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HUHTAMÄKI OYJ

DIRECTOR’S REPORT AND
FINANCIAL STATEMENTS

2022

BUSINESS ID: 0140879-6

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Contents

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Directors’ report 2022

Operating environment

The year 2022 was marked by continued volatile market conditions with high inflation, geopolitical tensions and the war in Ukraine. The high inflation impacted all of the company’s major input costs, including raw materials, freight costs, energy and labor.

Following a normalization in most markets after the COVID pandemic, overall demand remained on a good level. However, demand started to soften in several markets and categories towards the end of the year. The most impacted markets included China, India, Turkey and Egypt. COVID lockdowns were the main reason for the challenges in China. In India, Turkey and Egypt, the significant inflation had a negative impact on demand. Additionally, these three countries are used as a base for exports, and demand in many of the export markets also suffered from the inflation.

On a product category level, the most challenged area was frozen desserts and ice cream, most notably in North America. For consumers, these product categories are discretionary, and therefore the high inflation has a more meaningful impact on demand.

During the year, there were still some tensions on raw material availability. Most notably, this was visible for fiber-based raw materials in North America. The situation eased towards during the second half of the year.

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Strategic development

Huhtamaki’s 2030 Strategy builds on five priorities: growth through organic and inorganic investments, competitiveness through scale and performance, talent through developing strategic capabilities and a high-performance culture, sustainability through an ambitious agenda for Huhtamaki’s operations and product innovation as well as digitalization to improve operational performance and explore new business growth avenues. In 2022, Huhtamaki made good progress implementing the strategic priorities.

Innovation is increasingly important for Huhtamaki and during the year, the company made breakthroughs in the area. We partnered with Nespresso on their home compostable paper-based coffee capsules, which uses our manufacturing technology. The technology can be applied to a myriad of different consumer applications. Additionally, the company launched products such as the ICON recyclable ice cream packaging solution in North America and expanded the product range of recyclable flexible packaging.

Sustainable innovation is an important aspect of Huhtamaki’s sustainability work. The company continuously develops its agenda to take a comprehensive systems-thinking approach, with a framework to drive net positive impact of its products. The goal is to design all products to be recyclable, compostable, or reusable. That is still just a part of what Huhtamaki does to improve its sustainability performance. During the year, the company signed the second virtual power purchase agreement, created water management plans for all sites and launched a sustainability-linked bond. Huhtamaki also invested in scalable recycling pilots, as it launched a plastic recycling plant in India through the Huhtamaki Foundation, and started the Cup Collective, focused on recycling paper cups. The company’s performance was recognized externally for example through a gold medal by EcoVadis.

The war in Ukraine had broad implications for many companies. For Huhtamaki, the evolution of the situation and the long-term outlook in Russia was seen to prevent the realization of the growth strategy and ambitions in the country. Consequently, the operations in Russia were divested during the third quarter for a cash and debt free sales price of EUR 151 million. 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. The company will continue to prioritize investments that capture the significant growth opportunities in the rest of the world.

Key figures

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¹ Excluding IAC of EUR 18.0 million in 2022 (EUR -18.7 million in 2021 and EUR -8.6 million in 2020).

² Excluding IAC of EUR 10.2 million in 2022 (EUR -19.3 million in 2021 and EUR -36.8 million in 2020).

³ Excluding IAC of EUR 16.0 million in 2022 (EUR -17.1 million in 2021 and EUR -26.2 million in 2020).

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Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2021. 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 impairment losses and reversals, gains and losses relating to sale of intangible and tangible assets and fines and penalties imposed by authorities.

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 2022

Net sales by business segment

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Comparable net sales growth by business segment

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The Group’s net sales increased 25% to EUR 4,479 million (EUR 3,575 million) during the reporting period. Comparable net sales growth was 15%. Net sales growth was mainly driven by pricing, changes in currencies and the Elif acquisition. The divestment of the operations in Russia had a negative impact on net sales. The Group´s growth in emerging markets was 16%. Foreign currency translation impact on the Group’s net sales was EUR 234 million (EUR -54 million) compared to 2021 exchange rates.

Net sales by segment, 2022Net sales by segment, 2021

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Adjusted EBIT by business segment

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Adjusted EBIT by segment, 2022Adjusted EBIT by segment, 2021

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Adjusted EBIT margin by business segment

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The Group’s adjusted EBIT increased to EUR 395 million (EUR 315 million) and reported EBIT was EUR 405 million (EUR 296 million). Adjusted EBIT improved driven by sales growth and continued focus on operational efficiency as well as with the support from acquisitions. The Group’s adjusted EBIT margin remained unchanged and was 8.8% (8.8%). Foreign currency translation impact on the Group’s earnings was EUR 22 million (EUR -6 million).

