Total | |
EUR million | improvements | constructions | equipment | payments | assets | 2023 |
Acquisition cost on January 1, 2023 | 39.6 | 495.2 | 2,165.5 | 366.1 | 111.2 | 3,177.7 |
Additions | - | 3.0 | 17.6 | 291.7 | 4.6 | 316.9 |
Disposals | -0.8 | -9.2 | -26.2 | -8.2 | -5.2 | -49.6 |
Intra-balance sheet transfer | 11.0 | 65.1 | 206.6 | -298.3 | 5.4 | -10.3 |
Business combinations | - | - | - | - | - | - |
Reclassification to assets held for sale | - | - | -21.3 | - | - | -21.3 |
Changes in exchange rates | -1.9 | -18.3 | -65.9 | -8.6 | -3.0 | -97.7 |
Acquisition cost on December 31, 2023 | 47.9 | 535.8 | 2,276.3 | 342.7 | 112.9 | 3,315.6 |
Accumulated depreciation and impairment on | ||||||
| January 1, 2023 | - 1.7 | - 217.0 | - 1,294.0 | - | - 76.4 | - 1,589.2 |
Accumulated depreciation on disposals and | ||||||
| transfers | - | 4.6 | 22.6 | - | 4.8 | 32.0 |
Depreciation during the financial year | -0.3 | -20.6 | -140.1 | - | -8.6 | -169.7 |
Impairments during the financial year | - | - | -5.2 | - | - | -5.2 |
Impairments reversed during the financial year | - | - | - | - | - | - |
Reclassification to assets held for sale | - | - | 16.0 | - | - | 16.0 |
Changes in exchange rates | 0.1 | 6.5 | 37.8 | - | 2.0 | 46.4 |
Accumulated depreciation and impairment on | ||||||
December 31, 2023 | -1.9 | -226.6 | -1,363.1 | - | -78.2 | 1,669.8 - |
Book value on December 31, 2023 | 46.0 | 309.2 | 913.2 | 342.7 | 34.7 | 1,645.8 |
Owned assets | ||||||
Construction | ||||||
Buildings | Machinery | in progress | Other | |||
Land and land | and | and | and advance | tangible | Total | |
EUR million | improvements | constructions | equipment | payments | assets | 2022 |
Acquisition cost on January 1, 2022 | 39.9 | 474.4 | 2,108.2 | 257.0 | 105.4 | 2,985.0 |
Additions | - | 3.8 | 14.0 | 302.2 | 5.2 | 325.2 |
Disposals | -0.3 | -20.1 | -103.9 | -29.0 | -3.8 | -157.1 |
Intra-balance sheet transfer | 0.1 | 31.1 | 106.2 | -168.4 | 4.7 | -26.3 |
Business combinations | - | - | - | - | - | - |
Reclassification to assets held for sale | -0.3 | -4.1 | -2.3 | - | -0.4 | -7.2 |
Changes in exchange rates | 0.2 | 10.1 | 43.3 | 4.4 | 0.2 | 58.1 |
Acquisition cost on December 31, 2022 | 39.6 | 495.2 | 2,165.5 | 366.1 | 111.2 | 3,177.7 |
Accumulated depreciation and impairment on | ||||||
| January 1, 2022 | - 1.5 | - 203.3 | - 1,196.8 | - | - 73.0 | - 1,474.6 |
Accumulated depreciation on disposals and | ||||||
- | 8.9 | 62.9 | - | 3.6 | 75.4 | |
transfers | ||||||
Depreciation during the financial year | -0.1 | -19.5 | -133.7 | - | -7.7 | -161.0 |
Impairments reversed during the financial year | - | - | - | - | - | - |
Reclassification to assets held for sale | - | 1.2 | 1.9 | - | 0.4 | 3.5 |
Changes in exchange rates | -0.1 | -4.3 | -28.4 | - | 0.2 | -32.6 |
Accumulated depreciation and impairment on | ||||||
| December 31, 2022 | - 1.7 | - 217.0 | - 1,294.0 | - | - 76.4 | - 1,589.2 |
Book value on December 31, 2022 | 37.9 | 278.2 | 871.4 | 366.1 | 34.8 | 1,588.4 |
Right-of-use assets | |||||
Buildings | |||||
and | Machinery and | Other | |||
EUR million | Land | constructions | equipment | tangible assets | Total 2023 |
Acquisition cost on January 1, 2023 | 13.5 | 197.7 | 38.0 | 1.6 | 250.8 |
Additions | 1.4 | 21.9 | 12.8 | 0.7 | 36.9 |
Disposals | -0.0 | -12.8 | -9.7 | -0.2 | -22.7 |
Intra-balance sheet transfer | - | - | - | - | - |
Business combinations | - | - | - | - | - |
Changes in exchange rates | -0.4 | -2.0 | -0.5 | -0.0 | -2.9 |
Acquisition cost on December 31, 2023 | 14.5 | 204.8 | 40.6 | 2.1 | 262.1 |
Accumulated depreciation and impairment on January 1, 2023 | -5.8 | -77.5 | -19.4 | -0.6 | -103.4 |
Accumulated depreciation on disposals and transfers | 0.0 | 10.0 | 8.1 | 0.1 | 18.2 |
Depreciation during the financial year | -0.6 | -19.0 | -8.3 | -0.4 | -28.3 |
Changes in exchange rates | 0.2 | 0.1 | 0.2 | 0.0 | 0.6 |
Accumulated depreciation and impairment on December 31, 2023 | -6.1 | -86.5 | -19.4 | -1.0 | -113.0 |
Book value on December 31, 2023 | 8.4 | 118.4 | 21.2 | 1.1 | 149.1 |
Right-of-use assets | |||||
Buildings | |||||
and | Machinery and | Other | |||
EUR million | Land | constructions | equipment | tangible assets | Total 2022 |
Acquisition cost on January 1, 2022 | 14.9 | 201.2 | 39.3 | 0.7 | 256.1 |
Additions | 0.2 | 9.4 | 7.2 | 1.0 | 17.9 |
Disposals | -1.8 | -14.9 | -8.9 | -0.1 | -25.6 |
Intra-balance sheet transfer | - | - | - | - | - |
Business combinations | - | 1.7 | - | - | 1.7 |
Changes in exchange rates | 0.2 | 0.2 | 0.4 | -0.0 | 0.7 |
Acquisition cost on December 31, 2022 | 13.5 | 197.7 | 38.0 | 1.6 | 250.8 |
Accumulated depreciation and impairment on January 1, 2022 | -5.4 | -68.0 | -18.7 | -0.4 | -92.5 |
Accumulated depreciation on disposals and transfers | 0.2 | 10.0 | 8.0 | 0.1 | 18.4 |
Depreciation during the financial year | -0.5 | -19.9 | -8.6 | -0.3 | -29.4 |
Changes in exchange rates | -0.1 | 0.4 | -0.2 | 0.0 | 0.1 |
Accumulated depreciation and impairment on December 31, | |||||
| 2022 | - 5.8 | - 77.5 | - 19.4 | - 0.6 | - 103.4 |
Book value on December 31, 2022 | 7.7 | 120.2 | 18.6 | 1.0 | 147.4 |
ACCOUNTING PRINCIPLES
Tangible assets include both owned property, plant and equipment and right-of-use (ROU) assets.
Tangible assets comprising mainly of land, buildings, machinery, tooling and equipment are valued at cost less
accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of material, direct
labor costs and an appropriated proportion of production overheads. When an asset includes major components that
have different useful lives, they are accounted for as separate items. The costs of right-of-use assets include the amount
of the initial measurement of the lease liability, any lease payments made at or before the commencement date less
lease incentives received, any direct costs and an estimate of dismantling costs. The carrying amount is further adjusted
for any remeasurement of the lease liability.
Expenditure incurred to replace a component in a tangible asset that is accounted for separately, including major
inspection and overhaul costs, is capitalized. Other subsequent expenditure is capitalized only when it increases the
future economic benefits embodied in the asset. All other expenditure such as ordinary maintenance and repairs is
recognized in the income statement as an expense as incurred. The borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset are capitalized as part of the acquisition cost.
property, plant and equipment or over the lease term of right-of-use assets. Land is not depreciated.
The estimated useful lives of the owned property, plant and equipment are (years):
Buildings and other structures | 20–40 |
Machinery and equipment | 5–15 |
Other tangible assets and land improvements | 3–12 |
Tangible assets which are classified as held for sale are valued at lower of its carrying amount or fair value less costs to
sell. The depreciation of these assets will be ceased when assets are classified as held for sale. Gains or losses arising
from the disposal of tangible assets are included in Earnings before interest and taxes.
The carrying amounts of assets are assessed at each reporting period closing date to determine whether there is any
indication of impairment. If such indication exists, the recoverable amount is estimated. An impairment loss is recognized
whenever the carrying amount of assets or cash-generating unit exceeds the recoverable amount. Impairment losses
are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated
first to reduce the carrying value of goodwill allocated to groups of cash-generating units and then to reduce the carrying
amount of other assets in the group of units on pro rata bases.
For intangible and tangible assets the recoverable amount is the higher of the fair value less costs to sell and value-in-
use. In assessing value-in-use, the estimated future cash flows are discounted to their present value based on the
average cost of capital rate (pre-tax) of the cash-generating unit where the assets are located, adjusted for risks specific
to the assets.
In respect of tangible assets, and other intangible assets excluding goodwill, impairment losses recognized in prior
periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. An
Directors’ Report and Financial Statements 2023 | 60
4. Working capital
EUR million | 2023 | 2022 |
Raw and packaging material | 246.5 | 320.9 |
Work-In-Process | 79.6 | 104.6 |
Finished goods | 272.8 | 307.6 |
Goods in transit | 21.9 | 22.3 |
Total | 620.9 | 755.4 |
The value at cost for finished goods amounts to EUR 316.6 million (EUR 343.3 million). An allowance of EUR 43.7
million (EUR 35.7 million) has been established for obsolete items. Total inventories include EUR 0.9 million resulting
from reversals of previously written down values (EUR 2.5 million). Reversals relate to items used in production and sold
finished goods inventories.
ACCOUNTING PRINCIPLES
Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price
in the ordinary course of business, less the estimated costs of completion and selling expenses.
Cost of inventories is determined using the first-in first-out (FIFO) principle and include expenditure incurred in acquiring
the inventories and bringing them to their existing location and condition. Costs for produced finished goods and work-
in-process represent the purchase price of materials, direct labor costs, other direct costs and related production
EUR million | 2023 | 2022 |
Trade receivables | 511.0 | 563.2 |
Other receivables | 75.9 | 77.0 |
Accrued interest and other financial items | 10.3 | 28.0 |
Other accrued income and prepaid expenses | 39.4 | 41.1 |
Total | 636.5 | 709.4 |
Other accrued income and prepaid expenses include prepayments for goods, accrued royalty income, rebates and other
miscellaneous accruals.
Gross | Impairment | Net | Gross | Impairment | Net | |
EUR million | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
Not past due | 466.3 | 0.7 | 465.7 | 495.7 | 0.7 | 495.0 |
Past due 0-30 days | 33.6 | 0.2 | 33.4 | 47.9 | -0.2 | 48.1 |
Past due 31-120 days | 10.1 | 0.5 | 9.6 | 15.9 | 0.2 | 15.7 |
Past due more than 120 days | 7.2 | 4.9 | 2.3 | 10.1 | 5.7 | 4.4 |
Total | 517.3 | 6.3 | 511.0 | 569.5 | 6.3 | 563.2 |
ACCOUNTING PRINCIPLES
Trade and other current receivables are financial assets initially measured at fair value and subsequently measured at
amortized cost by using the effective interest method. The Group uses simplified approach to measure a loss allowance
for expected credit losses on trade receivables that do not contain a significant financing component, where the Group
always measures the loss allowance at an amount equal to the lifetime expected credit losses. For this purpose, trade
receivables are grouped based on geographical location, product type and customer rating. The Group uses its historical
credit losses experience adjusted with supportable information about current and future conditions to define the
expected credit losses. The amount of expected credit losses is updated at each reporting date.
In factoring arrangements for trade receivables, the sold trade receivables are derecognized once the contractual cash
Restructuring provisions
Restructuring provisions include mainly costs for various ongoing projects to streamline operations. Provisions relate to
employee termination benefits.
As announced on June 8, 2023, Huhtamaki has made the decision to consolidate the production footprint of its Flexible
Packaging segment in Europe and will be closing its Flexible Packaging production facility in Prague, Czech Republic. As
a result, a restructuring provision of EUR 4.4 million was made, and it relates mainly to employee termination benefits.
Other provisions
Other provisions include mainly captive insurance provisions relating to workers, environmental and litigation provisions.
Restructuring | ||||
EUR million | reserve | Other | Total 2023 | Total 2022 |
Provision on January 1, 2023 | 0.7 | 22.5 | 23.1 | 17.8 |
Translation difference | -0.1 | -0.5 | -0.6 | 0.3 |
Provisions made during the year | 4.9 | 5.6 | 10.5 | 17.6 |
Provisions used during the year | -0.2 | -8.7 | -8.9 | -8.2 |
Unused provisions reversed during the year | -0.1 | -0.1 | -0.2 | -4.2 |
Unwind of discount | - | - | - | -0.1 |
Provision on December 31, 2023 | 5.1 | 18.8 | 23.9 | 23.1 |
Current | 5.1 | 5.5 | 10.5 | 9.8 |
Non-current | 0.0 | 13.4 | 13.4 | 13.3 |
ACCOUNTING PRINCIPLES
Provisions are recognized in the statement of financial position when the Group has a present legal or constructive
obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle
such obligation, and a reliable estimate of the amount of the obligation can be made. Provisions arise from restructuring
plans, onerous contracts, legal proceedings and from environmental litigation risks. Obligations arising from restructuring
plans are recognized when the detailed and formal plans have been established and when there is a valid expectation
that such plan will be carried out (plan has been announced). Provision from emissions is recognized according to actual
Directors’ Report and Financial Statements 2023 | 62
EUR million | 2023 | 2022 |
Trade payables | 414.9 | 491.0 |
Other payables | 94.0 | 82.0 |
Accrued interest expense and other financial items | 26.5 | 27.0 |
Personnel and social security accruals | 86.9 | 79.0 |
Other accrued expenses | 81.1 | 55.8 |
Total | 703.5 | 734.9 |
Other accrued expenses include accruals for purchases of material and other miscellaneous accruals.
