​

HUHTAMÄKI OYJ

DIRECTOR’S REPORT AND
FINANCIAL STATEMENTS

BUSINESS ID: 0140879-6

​

Contents

Directors’ report 2020‌3

Business model‌27

Financial statements‌28

Consolidated financial statements‌28

Consolidated statement of income (IFRS)‌28

Group statement of comprehensive income (IFRS)‌29

Consolidated statement of financial position (IFRS)‌30

Consolidated statement of changes in equity (IFRS)‌31

Consolidated statement of cash flows (IFRS)‌32

Notes to the consolidated financial statements‌33

1. Basis of preparation‌33

1.1. CORPORATE INFORMATION‌33

1.2. BASIS OF PREPARATION‌33

1.3. DESCRIPTION OF THE IMPACT OF COVID-19 ON THE BUSINESS‌33

1.4. ADOPTION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS‌33

1.5. PRINCIPLES OF CONSOLIDATION‌34

1.6. FOREIGN CURRENCY TRANSLATION‌35

1.7. USE OF ESTIMATES AND JUDGMENTS‌35

2. Financial performance‌36

2.1. SEGMENT AND REVENUE‌36

2.2. EMPLOYEE BENEFITS‌39

2.3. DEPRECIATION AND IMPAIRMENT‌42

2.4. RESTRUCTURING ITEMS‌43

2.5. OTHER OPERATING INCOME‌43

2.6. OTHER OPERATING EXPENSES‌43

2.7. INCOME TAXES‌44

2.8. EARNINGS AND DIVIDEND PER SHARE‌45

3. Acquisitions and capital expenditure‌46

3.1. BUSINESS COMBINATIONS‌46

3.2. GOODWILL‌48

3.3. INTANGIBLE ASSETS‌49

3.4. TANGIBLE ASSETS‌50

4. Working capital‌53

4.1. INVENTORIES‌53

4.2. TRADE AND OTHER CURRENT RECEIVABLES‌53

4.3. PROVISIONS‌54

4.4. TRADE AND OTHER CURRENT LIABILITIES‌55

5. Capital structure and financial items‌55

5.1. NET FINANCIAL ITEMS‌55

5.2. INTEREST-BEARING RECEIVABLES‌56

5.3. CASH AND CASH EQUIVALENTS‌56

5.4. SHAREHOLDERS’ EQUITY‌57

5.5. FAIR VALUE AND OTHER RESERVES‌58

5.6. INTEREST-BEARING LIABILITIES‌60

5.7. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY‌61

5.8. MANAGEMENT OF FINANCIAL RISKS‌63

6. Other disclosures‌68

6.1. EQUITY-ACCOUNTED INVESTMENTS‌68

6.2. RELATED PARTY TRANSACTIONS‌68

6.3. SHARE-BASED PAYMENTS‌69

6.4. LEASES‌71

6.5. COMMITMENTS‌72

6.6. LITIGATIONS‌72

6.7. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD‌72

Subsidiaries‌73

Parent company financial statements‌75

Definitions for performance measures‌90

Key figures and financial development‌92

​

​

Directors’ report 2020

Operating environment

The year 2020 was dominated by the COVID-19 pandemic and its impact on demand and the operating environment. Demand for both food on-the-go and food on-the-shelf packaging was good in the beginning of the year, but the outbreak of COVID-19 and the restrictions on movement, in response to the pandemic, that followed changed the direction of the year.  

Following closures of quick-service restaurants, demand for food on-the-go packaging was negatively impacted by COVID-19, at times significantly. Demand improved gradually during the second half of the year but remained lower than in the previous year. The increased demand for food delivery did not compensate the decline in demand of in-store restaurant sales.

Demand for food on-the-shelf packaging remained resilient to the effects of COVID-19. Demand in certain product categories in retail tableware in North America was strong as in-home consumption was higher than normal following the restrictions related to COVID-19. Demand for egg packaging was also higher than normal, as consumers have stayed more at home as a result of the pandemic.

Sustainability and substitution of plastics continued to be an important topic for Huhtamaki and its stakeholders despite COVID-19. The interest in substituting plastic foodservice packaging with alternatives, made for example out of paperboard, continued. Overall, packaging is shifting to a circular model where materials are collected, recycled and reused.

The raw material price environment was somewhat favorable in 2020. The prices of most raw materials were broadly unchanged while the prices of plastic resins decreased following the outbreak of COVID-19.

Strategic development

In March 2020, Huhtamaki announced its renewed long-term strategy. The priorities for the 2030 strategy are growth, competitiveness and talent while embedding sustainability across all the operations. The focus areas for growth are scaling up the core business, expanding in emerging markets, developing sustainable solutions and food delivery packaging, and focusing on long-term innovation and venturing. Areas of focus to improve competitiveness are digitalization of operations, increasing efficiency in manufacturing and achieving world-class operational performance. To develop and foster talent, Huhtamaki focuses on building strategic capabilities, nurturing the company’s values and a high-performance culture.

Sustainability has a key role in Huhtamaki’s 2030 strategy. The company is taking a leading role within the food packaging industry in addressing the global challenges of circularity and climate change. Acknowledging that packaging has a significant role to play, the company is raising the bar across its activities and has set high sustainability ambitions.

During 2020, Huhtamaki completed two acquisitions, Mohan Mutha Polytech in India and the joint venture company Laminor S.A. in Brazil, but no new acquisitions were announced. Carrying out acquisitions was more difficult in 2020 as travel and other restrictions related to COVID-19 were in effect for much of the year. Despite no new acquisitions in 2020, acquisitive growth, together with organic growth, continues to be in focus as a way of scaling up the business.

To provide organic growth in the future, Huhtamaki announced in December 2020 that the company is setting up a new fiber packaging manufacturing plant at its existing site in Alabuga, Tatarstan. The new plant responds to the fast development of the retail business and egg packaging industry in Eastern and Central parts of Russia. At the end of

​

the year, preparatory work on the site was ongoing and production of fiber packaging is expected to begin during the first quarter of 2022.

