Huhtamäki Oyj (HUH1V) Earnings Call Transcript & Summary

Welcome, everyone, to Huhtamäki Capital Markets Day 2023. My name is Kristian Tammela, I'm VP of Investor Relations here. I'm really excited to have so many of you here at the venue and also online following this event when we are able to tell more about our newly launched updated strategy. The last time we actually had this kind of event was back in 2020, but due to COVID, the practicalities were a bit different back then. And also, within this time around, actually have our business segment presidents presenting for us. So really happy to have all of them here as well today. Today, we'll run 2 different sets. So first, we'll have presentations by Charles, Thomasine and Thomas, followed by a Q&A set for the 3 of them. Then we'll have a short break in between and do the same with Marco, Eric and Ann, our business segment presidents, and followed by Q&A. And then Charles will wrap up the day. To pose questions, you can actually do that already now and throughout the event. For those of you who are online, you will find a chat window in the browser and you can then type in your questions there. And after the event, for those of you who are here around, you'll be able to see our sustainable game-changing products outside here, a selection of those. Please note the disclaimer here before we get started. But with that, I'd like to hand over to Charles. Welcome, everyone.

Good afternoon. Hello to all of you, and welcome to our venue here in Espoo, Finland. And I would like to as well welcome and thank all of you who are joining us online today. This is a real pleasure, together with the global executive team, to be able to be together with you and, as Kristian was saying, present physically this time in 2023. Our plan, as the company Huhtamäki, our plan, how to play, how to win in a packaging industry, which is in rapid evolution, as you may know, and which is offering very exciting opportunities going forward. So what I would like to do first is, even though you -- most of you know the company, I would like to give you a quick insight about where we are and what we want to share with you about our strategy going forward, where do we play and where do we want to go as a company towards 2030. As you know, we are, Huhtamäki, a global advanced manufacturer of packaging focused on sustainable packaging solutions, and we are serving our customers and consumers, I would say, billions of consumers every day globally. Now when you reflect, and Kristian was talking about the last time we met with the Capital Markets Day was in March 2020, we think it's very timely to meet 3 years later because of the rapid evolution of the packaging industry. When we reflect about the 3 years that have been going forward from 2020 to now, we have been actually delivering on our promises. First of all, through business growth, we have been delivering more than 30% revenue growth in the last 3 years. Let's remember, in a constantly extremely disruptive environment for our business, for all industries, but the packaging industry obviously was no exception in that context. Now even more importantly, not only from an economic point of view, but from a transformational point of view, the last 3 years have been really a change for the company, where we have put, number one, sustainability at the center of our operations. We have put sustainability at the center of our strategy. And we even, as I remember, had an investors and analysts get-together in November 2020 focused specifically on sustainability and why sustainability is so central to the packaging industry if we want to be not only relevant, but if we want to be a differentiated leader in the future towards 2030. This transformation of the company didn't go only about sustainability, but as well it's about our product, our product portfolio. And when it comes to sustainability, then it was all about innovation. So we've been driving innovation alongside during these 3 years, and we're going to speak much more about innovation today. So today is really about where we're coming from, what is our vision of the packaging industry going forward and what is our plan to win in this packaging industry. Our journey to 2030, I will anticipate myself to what we're going to discuss later, and our business presidents are going to present to you segment by segment, business by business, we're going to speak about, for our journey to 2030, about 3 main things. Number one, we want to continue scaling our profitable core businesses. That is the first name of the game for us, is scaling up our profitable core businesses. I will come back to that. Second is about accelerating further development of innovation and particularly where we can play with proprietary technology that we know well at Huhtamäki. And the third aspect is going to be about accelerating or, I should say, stepping up our operational performance as a company. We believe as a company that we have a strong vision of the packaging and what it takes to win in the packaging for the future. We are absolutely passionate about packaging because we believe that packaging has a fantastic role to play in the development of the society, but not only the development of the society, the social and economic development of the society. It has a great role to play on the sustainability of the planet. And to do that, we have as well a very competent, experienced and, I would say, passionate team, and this is what we want to as well display to you and convey to you as a message today in order for you to be convinced that we are a company that's going to continue winning and even more accelerating our success going forward in the future. So a couple of words on -- even though all of you may know the company pretty well, a couple of words on our portfolio and where we are doing business. We are reaching out to customers and consumers around the world globally and in 4 different segments or channels of customers, the -- what we call foodservice or the QSR coffee shops, particularly; then the FMCG; the retailers; and then the pharma industry. On the -- each of those channels, we are clearly working with the key players, the key brands, the leading brands globally, but as well nationally in the different countries where we operate. So in terms of examples in the foodservice, for instance, our big customers count, of course, the McDonald's, Burger Kings, Starbucks, Costa Coffee, for instance, but as well, plenty many of local and national brands which are extremely relevant to grow this business. Same with FMCG. On FMCG, we are working with the global brands in the world, the Unilever, Mars, Nestle, Procter & Gamble, Kimberly-Clark, to name only a few. And national brands and retailers, we are working particularly with Walmart; for instance, Costco. But as well with national brands, if we're speaking about what is close to our heart in Finland with Kesko, for instance. So retailers, national and global international companies. Now our products are addressing basically 2 things: food and everyday necessities. With all the attributes of convenience, functionality, and sustainability, sustainability is where we want to drive the company to bring to 100%. You know that our target from a sustainability point of view, we want to have 100% of our portfolio being recyclable or compostable or reusable by 2030. That means sustainable from a planet point of view. Now we do that through 3 different technologies. The fiber-forming technology, the paperboard conversion technology and the flexible technology, we'll come back to each of those technologies. Particularly important to know that in -- across the 3 of them, we are a global nonintegrated leader in different categories. That's about presenting the company quickly. Now important to understand, I said at the beginning, we are passionate about packaging, and I want to emphasize this point a little bit further. We are truly passionate about packaging because we know we are convinced about the role that packaging is playing for the society, particularly being essential to the life of consumers for food and everyday necessities. By the way, just remembering the difficult period of the COVID, during that time, we were -- if you remember, we were able to maintain our production at 99% open across the world. That was thanks to the fact that we were recognized by governments across the world as being part of the essential industry for consumers. Now what do we mean with being essential for consumers, for the society, but as well for the sustainability of the planet? What we mean is that packaging is playing a very important role as enabling an uninterrupted safe and efficient supply chain from farm to fork, when it comes to food, for instance, and with attributes and values strength of the packaging that sometimes are a little bit unknown, and I want to spend a few seconds on this. The first thing is packaging plays an incredible role in making sure that consumers get food and everyday necessities available everywhere in the world, everywhere and every day. Meaning, packaging makes food and other products accessible, more affordable as well. Second, and the recent years, have been showing the importance of it even more, it's about securing hygiene and food safety. Third, probably less known, is that packaging is preventing from food waste. What does that mean? Today, we know from scientific studies that in the value chain of food, for instance, across the world, from 100% of the food that is produced, 30%, well, actually 1/3 is wasted through the production, through the logistics, 1/3 is wasted. That accounts for 10% of the global greenhouse gas emissions. So when we think about sustainability of the planet about the future, for the future generations, 10% of the global greenhouse gas emissions are linked to food waste. How do we prevent food waste? Well, the #1 way to prevent food waste is to have the right packaging on food to increase the shelf life and make sure that consumers are not wasting the food. So this is incredibly important, and that's 10% more than the impact itself of the packaging itself. So not meaning that packaging doesn't have any impact, but we need to work, first of all, of course, on reducing the impact of the -- on the environment from packaging, but we need to understand the attributes and the role that packaging is playing. We -- if we may say it in a summarized way, I would say that we believe -- not only we believe, we are strongly convinced, that the value of packaging is actually higher than its impact on the environment. I could spend a lot of time on this, but we have in the room Thomasine, our expert and leader of sustainability, she will come later after me on stage presenting to you in much more granularity the sustainability aspect, the challenges we have, the opportunities we have and the responsibility we feel for going forward and why it is at the center of our strategy and why it has a lot of implications on the way we do business and the way we are going to do business with innovation. Now here is why we are today together, three years after the previous CMD. And that's because we are, as I said, an essential -- packaging is essential for the consumers around the world for food and everyday necessities, but the food industry -- the packaging industry, sorry, is going through a significant shift, a significant shift because the transformation that is happening in the world is actually accelerating. There is no change in what are the transformative trends in the world, there is no change. What we said in 2020 as the basis of the foundation for our strategy 2030 is still valid, remains the truth. What is changing is the acceleration. If I take, for instance, sustainability again, it's accelerating. Why? Number one, because regulation is accelerating. And regulation is not negative, it's positive to sustainability. Without regulations, we all know that sustainability will not improve. It's accelerating. What is accelerating as well is consumers, all of us, but all consumers across the world are much more informed than before, much more aware and, I would say, feeling responsible in front of the future generations. This means that the consumers are requiring to consume every day products where they feel there is a better impact on the future of the planet. So that's something extremely important. And as a consequence, customers -- that's the second shift, customers today across the world are asking us the same thing: sustainability, innovation for functionality and competitiveness. Sometimes, the order may change between customers, but usually it's exactly this equation. They are asking us to be their partner for innovation, for those aspects of functionality, sustainability and convenience. And then the third dimension that is as well accelerating is, some years ago, some companies may have thought that we can do it all alone in terms of development, innovation and so on. This is not true anymore. Those technologies are complex. Those technologies are changing, evolving. There are new emerging technologies, we need to be open to the full industry, the value chain ecosystem, I should say, in order to innovate in the right things in the future, and that's another axis of acceleration which we consider as a transformative trend founding our updated 2030 strategy. So now packaging being essential, packaging industry going through a transformative change, we are really exciting to be in that business because when we look at the market and the chart that is on the screen, it's showing the addressable packaging market for Huhtamäki. It's a huge market. So the size of the market itself is already exciting. Second thing that is really exciting is that actually from studies, we know that this packaging industry is going to grow 3% to 5% in average per year across the world, with some variation, 3% to 5% variation between categories and geographies. But an industry that can grow with a market growth of 3% to 5% is already extremely positive. That's the #1 excitement factor. But the second one is, I talked a lot already about sustainability, when we look today at the market, less than 30% of the packaging that is in the market is actually sustainable. And I mean sustainable under the definition of being recyclable or compostable or reusable and made from responsibly sourced materials. Less than 30%. When we consider being relevant and being leading in the packaging industry by 2030, we need to be in between 75% and 100%. Our target is to be at 100%, designing all our products to be sustainable by 2030 100%. If we close the gap and our customers as well want us to close that gap together, if we close the gap, this is presenting a terrific growth opportunity for us in the packaging industry, particularly playing with our 3 technologies that I was mentioning. That's the market. Now when we look at us Huhtamäki, we have these 3 technologies that I was mentioning, the fiber forming, the paperboard conversion and the flexible packaging. You may say, from a sustainability point of view, how does it look like? Well, we have been analyzing objectively all types of technologies for packaging, and the news is there is no perfect solution. There is no perfect substrate from a sustainability point of view. It all depends on the applications, the products, what are the functionality, convenience and geographies as well. The infrastructure from a sustainability point of view, infrastructures in the different countries, they are not the same. They are not the same in the U.S. versus Europe or in different countries in Asia. All this has to be considered. And we came to the conclusion that these 3 technologies are extremely relevant to this end in terms of being -- developing sustainable packaging going forward. So now inside these technologies, where is it that we're going to focus in order to be on the forefront, creating more values, because at the end of the day, our aim is to create value for our customers, for our employees, for our shareholders and as well for the planet from a sustainability point of view. The #1 thing we want to focus on, and the recent developments we may speak about later, the recent development I'm showing them is in fiber forming. And in fiber forming, we have this very mature industry of the rough molded fiber. You all know that we are a global leader in egg packaging, for instance, or cup carriers, for instance, that's made out of rough molded fiber. Based on this mature technology that we know well since many years, we have developed what we call a high-precision forming -- fiber forming called smooth molded fiber, and that, we believe, is the direction the stream that is going to develop significantly in the future. So that's an axis of strong development for us going forward. And we have, as you know, and we'll come back to that, invested in that area in the last years. Now second one is on the paperboard conversion. There is as well a lot of opportunities. Why? Well, because you know that the industry is looking and the value chain is looking for plastic substitution. Not to say that plastic is wrong way, plastic has lots of sustainability, positive profiles and functionality that can be equaled by other materials, other substrates. But in the sense of plastic substitution, paperboard is playing a huge role, and we are innovating for sustainable coating in that area for -- particularly for the FMCG sector. Third one is on the flexible packaging. There, we are leading the technologies for making the flexible packaging fully recyclable. If we think about a little bit background, 4, 5 years ago, there was no flexible packaging in the world that was fully recyclable. And the reason is it was multi-complex structures of multi material. And therefore, it was not recyclable. And we are developing and we are on the forefront of developing recyclable structures based on mono material, Marco will come back to you later on, on this. So there, we are leading as well the industry development. Major opportunities in the 3 technologies that we have. So when we summarize all this together, the industry evolution, the industry opportunities and our views of our technologies and what they offer, well, we have defined or redefined our ambition as a company, what we call our 2030 North Star, and this is defined as being the first choice in sustainable packaging solutions, that we said already 3 years ago. What we are saying and emphasizing now is that it will be driven by, number one, innovation; number two, operational performance. If I may summarize it in one word, we want to create sustainable success through sustainable packaging. And therefore, we see our role today and in the future in redesigning the future of sustainable packaging solutions. So of course, when we say that, then we need to look at what is the journey taking us there. And that journey doesn't start today, it started actually 3 years ago when we had announced our 2030 strategy. We are coming from the foundation of the company, which is in our core business of being in -- a packaging converter. And as a packaging converter, I remember meeting customers right at the beginning when I took my role. They were always saying 2 things are the strength of the company. And those 2 things were the fact that we are always following our customers and supporting our customers in their international expansion with our global footprint; and second, that we are very good at implementing the incremental innovation that they were asking us. Now bringing us to the 2030 North Star that I was explaining, that takes us through a transformation journey in our packaging industry, that is our core business, where today we have a value proposition that has already evolved. It has evolved in being a packaging technology innovation leader. We see that with many different projects, I'm coming back to that in a minute. And that means that our value proposition is based on sustainable packaging innovation and being able to do it not for niches, but to be able to do it like our customers want around the world at scale and globally. Our 2030 vision will mean to even more invest into breakthrough innovation based on proprietary technology, that's really what we want to do, and to do it together with the value chain, investing and innovating together with the broader scale of the value chain. Across this journey, something is extremely important. That's our global footprint that plays a big role for our global accounts, customers, and our ability to focus on our world-class operations. That's the foundation of our ability to develop as a company going forward towards this 2030 North Star. So what I would like to do now is to take you through, in a couple of words, what is our plan. How are we going to make it happen? And this is going to be basically with 3 strategic pillars. One is continue to scale our profitable core businesses. Two is accelerating the development and the scaling up of our innovations and, I would say, innovations based on proprietary technology. And three, stepping up on the operational performance. To be able to do that, we will power up the company with strong competencies, what we call our strategic capabilities, there are 5: sustainability, innovation, digitalization, customer excellence and world-class operations. We come back to a bit these aspects later in different section of the day. And all this with a culture of empowerment of our talent. At the end of the day, it all depends on people. And we put a lot of emphasis on the talent, on developing our talent, on hiring the right talent, on retaining the right talent and developing our talent, but with one thing, is empowering people to do the right things across the world. I would like to focus on now on the 3 strategic pillars to get a little bit of more granularity before my colleagues are getting even deeper in the different businesses. I mentioned about scaling up our core business. And we see opportunities in the 3 different technologies, and you would recognize, for all of you who are following up the company, that we have already invested a lot in the last couple of years. We invested a lot in this core business, in scaling up the core business. I would give you a couple of examples, for instance. We started back in June last year a large factory in the manufacturing side that we had already in Hammond near Chicago in the U.S. for egg packaging. We were not present in the U.S. with egg packaging manufacturing, we were present with small imports, but not with a manufacturing unit. As of second semester this year, this unit will be live commercially. And there, I want to say, our investments was extremely timely because the regulation in the U.S. is actually, at least in about 1/3 of the state, I think remembering 17 states have been banning in a certain form what we call the EPS or the foam packaging for egg. And therefore, we will have the possibility to fill up our capacity upfront in this new factory. That's an example. We have invested in folding carton and in other applications in the retail as well if I take the U.S. where our core business is strong and, as you know, very profitable, we are investing as well. We have invested in the last 2 years in our core business for retail table where based on molded fiber and press plates, for instance, just to give a few examples. But as well in our core business where we are innovating at the same time, smooth molded fiber, we have a factory that is one of our flagship now in Elif in Germany, in the west side of Germany, that factory was a factory 100% plastic some years ago. We have transformed that factory. We didn't close it, we transformed it to become our flagship in smooth molded fiber and now fully utilized for producing different products that we're going to mention in a minute. Other examples have to do with the flexible packaging. Marco will come back to that. We are investing in this blueloop recyclable packaging in Europe, particularly in our factory in Germany, in Turkey, in South Africa, in India, in Thailand, for instance. And then we have the paperboard conversion where we are investing as well, where our flagship factory is in Nules in Spain, near Valencia. We have as well invested in the last couple of years. So as you see in the investments, over the last couple of years, we have already prepared for these aspects of innovation and scaling up our core business. Now I mentioned innovation a lot. I want to -- I cannot avoid presenting you this brand blueloop. Blueloop is standing for all our sustainability innovation in the company. This is our flagship brand for all our products that we design to be recyclable, compostable or reusable going forward, made of a material responsibly sourced. And the definition of that sustainability is that this material needs to have a positive handprint. That means a lower carbon footprint than the alternatives that these innovations represent in the market. We've talked in the last couple of years a lot about blueloop in Flexibles, now we have extended this branding to the entire company. That's why I'm saying, blueloop is now our brand for all sustainable packaging at Huhtamäki. And we have 4 streams of blueloop. The blueloop Fiber for fiber applications, the blueloop Paperboard for the paperboard conversion applications, the blueloop Flexibles, and then the blueloop Venturing. Because I mentioned before, we will not do it all alone, we need to work with the value chain in finding, in identifying, finding the right emerging technologies of the future, and that's what we're doing through venturing capital that -- where we are building partnership as well in the value chain. Now the third pillar -- sorry, before the third pillar, I wanted to give you a few examples of innovations. When we're talking about blueloop innovation and sustainable packaging, it's not the entire list of innovations we've been launching in the last 2 years, but a few probably iconic products. The first one well, the world iconic is well found, it's ICON, it's paperboard recyclable packaging for ice cream, which has been launched in the U.S., fully recyclable. And then the second one is for the pharma industry, very demanding industry where we have the PushTab blister lids which are made of mono-material structure replacing, as you know, for pharmaceutical blisters very complex material structures where we don't have production ourselves. So this is not a cannibalization, this is a fully new product stream for us. Then on the right-hand side of the screen, you see the home compostable solutions based on the fiber technology. And 2 examples, which are our flagships today is, number one, producing in this factory, Elif in Germany, the fiber lids which we have developed 2 years ago under the request and the partnership of our global account McDonalds. And then more recently announced, not yet launched in the market but soon to come, is the famous home compostable paper-based coffee capsules developed in partnership with Nespresso. Those are a couple of examples I wanted to mention. Now the third strategic pillar in our 2030 journey is stepping up on the operational performance. And we want to do that through structural performance improvement but as well continuous operational improvements. Structural improvements will involve, obviously, productivity measures. And as we speak in 2023, we are already particularly linked to the business conditions or environment. We are already taking actions in order to have cost savings visible in 2023 and in full impact 2024. We are working or accelerating on the automation of our processes, particularly in the manufacturing processes. We have areas where we need to address underperformance. We have very profitable categories and geographies, but we have some underperformance to address, and we're doing that. We want to optimize our manufacturing network. And we want to improve as well, both in our segments, but as well globally, our operating model, whether it has to do with the entire company organization or as well the different global functions. And then operational improvement, or what I would call, I like the word continuous improvement. We like it because it's the sense of not just improving but securing that we improve over time and sustain the improvement over time. We have 2 main initiatives going on in the company. One has to do with commercial excellence and the other one has to do with world-class operations across all our factories in the world. This is not only from an economic point of view, but as well from a safety point of view where we are working on a continuous improvement. All this, we believe, is going to enable us improving our margins by 1 to 2 points, this specific operational improvement. Then we will have improvements based on the portfolio that will be more innovative and more value-added. But this 1 to 2 points, which we believe are going to improve our margins and as well enable us to further invest into new technologies, new innovation. So that drives me to summarize something that you probably saw yesterday in the press release, is that we are actually enhancing our financial ambitions going forward. We want to be growing 5% to 6% in average per year in our business going forward on the mid- to long term. We want to deliver mid- to long-term an adjusted EBIT margin of between 10% to 12%, with a return on investment improved from where it is today to 13% to 15% and keeping very disciplined financial management of our balance sheet so that we remain always at a leverage between 2x to 3x in the ratio net debt to EBITDA in order to keep our policy of a payout -- a dividend payout that does 2 things: Number one, that is growing in absolute terms every year; number two -- and we are doing this since, I think, 14 years in a row, and number two, that remains in a corridor of 40% to 50% payout. So in summary, this economic ambition that is enhanced in this updated strategy, 2030 strategy, is possible thanks to our promise. And our promise is basically -- our promise is basically in 3 words. Number one, we believe and we commit to protect food, people and the planet. Number two, we want and we commit to deliver profitable growth through sustainable and innovative packaging solutions. And number three, we will do that through 3 technologies that we know well and plus we are developing on emerging technologies. That's the fiber forming, the paperboard conversion and the flexible packaging. We want to create sustainable success through sustainable packaging. That's really the essence of our 2030 strategy. With this, I would like to hand over to my colleague Thomasine, who's going to tell us more about sustainability, as you understand, summarizing our belief and our commitment to redesign the future of sustainable packaging solutions. Thomasine.