ACCOUNTING PRINCIPLES
5. Capital structure and financial items
EUR million | 2023 | 2022 |
Interest income | ||
Financial assets at amortized cost | ||
Interest-bearing receivables and other receivables | 10.8 | 7.2 |
Financial assets at fair value through profit or loss | ||
Derivatives | 0.2 | 1.8 |
Defined benefit plans | 2.8 | 1.9 |
Dividend income | ||
Other investments | 0.0 | 0.2 |
Other financial income | ||
FX revaluation gains | ||
Interest-bearing assets and liabilities | - | 0.0 |
Derivatives | - | 0.1 |
Financial income | 13.9 | 11.1 |
Interest expense | ||
Financial liabilities measured at amortized cost | ||
Interest-bearing liabilities (excl. lease liabilities) | -69.6 | -32.2 |
Lease liabilities | -5.5 | -5.7 |
Financial liabilities at fair value through profit or loss | ||
Derivatives | 6.2 | -11.2 |
Defined benefit plans | -5.2 | -2.8 |
Other financial expense | ||
FX revaluation losses | ||
Interest-bearing assets and liabilities | -4.7 | -4.4 |
Derivatives | -6.5 | 0.0 |
Change in fair value of contingent consideration | - | -4.8 |
Fees related to committed credit facilities | 2.3 | -2.5 |
Other fees | 0.1 | -0.7 |
Financial expense | -82.9 | -64.3 |
Net financial items | -69.0 | -53.2 |
ACCOUNTING PRINCIPLES
Gains and losses on fair value hedges are reported net of the gain or loss on the hedged item. Only foreign exchange
revaluation gains and losses arising from purely financial exposures such as loans denominated in foreign currencies are
reported in other financial items. Changes in fair value of contingent considerations related to business combinations
2023 | 2023 | 2022 | 2022 | |
EUR million | Carrying amount | Fair value | Carrying amount | Fair value |
Current | ||||
Loan receivables | 14.0 | 14.0 | 13.4 | 13.4 |
Finance lease receivables | 1.2 | 1.2 | 1.6 | 1.6 |
Current interest-bearing | ||||
receivables | 15.2 | 15.2 | 14.9 | 14.9 |
Non-current | ||||
Loan receivables | 0.1 | 0.1 | 0.0 | 0.0 |
Finance lease receivables | 2.2 | 2.2 | 0.9 | 0.9 |
Non -current interest-bearing | ||||
receivables | 2.4 | 2.4 | 0.9 | 0.9 |
EUR million | 2023 | 2022 |
Finance lease receivable is payable as follows: | ||
In less than one year | 1.2 | 1.6 |
Between one and five years | 2.2 | 0.9 |
Total minimum lease payments | 3.4 | 2.5 |
Present value of minimum lease payments | ||
In less than one year | 1.0 | 1.1 |
Between one and five years | 2.1 | 1.3 |
Total present value of minimum lease payments | 3.1 | 2.5 |
Unearned future financial income | 0.4 | - |
ACCOUNTING PRINCIPLES
Interest-bearing receivables are measured at amortized cost. Fair values have been calculated by discounting future
cash flows of each major receivable at the appropriate market interest rate prevailing at closing date. The fair value of
EUR million | 2023 | 2022 |
Cash and bank | 255.0 | 305.0 |
Liquid marketable securities | 93.2 | 4.4 |
Total | 348.2 | 309.4 |
ACCOUNTING PRINCIPLES
Cash and cash equivalents comprise of cash at bank and short-term highly liquid deposits and money market securities
Directors’ Report and Financial Statements 2023 | 64
Share capital | Number of shares | Share capital EUR | Share premium EUR | Treasury shares EUR | Total EUR |
January 1, 2022 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,205,188.88 | 450,203,223.50 |
Own shares conveyance through performance | |||||
| share incentive plan | - | - | - | ||
December 31, 2022 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -31,205,188.88 | 450,203,223.50 |
Own shares conveyance through performance | |||||
| share incentive plan | 1,594,440.60 | 1,594,440.60 | |||
December 31, 2023 | 107,760,385 | 366,385,309.00 | 115,023,103.38 | -29,610,748.28 | 451,797,664.10 |
All shares issued are fully paid.
Share capital of the parent company
Huhtamäki Oyj has one series of shares. Each share entitles its holder to equal voting rights and equal distribution of
dividend and other assets. The Company’s Articles of Association do not contain rules regarding the minimum or
maximum number of shares or the minimum or maximum share capital. Shares do not have a nominal value. All shares
issued are fully paid.
The amount of the subscription price exceeding the par value of shares (EUR 3.40) received by the Company in
connection with share subscriptions based on option rights granted under the option rights plan established under the
old Companies Act (734/1978) has been recorded in the share premium. The Company’s last existing option rights plan
ceased on April 30, 2014.
repurchased in total 5,061,089 own shares during 2002 and 2003. After 2003 no own shares have been repurchased.
The Annual General Meeting of Shareholders on April 27, 2023 authorized the Board of Directors to decide on the
repurchase of the Company’s own shares. The authorization remains in force until the end of the next Annual General
Meeting, however, no longer than until June 30, 2024. The authorization by Annual General Meeting on April 27, 2022
to the Board of Directors to resolve on the repurchase of own shares terminated at the end of the Annual General
Meeting on April 27, 2023.
The Annual General Meeting of Shareholders on April 27, 2023 authorized the Board of Directors to decide on the
issuance of shares as well as the issuance of special rights entitling to shares. The authorization remains in force until
the end of the next Annual General Meeting, however, no longer than until June 30, 2024. This authorization cancelled
the authorization given by the Annual General Meeting on April 27, 2022 to decide on the issuance of shares as well
as the issuance of special rights entitling to shares. During 2023 173,505 shares were transferred (during 2022 no own
shares were transferred based on the authorization in force at that time).
Members of the Board of Directors and the CEO of the Company owned on December 31, 2023 a total of 101,929
shares (69,850 shares). These shares represented 0.09% (0.06%)
of the total number of shares and voting rights in the
Proposal of the Board of Directors to distribute the earnings
financial period was EUR 39,425,010.98. The Board of Directors proposes that dividend will be distributed at EUR 1.05
per share. No dividend for the own shares held by the Company on the record date shall be distributed.
No significant changes have taken place in the Company’s financial position since the end of the financial year. The
Company’s liquidity position is good and the proposed distribution does not, in the view of the Board of Directors, risk
the Company’s ability to fulfill its obligations.
Treasury shares
Treasury shares include the purchase price of Huhtamäki Oyj’s shares held by Group companies. In 2023 173,505
shares were transferred (during 2022 no own shares were transferred). There are no additions in treasury shares in
2023.
Translation differences contain the differences resulting from the translation of foreign entities’ financial statements
into euros. Also gains and losses from net investments in foreign entities are reported in translation differences. Hedges
ACCOUNTING PRINCIPLES
Equity, dividends and own shares
The Group’s equity includes instruments that evidences a residual interest in the assets of an entity after deducting all
of its liabilities and contains no contractual obligation for the issuer to deliver cash or other financial asset to another
entity or to exchange financial assets or financial liabilities with another entity under conditions which are unfavorable
to the issuer. When Huhtamäki Oyj’s own shares are repurchased, the amount of the consideration paid, including
recognized in the financial statements until the shareholders have approved them at the Annual General Meeting.
EUR million | |
December 31, 2021 | -72.4 |
Cash flow hedges recognized in other comprehensive income | 7.5 |
Cash flow hedges transferred to profit or loss | -0.4 |
Cash flow hedges transferred to statement of financial position | 10.3 |
Deferred taxes | -3.4 |
Change of remeasurements on defined benefit plans | 44.1 |
Deferred taxes | -16.3 |
Change of non-controlling interest in other comprehensive income | 0.1 |
December 31, 2022 | -30.4 |
Cash flow hedges recognized in other comprehensive income | -2.4 |
Cash flow hedges transferred to profit or loss | -0.5 |
Cash flow hedges transferred to statement of financial position | -2.7 |
Deferred taxes | 1.2 |
Change of remeasurements on defined benefit plans | -18.2 |
Deferred taxes | 5.0 |
Change of non-controlling interest in other comprehensive income | -0.1 |
December 31, 2023 | -48.1 |
Fair value and other reserves
Fair value and other reserves contain the effective portion of fair value changes of derivative instruments designated
as cash flow hedges, the change in fair value of other investments, the change of remeasurements on defined benefit
plans and the change of non-controlling interest. Also deferred taxes in equity are reported in fair value and other
reserves.
ACCOUNTING PRINCIPLES
Fair value and other reserves
All derivative financial instruments are measured at fair value. The Group applies hedge accounting for certain interest
rate swaps and foreign exchange forwards that meet hedge accounting criteria as defined in IFRS 9. The hedged item
must be highly probable to occur and must ultimately affect the income statement. The hedges must be highly effective
prospectively. For qualifying cash flow hedges, the portion of any change in fair value that is effective is included in
other comprehensive income, and any remaining ineffective portion is recognized in the income statement. The
cumulative changes of fair value of the hedging instrument that have been recognized in equity are transferred from
equity and included in the income statement when the forecasted transaction is recognized in the income statement.
When the hedged forecast transaction subsequently results in the recognition of non-financial asset or non-financial
liability, the cumulative change of fair value of the hedging instrument that has been recognized in equity is transferred
from equity and included in the initial carrying amount of the asset or liability at the time it is recognized.
For qualifying fair value hedges, the valuation is recognized in the income statement relating to the hedged risk.
Derivative instruments that are designated as hedging instruments but not accounted for according to the principles of
hedge accounting or which do not fulfill IFRS 9 hedge accounting requirements are classified as financial instruments at
fair value through profit or loss and valued at fair value. Changes in fair values of these derivative financial instruments
are recognized in the income statement. A non-split presentation is applied to liabilities at fair value through profit or
loss because the presentation in OCI would create or enlarge an accounting mismatch in profit or loss.
The Group uses foreign exchange forwards and foreign currency loans to hedge net investments in foreign entities.
Hedges of net investment in foreign entities must meet the same hedge accounting criteria as cash flow hedges as
detailed in IFRS 9. All changes in fair value arising from the hedges are recognized as a translation difference in other
comprehensive income if hedge accounting criteria are met. If the hedged entity is disposed of, the cumulative changes
in fair value of the hedging instrument that have been recognized in equity are included in the income statement at the
2023 | 2022 | |||
EUR million | Carrying amount | Fair value | Carrying amount | Fair value |
Current | ||||
Loans from financial institutions | ||||
fixed rate | 19.9 | 19.6 | 277.6 | 277.5 |
floating rate | 106.5 | 108.0 | 63.5 | 63.5 |
Bonds | ||||
fixed rate | 99.7 | 96.1 | - | - |
Other current loans | ||||
floating rate | 0.2 | 0.2 | 5.1 | 5.1 |
Contingent considerations | - | - | 20.6 | 20.6 |
Lease liabilities | 24.8 | 24.8 | 25.3 | 25.3 |
Total | 251.0 | 248.7 | 392.2 | 392.0 |
Non-current | ||||
Loans from financial institutions | ||||
fixed rate | 33.6 | 32.0 | 79.3 | 74.3 |
floating rate | 259.6 | 288.4 | 371.0 | 371.0 |
Bonds | ||||
fixed rate | 971.2 | 962.7 | 815.8 | 777.6 |
Other non-current loans | ||||
floating rate | 2.1 | 2.1 | 4.6 | 4.6 |
Contingent considerations | - | - | - | - |
Lease liabilities | 136.5 | 136.5 | 133.2 | 133.2 |
Total | 1,403.0 | 1,421.7 | 1,403.9 | 1,360.7 |
Loan repayments
Loans from | ||||||
financial | Contingent | |||||
Repayment | institutions | Bonds | Other loans | considerations | Lease liabilities | Total |
2024 | 126.4 | 99.7 | 0.2 | - | 24.8 | 251.0 |
2025 | 215.1 | - | - | - | 35.0 | 250.1 |
2026 | 47.5 | 174.7 | 2.1 | - | 14.2 | 238.5 |
2027 | 30.6 | 498.1 | - | - | 11.7 | 540.4 |
2028 | - | 298.4 | - | - | 10.2 | 308.6 |
2029- | 0.0 | - | - | - | 65.4 | 65.4 |
Interest-bearing loans and borrowings are classified as other liabilities. Interest-bearing loans and borrowings are
originated loans and bank loans, and are carried at amortized cost by using the effective interest rate method. All
interest-bearing liabilities are other liabilities than liabilities for trading purposes or derivative financial instruments
defined in IFRS 9 and as such are carried at amortized cost. Fair values have been calculated by discounting future cash
flows at the appropriate market interest rate prevailing at period end closing date. Interest rates for measuring fair values
of interest-bearing liabilities were 3.81%–6.80%. The fair value of current interest-bearing liabilities is estimated to equal
the carrying amount.
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value
through profit or loss and reported in the interest-bearing liabilities.