During the COVID-19 pandemic, Huhtamaki has been conscious about its role as a corporate citizen. The company has played an active part in making a difference in where it matters the most. For example, Huhtamaki donated EUR 0.5 million to the International Red Cross, announced a EUR 0.9 million partnership with international charity WasteAid to drive community-level circular economy innovation in Vietnam, India and South Africa for a two-year period, and made a EUR 0.6 million donation to help clean plastics from the Mithi River in Mumbai, India. Additionally, Huhtamaki launched together with Food System 6, the impact-focused startup accelerator, a circular economy start-up program, with the purpose to accelerate the development of young and promising companies working to deliver innovative sustainable solutions. During the pandemic, Huhtamaki also made product donations to ensure food hygiene and food safety, started production of high-quality protective face shields for health care workers, and launched a range of reusable face masks, called Huhta Mask, for consumers.  

In 2020, two members of the Global Executive Team, Olli Koponen, President, Flexible Packaging and Clay Dunn, President, North America, retired. Both had a long and successful career at Huhtamaki. Arup Basu was appointed President, Flexible Packaging as of February 1, 2020 and Ann O’Hara was appointed President, North America business as of January 1, 2021. Additionally, Thomasine Kamerling was appointed Executive Vice President, Sustainability and Communications as of March 1, 2020. All three were also appointed as members of the Global Executive Team.

In 2020, the Board of Directors focused on developing Huhtamaki’s long-term strategy and supported management in efforts to limit the impact from COVID-19. The Board also continued to follow development and strengthening of people capabilities and resources, sustainability initiatives as well as innovation and digitalization activities. Due to the pandemic, the Board was not able to follow its established practice to have meetings by visiting units in different geographies.

Key figures

​

¹ Excluding IAC of EUR -8.6 million in 2020 (EUR -7.6 million in 2019 and EUR -8.4 million in 2018).

² Excluding IAC of EUR -36.8 million in 2020 (EUR -7.6 million in 2019 and EUR -25.5 million in 2018).

³ Excluding IAC of EUR -26.2 million in 2020 (EUR -5.9 million in 2019 and EUR -20.6 million in 2018).

Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2019. 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.

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 2020

Net sales by business segment

​

Comparable net sales growth by business segment

​

The Group’s net sales decreased 3% to EUR 3,302 million (EUR 3,399 million) during the reporting period. Comparable net sales growth was -2%. Net sales decreased especially in the Foodservice Europe-Asia-Oceania segment, following the impact of COVID-19. The Group´s growth in emerging markets was -6%. Foreign currency translation impact on the Group’s net sales was EUR -89 million (EUR 90 million) compared to 2019 exchange rates.

Net sales by segment, 2020Net sales by segment, 2019

Adjusted EBIT by business segment

​

​

Adjusted EBIT by segment, 2020Adjusted EBIT by segment, 2019

Adjusted EBIT margin by business segment

​

The Group’s adjusted EBIT increased to EUR 302 million (EUR 293 million) and reported EBIT was EUR 265 million (EUR 286 million). The increase in earnings was supported by the North America and Fiber Packaging segments. The Group’s adjusted EBIT margin improved and was 9.1% (8.6%). Foreign currency translation impact on the Group’s earnings was EUR -8 million (EUR 8 million).

Adjusted EBIT excludes EUR -36.8 million (EUR -7.6 million) of items affecting comparability (IAC).

Adjusted EBIT and IAC

​

Net financial expenses were EUR 28 million (EUR 29 million). Tax expense was EUR 53 million (EUR 58 million). The corresponding tax rate was 23% (23%). Profit for the period was EUR 184 million (EUR 199 million). Adjusted earnings per share (EPS) were EUR 1.95 (EUR 1.88) and reported EPS EUR 1.69 (EUR 1.82). Adjusted EPS is calculated based on adjusted profit for the period, which excludes EUR -26.2 million (EUR -5.9 million) of IAC.

Adjusted profit and IAC

​

​

Statement of financial position and cash flow

The Group’s net debt decreased, and at the end of December, net debt was EUR 867 million (EUR 904 million). The level of net debt corresponds to a gearing ratio of 0.64 (0.63). Net debt to EBITDA ratio (excluding IAC) was 1.8 (2.0). Average maturity of external committed credit facilities and loans was 2.7 years (3.4 years).

On June 26, 2020, a signing of a EUR 150 million freely transferable loan agreement (Schuldschein) was announced. The loan is divided into two floating rate and two fixed rate tranches with maturities of 3 and 5 years. The funds, which were received in July, will be used for refinancing and general corporate purposes of the Group.

Cash and cash equivalents were EUR 315 million (EUR 199 million) at the end of December and the Group had EUR 310 million (EUR 302 million) of unused committed credit facilities available.

Total assets on the statement of financial position were EUR 3,596 million (EUR 3,611 million).

Capital expenditure was EUR 223 million (EUR 204 million). The largest investments for business expansion were made in the U.S., the UK and Germany. The Group’s free cash flow was EUR 207 million (EUR 226 million).

Acquisitions and divestments

On September 30, 2019, Huhtamaki announced its agreement to acquire the assets and operations of Mohan Mutha Polytech Private Limited (MMPPL), a privately-owned flexible packaging manufacturer located in Sri City, Andhra Pradesh, India. The acquisition allows Huhtamaki to speed up its growth in India by improving its capability to serve the customers in South India. MMPPL has approximately 160 employees and its net sales in 2018 were approximately EUR 9 million. The debt-free purchase price was approximately EUR 10 million. The acquisition was completed on January 10, 2020 and since then the business has reported as part of the Flexible Packaging business segment.

On December 23, 2019, Huhtamaki announced its agreement to acquire full ownership of its joint venture company Laminor S.A. in Brazil. Laminor is specialized in high-quality tube laminates, particularly for oral care applications, and was set up in 2002 as a 50/50 joint venture together with Bemis Company, which is now part of Amcor. The acquisition enables Huhtamaki to expand its tube laminate business, an important part of the Group’s flexible packaging offering. Laminor has approximately 130 employees and its net sales in 2018 were approximately EUR 25 million. The additional shares were acquired at a price of approximately EUR 28 million and the acquisition was completed on March 31, 2020. The business has been consolidated as a subsidiary in the Group’s financial reporting and it has been reported as part of the Flexible Packaging business segment as of April 1, 2020. As a result of the transaction, a gain from the difference between remeasured interest according to the purchase price and previously held equity interest of approximately EUR 22 million has been recognized in the income statement as item affecting comparability in Q1-Q4 2020 financial results.