Adjusted EBIT excludes EUR 10.2 million (EUR -19.3 million) of items affecting comparability (IAC). The main change in IACs relates to the profit booked from the divestment of the operations in Russia.

Adjusted EBIT and IAC

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Net financial expenses were EUR 53 million (EUR 33 million). The increase was due to higher debt during the period as well as an increase in interest rates. Tax expense was EUR 67 million (EUR 60 million). The effective tax rate was 19% (23%), impacted by the tax-free gain related to the divestment of the operations in Russia as well as by a one-off fixed asset revaluation in Turkey, decreasing deferred tax liability. Profit for the period was EUR 285 million (EUR 203 million). Adjusted earnings per share (EPS) were EUR 2.49 (EUR 2.07) and reported EPS EUR 2.65 (EUR 1.91). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR 16.0 million (EUR -17.1 million) of IAC.

Adjusted profit and IAC

Statement of financial position and cash flow

The Group’s net debt decreased and was EUR 1,471 million (EUR 1,520 million) at the end of December. The divestment of the operations in Russia had a positive impact on net debt. The level of net debt corresponds to a gearing ratio of 0.77 (0.95). Net debt to EBITDA ratio (excluding IAC) was 2.5 (3.1). Average maturity of external committed credit facilities and loans was 3.2 years (2.6 years).

On April 8, 2022, Huhtamäki Oyj signed a EUR 250 million term loan facility agreement with a maturity of two (2) years. The facility has a one-year extension option at the discretion of the lenders. The facility will be used for refinancing and general corporate purposes of the Group. On June 1, 2022, Huhtamäki Oyj issued a EUR 500 million senior unsecured sustainability-linked bond. The sustainability-linked 5-year bond matures on June 9, 2027 and bears interest at the rate of 4.25 per cent per annum, which is subject to an increased rate upon the failure to satisfy certain sustainability performance targets. With the proceeds from the issue of the bond, Huhtamaki refinanced its USD 500 million bridge loan facility and will use it for general corporate purposes of the Group. On December 16, 2022, Huhtamäki Oyj signed a confirmation to extend the maturity of a EUR 400 million syndicated revolving credit facility loan agreement for a further period of one year.

Capital expenditure was EUR 318 million (EUR 259 million). The increase was driven by investments into innovative, sustainable products and business expansion. The largest investments for business expansion were made in North America and Germany. The Group’s free cash flow was EUR 11 million (EUR -26 million), mainly weighed on by increased working capital following market recovery and inflationary impact in raw materials. Free cash flow improved during the second half of the year.

Cash and cash equivalents were EUR 309 million (EUR 179 million) at the end of December and the Group had EUR 353 million (EUR 382 million) of unused committed credit facilities available.

Total assets on the statement of financial position were EUR 4,821 million (EUR 4,542 million).

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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. 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.

Impact of COVID-19

The impact of COVID-19 on Huhtamaki’s business has decreased gradually. During 2022, the situation in most markets has normalized, and demand has recovered overall. There were some exceptions, such as China, where the operating environment was still negatively impacted by lockdowns.

Significant events after the reporting period

There were no significant events after the reporting period.

Business review by segment

Foodservice Europe-Asia-Oceania

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¹ Excluding IAC.

In 2022, the demand for foodservice packaging was at a good level, fully recovering to the pre-pandemic level. However, variations between markets and product categories remained. Prices of all major input costs increased significantly compared to 2021. The supply chain was still disrupted during the first half of the year, leading to cost escalation as well as some challenges with availability.

Net sales in the Foodservice Europe-Asia-Oceania segment increased. Comparable net sales growth was 18%, driven by pricing and increased volumes. Net sales increased in all main markets and was especially strong in Central and Western Europe as well as Middle East and Africa. Net sales decreased most in China (due to COVID-19 lockdowns) and Ukraine. The business in Russia was divested in September 2022.

The impact of currency movements on the segment’s reported net sales was EUR 17 million.

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The segment’s adjusted EBIT improved, driven by pricing (to offset the significant cost inflation), increased sales volumes and an improved sales mix. Additionally, there was a continued positive impact from productivity actions in 2021.  

The impact of currency movements on the segment’s reported earnings was EUR -1 million.

North America

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¹ Excluding IAC.

