Huhtamaki Reports 1% Comparable Sales Increase in H1 2026 Despite Middle East Supply Chain Challenges

Comparable Sales Growth Maintained Amid Currency and Geopolitical Challenges

During the first half of 2026, Huhtamaki recorded a 1% increase in comparable net sales at the Group level, underscoring steady business momentum despite significant external pressures. Reported net sales declined by 3% to EUR 1,955.8 million, largely due to unfavorable currency translation effects totaling EUR -77.8 million. This currency impact significantly weighed on reported results, as exchange rate fluctuations reduced sales volumes and earnings across the company’s global operations. The report highlights that sales prices rose and volumes remained stable, indicating effective management of cost pressures while preserving customer relationships.

CEO Ralf K. Wunderlich stated the company "delivered comparable net sales growth and improved our adjusted EBIT margin" despite a "deteriorated geopolitical environment, where the Middle East crisis caused supply disruptions and significant cost increases." The company prioritized employee support in affected areas and ensured uninterrupted customer supply, demonstrating operational resilience amid volatility. The regional crisis triggered immediate supply chain interruptions and unexpected cost hikes, which were mitigated through operational flexibility and efficiency enhancements across production sites.

Adjusted EBIT Margin Growth Fueled by Flexible Packaging Segment

Adjusted EBIT for the Group declined 2% to EUR 198.2 million in H1 2026 compared with EUR 201.5 million in the previous year, yet the adjusted EBIT margin improved to 10.1% from 10.0% in H1 2025, reflecting effective cost control and operational gains despite challenges. Currency fluctuations negatively affected earnings by EUR -6.4 million during this period. The company implemented various efficiency measures that bolstered profitability, partially offsetting lower sales volumes, increased transportation expenses, and higher energy costs.

The Flexible Packaging segment was the top performer, achieving 5% comparable net sales growth in H1 2026 and a 25% rise in adjusted EBIT to EUR 66.0 million. Its adjusted EBIT margin surged to 10.2% from 8.3% the previous year. Volume increases combined with successful raw material cost pass-through, alongside cost-saving initiatives and operational improvements at previously underperforming units, contributed to profitability gains. In Q2 alone, Flexible Packaging recorded 14% comparable net sales growth and a 10.8% adjusted EBIT margin, indicating accelerating momentum as turnaround efforts took effect.

Fiber Packaging Drives Specialty Market Expansion

The Fiber Packaging segment delivered strong growth in H1 2026, with comparable net sales up 6% and adjusted EBIT rising 28% to EUR 30.1 million. The segment maintained a robust adjusted EBIT margin of 15.2%, up from 12.3% in the prior year. This success reflects effective execution of recent capital investments and the ability to capitalize on market opportunities in egg and fruit packaging, which are specialized and higher-margin products within Huhtamaki’s portfolio. Operational efficiency and pricing power supported margin expansion despite external cost pressures.

In Q2, Fiber Packaging achieved 7% comparable net sales growth and an adjusted EBIT margin of 15.3%, continuing the positive trend from Q1. The company noted that the segment "is delivering on recent investments and continues to invest in opportunities in the egg and fruit packaging markets," signaling management’s confidence in ongoing growth drivers. These specialty packaging products benefit from structural demand trends in sustainable food preservation and convenient fresh produce packaging.

North America Segment Encounters Operational and Seasonal Challenges

The North America segment faced significant headwinds in H1 2026, with 0% comparable net sales growth and a 21% decline in adjusted EBIT to EUR 67.3 million. The adjusted EBIT margin contracted to 10.0% from 12.0% the previous year, reflecting operational difficulties at several plants and unfavorable timing effects. Net sales fell 6% to EUR 670.6 million, partially offset by price increases, though volume pressures persisted. The company attributed some sales weakness to the timing of the Easter holiday, which typically influences foodservice packaging demand in North America.

Management highlighted that "lower sales and operational challenges at certain plants negatively impacted adjusted EBIT and cash flow," noting only partial relief from deliveries related to the World Cup and U.S. 250th anniversary events in July 2026. In response, "self-help actions have been initiated" to enhance efficiency and resolve operational issues at underperforming facilities. The company reported an 8% comparable net sales decline in Q2 in North America, indicating intensifying challenges requiring immediate management focus and operational restructuring.

Foodservice Packaging Segment Faces Ongoing Market Weakness

Huhtamaki’s Foodservice Packaging segment saw a 4% decline in comparable net sales in H1 2026, with adjusted EBIT falling 14% to EUR 36.9 million. The adjusted EBIT margin decreased to 8.3% from 9.0% year-over-year, reflecting difficult market conditions particularly impacting regional and local customers. Net sales dropped 6% to EUR 445.5 million, as traditional foodservice channels weakened and the Middle East crisis added demand pressures. However, net sales "remained close to last year’s level" in Q2, indicating some stabilization compared to the 8% decline in Q1.