Good morning, good afternoon. I hope not to bore you with some more detail on sustainability. It is a very, very big part of our journey, and Charles has covered a fair amount of it. But when we talk about embedding sustainability in everything we do, and you'd be excused for thinking they could be just buzzwords, but it is really about thinking about how we can have a net positive impact across our products, our operations and also our innovations. So we really look at the sustainability agenda from a holistic perspective, so really cutting across the E, the S and the G. For the purposes today, we'll be focusing a little bit more around the E, but not to say that, obviously, we're doing some big steps forward also on the S and G part of this agenda. So perhaps just to touch a little bit on what Charles was talking. So we're seeing a lot of sustainability-driven legislation, which is impacting the development of our packaging sector and impacting also innovation, R&D and so forth. And easily, you could really group this across 3 groups. So climate and environment, so it's actually also our operations; materials and waste, so our products; and food security. So it really is about the communities, our planet and the people and also the communities that we impact. And the way we see this is a couple of things perhaps to think about it is, one, is the real need, and you've heard us say this a number of times, the real need for evidence-based decisions, looking at LCAs, so life cycle assessments, really looking at the science in terms of how we drive through legislation. The other thing that we sort of -- we see as well is the real need for harmonization and legislation is clearly makes it incredibly difficult if you're not working across, with green claims as we're seeing now through the legislation is coming or others where you don't actually have harmonization. And certainly across the EU, that becomes challenging. We're also seeing that essentially, as Charles already touched on, there is no winning substrate. So essentially, legislation also has to incentivize innovation, and that's what we call for as well. But the other thing that legislation does and speaks to is really the need for differentiation. So we see consumers essentially very confused about sustainability claims but also governments as well. We also see this as a huge opportunity for us as an organization to differentiate what we offer and how we do it. And let's just talk a little bit about those changing consumer expectations. So here, they really talk about making packaging more sustainable; interestingly, affordable, and we'll touch on this; and also adaptable. So what we're seeing from a consumer perspective is, and this is definitely a shift, as well as Charles mentioned, sort of through COVID and coming out of COVID, is consumers really expect businesses to play a much bigger role in protecting the climate and the environment. And they have real expectations in terms of what that looks like in terms of progress on carbon emissions and how consumer brands should play a role in reducing those. They're also -- and this is a really interesting point, according to the data that we're seeing, is they're also starting to really shift their perceptions in terms of what they're willing to pay for. And that's a shift forward. So there is a willingness to pay for that sustainability piece as well. However, it does need to remain affordable. And this is also where you can start having some differentiation, and Marco will talk about being cost-effective in terms of innovation as well. It literally can be a win-win-win, from a sustainability point of view in terms of its impact on environment, from a consumer point of view in terms of getting what they want as it were, but also from a company in terms of really making sure that we have that commercial and cost-effectiveness approach as well. And so what we're also seeing as well is that packaging and consumers want packaging to be adaptable. So we're seeing emerging lifestyles. Charles talked about it a little bit in terms of the shift on to the to-go or on-the-go. We're seeing obviously the impact of e-commerce as well. we're seeing it in terms of not just the consumer experience, but what a package can then do, so what we call smart packaging as well. There are a couple of other conceptions that we have and which certainly we're seeing also, if I go back to the legislation, is this concept of overpackaging. And what over packaging means? And I think one of the areas that -- and it talks to also the value that we bring, is how we bring across what the difference is in terms of any packaging and food packaging. Because there are some essential parameters here that drive how we come up with solutions from a sustainability point of view in terms of the hygiene and safety that Charles touched on. So that basically means hygiene and safety means you cannot use recycled material for your food packaging. And when we see, in some of the legislation, the push for reuse, and perhaps having less strict safety and hygiene, I'd just like to think of this -- perhaps think of it this way. It is as if I were to take the paper cup that's sitting on your table there, lick it and give it back to you and say, "Here you are." We don't want that clearly. So that's some of the parameters that we also are challenged with in terms of how we do our packaging, the access to recycled content to be able to do that and the structures that there are there. Just touching on this very briefly, because Charles has actually sort of unpacked it very well. There's one part about social economic progress which I think is sometimes under estimated and perhaps not even thought of. None of us were in the 50s here, I believe. And I hope I don't -- I'm not insulting anybody, I think we're all young here. But in the 50s, with no access to packaging as much or to even refrigeration, the world, for women in particular that time was a very different one, so packaging and access to packaging has given some social and economic progress. It's also changed the role of food and how we use it and so forth. And perhaps this is where it's really important to think about it, is from the global south perspective. Not just in the global north, where our distribution channels really work, but also in the south, where distribution channels don't work, where you do need to make sure that you do have that safe and hygienic food and that it has shelf life and that it can travel long distances which is where, for example, flexible packaging can be incredibly helpful, because it's lighter, so you can have more of it on a lorry and less of a CO2 footprint as well. So when we think about the packaging world is to really think about it from a life cycle perspective. And that's what we look at and that's what we argue for when we say we want to have more evidence-based discussions. So we don't just think about either the end of life or the beginning of life, but the whole value system behind it. Now Charles touched on this and he kind of gave a little bit of an intro in terms of the sustainability ambitions we set ourselves in 2020. So this is an overview. Some of you have seen this. Some of you know that we report on this, and I'll show you where we're on -- where we're at in a couple of minutes on a regular level. I think it speaks to a couple of things. One was that our agenda was ambitious. And we set ourselves to 2030 because we knew we wanted to nail it by then. We're also seeing that a lot of our customers are pushing for some of these commitments to be reached by 2025 as well, and we're making progress, as you'll see. The other point perhaps is in terms of how we're measured against that. So running along the under side of the slide, you can actually see some of the ratings that we receive. It's a complex world, the ESG ratings. So some mark certain things higher up than others. But overall, you'll have seen a marked progress in terms of our ratings. So with EcoVadis, we got gold for the third year running; MSCI, which is an important one for this community, we got an A last year as well. And you'll see us progressing. If there's one observation to be made on this is that, of course, the goalposts keep on shifting forward as well, and we know that. So even to stay at the level that we are now, we need to continue progressing our agenda going forward. And on that, perhaps here, just a sort of an overview of where we land. We all know that green is good, obviously. So the one metric that we have here which is in the red is essentially about renewable or recycled materials. And that essentially speaks to the dichotomy that we have in our portfolio, because this is actually a direct reflection of the integration of Elif and the mix in our portfolio in terms of plastics, as you would expect. So in a way, you could say this is not a good thing, but it is also a natural reflection of where we are in terms of our portfolio. For the rest, you can see that we're making some progress. We are a way forward. Do we still have a way to go? Absolutely. You'll see a big shift in, for example, renewable electricity in 2024 when some of the VPPAs that we signed off on, which cover 80% of our energy use in Europe and 27% of our energy use in North America, will come online. And that's obviously important for us going forward. And this is made up essentially of some of the solar panel installations that we have on our operations, which typically account for about 6% of the electricity mix that is used in an operation as well. Just by the mere logistics of it, it is impossible to go much further beyond that. Perhaps a couple of other things to comment on this one. What we've done as a result of the dashboard and sort of the KPIs that we set ourselves, back in 2021, we set a global sustainability index for the entire global executive team. So that it really sat in and impacted in terms of their -- incentivize them in terms of their remuneration. And what we've done is we've actually rolled it out across the entire organization now. So every employee that is entitled to STI has a sustainability objective and it's linked to the Global Sustainability Index. And I think this is one of the biggest step forward in terms of really walking the talk in terms of saying when we embed sustainability, we make it relevant to everybody who works at Huhtamäki whether you're in operations or at the global executive team or wherever you are, it has to matter and you have to be -- you have to make a shift on this. The other thing that we've done is bring in to Safety in terms of the Global Sustainability Index, it's now going to be called GSSI, and added 2 additional KPIs that we're going to start tracking this year. One of it is around water. So one of the goals that we'd set ourselves was around water management, which is a hugely important point of view from an operational point of view. And going forward, we actually are going to set ourselves or have set ourselves a reduction target for our water usage per tonne per product. The second is around solvent use. So there, again, we're adding this to our sustainability index, and we'll be tracking that in terms of percentage amount used per tonne per product as well. So all to say, long journey, lots of additional pieces. Going forward, you'll also see us putting out some KPIs in terms of our social agenda as well and how this looks like from a supplier perspective, particularly as that then touches on the science-based targets, where our Scope 3 is our commitment to have over 70% of our suppliers signed up to the SBT, science-based targets, by 2026. And I'm happy to say we're also making progress on that. It's one of the most complicated ones. So we've gone to 20% of our suppliers in 2022 and are tracking it for '23. So we're on target there. So we talked a little bit about in terms of the impact from a product. And again, this is -- when we think about our products, we really work towards delivering fit for purpose. And what do we mean by that? It sort of touches on the piece I made -- I said earlier on, about over packaging, which is one is about having the right functionality to protect each product. So in other words, that the packaging becomes integral to the product that is packaging. The other is that we actually choose the right material for each application. So again, depending on what its use is, the market is going to and so forth. And then there's a really important part which you'll see play out particularly in the Flexibles business when we talk about the transition to mono material, is how we simplify the material that we use. Now from a sustainability point of view, that becomes really important. Think about it this perspective. If you're able to take out aluminum from your product, you're taking out one of the materials that has the highest CO2 footprint. That's great. That means that you will actually have an alternate that is -- has a much lower carbon footprint than the other alternative. And the other point is that we drive circularity both in the material selection, but also in the product design. And when we look at it from what we can do with our customers as well is how do we actually -- what does Huhtamäki play in terms of providing that sustainable alternative? How do we play as a partner of choice to our customers, really matching their objectives and their ambitions as well? And how we obviously play, as you would expect us to, how we are committed to comply with all global and regional and regulations and legislations? But how will you actually start looking about what those mean for us going forward as well? So we are a little bit ahead of the curve. And our commitment also to invest only where it makes sense from a sustainable economic point of view and that there is no other viable alternative on the market. And that basically means that we produce products that are innovative, as already mentioned, which sort of fit into our blueloop which are material positive. So we choose the right material, which are material and resource efficient, which has great additional commercial advantages, which are recyclable, which are circular. So they have recycled content, and which are also connected in terms of the digital perspective. Now talk -- Charles talked -- touched on this a little bit around the fact that packaging actually only accounts for 5% of greenhouse gas emissions. But one of the biggest challenges that we have in the value chain is of how we think about this from a systems point of view and how we address the impact of packaging that many question is about, which is the impact on environment on post consumer. So there's 2 pieces to that. One of it is that we see post-consumer waste is having a huge amounts of value for us. It's a secondary resource. So we're able to find ways of recycling this, this is a good thing for us as an industry, but it's also a good thing in terms of driving forward that systemic change. So one of the things we've been looking at is actually how we can play a role in finding ways to solve this. And Charles mentioned about the fact that depending on where you are in the world, you have different infrastructures that are able to better or worse manage recycling. So we've really taken and picked up some pilots that we are -- that we've set up to be scalable because that's one of the biggest challenges to this problem as it were, but also that they can act as pilots and that we are, for a lack of a better way, open source in terms of how we partner with others to make that change. So for example, The Cup Collective is a partnership that we launched with Stora Enso and with the objective of recycling 0.5 billion cups within 2 years. It's launched in Brussels because we also wanted to show the EU legislatures that it is possible, and it is. And there was a little -- there were a couple of images of it in the video that you show -- that you are seeing from the strategy perspective. Perhaps one other that is really important to us as well is around the [ cup lid ] factory that we have in India. So here, we're actually taking post-consumer multi-layered plastics and recycling them and, therefore, domestic products. And then the final one that I wanted to leave you with, because I get asked, is it really possible, is this one. So this essentially is our recycled paper cups. This was a project that we did in China and has been recycled into notebooks. So we know it's possible, and we'll keep on working on it to make sure that others start doing this as well. And with that, thank you very much. I'll hand over to Thomas.