Demand remained on a good level across the board in 2022. Cost inflation was significant and broad-based, affecting raw material, labor, distribution, and energy. Additionally, there were constraints on raw material availability, particularly during the first half of the year.

Net sales in North America segment increased, driven by pricing in all product categories. Comparable net sales growth was 14%.

The impact of currency movements on the segment’s reported net sales was EUR 161 million.

The segment’s adjusted EBIT improved, supported by net sales growth and increased operational efficiency, while an unfavorable sales mix had a negative impact. The impact on profitability from increased costs for raw materials, labor, distribution and energy was offset by pricing actions.

The impact of currency movements on the segment’s reported earnings was EUR 19 million.

Flexible Packaging

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¹ Excluding IAC.

Overall demand for flexible packaging remained satisfactory but the competitive situation in all regions was tight. Raw material prices increased significantly compared to 2021 as well as cost for energy and transport.

Net sales increased in all main markets, adapting to the high inflationary environment. Comparable net sales growth was 14%, where the key drivers were Europe and Asia. The Elif acquisition contributed favorably to the reported net sales.

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The impact of currency movements on the segment’s reported net sales was EUR 48 million.

The segment’s adjusted EBIT increased. The significant cost inflation was largely offset by pricing actions and cost management. Additionally, portfolio management actions and the Elif acquisition contributed favorably to the adjusted EBIT. The profitability was weighed on by an unfavorable currency impact on local operations, particularly linked to the devaluation of the Egyptian pound and the Turkish lira. A one-off inventory adjustment during the fourth quarter also had a negative impact.

The impact of currency movements on the segment’s reported earnings was EUR 3 million.

Fiber Packaging

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¹ Excluding IAC.

Overall demand for fiber-based egg packaging and food-on-the-go products remained on a good level in most markets. The prices of recycled fiber were higher compared to the previous year’s level.

Net sales in the Fiber Packaging segment increased. Comparable net sales growth was 15%. Net sales increased especially in Europe. Net sales growth was driven by volume and pricing actions.

The impact of currency movements on the segment’s reported net sales was EUR 9 million.

The segment’s adjusted EBIT increased, as a result of pricing to offset the significant cost inflation, and improved mix and increased sales volumes.

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), helping 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. To develop its climate-related governance and reporting further and to prepare for upcoming European Sustainability Reporting Standards that are under development, the Group has continued to align its process with the recommendations of the Task Force on Climate-Related Disclosures (TCFD) in 2022.  In 2022, Huhtamaki is reporting on the eligibility and alignment of its economic activities with the EU Taxonomy. Both the TCFD index and the 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

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Sustainability Report, which is part of this Huhtamaki Annual Report 2022. Huhtamaki’s business model is described on page 31 of this Huhtamaki Annual Report 2022 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 steering group, 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 regularly 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. For more information about the Group’s sustainability performance, see the Sustainability section.

In 2022, Huhtamaki continued to link remuneration to sustainability by introducing sustainability objectives to all employees that participate in the short-term incentive plan. The objectives are either site or segment specific sustainability objectives or the Global Sustainability Index (GSI) tracking Huhtamaki’s progress towards its 2030 sustainability ambitions. KPIs within the index are linked to the sustainability dashboard and relate, for example, to the share of renewable or recycled materials, the share of renewable electricity, and the share of non-hazardous waste recycled.

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.

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Huhtamaki updated its materiality assessment in 2022 to meet the revised Global Reporting Initiative (GRI) standards. 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. Biodiversity and ecosystems were identified as a new material topic in the assessment. In 2022, the Group conducted a biodiversity mapping to identify and manage biodiversity-related risks. Huhtamaki uses certified fiber to promote best practices in sustainable forest management. In addition, food availability and affordability, local communities and economic prosperity were identified as material topics. Food packaging plays a vital role in ensuring the availability of safe, hygienic, and affordable food products. Huhtamaki has a positive impact throughout the value chain in terms of the economic value generated and distributed upstream, directly in communities where the Group operates and employs people and downstream through value generated for the Group’s customers and shareholders.

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Impacts of Russia’s invasion of Ukraine on Huhtamaki’s sustainability work

As a result of the war in Ukraine, Huhtamaki divested its operations in Russia in Q3 2022. The company has operations in Ukraine but does not operate in Belarus. In Ukraine, the company has one factory, which has mostly served the local market.

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The invasion has had some effect on Huhtamaki’s non-financial KPIs, but not to a material degree. Huhtamaki has been able to continue advancing towards its sustainability ambitions and is committed to protecting its employees as well as business continuity.

