CHINA – Huhtamaki, a sustainable packaging solutions provider, has unveiled its strategy to streamline production operations in China, within the fiber foodservice Europe-Asia-Oceania segment.
The company intends to consolidate its manufacturing activities by closing down its Tianjin and Shanghai sites by the end of the second quarter of 2024, with operations being transferred to the Guangzhou facility.
Fortunately, this restructuring will not affect production at the Xuzhou site. This decision, while affecting 154 employees, underscores Huhtamaki’s commitment to supporting its workforce in transitioning to new employment opportunities.
The move is a strategic maneuver aimed at optimizing the company’s manufacturing footprint and bolstering its competitiveness.
It aligns with Huhtamaki’s broader strategy acceleration program announced last November, which is anticipated to significantly enhance profitability.
The efficiency improvements targeted by this program are expected to yield approximately €100 million (US$109.28m) in savings over the next three years, according to the company.
The decision to close the Tianjin and Shanghai sites is grounded in their apparent lack of significant contribution to Huhtamaki’s sales or profits, as indicated in the FY23 report.
Despite a 7% decrease in net sales to €4.16 billion (US$4.49bn) from €4.47 billion (US$4.85bn) in FY22, the company remains resilient.
Comparable net sales growth at the group level decreased by 2%, with a steeper decline of 4% observed in emerging markets.
While earnings before interest, taxes, depreciation, and amortization (EBITDA) for the period saw a slight increase of 1% to €621.2 million (US$674.60m), earnings before interest and taxes (EBIT) experienced a 6% decline from €405.3 million (US$440.14m) in FY22 to €380.9 million (US$413.64m) in FY23.
Similarly, earnings per share (EPS) witnessed a significant decrease of 25% to €1.97 from €2.65 the previous year.
Despite these challenges, Huhtamaki demonstrated resilience, with capital expenditure remaining stable at €318.7 million (US$346.09m).
In the fourth quarter of FY23, although net sales decreased by 6% to €1.03 billion (US$1.12bn) from €1.10 billion (US$1.19bn) in the same period a year ago, there was a notable improvement in EBIT, which surged by 87% to €146.0 million (US$158.55m), alongside a 55% growth in EPS to €0.83, and a 5% increase in adjusted EPS to €0.68.
Charles Héaulmé, President and CEO of Huhtamaki, expressed confidence in the company’s ability to navigate the volatile market environment and drive initiatives for growth and profitability.
He emphasized Huhtamaki’s diversified portfolio and organizational agility as key strengths enabling it to deliver results despite challenges.
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