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present
value of future lease payments using an effective interest rate method. The carrying amount is reduced to reflect the
lease payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when
Reconciliation of liabilities arising from financing activities
2023 | 2022 | |||||||
Non-cash changes | ||||||||
Foreign | Reclassification | |||||||
Business | Contingent | exchange | from long-term | |||||
EUR million | Total | Cash flows | combinations | considerations | movement | to short-term | Other | Total |
Long -term loans | 1,266.6 | 426.9 | - | - | - 2.8 | - 435.0 | 6.8 | 1,270.6 |
Short-term loans | 229.7 | -541.2 | - | -20.0 | -5.2 | 435.0 | 14.8 | 346.2 |
Long-term lease liabilities | 136.5 | - | - | - | -2.5 | -20.9 | 26.7 | 133.2 |
Short-term lease liabilities | 24.8 | -28.8 | - | - | -0.5 | 20.9 | 7.8 | 25.3 |
Total liabilities from financing | ||||||||
activities | 1,657.5 | -143.1 | - | -20.0 | -10.9 | 0.0 | 56.2 | 1,775.4 |
2022 | 2021 | |||||||
Non-cash changes | ||||||||
Foreign | Reclassification | |||||||
Business | Contingent | exchange | from long-term | |||||
EUR million | Total | Cash flows | combinations | considerations | movement | to short-term | Other | Total |
Long-term loans | 1,270.6 | 293.7 | - | -15.2 | 31.3 | -155.8 | -12.2 | 1,128.8 |
Short-term loans | 346.2 | -186.1 | - | 20.0 | 0.8 | 155.8 | -42.6 | 398.4 |
Long-term lease liabilities | 133.2 | 0.0 | -1.8 | - | 1.0 | -17.3 | 4.5 | 146.8 |
Short-term lease liabilities | 25.3 | -28.8 | 1.9 | - | -0.1 | 17.3 | 6.2 | 28.8 |
Total liabilities from financing | ||||||||
| activities | 1,775.4 | 78.8 | 0.1 | 4.8 | 33.0 | 0.0 | - 44.1 | 1,702.8 |
5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR million | 2023 | 2022 |
Financial assets at fair value through profit or loss | ||
Derivatives | 5.9 | 10.9 |
Derivatives designated for hedge accounting | 7.9 | 20.0 |
Financial assets at amortized cost | ||
Non-current interest-bearing receivables | 2.4 | 0.9 |
Other non-current assets | 17.0 | 28.7 |
Current interest-bearing receivables | 15.2 | 14.9 |
Trade and other current receivables | 569.9 | 611.8 |
Cash and cash equivalents | 348.2 | 309.4 |
Other investments | 2.3 | 2.4 |
Financial assets total | 968.6 | 999.0 |
Financial liabilities at fair value through profit or loss | ||
Derivatives | 9.3 | 14.7 |
Contingent considerations | 0.0 | 20.6 |
Derivatives designated for hedge accounting | 0.2 | 2.3 |
Financial liabilities at amortized cost | ||
Non-current interest-bearing liabilities | 1,403.0 | 1,403.9 |
Other non-current liabilities | 12.8 | 10.5 |
Current portion of long-term loans | 167.3 | 168.9 |
Short term loans | 83.7 | 202.6 |
Trade and other current liabilities | 485.5 | 541.4 |
Financial liabilities total | 2,161.8 | 2,364.9 |
In the statement of financial position derivatives are included in the following groups: non-current interest-bearing
liabilities, other non-current assets, trade and other current receivables, other non-current liabilities and trade and other
current liabilities.
ACCOUNTING PRINCIPLES
Financial assets are classified according to IFRS 9 on the basis of the Group’s business model for managing the financial
assets and the contractual cash flow characteristics to the following categories: financial assets at fair value through
profit or loss, financial assets at fair value through OCI and financial assets at amortized cost. Financial liabilities are
Publicly traded and unlisted shares are classified as financial assets at fair value through OCI. Publicly traded shares are
recognized at fair value, which is based on quoted market prices at the reporting period closing date. Gains or losses
arising from changes in fair value are recognized in other comprehensive income and are presented in equity in fair
value reserves. Unlisted shares are measured at cost, as their fair value cannot be measured reliably.
Non-derivative assets with fixed or determinable payments that are not quoted in an active market are classified as
financial assets at amortized cost. Trade receivables and other receivables are included in this category. Trade and other
receivables are measured at amortized cost by using the effective interest rate method.
The Group recognizes a loss allowance for expected credit losses on financial assets based on the general approach,
where a loss allowance is measured at amount equal to 12-month expected credit losses if there has not been a
significant increase in credit risk since the initial recognition. The Group measures expected credit losses based on
historical credit losses experience, current and future conditions. Simplified approach is used for trade receivables that
do not contain a significant financing component, where the Group always measures the loss allowance at an amount
equal to the lifetime expected credit losses. The amount of expected credit losses is updated at each reporting date.
values of foreign exchange options are calculated with the Garman-Kohlhagen model. Fair values of interest rate swaps,
futures and forwards are based on net present values of estimated future cash flows. Cash, short-term loans and
overdrafts have fair values that approximate to their carrying amounts because of their short-term nature. The
recoverable amount for financial investments is calculated as the present value of expected future cash flows,
Contingent considerations related to business combinations classified as financial liabilities are measured at fair value
through profit or loss and reported in the interest-bearing liabilities.
EUR million
Financial instruments measured at fair value | Level 1 | Level 2 | Level 3 | Total 2023 |
Assets | ||||
Derivatives | ||||
Currency derivatives | - | 8.9 | - | 8.9 |
Interest rate derivatives | - | 4.9 | - | 4.9 |
Other investments | - | - | 2.3 | 2.3 |
Total | - | 13.8 | 2.3 | 16.0 |
Liabilities | ||||
Derivatives | ||||
Currency derivatives | - | 9.2 | - | 9.2 |
Interest rate derivatives | - | 0.3 | - | 0.3 |
Contingent considerations | - | - | 0.0 | |
Total | - | 9.5 | - | 9.5 |
EUR million
Financial instruments measured at fair value | Level 1 | Level 2 | Level 3 | Total 2022 |
Assets | ||||
Derivatives | ||||
Currency derivatives | - | 23.9 | - | 23.9 |
Interest rate derivatives | - | 7.0 | - | 7.0 |
Other investments | - | - | 2.4 | 2.4 |
Total | - | 30.9 | 2.4 | 33.3 |
Liabilities | ||||
Derivatives | ||||
Currency derivatives | - | 10.8 | - | 10.8 |
Interest rate derivatives | - | 6.2 | - | 6.2 |
Contingent considerations | - | - | 20.6 | 20.6 |
Total | - | 17.0 | 20.6 | 37.6 |
The Group uses income approach in determining the fair value. Inputs used are foreign exchange rates, interest rates
and yield curves as well as implied volatilities.
Group’s currency and interest rate derivatives are subject to International Swaps and Derivatives Association (ISDA)
master netting agreements. The amounts are not offset in the statement of financial position.
Unquoted investments are carried at cost, as their fair value cannot be measured reliably.
The levels of the fair value hierarchy are defined as follows:
Level 1: Quoted prices in active markets.
Level 2: Valuation techniques based on observable market data.
Directors’ Report and Financial Statements 2023 | 70
The objective of financial risk management is to ensure that the Group has access to sufficient funding in the most cost-
efficient way and to minimize the impact on the Group from adverse movements in the financial markets. As defined in
the Group Treasury Policy, management of financial risks is guided and controlled by a Finance Committee, led by the
Chief Financial Officer (CFO). The Finance Committee reviews risk reports on the Group’s interest-bearing balance
sheet items, commercial flows, derivatives and foreign exchange exposures and approves required measures on
a monthly basis.
The Group Treasury department at the Espoo headquarters is responsible for the Group’s funding and risk management
and serves the business units in daily financing, foreign exchange transactions and cash management coordination.
The Group is exposed to exchange rate risk through cross-border trade within the Group, exports and imports, funding
of foreign subsidiaries and currency denominated equities.
Transaction risk
The largest transaction exposures derive from capital flows, imports, exports and royalty receivables. The objective of
currency transaction risk management is to protect the Group from negative exchange rate movements. Business units
are responsible for actively managing their currency risks related to future commercial cash flows, in accordance with
policies and limits defined by the business unit and approved by the Finance Committee. As a rule, commercial
receivables and payables recorded on the balance sheet are always fully hedged, as well as 25% of probable flows over
a minimum 12-month horizon. Eligible hedging instruments include currency forwards and in authorized subsidiaries
also currency options. The business units’ counterparty in hedging transactions is mainly Huhtamäki Oyj.
CNY | USD | |||||||||
exposure | exposure | |||||||||
EUR exposure | in | in | USD exposure | |||||||
in companies | companies | companies | in companies | USD exposure | ||||||
reporting in | reporting | reporting in | reporting in | in companies | ||||||
EUR million | GBP | in HKD | AUD | EUR | reporting in INR | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
Trade receivables | 8.4 | 2.1 | 0.1 | 0.1 | 1.2 | 1.9 | 0.1 | 19.2 | 14.5 | |
Trade payables | -19.4 | -23.2 | -3.9 | -6.7 | -9.6 | -7.3 | -4.3 | -7.3 | -6.3 | -6.4 |
Net balance sheet exposure | -11.0 | -21.1 | -3.8 | -6.6 | -8.5 | -5.5 | -4.3 | -7.2 | 12.9 | 8.1 |
Forecasted sales (12 months) | 19.4 | 16.5 | 0.1 | 1.0 | 6.6 | 5.3 | 1.2 | 65.4 | 66.7 | |
Forecasted purchases (12 months) | -90.5 | -113.9 | -17.0 | -23.6 | -49.6 | -47.8 | -10.1 | -33.0 | -38.9 | -45.4 |
Net forecasted exposure | -71.1 | -97.4 | -16.8 | -22.7 | -43.0 | -42.6 | -10.1 | -31.8 | 26.6 | 21.3 |
Hedges | ||||||||||
Currency forwards (12 months) | 39.3 | 48.6 | 7.4 | 9.8 | 21.0 | 17.3 | 7.7 | 19.8 | -16.6 | -17.9 |
Currency options (12 months) | - | - | - | - | ||||||
Total net exposure | -42.7 | -69.9 | -13.2 | -19.5 | -30.4 | -30.7 | -6.7 | -19.2 | 22.9 | 11.4 |
Translation risk
As a main rule individual subsidiaries do not carry translation risk as they are financed in local currencies. As an exception,
the Finance Committee can approve the use of foreign currency borrowing in countries with high local interest rates.
In 2023 and 2022 on reporting period closing dates no such borrowings were outstanding.
The main translation exposures derive from equities and permanent loans, which in substance form a part of the net
investment in the US, India and UK based subsidiaries. The Group hedges its translation risks selectively by using foreign
currency loans and derivatives. Equity hedging decisions are made by the Finance Committee, who in its decision making
considers the hedge’s estimated impact on the Group’s key indicators, long-term cash flows and hedging cost. On the
reporting period closing date the Group had outstanding translation risk hedges of USD 223 million (of which USD 50
million in the form of currency loans and USD 173 million in the form of derivatives) and of GBP 20 million (of which
GBP 20 million in the form of derivatives) (USD 223 million, of which USD 50 million in the form of currency loans and
USD 173 million in the form of derivatives and GBP 20 million, of which GBP 20 million in the form of derivatives).
A 10% appreciation of the EUR versus the USD, INR and GBP would as of the reporting period closing date decrease
the result before taxes by EUR
21.3 million (EUR 14.4 million) and the Group consolidated equity by EUR 126.1 million
(EUR 117.3 million).
Interest rate risk
The interest-bearing debt exposes the Group to interest rate risk, namely re-pricing and price risk caused by interest
rate movements. Management of interest rate risk is centralized to the Group Treasury. The Group’s policy is to maintain
in the main currency debt portfolios a duration that matches a benchmark duration range based on the Group’s
estimated cash flow, selected balance sheet ratios and also the shape of the yield curve. The objective of interest rate
risk management is to reduce the fluctuation of the interest charge, enabling a more stable net income. The Group
manages interest rate risk by selection of debt interest periods and by using derivatives such as futures, forward rate
agreements, interest rate swaps and options.
At the reporting period closing date the average interest rate on Group interest-bearing net debt was 4.2% (3.4% ) and
average duration 2.4 years (2.2 years). A one percentage point rise in market interest rates would increase Group net
interest expense by EUR 2.7 million (EUR 5.1 million) over the following 12 months. A similar rise in interest rates would
increase Group equity with EUR 1.7 million (EUR 1.9 million) due to mark-to-market revaluations of interest rate
derivatives designated for cash flow hedges.
Currency split and repricing schedule of outstanding net debt including hedges (excl. lease liabilities)
2023 | 2022 | ||||||
Debt repricing in period, incl. derivatives | |||||||
Amount | Amount | ||||||
Currency | EUR million | 2024 | 2025 | 2026 | 2027 | 2028 | EUR million |
EUR | 1,029.7 | 190.6 | 33.6 | 125.0 | 530.5 | 150.0 | 990.8 |
HKD | 81.2 | 81.2 | 84.8 | ||||
GBP | 64.7 | 64.7 | 92.5 | ||||
AUD | 25.4 | 25.4 | 16.4 | ||||
CZK | 13.3 | 13.3 | -3.2 | ||||
Other | -87.1 | -154.6 | 18.0 | 13.5 | 13.5 | 22.5 | 130.9 |
Total | 1,127.0 | 220.5 | 51.6 | 138.5 | 544.0 | 172.5 | 1,312.2 |
The Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools,
concentration accounts and overdraft financing facilities. To mitigate the refinancing risk, the Group diversifies funding
sources as well as the maturity structure of loans and debt facilities. The Group utilizes a EUR 400 million Finnish
commercial paper program and uncommitted credit facilities with relationship banks for short-term financing purposes.