Thank you, Thomasine. Thank you, Charles. And welcome from my side as well. From a financial point of view, I will take you through what we have been doing since the last CMD, where we are in the present and especially on what we will do in order to improve on our financial ambitions and our financial performance going forward. So if we start with where we are. Actually, since 2020, I would say we are well on our trajectory towards our previous ambitions. We have delivered good growth. We have delivered good, profitable growth, and we are well within our leverage level. We have also been able to pay out dividends. If you look at -- start with the growth element here, we have a close to 10% growth. That is a combination of organic growth and acquisitive growth, especially the acquisition of Elif have contributed to this one, but then also other elements here, with volume growth, with FX growth and with pricing, which has been quite important now in this inflationary environment which we have been going through. You see that EBIT, in EBIT, we are not on the level where we would like to be, so our 10-plus ambition has not been reached. However, if you put that in perspective to the absolute EBIT growth, that has actually been a quite strong growth if you compare that to our volume growth as well. So in a challenging market, we have secured the profitable growth, although not reaching our relative ambition. On the leverage side, we have been within the corridor except for a short period when we took onboard the acquired unit of Elif, therefore not accounting for the full EBITDA yet in our reported number from that. Since then, we have deleveraged to 2.5, and that obviously gives us financial strength also going forward, be it then investing in organic or M&A or just securing our financial performance. And with that one, we have also been able to pay dividend 40% to 50% out. Any industrial company, in order to grow, requires addition of assets. The assets and capabilities can be achieved either through M&A or through CapEx. In our case, it's a strong combination of both. We have invested roughly EUR 1.9 billion since 2014, and from a net M&A point of view, EUR 750 million roughly on M&A. What have we got with that one? Well, we have almost doubled our net sales. We have more than doubled our EBIT. And obviously, what we have gained is geographic expansion, product expansion. And more lately, what you will see is that we have been investing in technology development, so our own product capabilities. On the right side, you will also see why we believe we will be able to deliver on our growth ambition also going forward. We have already in our backlog invested technology into fiber, paperboard and flexible. So in all our businesses, we have applied capital which will be coming on stream over the coming years and, clearly, be a big part already of the financial ambition of growth. So you can already sense that CapEx will be one of the main tools for our growth also going forward, even though it will be slightly different or actually quite similar to what you have been seeing over the last 2 years. With quite similar, I'm saying that we will continue to invest into the fiber assets, and fiber assets has a slightly different profile from our lighter conversion assets. We try to illustrate it here from the point of view that when you get up to 2x asset velocity on the light converting assets, you get roughly 0.5 in the initial phase when investing into fiber assets. What does that then mean from a return point of view? Yes, in order to get a return of 13% to 15% return on investment, which is our ambition, it simply means that the fiber assets need to have a higher margin profile and paper conversion assets can then be on a lower level and generate the same type of return. It's important to have this mix as well, because in fiber, you tie capital for a longer period, you build the assets over a longer period. And that's also one of the reasons why you have seen our CapEx growing over the previous years. So we really have chosen to invest in our own technology where we think we are unique. So going forward, CapEx will remain on a higher level than what you used to see up to 2021. On the other hand, -- on the other hand, we will also be now bringing that invested capital on stream, so scaling up in these more profitable categories, helping us with the profitable growth. So with all of this, the enabling parts, we still have the facts of a company being frameworked within financial discipline. So financial discipline is core for a company to deliver on a strong shareholder value contribution. So for us, the sources we are looking for is, first of all, the cash flow side, cash flow obviously driven by profitable growth, by strict management of working capital and then an on-time investment into CapEx. Leverage is, for us, key, I will get back to that more in detail. We want to be disciplined in staying in our frame. And when we are doing so, then we are able to continue to invest in both CapEx and inorganic things. With the 2.5 leverage, we have more than EUR 400 million available of firepower as we use to call it. And with that one, obviously, it gives us quite some options to choose how to grow. On the payout side, when managing the financial agenda strictly, we will have the funds available to also continue to pay our financial ambition on the dividend side. So next, I will move more towards the how part. So in the how part, in order for us to have this profitable growth, take our adjusted EBIT to the 10% to 12% level, there are a few important things to take into account. So first of all, on the key drivers for how to do it, you will hear plenty of more of this from my colleagues later today, but just the key drivers. So first of all, commercial excellence, that means understanding what our customers need, having lots of insight to when to deliver, how to deliver and, as we are investing in innovative technologies, also being proud enough to get the value for that invested capital. So having the benefit of investing in value-adding technologies needs also to be seen on the profit side. Also for industrial company more on the lower side, we will always have to look tightly on our operational excellence. We will do all the traditional things we have always been doing, so taking out costs, optimizing the machinery and so on, but what we are adding is also tools around it. So it's on the digital side, we get more insight to how our machines are running, we get more insight into how to optimize the supply chain and thereby get better access and uptime on our machinery. All of that will help on profitability. It will also help on our CapEx agenda in order to not overinvest when we still have capacity available. The graph on the right side is showing our EBIT margin history. Here, I would actually highlight 2 things. First of all, if you look at 2021 to 2022, last year, we grew 25% on EBIT. That's a very strong absolute growth, first of all, on an annual basis. It's not visible in the margins. The real reason for that one is that we had to price the inflationary raw materials. And thereby, it had a dilutive effect on our margins. I would say we have roughly 1% point dilution on the margin in here. So that's one thing. The other thing is that when you are looking on the quarterly variations, historically, if you look up until 2021, we had quite some quarterly variations. In '21, '22, especially '22, that narrowed down, partly explained by the fact that it was a very tight supply chain, so everyone ordered throughout the year and it sort of equalized the year. Going forward, I would expect us to go more back into the seasonality rhythm as the customers are adapting and supply chain is normalizing. Cash flow is always important. If you look at the cash flow trajectory here, you can see that we have quite -- had quite some fluctuations. Actually, in 2019, 2020, we had over EUR 200 million in free cash flow generation. In 2021 and 2022, we were not generating cash on a full year basis. However, you see it picking up towards the end of the year. What explains the strong generation in 2019 and 2020, in 2019 we came out from investment cycle. In 2020, we had the COVID which took down the volume. And then in 2021, 2022, we lived in this disruptive world with high inflation on raw materials. But as you can see, now we are moving towards a better cash flow generation. I have been highlighting the importance of net debt to EBITDA for the last at least 3, 4, 5 years. It has always been our -- one of our core KPIs, really I would say the #1 KPI when it comes to looking at financial discipline. Many people ask, why don't we have free cash flow as a target? It actually goes back to my explanation earlier of prioritizing between M&A and CapEx. CapEx will be visible in our free cash flow, M&A will not be visible in our free cash flow. However, both of them will be visible in the net debt levels. So as you can see from this one, we have all the time, except for that short period of bringing on Elif, been within the corridor. And even during that period, we were really just on the brink of being there. So we will continue to monitor this one. It will remain our core target. We will do our best to release as much as possible cash flow in order to monitor and manage the graph we have on the right side, which is our debt structure. We have roughly EUR 1.8 billion of debt. That's clearly higher compared to where we used to be. However, also there, I would say, from a maturity point of view, we are quite okay. And it seems like financial -- the financial markets are able to provide us with financing also going forward. So from that perspective, I'm not that concerned. Life reality though is that financing cost is getting more expensive. And for that reason, we would obviously keep the debt level as low as possible but not endangering our growth agenda. So when we manage the net debt to EBITDA, it will also give us the possibility to continue to pay the 40% to 50% payout ratio on dividend. This is an unchanged dividend ambition, but you can also see the reason for it. So we have been quite strictly within that corridor over all the years. So since 2008, we have been paying over EUR 1 billion in dividend. We have had a continuous dividend increase, which I think we are the company in Finland with -- of the listed companies with the longest continuous dividend growth. And obviously, that has been enabled by the fact that we have been capable of managing our EPS. So to conclude, our long-term ambition is founded on scaling up the core and game-changing sustainable innovation. In reality, that -- what that will lead to, hopefully, is that we deliver on our absolute EPS growth. The drivers for delivering absolute EPS growth come from profitable growth, it comes from managing our balance sheet and thereby improving on our return on investment, maintaining our net debt-to-EBITDA in the 2 to 3 corridor and thereby enabling us to pay dividend in accordance with our range. So that is our long-term financial ambition, also giving some insight to how we and why we believe we will be able to deliver on it. And that actually concludes my part, and we will be moving into the Q&A session.