Significant events during the reporting period

On March 23, 2020, Huhtamaki announced its long-term 2030 strategy in order to maintain its growth trajectory and meet future transformative trends. Going forward, Huhtamaki will focus on growth, competitiveness, talent and sustainability. The company’s ambition is to become the first choice in sustainable food packaging. Huhtamaki also outlined its long-term financial ambitions and introduced its new 2030 sustainability ambitions. The strategy emphasizes strong core values: Care, Dare, Deliver. In line with its renewed strategy, the company decided to integrate its Foodservice Europe-Asia-Oceania and Fiber Packaging business segments. The segments will continue to be reported separately. Eric Le Lay will continue as President for the combined Fiber and Foodservice EAO (Europe-Asia-Oceania) segment. This change became effective as of June 1, 2020.

On March 26, 2020, Huhtamaki announced that it has decided to withdraw its outlook for 2020 (published on February 13, 2020) due to the unprecedented and accelerated situation caused by the COVID-19 and its impact on the Group’s

​

trading conditions. It was announced that the company will provide a new outlook when impacts of the changing business environment on its trading conditions in 2020 can be assessed in a reliable manner. Huhtamaki announced a new outlook for 2020 on July 23, 2020, in conjunction with its Half-yearly Report January 1–June 30, 2020.

On March 26, 2020, Huhtamaki announced that the Board of Directors changed its proposal for use of the profit shown on the balance sheet and proposed that no dividend payment would be decided by the Annual General Meeting. Instead, the Board of Directors proposed to the Annual General Meeting that the Annual General Meeting would authorize the Board of Directors to decide at a later stage and in its discretion on a dividend payment in one or several installments of a total maximum of EUR 0.89 per share. On September 17, 2020, Huhtamaki announced that the Board of Directors decided to pay out a dividend of EUR 0.89 per share from the distributable funds of the Company. The dividend was paid to a shareholder who on the dividend record date September 18, 2020 was registered as a shareholder in the Company’s shareholders’ register held by Euroclear Finland Ltd. The dividend was paid on September 25, 2020.

Significant events after the reporting period

On January 7, 2021, a signing of a EUR 400 million syndicated multicurrency revolving credit facility loan agreement (“RCF”) with a maturity of three (3) years was announced. The RCF refinances an existing EUR 400 million credit facility signed in January 2015 and will be used for general corporate purposes of the Group. The RCF has two one-year extension options and the interest margin is tied to three sustainability indicators: share of renewable or recycled material in products, share of non-hazardous waste recycled and EcoVadis rating.

Business review by segment

Foodservice Europe-Asia-Oceania

​

¹ Excluding IAC.

Demand for foodservice packaging was good in the first two months of the year, but the outbreak of COVID-19 had a significant negative impact on demand for foodservice packaging as governments across markets imposed restrictions on movement to contain the spread of the virus. Demand improved gradually during the reporting period, but the overall demand remained low. Compared to the previous year, prices of paperboard increased, and prices of plastic resins decreased, though with variation between markets and types of resin.

Net sales decreased significantly in the Foodservice Europe-Asia-Oceania segment. Comparable net sales growth was -10%. Net sales decreased in all main markets. During the reporting period, Huhtamaki started selling face shields and face masks, which partially offset the decline in net sales.

The impact of currency movements on the segment’s reported net sales was EUR -24 million.

The segment’s adjusted EBIT decreased as a result of lower utilization of assets due to lower demand.

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

​

North America

​

¹ Excluding IAC.

Demand for foodservice packaging decreased following the outbreak of COVID-19. Demand for retail tableware was strong throughout the year, partially supported by the consumption spike related to COVID-19. Demand for ice cream in-home packaging improved. Compared to the previous year, costs of transportation fuel, energy and plastic resins remained generally stable through the year although trending up at the end of the year.

Net sales growth in the North America segment was strong in Q1 but during the rest of the reporting period growth was impacted by the outbreak of COVID-19. Comparable net sales growth was1% in 2020. Growth was strong within retail tableware while COVID-19 impacted foodservice packaging sales negatively. Net sales growth was driven primarily by strong demand for retail tableware plates and in-home ice cream packaging.

The impact of currency movements on the segment’s reported net sales was EUR -22 million.

The segment’s adjusted EBIT increased, and profitability was strong. Earnings improved as a result of the continuation of the margins established in 2019 and favorable sales mix.

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

Flexible Packaging

​

¹ Excluding IAC.

Demand for flexible packaging was good across most markets. However, pandemic-driven supply chain disruptions impacted the market especially in the second quarter of the year. The competitive situation in Southeast Asia remained tight. Raw material prices decreased compared to the previous year.

Net sales increased in the Flexible Packaging segment. Comparable net sales growth was 1%. Growth was strongest in Southeast Asia and Oceania. Restrictions and lockdowns related to COVID-19 impacted sales negatively in India and the United Arab Emirates. Net sales was supported by the new unit in Egypt, inaugurated in April 2019, and the acquired units.

The impact of currency movements on the segment’s reported net sales was EUR -28 million.

​

The segment’s adjusted EBIT decreased due to COVID-19 related production and logistics interruptions in India mainly during Q2 2020, and the impact of strict restrictions related to COVID-19 in the United Arab Emirates. Cost management actions, lower raw material prices and the acquired units supported earnings.

The impact of currency movements on the segment’s reported earnings was EUR -2 million.

Fiber Packaging

​

¹ Excluding IAC.

Demand for fiber-based packaging was strong throughout the year, especially in egg packaging. Demand for cup carriers decreased following the outbreak of COVID-19 but increased as restrictions related to COVID-19 were lifted. Prices of recycled fiber were at similar levels compared to the previous year.

Net sales growth in the Fiber Packaging segment was strong. Comparable net sales growth was 9%. Net sales increased especially in Europe. Net sales growth was driven primarily by volume following the increased demand due to COVID-19 pandemic.

The impact of currency movements on the segment’s reported net sales was EUR -14 million.

The segment’s adjusted EBIT increased driven especially by volume growth but also by pricing actions implemented earlier. The development and commercialization costs of the Fresh ready meal tray had a negative impact on the segment’s earnings growth.