At the reporting period closing date, the Group had committed credit facilities totaling EUR 400 million (EUR 400 million)
of which EUR 355 million (EUR 353 million) remained undrawn. Undrawn committed long-term debt facilities are
sufficient to ensure adequate financing resources in all foreseeable circumstances.
In May 22, 2023, Huhtamäki Oyj signed a EUR 125 million bilateral term loan facility agreement with a maturity of two
years. The term loan is used for refinancing and general corporate purposes of the Group.
In November 16, 2023, Huhtamäki Oyj issued a EUR 300 million senior unsecured bond. The 5-year bond matures on
November 24, 2028. The net proceeds from the issue of the bond are used for the partial repurchase of existing notes
issued by Huhtamäki Oyj due in 2024 and for refinancing and other general corporate purposes of the Group.
Huhtamäki Oyj has a long-term issuer credit rating of BB+ with a stable outlook from S&P Global Ratings Europe Limited.
EUR million including interests | 2023 | ||||||||
Maturity of facility/loan | |||||||||
Amount | |||||||||
Amount | available of | ||||||||
Debt type | drawn | committed | Total | 2024 | 2025 | 2026 | 2027 | 2028 | Later |
Committed revolving facilities | 45.0 | 355.0 | 400.0 | 400.0 | |||||
Bonds | 1,070.9 | 1,070.9 | 99.7 | 174.7 | 498.1 | 298.4 | |||
Commercial paper program | 50.5 | 50.5 | 50.5 | ||||||
Other loans from financial institutions | 326.4 | 326.4 | 76.1 | 215.1 | 4.6 | 30.6 | |||
Estimated contractual interest payments | 184.2 | 49.3 | 42.8 | 39.5 | 37.3 | 15.4 | |||
Contingent liabilities | |||||||||
Lease liabilities | 161.3 | 161.3 | 24.8 | 35.0 | 14.2 | 11.7 | 10.2 | 65.4 | |
Trade and other current liabilities | 518.1 | 518.1 | 518.1 | ||||||
Total | 2,172.2 | 355.0 | 2,711.5 | 818.5 | 293.0 | 633.0 | 577.7 | 324.0 | 65.4 |
EUR million including interests | 2022 | ||||||||
Maturity of facility/loan | |||||||||
Amount | |||||||||
Amount | available of | ||||||||
Debt type | drawn | committed | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Later |
Committed revolving facilities | 47.0 | 353.0 | 400.0 | 400.0 | |||||
Bonds | 821.0 | 821.0 | 150.0 | 173.4 | 497.6 | ||||
Commercial paper program | 111.5 | 111.5 | 111.5 | ||||||
Other loans from financial institutions | 637.4 | 637.4 | 234.7 | 286.0 | 86.0 | 30.8 | |||
Estimated contractual interest payments | 132.4 | 35.0 | 26.3 | 25.3 | 23.9 | 21.9 | |||
Contingent liabilities | 20.6 | 20.6 | 20.6 | ||||||
Lease liabilities | 158.5 | 158.5 | 25.3 | 38.7 | 13.9 | 11.4 | 9.4 | 59.9 | |
Trade and other current liabilities | 583.8 | 583.8 | 583.8 | ||||||
Total | 2,379.8 | 353.0 | 2,865.3 | 1,010.9 | 500.9 | 125.2 | 608.6 | 559.6 | 59.9 |
The Group is exposed to credit risk from its commercial receivables and receivables from financial institutions based on
short-term investment of liquid funds as well as derivatives transactions.
The business units are responsible for the management of commercial credit risk in accordance with policies defined by
the business units and approved by the Finance Committee. A Group policy sets out certain minimum requirements as
to credit quality, sales terms and collection. The commercial credit risk for the Group as a whole is considered low as
the receivable portfolio is diversified and historical credit loss frequency is low (see note 4.2.).
Liquid funds are from time to time invested in short-term bank deposits at relationship banks with a solid credit rating,
in government bonds, treasury bills or in commercial papers issued by corporate borrowers with an investment grade
rating. Credit risk stemming from receivables from financial institutions, including derivative transaction settlements, is
considered small and is managed centrally by the Group Treasury department and in accordance with limits set by the
The Group’s objective is to maintain an efficient capital structure. Consequently, the Group aims to maintain in the long
term the net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio in a range between
2–3. Net debt is defined as interest-bearing liabilities less interest-bearing receivables, cash and cash equivalents.
The Group is subject to a restriction on its net debt to EBITDA ratio (excluding items affecting comparability) through a
clause in a key financing agreement. This restriction is not seen hindering the Group’s ability to carry out its business or
its strategy.
Changes in the capital structure are resulting from capital investments in the business and cash returns to shareholders,
which are funded by the stable cash flow.
Capital structure
EUR million | 2023 | 2022 |
Interest-bearing liabilities | 1,654.0 | 1,796.0 |
Interest-bearing receivables, cash and cash equivalents | 365.7 | 325.3 |
Net debt | 1,288.3 | 1,470.8 |
Total equity | 1,924.9 | 1,922.2 |
Net debt to equity (Gearing ratio) | 0.67 | 0.77 |
Net debt to EBITDA (excluding items affecting comparability) | 2.18 | 2.46 |
EUR million | 2023 | 2022 | |||||
Nominal Value | Maturity Structure | Nominal Value | |||||
Instrument | 2024 | 2025 | 2026 | 2027 | 2028 Later | ||
Currency forwards | |||||||
for transaction risk | |||||||
Outflow | -196.1 | -194.6 | -1.5 | -210.4 | |||
Inflow | 195.0 | 193.5 | 1.5 | 210.8 | |||
for translation risk | |||||||
Outflow | -178.6 | -178.6 | -185.0 | ||||
Inflow | 180.7 | 180.7 | 194.0 | ||||
for financing purposes | |||||||
Outflow | -646.0 | -646.0 | -589.1 | ||||
Inflow | 643.3 | 643.3 | 590.0 | ||||
Interest rate swaps | |||||||
EUR | -200.0 | -50.0 | -150.0 | -50.0 | |||
USD | 76.5 | 4.5 | 9.0 | 13.5 | 18.0 | 31.5 | 93.9 |
Fair values of derivative financial instruments
EUR million | 2023 | 2022 | ||||
Positive | Negative | Net Fair | Positive | Negative | Net Fair | |
Instrument | Fair values | Fair values | values | Fair values | Fair values | values |
Currency forwards | ||||||
for transaction risk | 1.4 | -2.9 | -1.5 | 2.7 | -2.4 | 0.3 |
of which cash flow hedges 1 | 0.8 | -1.2 | -0.4 | 1.7 | -1.2 | 0.5 |
for translation risk | 2.8 | 0.0 | 2.8 | 11.3 | -1.1 | 10.3 |
of which hedges of net investment 2 | 2.8 | 0.0 | 2.8 | 11.3 | -1.1 | 10.3 |
for financing purposes | 4.6 | -6.3 | -1.7 | 9.9 | -7.3 | 2.6 |
Interest rate swaps 3 | ||||||
EUR | 4.3 | -4.0 | 0.3 | -6.1 | -6.1 | |
of which fair value hedges 4 | 4.3 | -4.0 | 0.3 | -6.1 | -6.1 | |
USD | 4.7 | 0.0 | 4.7 | 7.0 | -0.1 | 6.9 |
of which cash flow hedges 5 | 4.7 | 0.0 | 4.7 | 7.0 | -0.1 | 6.9 |
Commodities | 0.3 | 0.0 | 0.3 | - | - | - |
1
Fair values of currency forwards designated as cash flow hedges are reported in fair value and other reserves.
2
Fair values of currency forwards designated as hedges of net investment in foreign subsidiaries are reported in equity in translation difference.
3
Fair values of interest rate swaps include accrued interest which is reported in the income statement in financial expense.
4
Fair values of interest rate swaps designated as fair value hedges are reported in the income statement in financial income.
5
Directors’ Report and Financial Statements 2023 | 74
6. Other disclosures
Sustainability is integral to Huhtamaki’s 2030 Strategy. The ambition is to become the first choice in sustainable
packaging solutions. The sustainability agenda focuses on two key topics: transitioning to a circular economy and
taking climate action, whilst not forgetting other environmental and social aspects of sustainability.
To achieve Huhtamaki’s ambition, management is continuously considering climate related matters when conducting
the business. These considerations and related assumptions have been reflected in the estimates and judgements of
the reported amounts of assets, liabilities, income and expense.
The items in the consolidated financial statements that are impacted by climate related assumptions in particular:
•
Goodwill: The Group has defined EBIT and discount rates as the key assumptions in the goodwill impairment
testing. Climate related risks and opportunities have been recognized and evaluated as part of the strategy-
based EBIT estimates together with other factors impacting the business development. (Note 3.2. Goodwill)
•
Intangible and tangible assets:
o
Climate related matters may impact the recognition and measurement of intangible and tangible
assets. In the end of the reporting period, climate related matters did not have material impact to the
estimated useful lives of the assets, nor to the impairment of assets. The Group continues to invest in
sustainable packaging solutions. (Note 3.3. Intangible assets and Note 3.4. Tangible assets)
o
Emission rights and renewable energy certificates are in scope of IAS 38 Intangible assets. (Note 3.3
Intangible assets)
•
Other non-current assets: The Group has signed two major virtual power purchase agreements to reach its
target for using 100 % renewable electricity and carbon neutral production by 2030. The agreements are in
scope of IFRS 9 Financial Instruments. (Note 5.7. Financial assets and liabilities by category).
•
Inventory: Climate related matters may impact the measurement of the inventories. In the end of the
reporting period, climate related matters did not have material impact to the net realizable value. (Note 4.1.
Inventories)
•
Interest-bearing liabilities:
o
In 2021, the Group has signed a EUR 400 million sustainability-linked syndicated multicurrency
revolving credit facility loan agreement (“RCF”). The interest margin is tied to three sustainability
indicators: 1) Absolute scope 1 and 2 greenhouse gas emissions amount, 2) Share of non-hazardous
waste recycled and 3) EcoVadis rating. The loan margin decreases or increases according to the
number of targets achieved for the three sustainability indicators. (Note 5.6. Interest-bearing
liabilities)
o
In 2022, the Group has issued a EUR 500 million senior unsecured sustainability-linked bond under
its newly established Sustainability-Linked Bond Framework. The interest rate is subject to increase
upon the failure to satisfy certain sustainability performance targets. The chosen targets for the
sustainability-linked bond are related to greenhouse gas emission reductions. (Note 5.6. Interest-
bearing liabilities)
o
In 2023, the Group has signed a EUR 125 million sustainability-linked bilateral term loan facility
agreement. The interest margin is tied to three sustainability indicators: 1) Absolute scope 1 and 2
greenhouse gas emissions amount, 2) Share of non-hazardous waste recycled and 3) Ecovadis Rating.
(Note 5.6. Interest-bearing liabilities)
•
Employee benefits: Huhtamaki Global Sustainability and Safety Index (GSSI) is one of the business objectives
for employees within the global short-term incentive plan. KPIs within the index are linked to the
sustainability dashboard and relate to e.g. the share of renewable or recycled materials, the share of
renewable electricity, the share of non-hazardous waste recycled, and employee safety. (Note 2.2. Employee
Huhtamaki Group’s related parties include the parent company, subsidiaries, associates, joint ventures and pension funds
that are separate entities. Related parties also include the key management, their close family members and entities in
which they have control or joint control. The key management personnel are the members of the Global Executive Team
and the Board of Directors. Related parties also include Shareholders of Huhtamäki Oyj controlling more than ten per
Details of transactions and outstanding balances between the Group and its related parties are disclosed below.
Intragroup related party transactions and balances are eliminated on consolidation.
Compensation to the Global Executive Team and the Board of Directors is disclosed in the following tables. In addition,
the key management is receiving dividends based on their ownership of Huhtamäki Oyj shares. There has not been any
other transactions between the Group and the key management, their close family members or entities in which they
have control or joint control.
The President and CEO Charles Héaulmé's pension coverage is arranged by the President and CEO himself. The
company contributes towards the pension through monthly cash payments to the President and CEO. The total cash
payment is EUR 297 thousand
(EUR 294 thousand) per annum. Some of the other Global Executive Team members
belong to a supplementary defined contribution pension plan. In 2023, the Company paid a total of EUR 355 thousand
(EUR 322 thousand) to pension arrangements of the other GET members, excluding the CEO. Members of the Board
of Directors and the Global Executive Team owned a total of 147,026 shares (101,689 shares) shares at the end of the
year 2023.
Employee benefits of CEO and members of the Global Executive Team
EUR million | 2023 | 2022 |
Salaries and other short-term employee benefits | 6.6 | 7.4 |
Post-employment benefits | 0.4 | 0.3 |
Share based payments | 5.6 | 5.1 |
CEO and members of the Global Executive Team in total | 12.6 | 12.8 |
Remunerations of CEO and members of the Board of Directors
In thousand euros | 2023 | 2022 |
CEO Charles Héaulmé | 3,372 | 2,063 |
Board members | ||
Ala-Pietilä Pekka | 206 | 198 |
Tuomas Kerttu | 120 | 121 |
Baillie Doug | 104 | 104 |
Barker William R. | 100 | 104 |
Korhonen Anja | 116 | 118 |
Turner Sandra | 23 | 106 |
Wunderlich Ralf K. | 101 | 104 |
Alonso Mercedes | 104 | 72 |
Takala Heikki | 22 | 73 |
Lindwall Pauline | 79 | - |
Vauramo Pekka | 78 | - |
CEO and Board in total | 4,425 | 3,061 |
Pension funds
The Group’s related parties include post-employment benefit plans that are separate entities. These entities are in
Finland, India, the UK and the U.S.. For more information, see note 2.2. Employee benefits. The Group made EUR 1.8
million (EUR 2.6 million) contributions to the plans and there was related outstanding balance of EUR 0.2 million (EUR
Directors’ Report and Financial Statements 2023 | 76
Performance Share Arrangement 2010
On March 12, 2010 the Board of Directors of the Company decided on establishing a Performance Share Arrangement
to form a part of the long-term incentive and retention program for the key personnel of the Company and its
subsidiaries. The Performance Share Arrangement offers a possibility to earn the Company shares as remuneration for
achieving established targets. The Arrangement consists of annually commencing individual three-year performance
share plans. A possible reward shall be paid during the calendar year following each three-year plan. Commencement
of each three-year plan will be separately decided by the Board of Directors.