All right. So now it's time for Q&A. For you all online, you can continue posting questions through the chat box and for people here through the app that you have here, the QR code. We have already a lot of questions, so let's get started. We'll see how many we get through. First lone would be actually for Thomas and Charles combined. So from the operational efficiencies that you talked about and the 1 to 2 percentage point margin improvement, so could you give any more detailed concrete actions on it and maybe a time line of when you see those coming through? So if Charles start on that one.

So I would say that the increase in our margin is going to come from basically 2 aspects, or I should say 3. One is the benefits of scaling up our core business, the profitable core business. The second is the mix -- the positive mix impact that will come from the innovation. Innovative, sustainable products will have more value than, I would say, basically commoditized product obviously in the market. And the third will be the operational improvements. Now the -- the other part of the question is the when. So first of all, we need to think about where we're coming from. We are, and I think Thomas explained that very clearly, we're coming from an improvement of, let's say, 1 point of margin already in the last 3 years. We were at just 8% in 2018. We are very close to 9% in 2022, at the end of 2022. But Thomas was explaining, there was a dilutive effect from the inflationary environment, as well as something not mentioned yet, the fact that we were obliged to divest our Russian operations, that has as well a negative dilutive effect. That's about the past. Going forward, this improvement is not going to be an overnight, immediate improvement. We believe in progressive improvement. We've talked about continuous improvement. The mix improvement I was talking about in terms of portfolio evolution is not going to happen in 1 year, it's an evolution more than a shift. And the operational improvement, some of it will come from immediate productivity measures that we are taking already in '23, actually. But most of it will come from structural efficiencies, automation, manufacturing footprint, all this is going to come through the, let's say, 5 years to come.

I would maybe add to that one of the things for us as industrial producers, having an available market is important. And let's remember that there are still markets like China which are subdued due to market closedowns and similar. So in order to optimize the footprint, how we use the machinery and so on, we would need to have good consistency and understanding in how the market is progressing.

Thank you. Now actually, I was going in the different order, obviously you talked about China. So what's the current profitability levels in Turkey, in China, in India? So the ones with a bit more challenges.

Yes. So first of all, I would start positively. They are on an improving trend, for simple reasons I just mentioned, there is actually more stability in those markets although the conditions still remain challenging. We are not commenting and giving away clear details on where the profitability levels are, but they are for the foodservice business is below the average foodservice levels, clearly.

If I may add. We have to recognize that this -- because you mentioned emerging markets basically into these questions, the emerging markets are one of the reasons for us to believe in growth, but at the same time, in crisis times like we've been through in the last years, mature markets have been resisting much better from a consumption point of view. So obviously, it's -- we are in a cycle towards improvement, as Thomas was saying now.

Right. Then we have a few questions on sustainability on the topic of taxonomy. So what's your perception of the EU taxonomy? It's still a work in progress and all of our activities aren't eligible in that even though we are contributing to the circular economy. So what's, first of all, your view on that? And then second question is how much will we project that would be green revenues for us, maybe in '25 and '30%?

That, I'll leave to my esteemed financial colleagues. But maybe on EU taxonomy, I mean I think it is work in progress. I think a lot of the reporting standards are work in progress, and there's a level of complexity. We took a view initially that some of our Flexibles would be impacted and then we did not. And I think that actually speaks to the complexity of the EU taxonomy and the many different interpretations you can have. So depending on who you speak to, you have a slightly different view. I think where we're landing on this is to be as pragmatic and common sense as we can be so that we -- so it doesn't become onerous in terms of reporting, but also thinking about it in terms of what is it trying to do? And then as passing how we report on that in the way that is obviously legally binding and so forth. So that would be my response.

Thank you. And obviously, given that it's work in progress, estimating what that would be is obviously not possible at the moment.

Yes, exactly.

Good. Then Thomas, two follow-up questions. So we don't have obviously outlook, but what's your view on '23 and Q1 now specifically on volumes and prices?

Surprising question. So first of all, I think I hinted already when I showed the cyclicality and the variations between quarters on my chart earlier that I predict that we will be seeing the cyclicality coming back. So the seasonality of when and how we deliver, for instance, is the times summer holidays, Thanksgiving and similar things, that will come back. It's natural from the point of view that the supply chain is today better. And the second part is that all of our customers are clearly managing their inventory very strictly at the moment. Towards -- in Q4, we saw already a down-going trend on the volumes. Last year, Q1 was still a strong volume year and volume quarter. And then if you add to that one the fact that we don't have Russia in, I would say the current volumes are on a lower level than what we saw on average last year. But then going to a full year level, I would say from a full year perspective, what I have seen on the market views currently, it seems like the market views are pretty much in line with what the company also believes in.