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

Non-Financial Review

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 complies with local laws and regulations and acts in accordance with commonly accepted best practices everywhere it operates. Huhtamaki does not accept the violation of any laws or regulations or any unethical business dealings.

In 2020, Huhtamaki introduced key sustainability ambitions, as part of its renewed 2030 Strategy. Huhtamaki’s previous sustainability program, Packaging for Good, has been a building block for the new sustainability ambitions since 2018. Building on this, Huhtamaki has defined internal actions to achieve its 2030 ambition. The Group has also developed an external dashboard with the aim of tracking progress through regular performance assessments at the manufacturing unit, business segment and Group levels.

To ensure that the Group’s sustainability work is focused on the most material issues, a materiality assessment is performed regularly using a data-driven approach, powered by Datamaran’s artificial intelligence platform. Datamaran tracks approximately 100 Environmental, Social and Governance (ESG) topics across corporate reports, mandatory regulations and voluntary initiatives, news, as well as social media. In 2020, Huhtamaki went through these sustainability topics. As a result, the topics “Transition to a circular economy” and “Transition to renewable energy”

​

were included as new topics to be tracked via Datamaran. “Transition to renewable energy” was grouped under the already existing “Energy” topic, while “Transition to a circular economy” was added as a new topic. Also, the number of surveys sent out to internal and external stakeholders as part of the assessment was increased.

The updated assessment indicated some changes in the order of importance of the material topics. It also reaffirmed that the new sustainability ambitions cover the most material topics and that Huhtamaki’s sustainability efforts continue to focus on the right issues. More information on Huhtamaki’s sustainability work and the materiality assessment can be found in Huhtamaki’s Business Overview and its Sustainability Performance supplement, which are part of this Huhtamaki Annual Report 2020.

Huhtamaki’s business model is described on page 27. Risks and risk management procedures related to the non-financial review are described in a separate section within this Directors’ Report, on pages 19-22.

Impact of the COVID-19 pandemic

Huhtamaki’s diversified portfolio of food on-the-go and food on-the-shelf packaging solutions has provided resilience from the impact of COVID-19. This has been most significant in terms of drop in demand in product categories related to foodservice. The impact has been visible following, for example, the closures of quick-service restaurants. At the same time, demand for food delivery has increased as people have stayed home more. However, this increase in demand has not compensated the decline of in-store restaurant sales.

In contrast, demand for food on-the-shelf packaging, comprising mainly of flexible and fiber packaging, has remained relatively resilient to the effects of COVID-19. The impact on retail business and consumer goods products has been limited, as some of Huhtamaki’s customers have been stocking up to meet demand. The overall impact from COVID-19 on demand reduced as countries and governments lifted restrictions on movement and access to establishments.

To manage the impact of the COVID-19 pandemic, Huhtamaki has implemented a phased approach. In the first phase, the crisis was handled daily at a global and unit level. The focus during this point was to protect employees as well as business continuity. In addition, the company’s cash position was managed daily and effectively through an increased focus on cost management and the prioritization of investments as well as securing liquidity through financing arrangements and postponement of dividend. In a second phase, the company concentrated on its competitiveness in preparation for a post-COVID future. Currently, in the third phase, the company is working on defining the opportunities that will emerge from the crisis. This includes, among others, generating innovation and identifying immediate opportunities and long-term shifts in our operating environment.

Huhtamaki plays an essential role in in ensuring food safety and availability and reducing food waste, as has been acknowledged by governments around the globe, which granted its operations essential status during the pandemic. Maintaining its operations has been just one part of Huhtamaki’s support towards alleviating the impact of the pandemic globally, as evidenced by Huhtamaki’s face shield initiative and other actions the Group took in its local communities. When the coronavirus pandemic started, the Group reacted and formed a crisis management team immediately. This team monitored the development and impact of the situation and acted as an effective forum for information sharing and decision making across all Huhtamaki sites and employees. Huhtamaki also partnered with the International Red Cross to do its share in helping respond to the humanitarian aspect of the COVID-19 crisis. In addition, throughout the year the Group made product donations through its local communities.

​

Environmental matters

Policies

​

Huhtamaki continuously looks for ways to improve resource efficiency, which is supported by a strong environmental and financial rationale. Circularity is a key focus area in the Group’s 2030 sustainability ambition. Greenhouse gas emissions and production waste are the main environmental impacts of the Group’s manufacturing operations. 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 Global Environmental Policy. These policies are supported by Total Productive Manufacturing trainings and ISO management systems and are implemented on manufacturing unit level. At the end of 2020, 53(52) manufacturing units, representing 66% (68%) 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.

​

The main environmental KPIs and performance are:

​

*2019 figures have been updated to include previously excluded sites.

The Group’s energy consumption and emissions per ton of product decreased compared to 2019. The total amount of waste decreased by 3%. The recycling rate declined to 70% (73%). The recycling landscape has fundamentally changed over the last 3 years. Now Europe and America need to develop their own recycling infrastructure as exporting to South East Asia for processing into recycled raw materials is no longer an option. In 2020, this new infrastructure is not yet widely in place, and because of this, recycling rates for non-hazardous production waste have tended to decline. Huhtamaki continues to identify and develop recycling solutions for non-hazardous production waste.

The environmental data excludes the units that have been acquired during the reporting year 2020 based on the transition period needed to introduce Huhtamaki reporting. Units closed during the reporting year 2020 are included in the data until their closing date.

The Group’s Natural Resource Plan continued to focus on climate and emissions, water and waste. During 2020, the Natural Resource Plan was merged into the sustainability working stream in the newly launched World Class Management (WCM) project implementing Huhtamaki’s 2030 Strategy. The Natural Resource Plan forms the environmental core of the WCM sustainability stream. The stream defines how Huhtamaki measures, improves and communicates sustainability performance against its commitments.

​

Huhtamaki’s environmental operating costs totaled EUR 16 million (EUR 13 million). The costs consist mainly of expenses related to waste and wastewater management as well as environmental management.