GET members (excl. President and CEO) that are participants to the performance share plan shall hold at least half (50%)
of the shares received until they hold shares received from the performance share plans corresponding in aggregate to
the value of their annual gross base salary. President and CEO shall hold at least half (50%) of the shares received until
he holds shares received from the performance share plans corresponding in aggregate to the value of 3 times his
annual gross base salary.
The ownership requirement applies until termination of employment or service. The maximum
value of the reward payable to the participants based on the Performance Share Arrangement is limited by a cap linked
to Company’s share price development (Performance Share Plan 2021-2023 and onwards).
Performance Share Plan 2020-2022
The Performance Share Plan 2020-2022 commenced in 2020. The reward was based on the Group’s cumulative
adjusted earnings per share (EPS) for the earning period 2020-2022 and was paid in 2023 to 97 participants.
The achievement of performance criteria, Group’s cumulative adjusted earnings per share (EPS) for the earning period
2020-2022, set forth in the Performance Share Arrangement 2010 for the earnings period 2020–2022, was 54.88%
of maximum. According to the terms and conditions of the Performance Share Arrangement, 245,371, shares were paid
in March 2023. Applicable taxes were withheld from the gross reward before paying remaining net shares to the
participants. Fair value of the paid shares on the grant date was EUR 33.96 per share. Pursuant to the IFRS standards,
an expense relating to the Performance Share Plan 2020–2022 totaling 7,559,961 was recorded for the reporting
periods 2020–2022. This amount includes an expense totaling EUR 2,352,132 which was recorded in the reporting
period ending 31 December 2022.
Performance Share Plan 2021-2023
The Performance Share Plan 2021-2023 commenced in 2021 and the reward is based on the Group’s cumulative
adjusted earnings per share (EPS) for the earning period 2021-2023. The Performance Share Plan 2021-2023 was
directed to 110 persons at the end of 2023.
The achievement of performance criteria, Group’s cumulative adjusted earnings per share (EPS) for the earning period
2021-2023, set forth in the Performance Share Arrangement 2010 for the earnings period 2020–2022, was 86.05%
of maximum. According to the terms and conditions of the Performance Share Arrangement, 386,388 shares will be
paid in March 2024. Applicable taxes are withheld from the gross reward before paying remaining net shares to the
participants. Fair value of the paid shares on the grant date was EUR 39.18 per share. Pursuant to the IFRS standards,
an expense relating to the Performance Share Plan 2021–2023 totaling EUR 13,859,983 was recorded for the reporting
periods 2021–2023. This amount includes an expense totaling EUR 4,518,279 which was recorded in the reporting
period ending 31 December 2023.
Performance Share Plan 2022-2024
The Performance Share Plan 2022-2024 commenced in 2022 and the possible reward will be based on the Group’s
cumulative adjusted earnings per share (EPS) for the earning period 2022-2024. The reward, if any, will be paid during
2025. The Performance Share Plan 2022-2024 was directed to 126 persons at the end of 2023.
Performance Share Plan 2023-2025
The Performance Share Plan 2023-2025 commenced in 2023 and the possible reward will be based on the Group’s
cumulative adjusted earnings per share (EPS) for the earning period 2023-2025. The reward, if any, will be paid during
2026. The Performance Share Plan 2023-2025 was directed to 136 persons at the end of 2023.
Performance Share Plan | 2020-2022 | 2021-2023 | 2022-2024 | 2023-2025 |
Amount of granted shares (gross) | 601,600 1 | 582,000 1 | 600,000 1 | 590,000 1 |
Share price at grant date, eur | 33.96 | 39.18 | 35.86 | 30.58 |
Actual achievement (% of maximum) | 54.88% | 86.05% | ||
Number of achieved shares (gross) based on performance criteria | 245,371 | 386,388 2 | - | - |
Number of participants of December 31, 2023 | 97 | 110 | 126 | 136 |
Share delivery | 2023 | 2024 | 2025 | 2026 |
Perfomance criteria | adjusted EPS | adjusted EPS | adjusted EPS | adjusted EPS |
1
In case shares are paid as reward, the net number of shares which remains after deducting the number of shares corresponding to the
applicable taxes will be delivered to participants.
2
Achieved shares under PSP 2021-2023 will be paid in March 2024.
Restricted Share Arrangement 2021
As part of the long-term incentive and retention program for the key personnel of Huhtamaki, the Board of Directors
of the Company decided on February 10, 2021 on establishing a restricted share arrangement as a share-based long-
term incentive arrangement (Restricted Share Arrangement). The aim of the restricted share arrangement is to retain,
motivate and reward selected key employees in order to increase the shareholder value in the long term. The restricted
share arrangement consists of individual share plans. The commencement of each plan will be separately decided by
the Board of Directors. Each plan comprises of three consecutive calendar years.
Share rewards will be paid in shares of the Company. No reward will be paid if the participant's employment or service
ends before the payment of the reward. The members of the Global Executive Team (excl. President and CEO) shall
retain at least 50% of the shares received until the value of their share ownership in the Company corresponds to their
annual gross base salary. President and CEO shall hold at least half (50%) of the shares received until he holds shares
received from the performance share plans corresponding in aggregate to the value of 3 times his annual gross base
salary. The maximum value of the reward payable to the participants based on the restricted share arrangement is
limited by a cap linked to Company’s share price development.
The first share plan within the Restricted Share Arrangement, covering the years 2021-2023, commenced as of the
beginning of the year 2021. The aggregate maximum number of shares payable based on the first plan is 163,500 shares
(gross) and possible rewards will be paid in 2023 and 2024. For potential subsequent share plans the aggregate
maximum number of shares payable is 60,000 shares (gross) per plan. Applicable taxes are withheld from the gross
reward before paying remaining net shares to the participants.
Restricted Share Plan 2021-2023 (2-year vesting)
The Restricted Share Plan 2021-2023 (2-year vesting) commenced in 2021 and the reward was paid in 2023 based on
continuous employment. Group’s adjusted EBIT margin of 8% for the result release preceding the payment was used as
an underlying threshold criterion for share payment. Financial year 2022 Group adjusted EBIT margin was 8.8% and
thus there was no restriction to payout.
According to the terms and conditions of the Restricted Share Arrangement, 81,400 shares (gross) were be paid in
March 2023 to 61 participants. Applicable taxes were withheld from the gross reward before paying remaining net
shares to the participants. Fair value of the paid shares on the grant date was EUR 39.18 per share. Pursuant to the
IFRS standards, an expense relating to the Restricted Share Plan 2021-2023 (2-year vesting) totaling EUR 3,273,480
was recorded for the reporting periods 2021-2022. This amount includes an expense totaling EUR 1,796,256 which
was recorded in the reporting period ending 31 December 2022.
Restricted Share Plan 2021-2023
The Restricted Share Plan 2021-2023 commenced in 2021 and the reward will be paid during 2024 based on
continuous employment. Group’s adjusted EBIT margin of 8% for the result release preceding the payment is used as
an underlying threshold criterion for share payment.
The Restricted Share Plan 2021-2023 was directed to 12 persons
at the end of 2023.
Financial year 2023 Group adjusted EBIT margin was 9.4% and thus there is no restriction to payout. According to the
terms and conditions of the Restricted Share Arrangement, 30,700 shares will be paid in March 2024. Applicable taxes
are withheld from the gross reward before paying remaining net shares to the participants. Fair value of the shares on
the grant date was ranging from EUR 30.58-45.20 per share. Pursuant to the IFRS standards, an expense relating to
the Restricted Share Plan 2021-2023 totaling EUR 1,027,992 was recorded for the reporting periods 2021-2023. This
amount includes an expense totaling EUR 571,626 which was recorded in the reporting period ending 31 December
2023.
Restricted Share Plan 2022-2024
The Restricted Share Plan 2022-2024 commenced in 2022 and the reward will be paid during 2025 based on
continuous employment. Group’s adjusted EBIT margin of 8% for the result release preceding the payment is used as
an underlying threshold criterion for share payment. The Restricted Share Plan 2022-2024 was directed to 5 persons
at the end of 2023.
Restricted Share Plan 2023-2025
The Restricted Share Plan 2023-2025 commenced in 2023 and the reward will be paid during 2026 based on
continuous employment. Group’s adjusted EBIT margin of 8% for the result release preceding the payment is used as
an underlying threshold criterion for share payment. The Restricted Share Plan 2023-2025 was directed to 3 persons
at the end of 2023.
Restricted Share Plan | 2021-2023 (2-year vesting) | 2021-2023 | 2022-2024 | 2023-2025 |
Amount of granted shares (gross) 1 | 100,800 | 30,700 | 10,000 | 7,000 |
Share price at grant date, eur | 39.18 | 45.20-30.58 | 32.86-31.29 | 33.58-30.56 |
Number of achieved shares (gross) based on performance criteria | 81,400 | 30,700 2 | - | - |
Number of participants of December 31, 2023 | 61 | 12 | 5 | 3 |
Share delivery | 2023 | 2024 | 2025 | 2026 |
Perfomance criteria | Continuous employment 3 | |||
1
In case shares are paid as reward, the net number of shares which remains after deducting the number of shares corresponding to the applicable taxes will be delivered
to participants.
2
Shares under RSP 2021-2023 will be paid in March 2024.
3
However, if Huhtamaki Group’s adjusted EBIT margin in the result release preceding the payment of the rewards is under 8%, no shares will be paid.
The Group has incentive plans which include equity-settled or cash-settled share-based payment transactions. The
fair value of equity-settled share-based payments granted is recognized as an employee expense with a corresponding
increase in equity. The fair value of cash-settled share-based payments is valued at each reporting period closing date
and the changes in fair value of liability are recognized as expense when incurred. The fair value is measured at grant
date and spread over the vesting period during which the employees become unconditionally entitled to the awards.
The amount recognized as an expense is adjusted to reflect the actual number of awards that will be vested. Non-
market vesting conditions are not included in the value of share-based instruments but in the number of instruments
that are expected to vest. At each reporting period closing date, the estimates about the number of awards that are
Right of use assets are presented in note 3.4 Tangible Assets. Right of use depreciations are presented in note 2.3
Depreciation, amortization and impairment. Lease liabilities are presented in note 5.6 Interest bearing liabilities. Lease
liability interests are presented in note 5.1 Net Financial Items. Items where Huhtamaki is the lessor are presented in
note 5.2. Interest Bearing receivables.
Lease expenses
EUR million | 2023 | 2022 |
Short-term leases | 7.4 | 6.5 |
Low-value leases | 0.7 | 0.5 |
Variable lease payments based on use/performance | 2.7 | 2.6 |
Lease payments in Profit or Loss | 10.8 | 9.6 |
Cash based lease payments in total | 43.8 | 42.9 |
Leases
The leases that the Group recognizes in the statement of financial position include mainly land, building, machinery and
equipment. Short-term leases (lease term of 12 months or less) and leases for which the underlying asset is of low value
are not booked to the statement of financial position. Payments for short-term and low-value leases and variable lease
payments are expensed in P&L.
Right of use (ROU) assets are recognized at the commencement date of the lease. ROU assets are measured at cost
less accumulated depreciation and impairment losses. The costs include the amount of the initial measurement of the
lease liability, any lease payments made at or before the commencement date less lease incentives received, any direct
costs and an estimate of dismantling costs. The carrying amount is further adjusted for any remeasurement of the lease
liability. Depreciation is expensed to the income statement on a straight-line basis over the lease term. The lease term
includes the noncancelable period of lease together with any extension or termination options that are reasonably
Lease liabilities are recognized at the commencement date of the lease. Lease liabilities are measured at the present
value of future lease payments using an effective interest method. The carrying amount is reduced to reflect the lease
payments made and the interest expense is allocated over the lease term. A lease liability is remeasured, when there is
a lease modification or reassessment. Lease liabilities are presented as current and non-current interest-bearing liabilities
EUR million | 2023 | 2022 |
Capital expenditure | 61.6 | 115.9 |
Leases | 67.1 | - |
Total commitments | 128.8 | 115.9 |
EUR million | 2023 | 2022 |
Capital expenditure commitments | ||
Under 1 year | 61.6 | 115.9 |
Total | 61.6 | 115.9 |
EUR million | 2023 | 2022 |
Lease commitments | ||
Not later than 1 year | - | - |
Later than 1 year and not later than 5 years | 19.5 | - |
Later than 5 years | 47.6 | - |
Total | 67.1 | 0.0 |
ACCOUNTING PRINCIPLES
Commitments
Capital expenditure commitments are commitments at the balance sheet date to acquire tangible and intangible assets
The European Commission announced on March 7, 2019 to open an investigation into Luxembourg's tax practices, in
particular Huhtamaki tax rulings from the years 2009, 2012 and 2013. The investigation is not targeted at Huhtamaki
and Huhtamaki has not been approached by the European Commission. The European Commission is investigating
whether the tax ruling could potentially be considered as prohibited state aid by Luxembourg. State aid means that a
public authority has granted a selective (not available for everyone) competitive advantage to a company in Europe.
Huhtamaki monitors the situation and is cooperating with authorities. Huhtamaki complies with all laws and regulations
and it is important for Huhtamaki to secure predictability in financial and tax affairs. In Huhtamaki’s view, the structure
Directors’ Report and Financial Statements 2023 | 81
The list contains significant subsidiaries. A complete list is enclosed in the official statutory accounts which may be obtained
from the company on request.