If I may add on the full year view. One dimension is the market, as you're saying. The other dimension is we have some capacities coming live, producing commercially as of the second semester, particularly in the U.S., and that will as well support our growth.

Thank you. Charles, what do you feel is the biggest risk for achieving the targets and doing the strategy?

Well, I think the -- one of the risks is, of course, in -- we've seen it with the regulation in Europe. There are dimensions that we don't control and we need to adapt to. And I know that there's been lots of concern about what the regulation in Europe, for instance, means for our business. And maybe we've not been communicating clearly at the time this regulation came as a project. The -- I'm talking about the PPWR, the packaging -- packaging waste regulation project. But actually, we believe that this regulation may turn actually on the long term positive to us with different dimensions, different evolutions, depending on the categories. But net-net, relatively positive. So that's one dimension of risk, how much risk -- high tech risk as not just negative, risk being positive as well. Regulation is one dimension. Then there is the geopolitical aspects which we have unfortunately learned through 2022 with the Russia-Ukraine crisis, that is a dimension that we don't have a control on. And then closer to us, what is under our control? I would say, I think we have a very solid plan. We have very exciting opportunities. But the dimension that is under our control and which is always a risk in a strategy, it's on execution. So we have to be, as a company, we have to continue having the talent. We have to be, as a company, always implementing what we said we will be doing and we need to implement it in the right way. That's -- as I mentioned, that is very, very important to me.

Thank you. We already talked about PPVR (sic) [ PPWR ] and our colleague, Eric, will talk about it more today, but maybe we can ask the question to them as well. So what would be the effect if we would have a similar PPVR (sic) [ PPWR ] in the U.S. that we see in Europe?

So that's a complex question. But I would say -- so first of all, what I mentioned about the PPWR in Europe, I want to reiterate the point is, let's not consider that it's all negative. First of all, it's -- I think it's very positive, I said it in my introduction. It's very positive to have regulation. If we believe about the future, the sustainable future of the planet, we need a regulation. Now Thomasine made the point very, very elegantly, we need the right legislation. And with right, I'm not saying favorable to Huhtamäki or to whoever. I'm saying the right legislation, meaning a legislation that is pragmatic, based on the right science, based on the right facts and figures and the reasons and not being a legislation that is dogmatic, I will not make further judgment or comment on this. But this is the essence of a good regulation. Now if it comes to the U.S., I think Ann, who comes later in our meeting, will be more competent than me about -- speaking about the U.S. But if I give my view is, I think this regulation is, from a U.S. American culture, much less probable to come. There are actually regulations in the U.S., but those regulations, if I may, take the risk of a little bit of a judgment, I think, are more pragmatic than what is being developed in Europe. Pragmatic, meaning being based on material substrates, and that's where we have discovered that sustainability is not a monopoly of Europe. In the U.S., they are thinking about sustainability in a pragmatic way. Now if the same would happen, meaning touching our foodservice business, let's remind, our foodservice business is roughly 30% in the U.S. What we see is that it's a business that is growing rapidly because of the convenience culture in the U.S. So that's why I'm thinking that there is a low probability that it will happen. And on the contrary, I think from regulations, we see more opportunities in the U.S. like with the foam ban that is ongoing in many states. But Ann, I think I should invite Ann to speak later about it.

We'll ask the same question from her later on, so just heads-up. Good. Thomasine, we have announced 2 VPPAs. Do you see any room for any other similar transactions or...

So we wouldn't exclude it. We're having a little bit of a delay with the European one because there were some challenges in Spain, so -- which doesn't make me entirely happy because I like us delivering on our commitments. But I think they are a sensible way of actually the additionality. And I think, certainly, in North America, there's a possibility to explore some more. In Europe, as I said, the existing VPPA covers 80% of value, so the chances of doing much more there are more limited.

Yes. All in all, there needs to be assets available. I mean that's...

Yes. And there is definitely pressure on that in the market. Yes. Thank you.

Thank you. Thomas, you called out a few expansion projects coming online. So what is the approximate level of maintenance CapEx going forward?

So we are, I would say, roughly on EUR 60 million currently in maintenance CapEx, and I would expect that level to be more or less remaining.

Thank you. Then a follow-up question is for you, a shorter one. So how much of sales split now on the group is food on-the-go and how much is food on-the-shelf?

If we would think about it from the perspective that we include in North America the retail business, then I would say roughly 2/3 is on-the-shelf.

Thank you. Charles, would you elaborate a bit more on how you see the emerging markets' role in our portfolio?

So the role of the emerging markets in our portfolio is basically about creating opportunities of growth. We are -- today, we are operating in 38 countries. When I say operating, meaning with manufacturing footprint. That means that there is quite still some opportunities of penetration in certain geographies. We want to be very selective going forward, selective from different aspects, selective from the geopolitical dimension, if we are able to anticipate certain things. We have -- all industries have made the learning in 2022. But as well in terms of the growth potential, there is a lot of growth potential in Asia, for instance. But at the same time, we need to be conscious of the challenges in terms of profitability, the competitiveness. When we think about market shares, for instance, the -- and the market -- the competitive landscape in the emerging markets, it's markets which are much more automized and therefore it's more complex to get a relevant size in the market through acquisition or greenfield. Those are dimensions to consider. But we are faithful to our view that we want to be growing with emerging markets, being maybe slightly more selective from the factors that I mentioned.

Thank you. And then a suitable follow-up question is that, are you currently looking for acquisitions?

So I think Thomas was mentioning very clearly that we have been prioritizing CapEx. So investments, organic investments, on the technologies that we know well and that we master. Because we see so much opportunity and obviously there is -- we see much less risk in this, even though it usually takes more time to get the return on the investment. That has been the priority. We're not excluding M&As at all. We have a team permanently scouting the market. But we want to do the right things in the right place in the right markets. So it can be for expanding or penetrating a new market or consolidating a position in the relevant market. We want to first, let's say, digest and integrate well Elif, that is a sizable acquisition we did -- we made last year, about 15 months ago. But we are permanently looking into bolt-on acquisitions and why not transformative acquisitions in the future. That's why what Thomas was saying about managing in a disciplined way our financial is so important because we want to have the firepower at the time comes an opportunity.

Thank you. Last question before we go on a break. So Thomas, on the balance sheet, so how comfortable are you having a high-yield credit rating? And are you looking into changing that to an investment grade?

Yes. So first of all, on the rating side, one of the important things is the size of the company. And with more size of the company, the better you will be rated. So that's just a generic statement from my side on the ratings. When we decided to go for the rating and got the rating level and still decided to go, the reason was that within the 2 to 3 frame, that is where we are. And in order for us to be able to grow the company, the level seems to be on a high yield side. And consequently, we are quite comfortable with being there.

Thank you to all of you. And now we'll have a break and get back at 14:40 Finnish time. [Break]

Welcome back. I have the pleasure to give you an overview of the Flexible Packaging business. And let me start with a bit of a bolder statement. Flexible Packaging is the best cost performance ratio of all packaging solutions. I will come back to that and hopefully back it up with some more facts there. When we look at our total sales today, it's a bit more than EUR 1.5 billion. We have 3 large segments we're operating in, the biggest one being food and beverage. Food and beverage, roughly 60% of our share. Big customers in there are Mars, Nestle, Mondelez. Next biggest one is with 30% home and personal care, which grew a lot with the Elif acquisition. Famous customers in there are P&G, Kimberly-Clark, Unilever. And then we have 10% health care and industrials other segments. Our market is very large, EUR 100 billion to EUR 120 billion globally, growing at 4% to 5% range. We are leaders in global categories, a few to mention are retort, tube laminates, soup cubes, which we don't know really well, but really big in places like Africa and Nigeria, and with the acquisition of Elif, also the home and personal care market. The opportunity we have is combining our global category leadership with scaling our innovation towards recyclability. When we look at our performance in 2022, it's a bit of a tale of 2 cities. On one hand, we had solid growth on our top line. We grew 27%, including Elif. If we just look at it from an organic point of view, it's 15%. The reason we grew accordingly is because we were able to pass through all the cost increases we had. With the Elif acquisition, we improved our position and added the segment on a global category leadership, which is the home and personal care segment. But we also added substantial new capabilities to our footprint, such as flexo printing, as well as filmmaking, polyethylene film making, which is very important as we go into blueloop. We used the time to develop those recyclable structures. Recyclable means monomaterial, as you heard, and depending on the application, the material is different. On the retort side, we use polypropylene. On the dry powder side and for the niche area, we use paper. For pharma applications, we use polyester. And for everything else, we use polyethylene. So polyethylene is pretty much the 80% solution for most of the packaging solutions out there. So that's the good side. The other side is that our profitability didn't develop as expected. The main reasons are that we had more inflationary pressure in the emerging markets. That we had devaluations, substantial devaluations in the areas, especially where Elif came in, so Turkey and Egypt. And the Indian performance last year was not yet at expectation. Then add to that, the dilution, which was mentioned before in that range, you heard. So that is what put our margin under pressure. Let me talk about how we're going to address the performance challenge. On the operations side, we have definitely an opportunity of 1 to 2 points with a combination of activities. First one, productivity actions. This business was a very decentralized business until a short while ago. What that means is now that we build a global capability around operations with the help of world-class operations, we can identify the best practices internally but also externally and then lift the productivity in all our locations around the world. We're also rightsizing the operations. In addition, we also optimize our manufacturing network. We have opportunities in various places around the world, and we harmonized our operating model across the segment. We -- for example, we consolidated our innovation activities on a global level. So we have now 1 global innovation team with local focus. And we did that for other functions already as well. Last point there is we're accelerating the Elif synergies. So all of that together will deliver us the ambition you see on the left side. This is all supported by building capabilities. First one, we focus on, of course, health and fire safety, one of our top priorities. Manufacturing continuous improvement is something we drive on a global level, and we benefit from in the segment. Why is blueloop on that picture? It is because blueloop will allow us to significantly simplify our raw materials and therefore, our SKUs. Right now, we source thousands of films. And what blueloop does, it helps us to in-source that complexity and completely simplify and standardize that. And then it was mentioned before by both Thomas and Charles, commercial excellence. What that means is that we can ask for the premium of our improved products as well as making sure that we have no leakages and we get paid for all our services and products. Blueloop. Why is it so exciting for our segment? The fact is today, from our portfolio, roughly 30% of our products are recyclable, mono-material. Our aspiration is to go to 100% by 2030. Well, the customers I mentioned before the global key accounts, almost all of them pledged to be fully recyclable by 2025. So we have an accelerated time line there. which means that we have to deliver the solutions very soon so that our customers can live up to their pledges. The market we can address with our blueloop solution is massive. You see the numbers there. How do we do it? I talked about the different raw materials, which we use. Now the reason as it was mentioned that today's Flexible Packaging solutions in the high barrier area are not monomaterial, is because the different materials deliver different aspects, aluminum is the best barrier as an example, some materials, seal better than others. So when you go monomaterial, you need to make some kinds of compromises, but it's very important that we cannot make 2 compromises. One being, we cannot reduce shelf life. Thomasine was very clear about that. If we start to harm the product we pack, the whole sustainability ratio looks very different. The second one, which is also very important is that we have a solution which is affordable. We operate in markets such as India. It's very important that we just -- don't just bring fancy solutions, which nobody can afford. We need to bring them in a way that they are affordable. And the way we did that is we let our Indian colleagues develop the polyethylene solutions with that in mind, and now we roll that out on a global scale. By second half of this year, we will have products in the market and then ramping up into next year so that we are on time for our global key accounts. And we also will announce that as we go into Interpack, which is beginning of May, you will see a lot of announcements about our products. In summary, we remain committed to our long-term strong profitable growth ambition. On the volume side, 6% to 7%. You saw that it's a little bit higher than what we believe the market delivers. How can we have that ambition and be confident about it? Well, we are in emerging markets. Charles talked about that. We have products, which have a high demand because we solve real problems our customers have. And together, that will help us with the global category leadership to deliver that growth. The lift on the profit side. comes from the areas I mentioned, productivity improvements, network review, Elif synergies, blueloop on the side of simplification as well as delivering on capabilities or improving our capabilities, be it on the operations side as well as on the commercial side. And that combined will allow us then also to deliver a RONA of 11% to 13%. So what we have to crack on the flexible side is to make our the best cost performance ratio in packaging fully recyclable and we are really on a really good track to deliver that. With that, I'd like to hand over to Eric to talk about fiber food service.