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Environmental matters

Policies

• Huhtamaki Code of Conduct

• Code of Conduct for Huhtamaki Suppliers

• Global Environmental Policy

• ISO management systems 14001, 50001

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Circularity and climate are key focus areas in Huhtamaki’s 2030 sustainability agenda. Similar to 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 raw materials and the end-of-life treatment of products. In terms of the Group’s own operations, greenhouse gas emissions and production waste are the main environmental impacts. Additionally, water usage is a material topic in the Group’s molded fiber manufacturing operations.

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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. The Group has set Scope 1, 2 and 3 greenhouse gas (GHG) emissions reduction targets, which are approved and validated by the Science Based Targets initiative based on the well-below 2°C scenario. These targets guide Huhtamaki’s low-carbon transition plan to ensure the resilience of its business model with the 1,5°C target set by some stakeholders. Huhtamaki’s science-based targets add to the previously defined metrics on sourcing 100% of renewable electricity and carbon neutral production by 2030. Huhtamaki aims to reduce operations-related absolute Scope 1 and Scope 2 GHG emissions by 27.5% by 2030 from a 2019 base year.

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During 2022, Huhtamaki continued to follow the global energy strategy launched in 2021. The strategy outlines the main levers Huhtamaki works on to reduce each of the three GHS emissions scopes. The main levers to reduce Scope 1 and 2 emissions include improving energy efficiency, switching to alternative fuels such as biogas, electrification of systems and increase in the share of renewable electricity, globally. The main levers to reduce the 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 2022, Huhtamaki initiated a supplier engagement strategy and addressed product end-of-life by launching The Cup Collective, an open-source initiative aimed at driving the collection and recycling of used paper cups, together with Stora Enso.

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During 2022, the Global Sustainability function benchmarked different options to further develop the assessment of the Group’s strategy and resilience against climate change including climate-change scenarios for reviewing the impacts of the physical and transition risks to the company. Read more about the current climate-related risks and opportunities that have been identified in the Risk Management section.

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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 Global Environmental Policy. The Environmental Policy was updated in 2022. The objective of the policy is to ensure a group-wide understanding of Huhtamaki’s environmental commitments and covers the topics of climate and energy; water and effluent; biodiversity and forests; waste, design for circularity and proactive chemicals management.

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These policies are supported by Total Productive Manufacturing trainings and ISO management systems and are implemented on manufacturing unit level. At the end of 2022, 53 (54) manufacturing units, representing 66% (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.

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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.

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The main environmental KPIs and performance are:

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*Scope 2 GHG emissions are calculated using the market-based calculation method. The figure has been updated from the one reported in 2021 due to updates in available emission factors.

In 2022, the absolute GHG emissions from the Group’s own operations (Scope 1 and 2) decreased by 2.4% (16,800 tCO2e), even though the production volume increased slightly compared to 2021. Hence, the GHG intensity per sellable ton produced decreased by 2% compared to 2021. As a result, the Group achieved a reduction of 17,100 metric tons CO2e in its GHG emissions when adjusted for the change in the production volume in 2022. This development is in line with Huhtamaki’s GHG emissions reduction targets and was achieved thanks to the increased share of renewable electricity in the Group’s operations, resulting in an 81,800 tCO2e (11%) overall reduction from the 2019 base year level. The calculation of emissions intensity and reduction covers Scope 1 and Scope 2 emissions.

The Group’s absolute Scope 3 GHG emissions increased by 3% mainly due to the 6% increase in material purchases when compared to 2021. The emissions related to purchased materials increased by 5%. The amount of business travel recovered nearly to the pre-covid levels, increasing the related air travel emissions notably. The rest of the increase in the Scope 3 emissions was due to the higher waste amount generated and increased energy consumption compared to 2021. Due to the indirect nature of Scope 3 emissions and the variety in the emissions sources, Huhtamaki’s calculations include both simplifications and estimations in several categories. As the Group proceeds with its Scope 3 emissions reduction roadmap, it will also constantly improve the accuracy of its calculations.

The Group’s share of renewable and recycled materials decreased slightly, mainly due to the change in the Group’s product portfolio after the Elif acquisition in 2021. 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 17 million (EUR 16 million). The costs consist mainly of expenses related to waste and wastewater management as well as environmental management.

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New manufacturing units are included in the Group’s sustainability reporting from the start of their production. Manufacturing units acquired or sold during the reporting year 2022 are included in the sustainability performance data from their acquisition date onward or until their divestment date. Closed manufacturing units are included in the sustainability reporting until their closing date. In 2022, Huhtamaki opened one new manufacturing unit in an existing location and sold two manufacturing locations in Russia.