Country | Company | Group holding % |
Australia | Huhtamaki Australia Pty Limited | 100.0 |
Huhtamaki Tailored Packaging Pty Ltd - Group | 100.0 | |
Brazil | Huhtamaki do Brasil Ltda | 100.0 |
Huhtamaki Embalagens Flexíveis do Brasil Ltda | 100.0 | |
Czech Republic | Huhtamaki Ceska republika, a.s. | 100.0 |
Huhtamaki Flexible Packaging Czech a.s. | 100.0 | |
LeoCzech spol s r.o. | 100.0 | |
Egypt | Elif Global Packaging S.A.E. | 100.0 |
Huhtamaki Egypt L.L.C. | 75.0 | |
Huhtamaki Flexible Packaging Egypt LLC | 100.0 | |
Finland | Huhtamaki Foodservice Nordic Oy | 100.0 |
France | Huhtamaki Foodservice France S.A.S | 100.0 |
Huhtamaki La Rochelle S.A.S | 100.0 | |
Germany | Huhtamaki Flexible Packaging Germany GmbH & Co. KG | 100.0 |
Huhtamaki Foodservice Germany Operations GmbH & Co. KG | 100.0 | |
Huhtamaki Foodservice Germany Sales GmbH & Co. KG | 100.0 | |
Hungary | Huhtamaki Hungary Kft | 100.0 |
India | Huhtamaki Foodservice Packaging India Private Limited | 100.0 |
Huhtamaki India Limited 3 | 67.7 | |
Ireland | Huhtamaki CupPrint Limited | 100.0 |
Italy | Huhtamaki Flexibles Italy S.r.l. | 100.0 |
Luxembourg | Huhtamaki S.à r.l. | 100.0 |
Malaysia | Huhtamaki Foodservice Malaysia Sdn. Bhd. | 100.0 |
Mexico | Huhtamaki Mexicana S.A. de C.V. | 100.0 |
Netherlands | Huhtamaki B.V. | 100.0 |
Huhtamaki Finance B.V. | 100.0 | |
Huhtamaki Molded Fiber Technology B.V. | 100.0 | |
Huhtamaki Nederland B.V. | 100.0 | |
Huhtamaki Paper Recycling B.V. | 100.0 | |
New Zealand | Huhtamaki Henderson Limited | 100.0 |
Huhtamaki New Zealand Limited | 100.0 | |
Philippines | Huhtamaki Philippines, Inc. | 100.0 |
People’s Republic of China | Huhtamaki Foodservice (Shanghai) Limited | 100.0 |
Huhtamaki Foodservice (Tianjin) Ltd. | 100.0 | |
Huhtamaki Foodservice (Xuzhou) Ltd. | 100.0 | |
Huhtamaki (Guangzhou) Limited | 100.0 | |
People’s Republic of China/Hong Kong | Huhtamaki Hong Kong Limited | 100.0 |
Poland | Huhtamaki Foodservice Gliwice Sp. z o.o. | 100.0 |
Huhtamaki Foodservice Poland Sp. z o.o. | 100.0 | |
Saudi Arabia | Arabian Paper Products Company | 50.0 1 |
Singapore | Huhtamaki Singapore Pte. Ltd. | 100.0 |
South Africa | Huhtamaki South Africa Holdings (Pty) Ltd | 70.0 |
Huhtamaki South Africa (Pty) Ltd. | 70.0 | |
Huhtamaki Flexible Packaging South Africa (Pty) Limited | 70.0 | |
Spain | Huhtamaki Spain S.L. | 100.0 |
Switzerland | Huhtamaki AG | 100.0 |
Thailand | Huhtamaki (Thailand) Ltd. | 100.0 |
Turkey | Elif Plastik Ambalaj Sanayi ve Ticaret Anonim Ş irketi | 100.0 |
Huhtamaki Turkey Gıda Servisi Ambalajı A. Ş . | 100.0 | |
Ukraine | Huhtamaki Foodservice Ukraine LLC | 100.0 |
United Arab Emirates | Arabian Paper Products FZCO | 50.0 1 |
Huhtamaki Flexible Packaging Middle East LLC | 49.0 2 | |
Positive Packaging United (M.E.) FZCO | 100.0 | |
Primetech (M.E.) FZE | 100.0 | |
United Kingdom | Huhtamaki BCP Limited | 100.0 |
Huhtamaki Foodservice Delta Limited | 100.0 | |
Huhtamaki (Lisburn) Limited | 100.0 | |
Huhtamaki (Lurgan) Limited | 100.0 | |
Huhtamaki (UK) Limited | 100.0 | |
United States | CupPrint LLC | 100.0 |
Huhtamaki, Inc. | 100.0 | |
Vietnam | Huhtamaki (Vietnam) Limited | 100.0 |
1
The Group’s control is based on a Shareholders’ Agreement according to which the Group has control in the company.
2
The Group has control in the company and can consolidate the company as a fully owned subsidiary based on a Shareholders’ Agreement.
3
For more information:
www.huhtamaki.com/en-in/flexible-packaging/investors/
The following German subsidiaries are exempt from the duty of corporations to audit and disclose financial statements
pursuant to German legislation (Sec. 264b HGB): Huhtamaki Flexible Packaging Germany GmbH & Co. KG, Huhtamaki
Foodservice Germany Operations GmbH & Co. KG, Huhtamaki Foodservice Germany Sales GmbH & Co. KG,
Directors’ Report and Financial Statements 2023 | 83
Parent company financial statements
Parent company income statement (FAS)
EUR
Note
2023
2022
Net sales
1
201,855,155.65
172,573,850.08
Other operating income
2
6,444,669.71
112,865,034.87
Materials and services
3
-97,100,321.82
-71,106,810.73
Personnel expenses
4
-29,321,903.63
-26,193,482.03
Depreciation and amortization
5
-8,642,652.17
-2,753,166.78
Other operating expenses
6
-6,547,656.64
-7,361,118.68
Earnings before interest and taxes
66,687,291.10
178,024,306.73
Net financial income/expense
7
-19,781,237.93
386,209,236.19
Profit before appropriations and taxes
46,906,053.17
564,233,542.92
Group contribution
0
992,000.00
Income tax expense
8
-7,481,042.19
-12,400,624.35
Profit for the period
39,425,010.98
552,824,918.57
Parent company balance sheet (FAS)
Assets
EUR
Note
2023
2022
Non-current assets
Intangible assets
9
Intangible rights
920,909.48
345,987.69
Development expenditure
13,474,354.11
7,819,820.60
Other capitalized expenditure
1,079,571.74
4,161,982.16
Construction in progress and advance payments
8,171,012.80
6,806,530.09
23,645,848.13
19,134,320.54
Tangible assets
10
Machinery and equipment
93,833.69
223,646.14
Other tangible assets
96,301.19
96,301.19
190,134.88
319,947.33
Investments
Investment in subsidiaries
2,417,271,132.51
2,418,071,132.51
Other shares and holdings
1,070,560.54
1,132,636.92
2,418,341,693.05
2,419,203,769.43
Current assets
Non-current receivables
Loan receivables
11
169,831,365.20
555,828,762.19
Current receivables
Loan receivables
11
415,174,454.66
0
Accrued income
12
42,014,802.36
59,649,417.09
Other receivables
11
184,122,805.51
152,760,263.19
811,143,427.73
768,238,442.47
Cash and bank
98,086,795.35
19,509,964.47
Total assets
3,351,407,899.14
3,226,406,444.24
Directors’ Report and Financial Statements 2023 | 84
Equity and liabilities
EUR
Note
2023
2022
Shareholders' equity
13
Share capital
366,385,309.00
366,385,309.00
Premium fund
115,023,103.38
115,023,103.38
Retained earnings
817,649,081.26
369,329,656.23
Profit for the period
39,425,010.98
552,824,918.57
1,338,482,504.62
1,403,562,987.18
Liabilities
Non-current liabilities
Loans from financial institutions
14
1,257,207,607.66
1,270,066,457.77
Other non-current liabilities
15
437,130.31
641,231.73
1,257,644,737.97
1,270,707,689.50
Current liabilities
Loans from financial institutions
14
184,887,832.01
254,017,867.58
Other loans
14
496,606,878.77
198,444,084.30
Trade payables
16
15,746,839.04
17,971,143.64
Accrued expenses
17
48,724,839.47
66,452,535.56
Other current liabilities
16
9,314,267.26
15,250,136.48
755,280,656.55
552,135,767.56
Total equity and liabilities
3,351,407,899.14
3,226,406,444.24
Parent company cash flow statement (FAS)
EUR
2023
2022
Earnings before interest and taxes
66,687,291.10
178,024,306.73
Adjustments
Depreciation and amortization
8,642,652.17
2,753,166.78
Other adjustments
0.00
-108,749,623.87
Change in non-interest-bearing receivables
-28,585,279.64
-57,542,104.09
Change in non-interest-bearing payables
-109,442.64
-11,067,226.01
Net financial income and expense
-32,825,568.40
13,568,285.64
Taxes paid
-14,843,835.86
-9,223,679.31
Net cash flow from operating activities
-1,034,183.27
7,763,125.87
Capital expenditure
-16,275,988.55
-4,964,076.43
Disposal of tangible and intangible assets
0.00
18,526.05
Investments in subsidiaries
0.00
-10,000,000.00
Dividends and repayments of capital
13,632,434.00
1,832,916.90
Divestments of subsidiaries
0.00
156,027,000.00
Change in non-current deposits
385,997,396.99
-144,238,843.05
Change in current deposits
-415,174,454.66
73,134,252.33
Net cash flow from investing activities
-31,820,612.22
71,809,775.80
Change in non-current loans
-13,062,951.53
192,640,123.44
Change in current loans
229,032,758.90
-162,078,548.65
Dividends paid
-104,538,181.00
-97,692,891.49
Cash flow from financing activities
111,431,626.37
-67,131,316.70
Change in liquid assets
78,576,830.88
12,441,584.97
Liquid assets on January 1
19,509,964.47
7,068,379.50
Liquid assets on December 31
98,086,795.35
19,509,964.47
Directors’ Report and Financial Statements 2023 | 85
Parent company accounting principles
The financial statements of Huhtamäki Oyj have been prepared according to Finnish Accounting Standards (FAS). The
financial statements have been prepared on the basis of historical costs and do not take into account increases in the
fair value of assets, unless otherwise stated.
The company changed the presentation of the income statement from an activity-based income statement to a cost-
based income statement. The cost-based income statement better describes how the company’s result is formed. The
comparative information is restated.
Foreign currency
Foreign currency transactions are recorded according to the exchange rates prevailing on the transaction date.
Receivables and payables are revalued at the rate of exchange on the balance sheet date. The exchange rate used at
the balance sheet date is the rate of the date prior to the last working day of the reporting period closing date. Exchange
rate differences arising from translation of receivables are recognized under other operating income, and exchange rate
differences on payables under costs and expenses. Exchange rate differences on translation of financial items, such as
loans and deposits, are recognized under financial income and expenses.
Derivative instruments
Foreign exchange derivative contracts are used for hedging the company’s currency position. The company manages its
interest rate risks using interest rate derivatives. The prudence principle is applied to derivatives in the financial
statements. However, also the positive changes in market values of foreign exchange derivatives are recognized in the
income statement and the balance sheet in cases where corresponding negative changes in market values exists. Foreign
exchange derivatives are marked-to-market at the rate of exchange on the balance sheet date and recorded in the
income statement as an adjustment to financial items or sales and purchases only to the extent they relate to balance
sheet items being hedged. Interest derivatives used for hedging the company’s loans are stated at historical cost. Interest
derivatives used for hedging subsidiaries’ external loans are stated at lower of historical cost or market value. Interest
income or expenses deriving from such instruments are accrued over the contract period.
Intangible assets
Intangible assets are amortized on a systematic basis over their estimated useful life. The period of amortization does
not exceed 20 years.
Tangible assets
Items of tangible assets are stated at historical cost and depreciated using the straight-line method over their estimated
useful lives. The period of depreciation does not exceed 12 years. Leases of tangible assets are classified as operating
leases.
Investments
Investments classified as long-term assets are carried at cost, less amounts written off to recognize permanent declines
in the value of the investment. On disposal of an investment, the difference between the net disposal proceeds and the
carrying amount is recognized as income or expense.
Investments in subsidiaries are carried at cost in the balance sheet of the company.
Income taxes
The income statement includes income taxes of the Company based on taxable profit for the financial period according
to local tax regulations as well as adjustments to prior year taxes.
Directors’ Report and Financial Statements 2023 | 86
Appropriations
Gains and losses from appropriations include items which fall outside the ordinary activities of the company, such as
group contribution or divestment related items.
1.
NET SALES
EUR million
2023
2022
Royalty income
75.0
76.8
Group cost income
107.9
90.6
Other
18.9
5.1
Total
201.9
172.6
2. OTHER OPERATING INCOME
EUR million
2023
2022
Divestment of subsidiary
0.0
109.5
Other
6.4
3.4
Total
6.4
112.9
3. MATERIALS AND SERVICES
EUR million
2023
2022
Purchaces from group companies
59.5
42.5
Purchaces from other companies
37.6
28.6
Total
97.1
71.1
4. PERSONNEL EXPENSES
EUR million
2023
2022
Wages and salaries
20.0
18.6
Pension costs
3.5
3.1
Other personnel costs
5.8
4.5
Total
29.3
26.2
The above amounts are on accrual basis. Remuneration paid by the parent company to the members of the Board of
Directors as well as the CEO of Huhtamäki Oyj (10 people) amounted to EUR 4.4 million (EUR 3.1 million).