Very warm welcome. It feels good to meet with people post COVID. We have interesting times, and we have exciting strategies. So I will guide you through our Fiber & Foodservice. Flexibles is a very interesting business, but you will see that Fiber & Foodservice is not bad either. The way we operate in Fiber & Foodservice, we have 2 big branches. One is Foodservice and the other one is Fiber, and we merged those 2 businesses together in 2020. Foodservice is the items we deliver for Foodservice are the crabs, the clam shells, the fries cartons, the wraps. And the customers we serve are operating across continents. They are the big brand owners, McDonald, Starbucks, Kentucky Fried Chicken and Burger King. Fiber, we have national champions. It's mostly egg packers that are operating in their respective countries. For those 2 businesses, we have a leadership position, okay? And that's about 32 manufacturing sites and a bit more than 6,000 employees. I'm sure you have lots of questions on PPWR. I can start to talk about this if you want. PPWR, I think the -- what I want to say, and I'm sure we'll have more questions when I will be sitting over there. It's a regulation that started in Europe. Huhtamaki did a lot in this. I was also chairing the paper packaging alliance in Europe with other companies like Stora Enso. What we did is we brought science in fact. And because at the beginning, we didn't understand what this meant for us, okay? And what we discovered is that the best solutions from a sustainability and financial standpoint is single use, the items made of paper and fiber that we manufacture. What I also see is when I talk to my customers, is no one is changing their growth trajectory because post COVID, you have a major shift between the in-store business to the takeaway business. and the takeaway will remain in paper and fiber. If you look at the regulation. So it's quite positive for us, okay? So I'm not -- what I'm saying is I'm not -- I'm concerned, but I'm not overly worried, okay? And I think for us, -- we see this as a massive opportunity because we have the right platforms for the technology to bring the answers and the solutions to the markets and to the customers. This second slide is interesting because it shows that this segment has developed a unique ability to go through the crisis. We had a major hit with the COVID and it started actually in my segment in China. I remember it started to hit this in 2020 and very quickly it shifted to Europe. We can see a dip in the sales and in the profitability. But quickly, we are back up, and we continue to deliver a very strong growth and profitability when we went through this COVID and also the other disruptions. We merged -- so during this time, we also divested Russia, and we merged Fiber & Foodservice, which is very interesting because when we did this, I think that's probably the best decision we took. We delivered 2 things. One is the synergies, 2 organization merging into 1, less cost. But what's more interesting is the convergence of the technological platforms. When you face the customers and they're asking you solutions to replace, for instance, plastic rigid containers, you can offer paperboard and fiber, okay? And you have growth a lot through those different technologies in the world of FMCG, for instance, okay? I have been in packaging for quite a while, more than 25 years. We used to grow steadily in the world of packaging, doing a bit of innovation. I think what I leave today is completely unprecedented. I'm pretty sure that in 10 years most of the products that were put on the market do not even exist today. It's all about innovation, all about innovation. And we have 3 big platforms here. And even if you go beyond this, we have flexibles that we can blend with those platforms. We have the paperboard conversion, the rough molded fiber. So the paperboard, the typical item is the paper cup. The rough molded fiber is the egg carton that you find in the stores. And then we have this new technology that we invented, merging those 2 ones here, smooth molded fiber, okay, which is the high precision fiber. I will give you examples, okay? On paperboard, we invested a lot in R&D. We created capabilities. We invested in capacity. The example is the investment we did in Spain, which is the center of excellence for FMCG paperboard, ice cream, okay? Or your good cup, you can think in the future, your good cups could be replaced by a fiber or a paperboard cup with a lead in flexibles, okay? And that Huhtamaki can do. We invested also a lot in the core foodservice. We improved the core post-COVID. I think there's a lot of actions in collaboration with group and with my colleagues to improve the operational efficiencies. And we did something in the space of foodservice with Stora Enso. We created that Cup Collective, which is the first step of the implementing a circular economy, and that's absolutely crucial to close the loop and bring also solutions to the regulations. On rough molded fiber, we have a nice growth, but we have lots of very, very good ideas to unlock that capacity, improve the operational efficiencies, very, very interesting ideas and expand with 3 innovations as well. So we want to play better where we play, and we want to play where we don't play. And the first example is investment we did in North America where both segments collaborated with Ann. And smooth fiber, this high precision technology. That's very, very exciting. I will give you an example. It would not exist without the merger of paperboard conversion and rough molded fiber. In paperboard conversion, we are producing plastic lids. And in rough molded fiber, egg carton, when one of our customers asked us to replace the plastic lids with fiber lids, you have to use both technologies because they're producing a fiber lid is simply thermal forming fiber instead of plastic. So we brought the engineers together. That's how it worked, okay? The other beautiful example is the new product that we created recently for one of the major coffee players in the world, okay, Nespresso. And that's really a piece of technology. I can tell you. This one is a piece of art. And this is our own technology. And that's super exciting for one reason because it's bringing Huhtamaki from a simple converter to a provider of technologies and solutions for customers and markets. It's a completely different positioning. This one is very interesting because, again, you find the 3 technologies on the left and smooth fiber paperboard conversion and rough molded fiber, and that serves all the channels. And in FMCG, you have lots of projects where you can serve them with either paperboard or fiber. In foodservice, you have a lot of growth still in the core business because our customers are asking for more sustainable solutions. So first, if you remember, post-COVID, we will keep growing because of the shift from in-store to take away, but we will keep growing also because of that, I would say, plastic rigid containers substitution with paper and fiber, okay? And when you look at this, it's basically doubling the size of the play field because this world of FMCG or rigid plastic container substitution is a massive, massive opportunity. And that brings me to the target. So we look at this from a different perspective because we have Fiber & Foodservice, okay? So fiber, as I explained, will continue to grow, and we believe we will bring this business to 11%, 12% adjusted EBIT margin with a return on assets of 14% to 16% through what I explained, okay? Unlock the capacity, improve the operational efficiency, very interesting ideas here and bring innovations in it. The full foodservice will continue to grow for the core and will expand through SMF, okay, this high-precision fiber technology, bringing a 4% to 5% growth, 10% to 12% EBIT and 13% to 15% return on assets. And that brings me to the end. Thank you. I will welcome Ann now for North America.