Despite these challenges, the segment "achieved an adjusted EBIT margin of 8.6% in Q2 and generated strong cash flow." Cost-saving initiatives and capital discipline helped maintain profitability amid constrained revenues. The company noted that "market conditions remained challenging, especially for regional and local customers," suggesting structural issues beyond seasonal trends. Management’s focus on capital discipline and cost control positions the segment defensively while retaining flexibility to respond to market recovery.

Currency Effects and Items Affecting Comparability in H1 2026

Currency fluctuations posed significant challenges for Huhtamaki in H1 2026, with foreign exchange translation reducing net sales by EUR -77.8 million and EBIT by EUR -6.4 million. These currency impacts accounted for a 4% negative effect on reported sales growth, meaning the underlying 1% comparable growth would have translated to 5% reported growth without exchange rate shifts. The report notes comparisons used 2025 exchange rates, underscoring volatility across the company’s operations spanning 35 countries and 105 locations.

Items affecting comparability (IAC) totaled EUR -40.8 million in H1 2026, compared to EUR -61.6 million in the previous year. The largest item was a EUR 16 million impairment in the Foodservice Packaging segment related to production footprint optimization amid restructuring. Other notable components included EUR -22.9 million in restructuring costs and EUR -16.3 million in implementation expenses for large SaaS cloud computing projects. These adjustments exclude one-time charges and restructuring costs to present adjusted EBIT of EUR 198.2 million, offering a clearer view of operational performance.

Capital Expenditure and Cash Flow Management in H1 2026

Huhtamaki’s capital expenditures totaled EUR 53.4 million in H1 2026, down 27% from EUR 73.2 million in the prior year, reflecting disciplined investment amid market uncertainty and operational challenges. The reduction occurred while maintaining growth investments, especially in Fiber Packaging’s expansion in egg and fruit packaging markets. Free cash flow reached EUR 33.9 million, a 46% decrease from EUR 63.1 million in H1 2025, due to lower profitability, working capital changes, and reduced capital intensity.

The company’s financial position remains strong, with management stating "the solid financial standing will enable the Group to pursue profitable growth opportunities" under an unchanged 2026 outlook. The lowered capital intensity relative to sales indicates cautious resource allocation while preserving financial flexibility. This approach aligns with the company’s focus on "disciplined capital allocation," one of its three key value drivers alongside growth and accountability.

Earnings Per Share and Tax Developments

Adjusted earnings per share (EPS) for H1 2026 were EUR 1.20, based on adjusted profit attributable to equity holders of EUR 125.6 million. Reported EPS rose 20% to EUR 0.89 from EUR 0.74 the prior year, supported by a 13% increase in reported EBIT to EUR 157.4 million. The EPS improvement reflects strong operational results and restructuring execution, partially offset by EUR -31.8 million in items affecting comparability. The tax expense was EUR 30.4 million, with an effective tax rate of 23%, down from 26% the previous year, partly due to changes in country-level profit mix.

In Q2, adjusted EPS were EUR 0.64 versus EUR 0.63 in the prior year quarter, showing modest adjusted profit growth. Reported EPS surged to EUR 0.43 from EUR 0.20, more than doubling due to significantly lower items affecting comparability in Q2 2026. Net financial expenses decreased to EUR 28.0 million from EUR 29.4 million in H1 2025, reflecting benefits from lower interest rates on debt. These financial improvements helped offset operational headwinds, supporting earnings resilience.

Strategic Focus and Outlook for Full-Year 2026

Huhtamaki’s management framework revolves around three value drivers: growth across all levers, disciplined capital allocation, and accountability with swift execution. CEO Ralf K. Wunderlich emphasized that "execution of our three value drivers enables resilience amid ongoing market volatility," expressing confidence that "our team’s ability to deliver on these drivers" will sustain performance. This strategy guides capital deployment, operations, and accountability across 17,400 employees in 35 countries. The company’s resilience focus addresses macroeconomic uncertainty marked by geopolitical tensions, volatile energy prices, and uneven regional demand.

Looking forward, management maintained its 2026 outlook, noting "trading conditions are expected to remain relatively stable," and "our strong financial position will support profitable growth opportunities." This cautiously optimistic view balances market challenges with confidence in operational and financial strength. The diversified portfolio—with Flexible and Fiber Packaging driving growth while Foodservice Packaging and North America stabilize—provides flexibility to navigate volatility. Management’s commitment to executing value drivers and resolving operational issues positions Huhtamaki to capitalize on market improvements while maintaining disciplined cost control.