In 2022, 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 that are under development and aims to increase understanding of the impacts of climate change on its business environment and operations. Huhtamaki continues to develop the assessment of the financial exposure that the physical and transition risks related to climate change pose.

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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 climate and environmental objectives, while at the same time not significantly harming any

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of these objectives and meeting minimum social safeguards. The six environmental objectives are 1. Climate change mitigation, 2. Climate change adaptation, 3. The sustainable use and protection of water and marine resources, 4. The transition to a circular economy, 5. Pollution prevention and control, and 6. The protection and restoration of biodiversity and ecosystems.

The two climate change-related environmental objectives already published as a Delegated Act address emission-intensive economic activities with an aim to guide development towards climate change mitigation and adaptation. The criteria for substantial contribution and significant harm are given in the Technical Screening Criteria for each environmental objective.

Most of Huhtamaki’s economic activities are not considered emission-intensive and, therefore, they are not considered eligible under the currently disclosed technical screening criteria. During 2022, Huhtamaki has reassessed both eligibility and alignment against the guidance published by the European Commission to support assessment. The stringent conditions associated with the criteria lead Huhtamaki to reassess the eligibility requirements of its economic activities related to the published Taxonomy objectives 1 and 2. Given these, for the financial year 2022, Huhtamaki has decided to report no eligibility and no alignment on the Taxonomy. The mandatory reporting templates described in Annex II of the Article 8 Disclosure Delegated Act are presented as an appendix on page 15-17. 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.

Net sales

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Capex

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Opex

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Personnel and social matters

Policies

• Huhtamaki Code of Conduct

• OHSAS 18001 / ISO 45001

• Global Employment Guidelines

• Huhtamaki Working Conditions Requirements

• Group Performance Management Policy

• Performance Review Guidelines

• Group Compensation and Benefits Policy

• Global Human Rights Policy

• Global Occupational Health and Safety Policy

•Recruitment Policy and Guidelines

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Huhtamaki aims to create a safe, engaging and motivating workplace for its people. Huhtamaki nurtures its high-performance culture by continuously developing its people and leaders and encouraging all employees to act according to its 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.

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In 2022, the average number of employees was 19,550 (18,385), of which 71% (70%) worked directly in production. Countries with the largest number of employees were US, India and Germany, which accounted for 45% (44%) of the Group’s personnel. At the end of the year Huhtamaki had a total of 18,927 (19,564) employees.

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Huhtamaki’s latest employee engagement survey, Connect, was conducted in September 2021 with the response rate at 79% (88%). The employee engagement index was at 73% (75%) and employee enablement index at 76% (76%). The Group identified performance management, resources, diversity and career opportunities as its global focus areas. In response to this, Huhtamaki renewed its talent acquisition and career development processes in 2022. The Group approved a new Recruitment policy and Guidelines and created a global induction (e-learning) for new hires to increase engagement and improve employee experience.

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After the COVID-19 restrictions were lifted in most parts of the world, the Group was able to deliver two new leadership development programs that brought leaders together from different parts of the business. The Group continued to offer online learning opportunities through a new learning management system which was implemented in 2022. The Group continued investing in the development of its strategic capabilities by organizing different learning opportunities for its employees, such as Global Week of Learning filled with online webinars and an e-learning on sustainability. In addition, Huhtamaki continued to provide an increasing number of LinkedIn Learning licenses and access to an online business conference to all employees across the globe. These platforms offer an opportunity to learn from industry experts specializing in personal and business skills. Also, Huhtamaki’s strategic key projects provide a wide range of learning opportunities, whilst at the same time increasing collaboration across the organization.

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Business units adhere to Huhtamaki’s global Working Conditions Requirements that cover topics such as anti-corruption, safety, work ergonomics, work contracts, working hours, grievances, and supplier management.

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Occupational Health and Safety (OHS) is a top priority for Huhtamaki. Huhtamaki is building a safety culture and strives to embed safety across the whole organization. Huhtamaki’s ambition is to develop a mindset to deliver an organization where nobody gets hurt and everyone goes home safe at the end of the day. To achieve this, Huhtamaki is developing a global mindset by strengthening its leadership of safety, safety systems and employee safety culture. Health and safety is one of the core elements of the

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Group’s business agenda, and one of the key KPIs for its business, which is reviewed by the Global Executive Team and presented quarterly to the Board of Directors.