Good afternoon. It's my pleasure to share with you an update on the North America segment as part of the Huhtamaki Capital Markets Day. North America segment, roughly is the same size as the other 2 segments, composed of 18 sites in the U.S. and Mexico, serving Canada, U.S. and Mexico, with products, as mentioned by the colleagues. It's an attractive market. Why is it attractive? And we are an attractive player because we are the global fiber leader. Smooth molded fiber was invented more than 100 years ago in Maine and then that is now part of our portfolio. We make 4 billion pieces of smooth molded fiber in North America every year. It's not the high precision products that are made now in Europe, and this is a real collaboration between the 2 segments, but we have extensive experience and extensive competitiveness in smooth molded fiber. Likewise, we've been making rough molded fiber for many years. The rough molded fiber products were more oriented towards the -- not the B2C applications but more B2B applications. And again, as Eric has mentioned, we've collaborated and we'll be introducing egg cartons in the second semester of 2023, which is incredibly convenient because I'll show you later how regulation is going to support continued growth of rough molded fiber in North America. Likewise, we're the largest nonintegrated paper converter in North America, which was a real advantage last year when there was constraints of supply because being nonintegrated meant that we had a lot of different options, and we were able to support and deliver to our customers better than most because we are the nonintegrated supplier. We also see this as a major advantage looking forward because it allows us more degrees of freedom when we innovate. Those 2 attractive advantages are complemented by our portfolio and our partnership approach with our customers, which is really what built our resilience. I'll tell you a little bit about each of these markets and the resilience of them. So in retail tableware, which is about half of our business, we service the largest customers of Walmart, Costco, BJ's, Kroger's and the list goes on, many different retailers in North America with a uniquely American consumer behavior, which is to use disposable tableware in events, but also in everyday occasions. In that retail tableware segment, there's 2 parts of the business. One part of the business is a branded product, again, anchored in our 100-year experience of making smooth molded fiber with the China classic plates and bowls. It's been complemented over time with other products, Chinet Comfort, the Coffee Cup and Chinet Crystal, the party ware. That is a suite of branded products. We are actually a B2C company as well as a packaging B2B company. In the last 5 to 10 years, we've invested in the segment to also become a private label supporter. So we've complemented the branded products in retail tableware with private label capabilities really partnering with those retailers and again, the largest retailers that I've mentioned before. And this is really a sign of resilience and the ability to partner in that category. In foodservice is about 1/3 of our business. Again, a portfolio approach, grounded in our nonintegrated paper converting but also providing a portfolio of products to our customers. It's a very unique market. I think you could say every market is unique, but I'll explain the uniqueness of North America. So North America, our foodservice market is 2 parts. It's the QSRs or the quick service restaurants and then the stadiums, offices and schools. In the QSRs, our market is made of about 70% chained restaurants, chain meaning that there's more than 10 stores as compared to less than 1/4 in Europe. So it's very much a business category, and it's a business category full of innovation because it's not very consolidated, extremely fragmented chain restaurant environment. So the largest QSR in North America only represents about 10% of the chain restaurants. In Europe, the largest QSR represents more than 20% of the market. So I'll give you some examples. In the hamburger space, Wendy's is a very large customer for us, but so is Jack in the Box, and that's not a very well-known name globally. In the area of chicken, Kentucky Fried Chicken is a very large customer of ours, which is a globally known brand. But Chick-fil-A and Popeyes are perhaps not known as well globally, but very meaningfully in large-sized customers for us. In the sandwich category, Subway, is a fairly well-known global QSR, but maybe Jimmy John's is not, and that's actually a fairly sizable customer to us. Another way of saying it is the 50th largest QSR in North America is a very meaningful customer for us. And it's a market that we serve well because, again, we're anchored in our strengths, but we provide a portfolio of products. And that approach also allows us to really aspire to the sustainable and circular future because we'll be working with those customers hand-in-hand, not on a product basis, but across their entire portfolio. In the consumer goods space, we are also historically anchored in the frozen dessert category, or ice cream, where we service customers, both by providing cups and other items that nest, but also by selling systems. A good example of a system is that the bulk ice cream is sold in a round container to reduce the shipping cost and also not to ship air, we deliver to our customers flat. And when we support them with equipment, that allows them to reerect that package and then to fill it. So it's a system sale. And it's a meaningful part of that consumer goods business. We're expanding consumer goods with our investment in the egg cartons, as we've mentioned before, but also with new technologies like ICON, which is a recyclable non-polyethylene coated cup that we have invented over 10 years to bring to market. I'm very proud of the business for finally getting it to market with some customers that are partnering with us. But likewise, yogurt cups, which was also launched last year. So very exciting growth in consumer goods, and we see a future of growth there. This -- across these 3 markets that we serve is an acceleration of sustainability of trends. And it is partly regulatory. Charles mentioned the -- how we view and how I think you can view the North American regulatory environment, which is very pragmatic but also pretty fragmented. A lot of our regulations start on a state basis or even smaller jurisdictions. And then they grow and as they grow, they become even more pragmatic in the whole industry, starting with consumers and customers and suppliers start to reinforce that. And I'm going to come back to that in a second because I'll talk later about what's the third point here, which is the foam bands. And this is something that has, again, started in a local jurisdiction, expanded to states and now it's something that the -- it's becoming a trend in North America being supported not just by regulatory but also by consumer trends. And as we think about this business and we think about our opportunities across those 3 segments, we think about continuing to invest in the next wave of growth to support our ability to provide sustainable solutions to these major customers. If I talk about how we're doing now, I would say that it'd be tempting to look at the left-hand side and say, well, we've scaled up the old investments and now it's stable, but that would be perhaps an oversimplification. 2020 was a very, very dynamic year. That year in 2021 represented a massive change in consumer consumption. In the space of ice cream, we saw the bulk containers go nearly to 0 because people were not going on cruises and they were not going out to the scoop shops. And we saw the retail ice cream go much higher as people comforted themselves at home when they were not able to travel. Likewise, on foodservice, there was a lot of takeaway, but there was not as much on-premise consumption. So it is tempting to look at that and say how nice and stable this is, but that was a very large effort. Through that effort, we really developed the capabilities and the centralization and the nimbleness to react to inflation. And that's why you see the stability in the last 18 months through North America. It was really that crisis of being able to react to the changing demand that led to our capability to react to the inflationary environment because that is substantially contributing to the growth, in addition to the volume growth that we see for our products. So very proud of the team, very good execution, really a reaction to a very dynamic market. We're going to continue -- we are currently leveraging scale. Scale is definitely part of the story. Our customer positions, as I had mentioned, creating benefits from the scale, not just -- just not from the drift of the scale itself, but also using the scale to have a better supply chain, better operations and central functions and then developing those game-changing innovations like the recyclable ice cream container with the scale that we have. How will we continue to do this? Well, 2 parts. One part is on the portfolio and the other part is on our capabilities. On the portfolio, you can see a number of examples here of how we're going to partner with those market segments and really deliver the most sustainable portfolio of products in the future. I'll just point out a few highlights. I'd say in retail, it's really the ability to now with the substantial presence we have in the retail aisle to really partner with these retailers and say, what is the future of that aisle. What is their pledges that they're making that we're going to help support them in? And how can we not only improve the sustainability of the product that we're delivering but also the packaging that is contained in. The full suite using our brand research on consumer behavior to help develop the private labels so they can also have the same sustainable future. In foodservice, it's really taking more of a comprehensive approach. I'm very proud that we announced recently that we have partnered with a stadium in Kansas City. It's the Sporting KC, which is a soccer team, better known as football. That -- it's about a 20,000-person stadium. And why that's important is because it doesn't have a chained restaurant there that already has its packaging defined. So we're partnering. We are the sustainable packaging partner to Sporting KC. And we are going to -- we have committed and developed a network of partners so that we can compost or recycle everything that comes from the stadium. We are inspired by our own internal efforts where we have had a number of factories achieved 0 to landfill status. So our commitment to foodservice is to make that stadium and future stadiums 0 to landfill, which is really an ambitious target, and we're very much looking forward to when we achieve that. If I look at building historic strengths, I would say that we'll continue to improve. We have a continuous improvement culture that's being backed up with digitalization investments. We have -- more than half of our factories are connected to our equipment to a central system that will allow not only for better analysis and improvement, but more importantly, for access to the data at the floor. So more than 300 machines are connected and the operators themselves can see trends and can react to trends. And that digitalization will just continue to offer more continuous improvement opportunities. We're broadening our capabilities with supplier networks. As I mentioned, we see nonintegrated as a major strength, not only last year when there were constraints, and we had more options than everyone else. But in the future, as we try to innovate and we partner with all of these suppliers that we have and build our network as well as strengthening our commercial excellence to continue to partner with our customers as they're also making pledges and commitments, whether it's 2025 or it's 2030. So I mentioned foam early on, and you've heard a little bit about that. Foam is a cautionary tale. It's a substrate that actually has a very low carbon footprint, but it doesn't have a great end-of-life story that is very hard to collect in mass, and it's very hard to convince everyone that, that will ever happen. So what you see is a pragmatic set of regulations, initially studied jurisdictions, expanded to 17 states. And you also see consumers starting to prefer other substrates to foam. And what does that mean for us? Well, it means a lot of support for the products that we already make. So in retail, you can walk down a retail aisle. And today, in states that don't yet have the regulations, you'd see about half of the aisle is foam, foam plates, hot coffee cups. If you were in foodservice, again, if you're in a state that didn't have the foam regulations, you'd see schools with trays that are made of foam or stadiums, you would see the takeaway containers and many restaurants being foam. And likewise, in FMCG, if you look in the egg aisle, again, in the states that don't yet have the foam regulations, you'd see enormous -- more than half of the egg cartons in the United States are made of foam. So this trend is really offering some significant tailwinds to our products and to our future. In conclusion, what it means for us is that we're very ambitious about our future. We're aspiring to a 5% to 6% growth rate in the developed economy, again, because the trends are with us, our portfolio is with us and our customers are with us. We have, to no surprise to most of you updated our profit target to 11% to 12%. It is where we're performing now. It is dynamic, of course, and it's seasonal, as Thomas had mentioned, but that is a level that we have achieved. And we believe that we have proprietary technology and proprietary relationships that will lead to stability with that target. And those 2 combined with good capital discipline will lead to 15% to 17% RONA. There's 3 main things that will lead to the success partnering with our customers, really moving with them, supporting them broadly with all the products that they need for their sustainable future. It's building on our internal capabilities, continuous improvement, world-class operations to deliver the best output, lowest waste and highest efficiency. And it's really investing in our future, really supporting the segments and the products that are being called for by customers and consumers and smooth molded fiber and paper and now also in rough molded fiber. Very pleased to share that update on North America, and I believe we have some Q&A now.

All right. Then it's time for some questions. We do apologize we apparently had some small technical issues with the webcast, but I can remind you that you can find a full recording afterwards behind the same link that you are using already right now. And now we have time for some Q&A. So let's start the directly with Ann, as you came up here. So apparent the sales per employee is clearly highest in the group. So is that primary reason for the higher margins in your segment?

Well, I'd say that it certainly doesn't hurt to have high sales per person. But I think it's a whole -- profitability is a whole network of reasons for developing and sustaining high profitability. I think first is really finding a consumer and customer need that you're solving in a unique way and making sure that you're preferencing your investment dollars behind those proprietary technologies. I think it is running at a very efficiently, efficiently -- the sourcing of the raw materials, the running, the selection of equipment, we make a lot of our own equipment and it's also running of the equipment. I think high sales per employee doesn't hurt, but profitability really is a formula of many different factors.

Thank you. Eric, so would you like to go through -- how do you see the situation in China at the moment? Do you believe that the market is going to rebound to where it was? And if it's not, then how do you see that?

China has been really, really difficult to operate in -- during times of COVID. I think maybe something we don't really know in Europe, but people were locked at home, not for days, but for months, okay? So there was no traffic. So it's been really difficult for us. I think it's very nice to see that China is reopening. People are back on the streets consuming. So it brings a lot of hope, yes, for sure. Yes.

Thank you. Marco, how do you see India fit into your overall profitable growth path?

So India has the right fundamentals. If you look at demographics, if you look at the shift of the middle level of society. But India -- the market is not fully there yet. So it's still kind of recovering long term, I'm very, very positive and bullish about India. Now we have some work to do on ourselves in that area. We spent last year basically to get the right team in place and now we're accelerating our way forward in India.

Okay. If we continue with that, so would you elaborate on the Elif acquisition? Are you happy with that one?

Sure. So as I mentioned before, Elif really was complementary in terms of coming to our footprint. It brought new capabilities, flexo as well as film making. And as a personal side note, I've seen a lot of flexible factories around the world. And the one in Turkey is probably the most impressive I've ever seen, okay? In terms of scale, in terms of how it was laid out with a vision in mind when they started with the first 2 lines to what it is right now. So extremely impressive operations, same in Egypt, built the same way, of course, smaller. So the long-term fit is great. The way we are progressing in terms of integration, we're on time. I think the timing could have been a bit better. If we look at what happened last year with 85% inflation in Turkey, that didn't help in Egypt, a similar situation with the currency against the U.S. dollar. So timing was not fantastic, but the long-term outlook is absolutely positive.

Good. Eric, you have already -- with the SMF proprietary technology, we have leads. So what -- and obviously, the coffee part. So what else would you think that your team could do with that technology?

Basically everything. I think when you look at the complexity of a lid looks like nothing. It looks like a very simple piece, but actually, it's very complex and you have liability behind -- liabilities behind the lid because you -- the test is that you need to drop the cup and the lid needs to stay on. So it's a lid of fiber. It's about a hot liquid. There's condensation. It needs to stay on the cup, even if you drop it from 1.2 meters, it's very technical. You can make it, okay? And it's a very beautiful piece. But what's even more impressive is the fiber capsule. There's lots of nice [Indiscernible] behind the technology that we own now. And if you can make this, I think you can basically make everything with our smooth fiber.

Then a question actually for both Ann and Marco. Maybe start with Ann. So we don't have -- or the thing is we don't have flexibles in North America now. So when are you going to do that?

Yes. Well, I'd say the North American market is well served by current suppliers except for unique products. So I think for Huhtamaki, the question would be what kind of unique products we have. The good news is that we already have answered that question. There's tens of millions of dollars of sales today into North America from flexible sites that my team helps warehouse and service together with Marco's team based on unique products that companies like Unilever and Henkel can't get anywhere else. So we sort of have the beginning of that answer, which is to work together and support those customers with unique products. But then I would sort of turn it back to Marco to say what more unique products do you have?

Well, before we go there, I would say the reason why we can already export a lot of product into the American market today is because Flexible Packaging ships very well. So you don't ship a lot of air. You roll it up on reels and then you pack -- you can get a lot of Flexible Packaging into a container. So that's why, for those global categories where we are in a leadership position that works already today. With regards to priority, I would maybe add that right now, our focus is clearly on rolling out blueloop and making sure that we can serve our global key accounts on the portfolio we have and help them on their pledge to 2025. Of course, we're always open for opportunities as they come along.

Eric, our consumer -- consumers buying less expensive coffee takeaways these days due to lower purchasing power. So do you see inflation impact here?

Not really, but what we watch currently is the impact that inflation can have. And one of the possibilities in [Indiscernible] is to shift to cheaper products like smaller size cups and this sort of stuff. But we don't see this much at the moment, yes, but that could be a trend.

Okay. Ann, what are you doing to maintain the strong margins that you already have?

Yes. Well, I think we're trying to be choiceful. So where we invest, we try to invest where we add unique value. We're also being choiceful in terms of spending our time developing a portfolio of products that are useful to our customers, developing their sustainable future. We're investing in scale, and we're keeping the scale benefits in the business by making sure we don't add a lot of central resources behind that additions and scale. And we're continuing to work together globally on 2 major initiatives, which Charles mentioned before, which is commercial excellence and also on operational excellence.

Thank you. Marco, you briefly spoke about expanding into medical solutions. So does it give you a platform to develop in this area given they have PPP extrusion?