Personnel and social matters

Policies

​

Huhtamaki aims to create a safe, engaging and high-performance culture by encouraging its employees to act according to its new values Care Dare Deliver. The Group’s functional people processes and solutions support the business in reaching strategic and operational targets. Data analysis and digital workplace tools help the Group make informed decisions and enables employees to succeed in their work.

In 2020, the average number of employees was 18,440 (18,125), of which 70% (71%) worked directly in production. Countries with the largest number of employees were USA, India and Germany, which accounted for 49% (50%) of the Group’s personnel. At the end of the year Huhtamaki had a total of 18,227(18,598) employees

In 2020, Huhtamaki renewed its values, respecting the tone and message behind its original values. Huhtamaki’s new values are Care Dare Deliver. For Huhtamaki, values are not just principles. They shape the decisions that are made and help make a difference where it matters, across businesses and geographies. They unify the organization as one Huhtamaki family, to make a positive contribution to the world.

Huhtamaki’s latest employee engagement survey, Connect, was conducted in September 2019 with the highest response rate ever at 88% (80%). The employee engagement index was at 74%, (69%) and Employee Enablement at 75% (75%). During the past year, teams in the organization have reviewed and discussed the results, looked for ways to cultivate the areas that are clearly appreciated by employees, and found means to improve those which were reported to require more attention. These areas included Collaboration, Training and development, Resources and Performance management. The next survey will be conducted in 2021.

As the pandemic resulted in all face-to-face training programs being put on hold, Huhtamaki invited employees to contribute online to global and local initiatives, such as the Huhtamaki 100 years celebration, Connect action planning and strategic key projects, to provide a wide range of learning opportunities, especially in the areas of leadership and collaboration skills. In addition, in 2020 Huhtamaki provided a LinkedIn Learning license to approximately 200 employees across the globe. With this, the Group wants to support their development with access to a platform that offers courses taught by industry experts specializing in personal and business skills.

During the COVID-19 pandemic the Group focused on safeguarding the health and safety of its employees. Already in January, the Group started managing the crisis and set up a global COVID-19 working group, focusing on its operations and on providing guidance to safeguard employees on sites as well as those requested to work remotely. The guidance covered instructions for increased hand and respiratory hygiene, avoiding close contact, identifying early symptoms and assisting a potentially infected employee promptly and safely in testing and treatment. Guidance was also provided for a safe return to offices, which included promoting social distancing and limiting meeting room and office seat occupancy. Huhtamaki regularly reviewed the guidance and addressed issues and questions raised across its operations by its employees.

Working remotely was supported by providing essential office tools and equipment at home where possible. Huhtamaki also provided advice and suggestions for behaviors and ways of working to help make remote work more efficient and easier for employees. The Group conducted a check in on the well-being of employees after a couple of months through a survey focused on understanding how employees felt and how they were coping with working remotely. Overall, the results were very positive, although many employees did say they missed casual discussions with colleagues at the office. Encouraged by the experience, Huhtamaki has continued to explore what impact work arrangements made during the pandemic have for the future of work at Huhtamaki.

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. During

​

2020, the implementation of the Working Condition Requirements was focused mainly on the renewal of the health and safety ambition and its future roadmap.

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.

Huhtamaki’s 2020 refreshed OHS governance and policy strengthens the focus on key development programs. In 2020, two major improvement projects were initiated, one related to improving safe work practices with machines, and another focused on chemical management. Both projects address technical, behavioral and leadership elements.

Going forward, in 2021 new KPIs will be introduced that not only aim at reducing the number of injuries globally, but also strive to prevent the reoccurrence of an event. In addition to tracking lost time and medical treatment injuries, the Group will also start following learnings shared from lost time injuries.

The key OHS indicators for 2020 are Lost Time Incident Frequency Rate (LTIFR) and Lost Day Rate (LDR). In 2020, LTIFR decreased to 1.6 (2.0 in 2019 and 1.8 in 2018). When calculating LTIFR Huhtamaki considers lost time incidents and actual working hours of Huhtamaki employees and external workers. There were no fatalities during 2020. Severity of incidents, measured in LDR, was down to 454 in 2020 (526 in 2019 and 358 in 2018). Huhtamaki calculates LDR by counting the scheduled workdays lost starting from the next workday after the incident.

​

Number of personnel by segment

​

Largest countries by number of employees

Employees by gender

​

Incident frequency and severity 2016–2020, Group

Human rights

Policies

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. Respecting human rights within the Group as well as in its supply chains, is essential to Huhtamaki.

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.

All suppliers are expected to comply with the Code of Conduct for Huhtamaki Suppliers. The document is available on the Group’s website and it is also referred to in the Huhtamaki General Terms and Conditions of Purchasing. The Code of Conduct for Huhtamaki Suppliers covers requirements related to compliance with laws and regulations as well as fundamental rights of employees, including provisions for providing a safe and healthy work environment. Huhtamaki’s suppliers are responsible also for their subcontractors’ compliance with the requirements.

Huhtamaki also provides suppliers with the opportunity to share their own Code of Conduct. If a supplier’s Code of Conduct fulfils the requirements of Huhtamaki’s policy, it can be accepted as equivalent.

Huhtamaki uses the NAVEX RiskRate tool to monitor the compliance of its suppliers with the Code of Conduct for Huhtamaki Suppliers. The focus is on key suppliers, defined as strategically important suppliers that fall into the top 80% of the procurement spend and into certain supplier categories. Additionally, NAVEX RiskRate is used to monitor all key suppliers inter alia against sanction lists, watch lists and adverse media, which helps Huhtamaki to control risks of any human rights violations in its supply chains. Each key supplier is assigned a risk rating in NAVEX RiskRate, and

​

depending on this rating suppliers might be required to answer a specific questionnaire. The answers provide Huhtamaki more insights into suppliers’ compliance practices.

In 2019, Huhtamaki updated its due diligence processes and tools for supplier monitoring with the aim of increasing visibility across the supply chain. This included defining new internal procedures, updating technical solutions, as well as providing training for relevant employees. After conducting a successful trial in the North America business segment in 2019, the updated due diligence process was rolled out to all business segments in 2020. The process now covers approximately 80% of supplier spend globally. In 2020, 92.5% of key suppliers accepted the Code of Conduct for Huhtamaki Suppliers, and 4.7% provided their own Code of Conduct which was approved after review. A few suppliers were exempted from the Code of Conduct acknowledgement requirement due to the nature of their business with Huhtamaki.

