Finnish food and drink packaging company Huhtamaki Oyj is launching an efficiency turnaround which will see some of its “non-competitive lines” closed and written off.
The move was prompted by "lower-than-expected" performance in the first six months of 2018, despite significant investments and customer recognition in the past three years.
Speaking to Plastics News Europe, Chief Financial Officer Thomas Geust said a review process is currently investigating operations in all regions and all segments of the company, but declined to give further information.
In addition to the line closures, Huhtamaki also expects to improve productivity by investing further in automation.
The company estimates that the effect of write-offs and other actions would amount to approximately 30 million euros ($34.6 million), which it would report as items affecting comparability (IAC) in its fourth quarter 2018 results.
The Espoo, Finland-based group expects the efficiency measures to result in annual improvements of approximately 15-18 million euros ($17.3-20.7 million) in profitability with full impact in 2020.
"With these actions we plan to improve our productivity and efficiency, and ensure we are well positioned to continue implementing our profitable growth strategy," CEO Jukka Moisio said.
Moiso went on to add that his company saw “good growth opportunities in food and drink packaging."
In the six months that ended June 30, Huhtamaki sales remained flat year-over-year at 1.5 billion euros ($1.7 billion), while its earnings fell 5 percent to 130 million euros ($150 million).
Commenting on the half-year results in July, Moisio said currency conversion weakened company earnings by 4 million euros ($4.6 million).
Profitability improved in food service in the Europe, Asia and Oceania region and flexible packaging segments during the six months while North America had negative margin development due to higher distribution costs and start-up costs of a new Goodyear, Ariz., thermoforming facility.