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Effective Health and Safety management at Huhtamaki is delivered through safety management systems. These are implemented at each operating site across the organization. The management systems are supported by an overarching Global OHS policy.

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The key OHS indicators for 2022 are Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR). In 2022, LTIFR increased to 1.5 (1.4). When calculating the injury frequency rates, Huhtamaki considers the injuries and actual working hours of Huhtamaki employees and external workers. TRIFR in 2022 was 3.7 (4.3). There were two fatalities during 2022. Both cases were contractors working at Huhtamaki premises – one in Khopoli (India) and one in Cairo (Egypt). The incidents have been thoroughly investigated to identify their root causes, which has allowed the Group to apply the learnings across the entire organization and ensure these incidents do not happen again.

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Human rights

Policies

• Huhtamaki Code of Conduct

• Code of Conduct for Huhtamaki Suppliers

• Global Human Rights Policy

•Global Working Conditions Requirements

•Global Employment Guidelines

•Group Occupational Health and Safety Policy

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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. The results from both a high-level, global assessment and two site level impact assessments indicate, that the potential human rights impacts in Huhtamaki’s own operations relate to for example employees’ health and safety, working conditions, working hours and rest, discrimination, and the position of service providers. Through the actions of the Group’s suppliers, Huhtamaki can also have an indirect impact on the fundamental human rights of employees upstream in the value chain, including topics such as working hours, wages or forced labor. Vulnerable groups that need to be taken into special consideration are migrant workers and their families, local communities, as well as women and children. While the vulnerable groups have been identified, Huhtamaki is still in the process of mapping the human rights impacts themselves. Going forward, Huhtamaki will continue to use a combination of methods to better understand its impacts and to further refine the list of salient human rights issues.

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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.

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The Global Human Rights Policy reflects Huhtamaki’s commitment to human rights as set forth in the United Nations International Bill of Human Rights and taking into account the UN Guiding Principles on Business and Human Rights.

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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.

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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.

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In the Group’s own operations, risks for human rights issues are identified via the global Enterprise Risk Management, the global Ethics and Compliance program and by following incidents reported through the whistle-blowing channel and grievance processes. The Global Working Conditions Requirements are implemented at all production sites and cover topics such as anti-corruption, safety, work ergonomics, work contracts, working hours, grievances, and supplier management. Occupational health and safety have been identified as key topics. As a result, all manufacturing units monitor safety metrics monthly, and performance is assessed against targets. Engaging with local communities gives valuable feedback from local stakeholders. In mergers and acquisitions, environmental and social impact assessments are part of the standard due diligence process.

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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 for example sanctions lists, watch lists and negative media, helping Huhtamaki to identify and address risks related to human rights in the supply chain.

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In 2022, the Group continued building on efforts launched in 2021 to strengthen its existing processes to better integrate human rights considerations into its processes and operating model. The Group established a cross-functional working group to drive initiatives and to follow up on the findings from the impact assessments. Several projects were initiated to strengthen key processes from a human rights perspective, such as the due diligence process in mergers and acquisitions. Huhtamaki also conducted its second human rights impact assessment at the Flexible Packaging site in Thailand. The Group has also increased the awareness of human rights internally through various global training opportunities, including an updated e-learning course on Modern Slavery and Human Trafficking.

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Anti-corruption and anti-bribery

Policies

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The Huhtamaki Global Ethics and Compliance program focuses on Huhtamaki’s commitment to integrity and legal compliance across the Group’s global organization. The program serves as a toolkit supporting Huhtamaki in conducting its business in compliance with laws, regulations and the Group’s ethical standards and ensuring that the Group has adequate procedures in place to prevent Huhtamaki taking part in any corruption or unethical business activities. At Huhtamaki, all forms of corruption and bribery are strictly prohibited, irrespective of the location of its operations.

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In 2022, Huhtamaki further developed its Anti-Corruption Program by launching the Huhtamaki Anti-Corruption Policy alongside related instructions and procedures on conflicts of interest and gifts and hospitality, which all Huhtamaki employees are required to follow globally.

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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, helping the Group 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.

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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 the commitment at every level around the world.

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One of the key elements of Huhtamaki’s Global Ethics and Compliance program framework is training and communication. In 2022, the Global Ethics and Compliance team focused on raising awareness of corruption risks and ethical business conduct in Europe, the Middle East and Southeast Asia regions, as well as in China and India. Employees were invited to discuss and review case examples of selected compliance topics like anti-corruption, gifts and hospitality and conflict of interest situations. Additionally, face-to-face training sessions were organized by Global Ethics and Compliance for Huhtamaki’s entities in Egypt, the UAE, Turkey, Germany, India, China, Malaysia, and Vietnam. The team also continued to raise awareness of trade sanctions and other topical compliance matters also in Huhtamaki’s other operating geographies during 2022 by providing training and communication through various online channels.