Huhtamaki is a corporate member of Sedex, the world’s largest collaborative platform for sharing responsible sourcing data on supply chains. As a part of strengthening its supply chain due diligence processes, Huhtamaki will start utilizing more third-party corporate responsibility audits in supplier assessments. Such audits give information on the environmental, social and ethical performance of Huhtamaki’s suppliers, helping to identify and monitor potential corrective actions. The plan for 2020 was to start the work with third-party corporate responsibility audits. Suppliers to be audited were identified based on certain attributes, such as their location and supplier category, concentrating first on key suppliers. Due to the COVID-19 pandemic, all planned supplier audits were put on hold until further notice, in order to protect the employees of Huhtamaki Group’s suppliers and auditors.

Recognizing that human rights is a topic that continues to increase in importance for stakeholders, Huhtamaki initiated a project in 2020 to further sharpen its human rights due diligence by assessing its processes and looking at where the Group still needs to develop. This work will continue in the form of a human rights impact assessment, which will start with a pilot in 2021.

Huhtamaki also expects suppliers to comply with its Human Trafficking and Modern Slavery Statement, which is available on the Group’s website. Suppliers, including labor agencies and recruiters, are required to have processes to ensure that they do not take part in human trafficking or modern slavery.

Huhtamaki’s suppliers and workers in its value chain can report any violations of the Code of Conduct for Huhtamaki Suppliers or concerning other Huhtamaki policies through Huhtamaki’s global whistleblowing system, the Huhtamaki Speak-Up channel.

Anti-corruption and anti-bribery

Policies

The Huhtamaki Code of Conduct 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. Anti-bribery and corruption provisions are an integral part of the Code. In addition, these provisions are included in the Code of Conduct for Huhtamaki Suppliers. The Global Ethics and Compliance function oversees the implementation of the company’s Ethics and Compliance program by advising and supporting conduct of business with high integrity and in compliance with laws and regulations, including anti-bribery and corruption provisions.

The Huhtamaki Global Ethics and Compliance program and related framework was introduced in 2019. The program focuses on Huhtamaki’s commitment to integrity and the highest ethical standards across the global organization. During 2020, Huhtamaki continued to execute the key initiatives supporting the Ethics and Compliance program, and continuously developed further the key elements of the framework.

​

Huhtamaki strongly believes that conducting business with integrity is the right thing to do, and is also its license to operate. The structured ethics and compliance program also helps Huhtamaki to answer to the growing interest of external stakeholders on ethics and compliance matters, and to the needs of Huhtamaki’s global organization by establishing a standard, structured approach to handle ethics and compliance matters across all Huhtamaki units globally.

One of the key elements of Huhtamaki’s Ethics and Compliance program framework is training and communication. In 2020, Code of Conduct and anti-bribery and corruption face-to-face training sessions were organized by the Global Ethics and Compliance function for the units in Saudi Arabia and South Africa. Additionally, the function continued to raise awareness of corruption and other compliance risks also in Huhtamaki’s other operating geographies during 2020 by providing training and communication through various online channels.

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 annual Code of Conduct e-learning was renewed in 2020, and it contains also an anti-corruption section with the commitment not to tolerate corrupt practices of any kind and practical examples for ethical decision-making. In 2020, 95.7% (84.7%) of Huhtamaki’s employees globally completed the mandatory Code of Conduct e-learning. For the first time, all line managers also need to confirm as part of the year-end review process that their team members have completed all mandatory Ethics and Compliance trainings.

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 were rolled out globally as part of the annual Ethics and Compliance training program to key internal stakeholders.

In accordance with Huhtamaki’s values, the Group promotes a speak-up culture and encourages everyone to speak up and raise concerns if there is any suspicion of a breach of the Huhtamaki Code of Conduct, any other Huhtamaki policies and guidelines or laws and regulations. If an employee 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 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. In the United States, reports can also be submitted through the local Alertline system. 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 function coordinates the Speak Up channels and oversees the overall investigation process of alleged violations. The Global Ethics and Compliance function 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 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.

Risk review

Risk management

Risk management at Huhtamaki aims to identify potential events in the short, medium and long-term that may affect the achievement of 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. 

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 strategic, operational and financial objectives of Huhtamaki, with sustainability and compliance embedded in all of them.

During 2020, the key risks identified in the 2019 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 Group or segment level and followed by the Global Risk Management function on a quarterly basis, with a focus on each business segment’s most significant risks. 

During the first half of 2020, business units, segments and global functions identified and assessed business risks against their short, medium- and long-term objectives. These risk assessment results were consolidated from business unit to segment and further to corporate level and used to identify the key risks at segment and corporate level. At each level from business unit to Group, risk treatment actions were defined in order to reach acceptable risk levels. Building on this risk assessment, the most relevant risks and opportunities were further assessed in connection with Huhtamaki’s and segments’ strategy review and budget preparation. Connections between the most important long-term strategic risks and medium to short-term operational and financial risks were identified and analysed both at Group and segment levels. The acceptable risk levels associated with appropriate risk management efforts were approved by the Global Executive Team, 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 2021.

The most significant strategic risks

Huhtamaki’s 2030 strategic priorities are to grow its business, drive competitiveness, develop talent and embed sustainability in everything it does. Huhtamaki views that the most significant risks and opportunities for growth arise from the macroeconomic environment. Continued uncertainty due to the impact of COVID-19 on the economy may impact consumer buying behavior, and thus demand for the Group’s products. Uncertainty on trade agreements, particularly post Brexit, as well as trade wars and political unpredictability may slow down investment and economic growth in impacted geographies. Another key risk to growth arises from the Group’s ability to hold and increase its market position while during and post pandemic the competitive environment is volatile and market dynamics are changing. Yet, these changes, together with certain changes in demand also present opportunities to build agile business models and grow in product categories that serve food delivery, casual at home entertaining and everyday convenience. Huhtamaki manages the risks by developing its range of product offering, allocating capital and resources carefully and diversifying investments geographically.