So medical solutions, oftentimes have very high performance elements in there in terms of barrier or breathability and other things. Of course, from a film manufacturing point of view, especially as we look into blueloop, the Elif platform will help. But the way we then look at it is we will have barrier film making platforms, and we have conversion platforms. So in any case, it's going to be a combination as we produce the final product. So on the other hand, of course, health care, pharma offers a lot of opportunities with our new technologies where we are today only present in a very small way.

Eric, there are other players as well that have been talking about going into fiber product, molded fiber. So how do you see that from your point of view?

That's very interesting. I think what we see a lot is, of course, people understood that fiber is potentially a very good substrate to provide solutions, sustainable solutions for the market. We see a lot of companies venturing into it. We see a lot of failures Huhtamaki is big and profitable and successful here. We see also now very serious companies like Metsa or Stora Enso moving into this. And I think it's a very good move honestly, because they have the scale, they are very professional. And we need to -- the market is going to be very big anyway. What I think we have as a unique features at Huhtamaki is we have the reach. We have an incredible footprint. For instance, when we talk with the customers I was talking about on the lids on the coffee part. Of course, they are looking at how we can deploy this quickly because they need this across the entire planet. We have the footprint. We have the reach. We have the technologies. We have everything for them, and we are able to manufacture very complex pieces of packaging.

Maybe building on that, so -- and that's actually for all of you, 3. But is anyone of you seeing something disruptive in the competitive landscape. So maybe Eric, if you continue on that?

Sorry, say it again?

Do you see something disruptive in the competitive landscape?

I wouldn't say disruptive, but we invented new technologies. And I think we are -- technology is in permanent evolution, so we are already looking at future generations of technologies that we could bring to the market. So I wouldn't say disruptive, but yes, some of them might be game changing, yes.

Ann?

Sure. I'd say in fiber, similar to what Eric was saying, we see a lot of start-ups that make some headway, but don't have the full solution. I think having 100 years of experience is move molded fiber and making 4 billion pieces a year, gives us a huge leg up on these other start-ups. But there may be collaboration opportunities in the future. So while that may appear disruptive, we may have a chance to work together as even our segments are working together on various solutions. But we substantially have the science, the technology and the experience to be continuing to evolve. I do think it will become a bigger market. And so we believe that the pie is going to grow faster than the slices get made, if you will. I think in paper technology, we're seeing a cycle happen at the moment where it was very constrained last year, and you're going to see a number of mill announcements, and that will be good because that will allow for a better supply demand dynamic. But equally, so we see a lot of investment in new different paper solutions, compostable, non-poly coated various things. And that's exciting to us because, again, as the world's largest nonintegrated supplier, we're promoting the fact that mills are making innovations and we're working with them, and we're going to bring these solutions to our customers faster than anyone else. And then our last area in North America is that a lot of our complement products are lids or plates or things of that nature that are made either injection molded or thermoform plastic. And we see a lot of innovation here with bioresins, compostable materials. We've just launched in a very small way. So I don't think it will move the stock price, but a cellulose acetate straw, which is essentially celluloses wood. It will be a very small product, but it's very encouraging because that kind of raw material development and our co-development with the major supplier of cellulose acetate, maybe brings us solutions in other areas as well as a lot of the suppliers of resin working to create the close-the-loop environment. So I think we're going to see a lot more recycled material and recycled content. And I think all of these trends and I'd say disruptions are going to give us growth opportunities, and we're very encouraged because these are chances for us to serve our customers better.

Well, I would say flexibles is in a very disruptive time right now as an industry for a very long time. The structures remained the same. It was clear that aluminum is the strongest barrier, and it was clear that you print them polyester because it runs well through the machines, et cetera. So that was all given for a very long time, and now it changes within years, which is a huge transformation for this industry. That means new barrier technologies, making films -- preparing the films in a different way so that they have different attributes, stiffness, et cetera. So there's really -- everything is in flux right now, and we believe we are on the forefront, and we made the right decisions 1 or 2 years ago already. Before it was all about digital print, shorter print runs and so on. I think that is a little bit in the background right now, although there is good development there as well. But right now, it's really about the structures. It's really about making 70% of the market recyclable.

Maybe if we continue with you. So when you talk about the improvement that you're doing in the shorter term, so what are the most important factors there in the margin improvement side.

So for us, it's waste reduction is clearly number one because that immediately drops to the bottom line, followed by rightsizing operations where there's opportunity both on the shop floor as well as indirect. Those are the short-term opportunities, followed by evaluating the network -- manufacturing network and working on that. But this is now going hand-in-hand with the ramp-up of blueloop. So those things will support each other in terms of improving profitability.

Then we have only one time for one question. Actually, this is for all of you. So what are you doing -- or are you doing anything different to bring new packaging innovations to market faster and scale in order to reduce ramp-up time and drive the profitability? Maybe just start again.

Sure. Sure. So what we did with blueloop because our global key accounts pledged to be recyclable, compostable, et cetera, by 2025. We went first to them. We gave them like half a year to make up their mind, how they want to utilize our structures and technologies. Now it's time that we open it to the market because we also have an obligation versus the whole industry. So what we do now is we basically promote the products in the next few weeks to the whole market and then showcase it in the big innovation fair coming up. So I think we are on the right track there.

Eric?

Well, I think everything we do is different because there's a huge demand from the markets and the customers to bring up new solutions. And almost every solution is bespoke is unique and we have to design technologies around this. So the way we design innovation is the way we bring new packaging to the market is very, very different than in the past, okay? You have to bring teams together, work together with the segments. For instance, we talk about fiber, but I need barriers, which are here, okay? So I will also tap into hands because they make fiber for more than 50 years in North America. So bringing the team together is one thing that we were not maybe doing well in the past, also tying up customers with longer-term contracts almost co-investing with us to mitigate the risk because these are heavy investments for us. This -- everything is really very different, bringing also project management capabilities into those projects that are very complex. I can't say that this was the same 5 years ago. Now it's very different today.

Yes. Building on that with a tangible example. Recently, we had a Canadian customer ask for the molded fiber lid and together, our groups work together to put together a very credible proposal because the volume in North America for that product is not yet as high demand as it is in Europe, given that the regulations are quite different, but we can see the market with the capabilities from our partner segment and when it does become big enough invest in that area. I'd say the second thing is, and I alluded to it while maybe give some tangible examples that partnering with customers to really think about their entire category. So working with retailers, which typically update their planograms once a year and really thinking with them about the future of the segment, not just our product and thinking about how they need to customize their planograms for the different states and the different ways the states and the consumers consume the products. Likewise, with global customers, we're working together on a large QSRs. Ironically, A number of these large QSRs are headquartered in the United States, but they're needing to change of packaging rapidly in places like Europe due to regulation and consumer trends. So really working together and having joint workshops to again help these QSRs plan the future of their products. which may be different by different regions. But we have the reach, the technical knowledge and the portfolio to offer them those broad solutions and customize it by geography.

Thank you all for your assistance. Good questions. And now we'll just hand over to Charles for final remarks.

Very good. Thank you very much, and we're coming to the end of this session today. I would like to start by thanking my global executive team colleagues, Thomasine, Thomas, Ann, Eric and Marco for -- together with Kristian, for sharing with me and hopefully convincing you about the fact that we are on the right track. We are obviously experts in our industry, but we want to convince you that we are on the right track. And even more importantly, we want to convince you that our future looks bright. This is basically the key message that we wanted to bring to you, showing all the opportunities that are different technologies and our strategic direction is offering going forward, very exciting opportunities. So I will not spend a lot of time and for sure, I will try not to repeat anything that has been said. But one of the key things and one of the questions asked to me earlier was about the risks in the strategy. Well, one risk is in the execution, as I said. And in the execution, we all know that you get what you measure. And we are extremely serious about measuring everything we're doing and we're going to measure even more going forward. Our strategy is very much about accelerating delivering and creating value to our customers, our employees, our shareholders and to the planet, those 4 dimensions are absolutely essential in our strategy. And in our commitment, I would like to say. And therefore, we're going to measure the progress that's something that is extremely important in our strategy. Of course, the financials we have always been measuring, and we will continue according to the economic ambition that we have presented. We have been starting to measure our sustainability performance 3 years ago, and we have been very transparent about showing you on a regular basis, 2 times a year our sustainability dashboard and showing where we are progressing, where we still have challenges. And Thomasine did it very quickly as well. Today, again, we have ambitious targets towards 2030. We are including new KPIs as we go. Thomasine was mentioning 2 of them, extremely important. But we're going to measure as well. We continue measuring and we're going to reinforce the measurements on the value to our customers and the value to our employees, including something that Thomasine mentioned through sustainability, which is safety, and that's extremely important to us as well. So for that, we have a long list of KPIs. I will not get you through now. But what I want -- the key message I want to deliver is that we're going to continue measuring -- increased measuring, and we will be transparent about the progress in implementing our strategy and delivering performance. Now to end this session, I would like to simply summarize why we are confident. We always, in our culture, remain humble and we prefer not to overpromise, but we largely prefer to over deliver them to overpromise, but we are confident about what we have become today and going forward, our strategy and our vision and there are 3 basic reasons: number one is, we believe strongly in our vision of the packaging industry; second, we have strength in this industry; and third, we have lots of very exciting opportunities. Vision, it's our inspiring vision. I think all our employees are passionate about our vision, which is to protect food people on the planet. This is inspiring. This is as well aspiring for the future. And we have strength in doing this, and we have as well a vision for the fact that this packaging industry is not going to be a statistical story. It's a very rapidly and actually accelerating story, and that's why we have so much spoken today about and we're going to speak more about innovation going forward because this -- and all my colleagues business presence were emphasizing this. It's going very fast. And I like the fact that Eric was saying, probably the products that will be in 10 years or in 2030 in the market are products that are not today even known. Who would have thought that it would be possible to make coffee capsules made purely of this paper solution. So that's the vision we have for the -- for our business, for our company and for the packaging industry. Our strength has to do with where we're coming from, it's all not started today or even 3 years ago. We have a long legacy. We have strong foundations. It has to do with the partnership that has been built with customers globally, but as well locally. Many, many examples we have given about -- I like when Ann was mentioning that our business is not just to be only across the board with global accounts, we have very relevant local and national brands. Our global footprint, our proven technology, but as well the fact that we are looking into emerging technologies for the future and our people, our people, our assets, I know it looks like a basic principle to say but when you look at when you look at our latest innovation that Eric was mentioning, the coffee capsules, it's not machines. It's really -- the difference was made by people. Two years ago, when we started in that strategic bet, a part of it was a bet because we didn't have the technology. We thought that we would have the capabilities to develop the technology. The entire difference was made by our people, our people developing, but as well partnering with that customer, and there will be more to come in the future. So that brings me to the opportunities and the opportunities have to do with our industry itself, as I said before in the introduction, it's an industry where there is a market underlying growth. But as well, the fact that it's in transformation, somewhat, we could be concerned that it's -- we are so much challenged by the changes, but no, we should be excited because if you are in a status quo industry, then what happens. The only name of the game is cost, it's commoditization and you don't want to be in an industry like this. You want to be in an industry like ours that is challenged where tomorrow is not the same as today, and that's why we believe that our future is going to be bright. In somewhat it's going to be different but it's going to be very, very bright. And hopefully, this is what we've been able to convince you about that our future is bright because we want to be leading the redesign of the future of sustainable packaging solution, creating sustainable success through sustainable packaging. With this, I want to thank all of you the audience that we have, all our analysts and investors who are in the room with us in expo. I want to thank as well all of you who are -- who have been joining us online and following us during this couple of hours. Hopefully, you found it very interesting. And I want to thank you for your trust and your interest in the company. Thank you very much.