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Huhtamaki employees are required to 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 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 94.5% (2021: 95.4%) of Huhtamaki’s employees globally in 2022.

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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.

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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. If an employee has concerns about potential misconduct or is made aware of a violation, the employee is expected to report the violation by contacting either his/her manager, over manager, a local Human Resources representative or Global Ethics and Compliance. To support the compliance with laws and regulations and the ethical business conduct, the company offers various channels to report concerns, including a dedicated email address and 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: report.whistleb.com/Huhtamaki. Retaliation or any negative actions against an employee reporting a suspected violation in good faith is explicitly prohibited and may result in disciplinary action.

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The Global Ethics and Compliance team coordinates the Speak Up channel and oversees the overall investigation process of alleged violations. The Global Ethics and Compliance team is responsible for all investigations involving serious allegations. All breaches and suspected breaches of the Huhtamaki Code of Conduct brought to the attention of Global Ethics and Compliance are investigated and reported further according to the Group Investigation Policy. The Huhtamaki Ethics and Compliance Committee, the Global Executive Team and the Audit Committee of the Board of Directors follow up on the reported incidents and review the implementation of mitigating activities regularly.

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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).

In order 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

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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 2022

In 2022, 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 in order to reach acceptable risk levels at each stage. Further, Huhtamaki Board of Directors had a risk management workshop to support the overall annual risk assessment. Disruptive risk scenarios were evaluated as a part of the strategy risk assessment.

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 2023.

During 2022, the key risks identified in the 2021 risk assessment process were monitored to 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 or 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 business. Further, these regulatory changes include a level of unpredictability, especially in certain geographics. To manage the threats, Huhtamaki is 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 so as 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 and dependence on large customers. 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. 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 may increase the business uncertainty and worsen

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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 behavior and purchasing power. Outbreak of the invasion of Ukraine, high inflation rates and disruption in energy supply are examples of recent events affecting the macro environment. Huhtamaki is actively monitoring the developments so that it can react to changes 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.

Disruption in raw material or energy supply is considered one of the key operational risks to the Group. The risk is managed, e.g., by extending the Group’s supplier network, securing volumes in advantage, monitoring and maintaining safety inventory levels and standardizing raw materials.

Risks related to property damage and IT infrastructure, systems and applications are important 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 maintains and further develops its disaster recovery and business continuity plans and allocates manufacturing capacity to several locations. Huhtamaki is also 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.

None of the key risks identified in connection with the 2022 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. 

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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

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occurrence. A risk impact is considered in terms of impact on the organization’s annual EBIT. Going forward, Huhtamaki will, to support the Enterprise Risk Management, conduct further targeted assessments of the risks and opportunities for climate change for the short, medium and long term.

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, 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 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, including a special focus on plastic substitution, plays an important role in managing these risks. 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 2022 publication.

Climate change related risks and opportunities are included and taken into account in the risk register used in the ERM process. The ERM process is described in the Risk management section, page 23. Huhtamaki continued to benchmark different options for publicly available climate-change scenarios that can be used for assessing the impacts of the physical and transition risks to the company. Huhtamaki recognizes the critical importance of risks and opportunities related to climate change and will continue developing its climate related risk assessment in order to further improve its governance, measurements and disclosure related to the topic.

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

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waste management can be found in the Sustainability supplement of this Annual Report 2022 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 Business Overview section and in the Sustainability supplement of this Annual Report 2022 publication.

In the 2022 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 2022 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 anti-corruption and zero tolerance to 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 2022 publication.

In 2022, Huhtamaki conducted internal social and environmental sustainability workshops to better understand the risks and opportunities and accelerate the development in sustainability.

Personnel

Number of personnel

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¹Including global functions in Finland

At the end of December 2022, the Group had a total of 18,927 (19,564) employees. The number of employees was 3% lower than in the comparison period, driven by the divestment of the operations in Russia.

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Personnel by segment on December 31, 2022Personnel by segment on December 31, 2021

Changes in management

On December 21, 2021, it was announced that the President and CEO Charles Héaulmé was diagnosed with a cancer. He took a leave of absence from early January 2022, to undergo treatment, and fully resumed his duties on April 19, 2022. Thomas Geust, CFO, acted as interim Deputy CEO from January 1, 2022, to April 18, 2022. During the same time, Eric Le Lay, President Fiber and Foodservice EAO, acted as interim Chief Operating Officer.