The key risks and opportunities to Huhtamaki’s competitiveness arise from its ability to manage prices effectively in the presence of aggressive competition, a rise in raw material pricing, it’s capability to meet customer demand for technology and digital solutions and its ability to benefit from its global position in terms of sales and sourcing. Activities to manage the threats and seize the opportunities involve cross-functional and cross-segment collaboration and active dialogue with the customers to develop ways to increase value and understand Huhtamaki´s competitive position. Furthermore, Huhtamaki’s competitiveness relies on the successful completion of its key projects as part of its World Class Management system. This is supported with good project governance and explicit accountability and responsibility structures.

To successfully reach its goals in talent development, the Group focuses on managing the risks and opportunities relating to leadership and human capital. These include developing the skills of leaders and managers, global and local talent pools and succession planning, and performance management activities that support a high-performing and diverse culture.

In terms of the Group’s sustainability ambition, the biggest strategic risks and opportunities arise from changes in consumer behavior and potential new environmental legal requirements on single-use products. 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. Understanding consumers enables Huhtamaki to realize business opportunities in building long-term sustainable growth in partnership with its customers. On the other hand, negative media attention on plastics and single-use products which does not take into consideration the value of packaging within the broader sustainability context, may depress demand for Huhtamaki’s products. Negative media attention may also drive governmental attitudes and legislation. 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.

Operational and financial risks

Huhtamaki’s ability to pass increases in the cost of raw materials and energy to the price of its products is considered one of the biggest operational risks and opportunities to the Group. The risk is managed by increased centralized purchasing by the business segments. Raw material and energy prices are monitored on an ongoing basis, and energy and material escalation clauses are included in contracts when possible.

Risks related to destruction of facilities and dis-continuity of operations, disruption in raw materials or energy supply as well as 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, the company maintains and further develops its disaster recovery and business continuity plans and allocates manufacturing capacity to several locations. Huhtamaki is also renewing its ERP systems, modernizing business software and updating hardware.

Product safety and quality is a number one priority to Huhtamaki. While consistent high quality and safety in Huhtamaki’s products build a competitive advantage, a critical shortcoming in product safety or quality could negatively impact the company’s reputation resulting in a decrease in sales. The Group applies rigorous quality control processes in all its manufacturing operations and has formal trial processes for new products and materials. Quality and hygiene management systems, such as ISO9001 and BRC, provide a solid base for securing manufacturing consistency.

Huhtamaki has made substantial investments into the production machinery serving its technology platforms. To mitigate the risk of its technology and machinery becoming outdated, inefficient or unfit for serving customer demand, the Group continuously monitors and anticipates long term needs for replacement investments. Huhtamaki is also actively working on strategic partnerships and M&A to secure a competitive advantage on new technology innovations.

Foreign exchange transaction risk remains among Huhtamaki’s twenty most important risks and is slightly increased in 2020 versus 2019. More information on financial risks and risk management can be found in Note 5.8. of the Financial statements 2020.

None of the risks identified in connection with the 2020 risk assessment are 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 a number of 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 includes 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.

​

Short to medium term sustainability risks and opportunities arising from changes in the business environment include bans on chemicals and materials used in products as well as new legal requirements affecting Huhtamaki’s products, plants or processes. Concerns on plastics, non-recyclable and non-renewable products as well as related consumption reducing measures or bans and increased costs on Huhtamaki’s Flexible and Foodservice products affect the business. Thus, the Group is continuously evaluating and developing its product portfolio to match market expectations on sustainability. It monitors regulatory changes and drivers through several sources and stakeholders. The Group views that changes can also bring significant business opportunities, which it is well-placed to address with its current knowledge and expertise of different raw materials and conversion technologies. 

​

In the medium to long term, climate change is likely to increase the frequency and severity of weather-related natural disasters such as windstorms, droughts and floods that pose a threat to Huhtamaki’s manufacturing and distribution continuity. The physical damage that extreme weather conditions may cause to manufacturing facilities or infrastructure could interrupt 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 plans. Proposed greenfield or acquisition target locations’ exposure to natural disasters is evaluated and must be considered acceptable, prior to proceeding with a project. Risks relating 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 on its business but on 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 of this Annual Report 2020 publication. 

​

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 with applicable laws and regulations, as well as the ethical and societal 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 2020 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 the most engaging, motivating and safest workplace in the sector. More information on the Group’s sustainable People strategy can be found in the Business Overview section of this Annual Report 2020 publication. 

In the 2020 ERM assessment, changes in legal requirements on food packaging, human resources, as well as product safety and quality risks represented the most significant sustainability risks and opportunities for

​

Huhtamaki. All three were among the top ten risks. Occupational health and safety, labor relations, human rights, sustainability requirements affecting manufacturing units or processes, as well as bans on materials used in products were considered medium risks to the Group.

​

Sustainability is also considered in connection with reputational risks relating to products, workplace, governance, and corporate citizenship. Reputational risks related to corporate citizenship and products are considered to pose a medium risk to the achievement of Huhtamaki’s objectives, whereas reputational risks relative to workplace and governance are seen a medium-low risk. Reputational risk management focuses on managing the potential root causes of the risks. 

​

Corruption risk is included in the ERM assessment and considered an operational as well as a reputational risk. While the risk of corruption, bribery, and fraudulent activity in general is considered medium-low in the 2020 ERM assessment, anti-corruption is a key element of the company’s ethics and compliance program framework. Ethics and business integrity requirements, including anti-corruption and zero tolerance to bribery, are also an integral part of Huhtamaki Working Conditions Requirements. Corruption and bribery risk and the related preventative procedures are evaluated in connection with a biennial ethics and compliance assessment, previously conducted in 2019 and scheduled to be refreshed in 2021.

​

Personnel

Number of personnel

​

¹Including global functions in Finland

The number of employees decreased by 2% during the review period. At the end of December 2019, the Group had a total of 18,227 (18,598) employees. The total number of employees has decreased slightly in 2020 as the Company continued to adjust its operational model towards an optimal structure to deliver on the 2030 Strategy. Huhtamaki has strengthened some of its functions as well as centralized resources by shifting employees from segments to global functions.

Personnel by segment on December 31, 2020Personnel by segment on December 31, 2019

​

Changes in management

Marina Madanat, M.Sc. (Economics and Business Administration), B.Sc. (Electrical Engineering), was appointed Executive Vice President, Strategy and Business Development as of January 1, 2020.