Average number of personnel
2023
2022
Huhtamäki Oyj
153
138
5. DEPRECIATION AND AMORTIZATION
EUR million
2023
2022
Depreciation and amortization by asset type:
Machinery and equipment
0.1
0.2
Intangible rights
0.1
0.1
Development expenditure
2.3
1.2
Other capitalized expenditure
6.1
1.3
Total
8.6
2.8
6. AUDITOR'S FEES AND SERVICES
EUR million
2023
2022
Audit fees
0.4
0.4
Audit-related services
0.0
0.1
Tax services
0.0
0.0
Directors’ Report and Financial Statements 2023 | 87
Total
0.4
0.5
For auditor's other services see note 2.5. in the consolidated financial statements.
7. FINANCIAL INCOME AND EXPENSE
EUR million
2023
2022
Dividend income
12.8
401.9
Interest and other financial income
Intercompany interest income
40.3
20.0
Other interest income
4.4
3.2
Total interest income
44.7
23.2
Other financial income
206.6
443.7
Total interest and other financial income
251.3
466.9
Interest and other financial expense
Intercompany interest expense
-13.5
-2.6
Other interest expense
-61.1
-29.4
Total interest expense
-74.6
-32.0
Other financial expense
-209.3
-450.6
Total interest and other financial expense
-283.9
-482.6
Net financial items
-19.8
386.2
8. TAXES
EUR million
2023
2022
Ordinary taxes
7.5
12.4
Total
7.5
12.4
Deferred taxes are not included in income statement or balance sheet. Unrecognized deferred tax liability from timing
differences is EUR 2.2 million (EUR 2.0 million).
9. INTANGIBLE ASSETS
EUR million
Intangible
rights
Developme
nt
expenditure
Other
capitalized
expenditur
e
Constructio
n in
progress
and
advance
payments
2023
Total
2022
Total
Acquisition cost on January 1
1.0
9.4
46.5
6.8
63.7
57.5
Additions
-
-
2.7
13.1
15.8
7.2
Disposals
-
-
-0.6
-2.7
-3.3
-0.9
Intra-balance sheet transfer
0.6
8.0
0.4
-9.1
0.0
-
Acquisition cost on December 31
1.6
17.4
49.0
8.2
76.2
63.7
-
Accumulated amortization on January 1
0.6
1.6
42.4
44.6
42.3
Accumulated amortization on disposals and
transfers
-
-
-
0.6
-
0.6
-
0.3
Amortization during the financial year
0.1
2.3
6.1
8.5
2.6
Accumulated amortization on December 31
0.7
3.9
47.9
52.5
44.7
Book value on December 31, 2023
0.9
13.5
1.1
8.2
23.7
-
Book value on December 31, 2022
0.3
7.8
4.2
6.8
-
19.1
Directors’ Report and Financial Statements 2023 | 88
10. TANGIBLE ASSETS
EUR million
Machinery and
equipment
Other tangible assets
2023 Total
2022 Total
Acquisition cost on January 1
2.5
0.1
2.5
4.0
Additions
-
-
-
0.1
Disposals
-0.7
-
-0.7
-1.5
Acquisition cost on December 31
1.8
0.1
1.9
2.5
Accumulated depreciation on January 1
2.2
-
2.2
3.6
Accumulated depreciation on disposals and transfers
-0.7
-
-0.7
-1.5
Depreciation during the financial year
0.1
-
0.1
0.2
Accumulated depreciation on December 31
1.7
-
1.7
2.2
Book value on December 31, 2023
0.1
0.1
0.2
-
Book value on December 31, 2022
0.2
0.1
-
0.3
11. RECEIVABLES
EUR million
2023
2022
Current
Loan receivables from subsidiaries
415.2
-
Accrued income
25.2
39.9
Accrued corporate income
16.8
19.8
Other receivables
0.7
5.4
Other receivables from subsidiaries
183.4
147.4
Total
641.3
212.5
Non-current
Intercompany loan receivables
169.8
555.8
Total
169.8
555.8
Total
811.1
768.3
12. ACCRUED INCOME
EUR million
2023
2022
Accrued interest and other financial items
4.0
5.7
Currency derivative assets
8.3
23.9
Accrued corporate income and prepaid expense
16.8
19.8
Other
12.9
10.3
Total accrued income
42.0
59.7
Directors’ Report and Financial Statements 2023 | 89
13. CHANGES IN EQUITY
EUR million
2023
2022
Restricted equity
Share capital January 1
366.4
366.4
Share capital December 31
366.4
366.4
Premium fund January 1
115.0
115.0
Premium fund December 31
115.0
115.0
Restricted equity total
481.4
481.4
Non-restricted equity
Retained earnings January 1
922.2
467.4
Dividends paid
-104.5
-98.0
Obsolete dividends
0.0
0.0
Profit for the period
39.4
552.8
Retained earnings December 31
857.1
922.2
Non-restricted equity total
857.1
922.2
Development expenditure
-20.6
-14.2
Distributable equity
836.5
908.0
Total equity
1,338.5
1,403.6
For details on share capital see note 5.4. in the consolidated financial statements.
14. LOANS
EUR million
2023
2022
Non-current
Loans from financial institutions
1,257.2
1,270.1
Non-current loans from financial institutions total
1,257.2
1,270.1
Current
Current portion of long-term loans from financial institutions
134.7
143.0
Loans from financial institutions and other current loans
50.2
111.0
Current loans from financial institutions total
184.9
254.0
Loans from subsidiaries
496.6
198.4
Other loans total
496.6
198.4
Changes in non-current loans
Loans from financial institutions
January 1
1,270.1
1,077.2
Additions
2,103.6
2,290.4
Decreases
-2,114.5
-2,127.3
FX movement
-2.0
29.8
Total
1,257.2
1,270.1
Repayments
Loans from
financial
institutions
2024
184.9
2025
210.5
2026
219.7
2027
528.6
2028-
298.4
Directors’ Report and Financial Statements 2023 | 90
15. OTHER NON-CURRENT LIABILITIES
EUR million
2023
2022
Loans from subsidiaries
0.0
0.0
Employee benefits
0.4
0.6
Total
0.4
0.6
16. TRADE PAYABLES AND OTHER CURRENT LIABILITIES
EUR million
2023
2022
Trade payables
4.3
5.7
Intercompany trade payables
11.5
12.3
Trade payables
15.8
18.0
Other current liabilities
4.4
4.3
Other current liabilities to subsidiaries
5.0
11.0
Other current liabilities
9.3
15.3
17. ACCRUED EXPENSES
EUR million
2023
2022
Accrued interest and other financial expense
16.6
15.8
Currency derivative liabilities
8.2
9.8
Accrued expense to subsidiaries
15.1
24.2
Salaries and social security
8.2
7.9
Accrued income taxes
0.0
6.0
Miscellaneous accrued expense
0.6
2.8
Total
48.7
66.5
18. DERIVATIVES
Fair values of derivatives, EUR million
2023
2022
Currency derivatives
with external parties
0.1
14.1
with subsidiaries
-4.0
-19.9
Interest rate swaps
5.0
0.8
Total
1.1
-5.0
Nominal values of principles, EUR million
2023
2022
Currency derivatives
with external parties
967.0
919.2
with subsidiaries
429.5
452.4
Interest rate swaps
276.5
143.9
Total
1,673.0
1,515.5
The nominal value of external currency derivatives is 967.0 MEUR and the nominal value of internal currency derivatives
allocated to them is 429.5 MEUR. For the rest of the external currency derivatives hedge accounting is applied.
See note 5.7. in the consolidated financial statements for more information on the Group’s financial risk management
.
19. COMMITMENTS AND CONTINGENCIES
EUR million
2023
2022
Operating lease payments
Under one year
1.2
1.2
Later than one year
0.4
0.2
Total
1.6
1.4
Guarantee obligations
For subsidiaries
194.4
224.8
Directors’ Report and Financial Statements 2023 | 91
Signatures of the Board of Directors’ Report and Financial Statements
Espoo, February 7, 2024
Pekka Ala-Pietilä
Kerttu Tuomas
Mercedes Alonso
Doug Baillie
William R. Barker
Anja Korhonen
Pauline Lindwall
Pekka Vauramo
Ralf K. Wunderlich
Charles Héaulmé
President and CEO
Directors’ Report and Financial Statements 2023 | 92
This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.
Auditor’s Report
To the Annual General Meeting of Huhtamäki Oyj
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Huhtamäki Oyj (business identity code 0140879-6) for the year ended 31
December, 2023. The financial statements comprise the consolidated balance sheet, income statement, statement of
comprehensive income, statement of changes in equity, statement of cash flows and notes, including material
accounting policy information, as well as the parent company’s balance sheet, income statement, statement of cash
flows and notes.
In our opinion
—
the consolidated financial statements give a true and fair view of the group’s financial position, financial
performance and cash flows in accordance with IFRS Accounting Standards as adopted by the EU.
—
the financial statements give a true and fair view of the parent company’s financial performance and financial
position in accordance with the laws and regulations governing the preparation of financial statements in Finland
and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing
practice are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical requirements
that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent company and
group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we
have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-
audit services that we have provided have been disclosed in note 2.5. to the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality is determined based on our
professional judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate
the effect of identified misstatements on the financial statements as a whole. The level of materiality we set is based on
our assessment of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to
have influence on the economic decisions of the users of the financial statements. We have also taken into account
misstatements and/or possible misstatements that in our opinion are material for qualitative reasons for the users of
the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Directors’ Report and Financial Statements 2023 | 93
The significant risks of material misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2)
are included in the description of key audit matters below.
We have also addressed the risk of management override of internal controls. This includes consideration of whether
there was evidence of management bias that represented a risk of material misstatement due to fraud.
THE KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN THE
AUDIT
Valuation of goodwill and acquisition related intangible assets (Refer to notes 3.1, 3.2 and
3.3 to the consolidated financial statements)
At year end 2023 goodwill and intangibles totaled
EUR 1 099 million and represented 24 percent of
the consolidated total assets.
Goodwill is tested for impairment at least
annually. Preparation of cash flow projections
used as the basis for the impairment tests
requires
management
judgments
and
assumptions for profitability, long-term growth
rate and discount rate.
The acquisition related intangible assets have
finite useful lives and are amortized on a straight-
line basis over their useful lives.
Due to the uncertainty related to the projections
used in the impairment testing and the significant
carrying amounts involved, valuation of goodwill
and acquisition related intangible assets is
considered a key audit matter.
Our audit procedures included assessment of the
key assumptions used in the impairment tests by
re
ference to the budgets approved by the parent
company’s Board of Directors, data external to
the Group and our own views.
We assessed the mathematical accuracy of the
calculations and to compare the assumptions to
externally available market and industry
data.
In addition, we considered the appropriateness of
the disclosures presented.
Revenue recognition (Refer to note 2.1 to the consolidated financial statements)
Huhtamäki Group revenues are generated from
sales
of
disposable
tableware
products,
foodservice packaging products as well as ice
cream containers and other consumer good
packaging products.
Consolidated net sales in 2023 were EUR 4 169
million.
Sales contracts with customers include several
different client specific delivery terms, which
determine when the ownership of the product is
transferred to the customer.
Revenue recognition is considered a key audit
matter due to the considerable number of sales
transactions and risk that revenue is recognized
in an incorrect period.
In our audit of revenues, we have tested key
controls
related
to
sales
and
performed
substantive
audit
procedures.
We
have
assessed
the
accounting
principles
and
practices fo
r different revenue streams and
evaluated the appropriateness of the revenue
recognition principles in relation to the IFRS
-
standards.
—
We have tested revenue, discounts, and
pricing using data-analytics.
—
We have tested selected samples of sales
transaction
s comparing them to sales
invoices, contracts, delivery notes, external
confirmations and payments received.
—
We have verified that revenues have been
recognized in the appropriate financial year
by comparing sales transactions, invoices
Directors’ Report and Financial Statements 2023 | 94
and delivery terms to actual deliveries as
well as by inspecting credit invoices issued
in early 2024.
—
In
addition,
we
considered
the
appropriateness
of
the
disclosures
regarding net sales.
Valuation of inventories (Refer to note 4.1 to the consolidated financial statements)
Group’s value of inventories totaled EUR 621
million at year end 2023.
Inventory management, stocktaking routines and
costing of inventories are underlying key factors
in determining the value of inventories.
The
valuat
ion
of
inventories
involves
management judgement and assessment in
relation to defining obsolete inventory and net
realisable values for finished goods and is
therefore considered a key audit matter.
We have evaluated the appropriateness of the
valuation
principles in relation to the IFRS-
standards and tested related key controls and
performed substantive audit procedures. We
have
attended
stock
takings
in
selected
inventory
locations
and
assessed
the
appropriateness of the stock taking processes.
—
We have compared the value of selected
finished goods inventory items to the sales
prices.
—
We have analysed slow-moving inventory
items and items with exceptional values.
—
We have assessed the inventory valuation
principles
and
the
adequacy
of
the
provisions recorded.
Income taxes (Refer to note 2.6 to the consolidated financial statements)
Income taxes are material to the financial
statements as a whole.
The Group’s presence is global, and it operates
in several countries with different and changing
tax rules.
Management use judgments when assessing tax
matters and -risks impacting on the recognition
of deferred tax assets, -liabilities and tax
provisions.
Due to the above income taxes are considered a
key audit matter.
We have evaluated th
e appropriateness of the
accounting principles in relation to the IFRS
-
standards and the processes for recognizing
and assessing current and deferred tax.
Our audit procedures for assessing recognized
deferred taxes and tax provisions included
assessment o
f assumptions and methodologies
used by management and correspondence with
tax authorities.
We involved KPMG tax specialists both on group
level and in significant subsidiaries.
In addition, we considered the appropriateness
of the disclosures regarding i
ncome taxes.
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and of
financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation
of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing
Directors’ Report and Financial Statements 2023 | 95
Director are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing
the parent company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating
to going concern and using the going concern basis of accounting. The financial statements are prepared using the going
concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease
operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
—
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
—
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
parent company’s or the group’s internal control.