Fredrik Davidsson, Bs (Engineering), was appointed as Executive Vice President, Digital and Process Performance and a member of the Global Executive Team as of May 1, 2022.

Share capital, shareholders and trading of shares

Share capital and share data

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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  2022: Board proposal

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Shareholder structure as at December 31, 2022

The number of registered shareholders at the end of December 2022 was 50,150 (43,774). Foreign ownership including nominee registered shares accounted for 44% (48%).

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 2022, the Company’s market capitalization was EUR 3,448 million (EUR 4,191 million). With a closing price of EUR 32.00 (EUR 38.89) at the end of the reporting period, the share price decreased approximately 18% from the beginning of the year. During the reporting period the volume weighted average price for the Company’s shares was EUR 34.30 (EUR 40.12). The highest price paid was EUR 39.94 (EUR 45.93) and the lowest was EUR 26.41 (EUR 36.57).

During the reporting period, the cumulative value of the Company’s share turnover on Nasdaq Helsinki Ltd was EUR 2,117 million (EUR 2,027 million). The trading volume of approximately 62 million (51 million) shares equaled an average daily turnover of 243,923 (200,455) shares. The cumulative value of the Company’s share turnover including alternative trading venues, such as BATS Chi-X and Turquoise, was EUR 7,665 million (EUR 6,022 million). During the reporting period, 72% (66%) of all trading took place outside Nasdaq Helsinki Ltd. (Source: Refinitiv Eikon).

Resolutions of the Annual General Meeting 2022

Huhtamäki Oyj’s Annual General Meeting of Shareholders was held on April 27, 2022 in Espoo, Finland. The meeting adopted the Company's Annual Accounts including the Consolidated Annual Accounts for 2021, discharged the members of the Company’s Board of Directors and the 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 presented to it.

The Annual General Meeting resolved that an aggregate dividend of EUR 0.94 per share be paid based on the balance sheet adopted for the financial period ended on December 31, 2021. The dividend was paid in two instalments. The first dividend instalment, EUR 0.47 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 April 29, 2022. The payment date for the first dividend instalment was May 6, 2022. The second dividend instalment, EUR 0.47 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 3, 2022. The payment date for the second dividend instalment was on October 10, 2022.

The number of members of the Board of Directors was confirmed to as nine (9). Mr. Pekka Ala-Pietilä, Mr. Doug Baillie, Mr. William R. Barker, Ms. Anja Korhonen, Ms. Kerttu Tuomas, Ms. Sandra Turner and Mr.

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Ralf K. Wunderlich were re-elected as members of the Board of Directors and, as new members, Ms. Mercedes Alonso and Mr. Heikki Takala. They were elected 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 160,000, to the Vice-Chair EUR 75,000 and to the other members EUR 62,000 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 15,000 and to the other members of the Audit Committee EUR 5,000 as well as to the Chair of the Human Resources Committee EUR 5,000 and to the other members of the Human Resources Committee EUR 2,500. 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, 2022. 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, 2023.

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, 2023.

Short-term risks and uncertainties

Significant and broad-based inflation (including raw materials, labor, distribution and energy), decline in consumer demand, availability of raw materials as well as movements in currency rates are considered to be relevant short-term business risks and uncertainties in the Group's operations. Geopolitical, general political, economic and financial market conditions, as well as a potential further escalation of the geopolitical crisis in Europe, can also have an adverse effect on the implementation of the Group's strategy and on its business performance and earnings. The COVID-19 pandemic may continue to create further disturbances in the Group’s trading conditions and its operating environment, as well as in demand for the Group’s products. Further, natural disasters may have negative effects on the Group’s operating environment.

Outlook for 2023

The Group’s trading conditions are expected to remain relatively stable, despite the continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable long-term growth opportunities.

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Dividend proposal

On December 31, 2022, Huhtamäki Oyj’s distributable funds were EUR 908 million (EUR 462 million). The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 1.00 (EUR 0.94) per share be paid.

Annual General Meeting 2023

The Annual General Meeting of Shareholders (AGM) will be held on Thursday, April 27, 2023 at 11:00 (EET) 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 2022 publication. The statements are also available on the Group’s website www.huhtamaki.com.

Operating model

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Financial statements

Consolidated financial statements

Consolidated statement of income (IFRS)

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Group statement of comprehensive income (IFRS)

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Consolidated statement of financial position (IFRS)

Assets