Antti Valtokari, M.Sc. (Computer Science), was appointed Executive Vice President, IT and Process Performance as of January 1, 2020.

Leena Lie, Executive Vice President, Marketing and Communications, and a member of the Global Executive Team decided to leave Huhtamaki to pursue other career opportunities on January 16, 2020.

Arup Basu, PhD (Technology), was appointed President, Flexible Packaging and a member of Global Executive Team as of February 1, 2020. Olli Koponen, President, Flexible Packaging, stepped down from the Global Executive Team and was appointed as Senior Vice President, Total Productive Manufacturing until his retirement.

Thomasine Kamerling, M.A., Modern History, was appointed as Executive Vice President, Sustainability and Communications and a member of Global Executive Team as of March 1, 2020.

Ann O’Hara, MBA, BSE (Chemical Engineering), was appointed President, North America business segment and a member of the Global Executive Team as of January 1, 2021. Clay Dunn, President, North America business segment retired at the end of 2020 after successfully leading Huhtamaki’s business in North America since 2005.

Share capital, shareholders and trading of shares

Share capital and share data

​

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  2020: Board proposal

​

Shareholder structure as at December 31, 2020

There were 36,764 (31,056) registered shareholders at the end of December 2020. Foreign ownership including nominee registered shares accounted for 50% (48%). At the end of the year, the largest shareholder was the Finnish Cultural Foundation holding 10.5 percent of all shares.

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 2020, the Company’s market capitalization was EUR 4,554 million (EUR 4,459 million). With a closing price of EUR 42.26 (EUR 41.38) the share price increased approximately 2 percent from the beginning of the year. During the reporting period the volume weighted average price for the Company’s shares was EUR 37.34 (EUR 34.74). The highest price paid was EUR 46.62 (EUR 42.20) and the lowest was EUR 23.48 (EUR 26.81).

During the reporting period, the cumulative value of the Company’s share turnover on Nasdaq Helsinki Ltd was EUR 2,217 million (EUR 1,905 million). The trading volume of approximately 59 million (55 million) shares equaled an average daily turnover of 235,468 (219,838) shares. The cumulative value of the Company’s share turnover including alternative trading venues, such as BATS Chi-X and Turquoise, was EUR 5,673 million (EUR 5,036 million). During the reporting period, 63% (64%) of all trading took place outside Nasdaq Helsinki Ltd. (Source: Fidessa Fragmentation Index, fragmentation.fidessa.com)

Resolutions of the Annual General Meeting 2020

Huhtamäki Oyj’s Annual General Meeting of Shareholders was held in Helsinki on April 29, 2020. The meeting adopted the Annual Accounts including the Consolidated Annual Accounts for 2019, 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. The Annual General Meeting also decided to approve the Remuneration Policy for the Company’s Governing Bodies presented to it.

The Annual General Meeting authorized the Board of Directors to decide at a later stage and in its discretion on the distribution of dividend in one or several instalments of a total maximum of EUR 0.89 per share.

The number of members of the Board of Directors was confirmed to be seven (7). Mr. Pekka Ala-Pietilä, Mr. Doug Baillie, Mr. William R. Barker, Ms. Anja Korhonen, Ms. Kerttu Tuomas, Ms. Sandra Turner and Mr. Ralf K. Wunderlich were re-elected as members of the Board of Directors for a term ending at the end of the next Annual General Meeting. The Board of Directors elected Mr. Pekka Ala-Pietilä as the Chairman of the Board and Ms. Kerttu Tuomas as the Vice-Chairman of the Board.

​

KPMG Oy Ab, a firm of authorized public accountants, was elected as Auditor of the company for the financial year January 1 - December 31, 2020. Mr. Henrik Holmbom, APA, will be 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. The Annual General Meeting also 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 remains in force until the end of the next Annual General Meeting, however, no longer than until June 30, 2021.

The Annual General Meeting resolved to establish a Shareholders’ Nomination Board and to adopt the Charter of the Shareholders’ Nomination Board. The Shareholders’ Nomination Board replaces the Nomination Committee of the Board of Directors. The Shareholders’ Nomination Board comprises one member appointed by each of the four largest shareholders of the Company in accordance with the appointment procedure set out in the Charter. The Chairman of the Board of Directors serves as an expert member of the Shareholders’ Nomination Board.

The Annual General Meeting resolved to amend the Articles of Association in accordance with the proposal of the Board of Directors so that amendments related to the establishment of the Shareholders’ Nomination Board and certain other technical amendments were made to the Articles of Association. As a result of the amendments, the Chairman and the Vice-Chairman of the Board of Directors can in the future be elected at the General Meeting.

Short-term risks and uncertainties

The COVID-19 pandemic is a significant short-term risk potentially creating disturbance in the Group’s trading conditions and its operating environment, as well as in demand for the Group’s products. Volatile raw material and energy prices as well as movements in currency rates are considered to be relevant short-term business risks and uncertainties in the Group's operations. General political, economic and financial market conditions can also have an adverse effect on the implementation of the Group's strategy and on its business performance and earnings.

Outlook for 2021

The Group’s trading conditions are expected to improve compared to 2020, however with continued volatility in the operating environment. Huhtamaki's diversified product portfolio provides resilience and the Group’s good financial position enables addressing profitable growth opportunities.

Dividend proposal

On December 31, 2020 Huhtamäki Oyj’s distributable funds were EUR 542 million (EUR 630 million). The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.92 (EUR 0.89) per share be paid.

Annual General Meeting 2021

The Annual General Meeting of Shareholders (AGM) will be held on Thursday, April 22, 2021 with exceptional meeting procedures based on the Finnish temporary legislative act to limit the spread of the COVID-19 pandemic (677/2020). The AGM will be held without the presence of shareholders or their representatives in order to ensure the health and safety of the Company‘s shareholders, personnel and other stakeholders. After the AGM, shareholders will be provided with an opportunity to follow a webcast where the Chairman of the Board and the President & CEO will address topical themes of the Company.

​

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 2020 publication. The statements are also available on the Group’s website www.huhtamaki.com.

​

Business model

​

​

Financial statements

Consolidated financial statements

Consolidated statement of income (IFRS)