—
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
—
Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the parent company or the group to cease to continue
as a going concern.
—
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events so that the financial
statements give a true and fair view.
—
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
Directors’ Report and Financial Statements 2023 | 96
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting on April 29, 2020, and our appointment represents
a total period of uninterrupted engagement of 4 years.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other information
comprises the report of the Board of Directors and the information included in the Annual Report, but does not include
the financial statements or our auditor’s report thereon. We have obtained the report of the Board of Directors prior
to the date of this auditor’s report, and the Annual Report is expected to be made available to us after that date.
Our
opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of
the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has
been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial
statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and
regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Helsinki, 7 February 2024
KPMG Oy Ab
HENRIK HOLMBOM
Authorised Public Accountant, KHT
Directors’ Report and Financial Statements 2023 | 97
Definitions for performance measures
Performance measures according to IFRS
Earnings per share (EPS) attributable to
Profit for the period – non-controlling interest
equity holders of the parent company =
Average number of shares outstanding
Diluted earnings per share
attributable to equity holders of the
Diluted profit for the period – non-controlling interest
parent company (diluted EPS) =
Average fully diluted number of shares outstanding
Alternative performance measures
EBITDA =
EBIT + depreciation and amortization
Dividend yield =
100 x Dividend per share
Share price at December 31
Shareholders’ equity per share =
Total equity attributable to equity holders of the parent company
Number of shares outstanding at December 31
P/E ratio =
Share price at December 31
Earnings per share
Market capitalization =
Number of shares outstanding multiplied by the corresponding
share price on the stock
exchange at December 31
Return on investment (ROI) =
100 x (Profit before taxes + interest expenses + net other financial expenses)
Statement of financial position total – interest-free liabilities (average)
Return on equity (ROE) =
100 x Profit for the period
Total equity (average)
Net debt to equity (gearing) =
Interest-bearing net debt
Total equity
Solidity =
100 x Total equity
Statement of financial position total – advances received
Current ratio =
Current assets
Current liabilities
Times interest earned =
Earnings before interest and taxes + depreciation, amortization and impairment
Net interest expenses
Return on net assets (RONA) =
100 x Earnings before interest and taxes (12m roll.)
Net assets (12m roll.)
Operating cash flow =
Adjusted EBIT + depreciation and amortization (including impairment) – capital
expenditure + disposals +/– change in inventories, trade receivables and trade payables
Free cash flow =
Net cash flow from operating activities – capital expenditure + proceeds from selling
tangible and intangible assets
Comparable net sales growth =
Net sales excluding foreign currency changes, acquisitions and divestments
In addition to IFRS and alternative performance measures presented above, Huhtamaki may present adjusted
performance measures, which are derived from IFRS or alternative performance measures by adding or deducting items
affecting comparability (IAC). The adjusted performance measures are used in addition to, but not substituting, the
performance measures reported in accordance with IFRS.
Directors’ Report and Financial Statements 2023 | 98
Key figures and financial development
Huhtamaki 2019–2023
EUR million
2023
2022
2021
2020
2019
Net sales
4,168.9
4,479.0
3,574.9
3,301.8
3,399.0
Increase in net sales, %
-6.9
25.3
8.3
-2.9
9.5
Net sales outside Finland
4,108.7
4,416.3
3,523.1
3,252.5
3,342.8
Earnings before interest, taxes, depreciation, amortization and impairment
621.2
614.9
469.6
464.5
448.8
Earnings before interest, taxes, depreciation, amortization and
impairment/net sales, %
14.9
13.7
13.1
14.1
13.2
Earnings before interest and taxes
380.9
405.3
296.0
265.3
285.5
Earnings before interest and taxes/net sales, %
9.1
9.0
8.3
8.0
8.4
Profit before taxes
312.0
352.1
263.0
237.1
256.7
Profit before taxes/net sales, %
7.5
7.9
7.4
7.2
7.6
Profit for the period
225.2
285.4
202.7
183.7
199.0
Total equity
1,924.9
1,922.2
1,597.2
1,364.5
1,437.1
Return on investment, %
10.9
11.4
10.6
10.3
11.9
Return on shareholders' equity, %
11.8
15.7
13.9
12.9
14.8
Solidity, %
41.3
39.9
35.4
38.1
39.9
Net debt to equity
0.67
0.77
0.95
0.64
0.63
Current ratio
1.60
1.50
1.22
1.42
1.39
Times interest earned
9.01
11.56
14.25
15.44
16.23
Capital expenditure
318.7
318.5
259.4
223.5
203.9
Capital expenditure/net sales, %
7.6
7.1
7.3
6.8
6.0
Research & development
36.0
30.6
25.7
20.7
22.0
Research & development/net sales, %
0.9
0.7
0.7
0.6
0.6
Number of shareholders (December 31)
53,834
50,150
43,744
35,764
31,056
Personnel (December 31)
17,910
18,927
19,564
18,227
18,598
Key exchange rates in EUR
2023
2022
2023
Statement
2022
Statement
Income
of financial
Income
of financial
statement
position
statement
position
Australian Dollar
AUD
1.6282
1.6246
1.5173
1.5859
British Pound
GBP
0.8700
0.8706
0.8525
0.8855
Indian Rupee
INR
89.3132
92.4490
82.7009
88.2295
Thai Baht
THB
37.6253
37.9990
36.8638
36.8770
US Dollar
USD
1.0815
1.1114
1.0541
1.0649
South African Rand
ZAR
19.9453
20.6003
17.2075
18.1967
The exchange rates used at the month end are the rates of the date prior to the last working day of the month, due to
the change of publication time of the ECB euro foreign exchange reference rates.
Directors’ Report and Financial Statements 2023 | 99
Share and shareholders
The Company has one class of shares. Each share carries one vote at the General Meeting of Shareholders. The
Company does not have in force any option rights plan or any other plan based on which the Company can issue special
rights entitling to subscription of the Company’s shares.
Article 11 of the Articles of Association of the Company contains provisions concerning the redemption obligation of
shareholders. Election of the members of the Board of Directors and the Chief Executive Officer is stipulated in Articles
4, 5 and 8 of the Articles of Association.
The Annual General Meeting of Shareholders on April 27, 2023 authorized the Board of Directors to decide: (i) on the
repurchase of the Company’s own shares and (ii) on the issuance of shares as well as the issuance of special rights
entitling to shares. The authorizations remain in force until the end of the next Annual General Meeting, however, no
longer than until June 30, 2024.
Certain agreements relating to the financing of the Company as well as supply agreements entered into with certain
most significant customers contain terms and conditions upon which the agreement may terminate if control in the
Company changes as a result of a public tender offer.
Per share data
2023
2022
2021
2020
2019
Earnings per share
EUR
1.97
2.65
1.91
1.69
1.82
Earnings per share (diluted)
EUR
1.97
2.64
1.91
1.69
1.82
Dividend (nominal)
EUR
1.05
1
1.00
0.94
0.92
0.89
Dividend/earnings per share
%
53.2
1
37.8
49.3
54.3
48.9
Dividend yield
%
2.9
1
3.1
2.4
2.2
2.2
Shareholders' equity per share
EUR
17.59
17.65
14.57
12.31
12.92
Average number of shares adjusted for
share issue
104,497,300
2
104,364,676
104,360,114
104,349,676
104,344,950
Number of shares adjusted for share issue
at year end
104,538,181
2
104,364,676
104,364,676
104,349,676
104,349,676
P/E ratio
18.6
12.1
20.4
24.9
22.7
Market capitalization at December 31
EUR million
3,839.7
2
3,339.7
4,058.7
4,409.8
4,318.0
Trading volume in NASDAQ OMX Helsinki
Ltd
units
43,440,333
3
61,712,620
50,514,600
59,337,954
54,959,467
Trading volume in alternative trading
venues
units
152,289,963
4
161,291,609
99,597,314
92,820,000
90,523,665
Trading volume, total
units
195,730,296
223,004,229
150,111,914
152,157,954
145,483,132
In relation to average number of shares
%
187.3
2
213.7
143.8
145.8
139.4
Development of share price
Lowest trading price
EUR
28.45
26.41
36.57
23.48
26.81
Highest trading price
EUR
37.20
39.94
45.93
46.62
42.20
Trading price on December 31
EUR
36.73
32.00
38.89
42.26
41.38
1
2023: Board’s proposal
2
Issue-adjusted and excluding treasury shares
3
Source: Nasdaq Helsinki Ltd
4
Source: Refinitiv Eikon
See also note 2.7. Earnings per share.
Directors’ Report and Financial Statements 2023 | 100
Distribution of ownership by number of shares on December 31, 2023
Number
Number of shares
shareholders
% of shareholders
Number of shares
% of shares
1–100
29,856
55.5%
1,185,008
1.1%
101–1,000
19,980
37.1%
7,007,305
6.5%
1,001–10,000
3,718
6.9%
9,407,638
8.7%
10,001–100,000
247
0.5%
6,411,977
6.0%
100,001–1,000,000
35
0.1%
12,754,972
11.8%
More than 1,000,000
10
0.0%
70,925,625
65.8%
Total
53,846
107,692,525
99.9%
In the joint book-entry account
67,860
0.1%
Number of shares issued
107,760,385
100.0%
Distribution of ownership by sector on December 31, 2023
Sector
Number of shares
%
Nominee-registered shares
44,496,814
41.3%
Non-profit organizations
17,537,919
16.3%
Households
17,144,785
15.9%
Public-sector organizations
11,535,585
10.7%
Financial and insurance companies
9,635,672
8.9%
Private companies
7,081,263
6.6%
Foreigners
260,487
0.2%
In the joint book-entry account
67,860
0.1%
Number of shares issued
107,760,385
100.0%
Largest registered shareholders on December 31, 2023*
Number of shares
Name
and votes
%
Finnish Cultural Foundation
11,319,080
10.5%
Varma Mutual Pension Insurance Company
4,101,051
3.8%
Ilmarinen Mutual Pension Insurance Company
3,767,618
3.5%
Elo Mutual Pension Insurance Company
1,655,000
1.5%
Holding Manutas Oy
1,500,000
1.4%
Security Trading Oy
1,150,000
1.1%
The State Pension Fund
1,100,000
1.0%
OP-Finland
968,642
0.9%
Society of Swedish Literature in Finland
963,500
0.9%
Total
26,524,891
24.6%
*Excluding own shares acquired by Huhtamäki Oyj totaling 3,222,204 and representing 3.0% of the total number of shares.
Directors’ Report and Financial Statements 2023 | 101
SHAREHOLDER DISTRIBUTION BY SECTOR DECEMBER 31, 2023
The list above includes only direct registered shareholders and is based on information available from Euroclear
Finland Ltd., excluding 3,222,204 shares held by Huhtamäki Oyj that represent 3.0% of the total number of shares.
Nominee-registered holdings, which may be substantial, are not included. On December 31, 2023 nominee-registered
shareholders held in total 41% of Huhtamäki Oyj’s shares.
Directors’ Report and Financial Statements 2023 | 102
DEVELOPMENT OF HUHTAMAKI’S SHARE PRICE JANUARY 2, 2019–DECEMBER 31, 2023
MONTHLY TRADING VOLUME ON NASDAQ HELSINKI 2019–2023
MARKET VALUE AND EQUITY 2019–2023
Directors’ Report and Financial Statements 2023 | 103
Independent Auditor’s Reasonable Assurance Report on Huhtamäki Oyj’s ESEF
Financial Statements
To the Board of Directors of Huhtamäki Oyj
We have undertaken a reasonable assurance engagement in respect of whether the consolidated financial statements
for the year ended 31 December, 2023 included in the digital financial statements 5493007050SJVMXN6L29-2023-
12-31-en.zip of Huhtamäki Oyj (Business ID 0140879-6) have been marked up with iXBRL markups in accordance with
the requirements of Article 4 of EU Delegated Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of Directors and
financial statements (ESEF financial statements) that comply with the requirements of ESEF RTS. This responsibility
includes:
—
preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS
—
marking up the primary statements and the notes to the consolidated financial statements, and the company
identification data included in the ESEF financial statements with iXBRL tags in accordance with Article 4 of the
ESEF RTS; and
—
ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem
necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the ethical requirements applicable in Finland, which apply
to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
The auditor applies International Standard on Quality Management ISQM 1, which requires the firm to design,
implement and operate a system of quality management including policies or procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulations requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking up of
the consolidated financial statements included in the ESEF financial statements comply in all material respects with
the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in accordance with
International
Standard on Assurance Engagements 3000
.
The engagement involves procedures to obtain evidence whether;
—
the primary statements of the consolidated financial statements included in the ESEF financial statements are, in
all material respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and;
—
whether the notes to the consolidated financial statements and the company identification data included in the
ESEF financial statements data, have been marked up, in all material respects, with iXBRL tags in accordance with
Article 4 of the ESEF RTS; and
—
whether the ESEF financial statements and the audited financial statements are consistent with each other.
The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes the
assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether due to fraud or
error.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Directors’ Report and Financial Statements 2023 | 104
Opinion
In our opinion, the primary statements of the consolidated financial statements, the notes to the consolidated financial
statements and the company identification data included in the ESEF financial statements of Huhtamäki Oyj identified
as 5493007050SJVMXN6L29-2023-12-31-en.zip for the year ended 31 December, 2023 are, in all material respects,
marked up in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion on the audit of the consolidated financial statements of Huhtamäki Oyj for the year ended 31
December, 2023 is set out in our Auditor’s Report dated 7 February, 2024. In this report, we do not express any audit
opinion or other assurance conclusion on the consolidated financial statements.
Helsinki 26 February, 2024
KPMG OY AB
Henrik Holmbom
Authorised Public Accountant, KHT