Huhtamäki Oyj (HUH1V) Earnings Call Transcript & Summary

Good morning all, and welcome to Huhtamaki's results call for the fourth quarter of 2025. My name is Kristian Tammela, VP of IR. Today, we have a presentation, as usual, first, by our President and CEO, Ralf Wunderlich; and then by our CFO, Thomas Geust. After that, we will take Q&A. And let's get started handing over to Ralf.

Thank you, Kristian. Good to be back, and good morning also from my side. Look, I'm going to give you the high-level overview about the business also by segment. And then Thomas, as always, will walk you through the financials. Look, the volatile market environment continues. Geopolitical issues, tariffs, very strong ForEx movements over the year was continue, so you name it, we had it during the year and unfortunately, also in the quarter. I am, however, really proud to say that 2 of our segments continued to see volume growth in the quarter and for the full year. That's really encouraging for us to see and hopefully we'll get the rest of the 2 other segments to follow in the future. Look, I mentioned already the FX impact, which we have seen, just to give you an idea that in the quarter -- last quarter '24 before we started '25, the U.S. dollar to the euro was at EUR 1.04, it finished the year at $1.17. So you can imagine how much only the impact on the U.S. is, and Thomas will walk you through later on also on the other currencies impact. We are really, really proud to see that our adjusted EBIT margin improved second time in our history, above 10%, both in the quarter and the full year at record highs. So really pleased to see that. I'm also really pleased to report that our adjusted EPS at EUR 2.48 is a repetition of last year and with that also at all-time high levels. The Board of Directors will propose at the AGM a dividend increase and it will be a dividend increase if approved at the AGM to EUR 1.14 per share. We started the year when I talked to you exactly a year ago, about our 3 value drivers because we wanted to be simple, pragmatic about what is really impacting us going forward and we have defined them and presented a year ago, and we followed through those 3 value drivers during the year. I can tell you now they are well established and really helping us to deliver shareholder value. Number one, and that's always going to be important, but especially important in a volatile market, which we are currently seeing is our focus on profitable growth. And we want to support it by using all levers, organic and inorganic levers. And it's an approach which is going to be very much linked to our customer relationships. We've got to strengthen the intimacy with our customers and drive their partnership forward with us. On the inorganic side, we are looking at bolt-ons, which makes sense for us, either because they're exactly in the geographies we want to win, in the markets, the substrates we want to play in and with management teams where we have a great cultural fit. So we had one last year. We announced on the 24th of April, our acquisition of Zellwin Farms and I'm proud to say that, that acquisition and integration is well on track and delivering as we were expecting it. I mentioned before, that we saw volume growth in 2 of our segments, that's, of course, very pleasing to see in the current environment. But it's also good to see if you talk about profitable growth, that our Flexibles segment is progressing really well, and we have launched turnarounds, and I'll cover that later when I talk about the Flexibles business. But to preempt, we are really proud with what we are seeing happening on the Flexibles segment side. Moving on to capital discipline and how we allocate capital to the segments. We made it a point last year that after a few years of heavy investments, more than EUR 300 million, EUR 320 million per year, we needed to actually be much more disciplined on how we allocate capital and making sure that we allocate it to projects which can deliver growth, can deliver efficiencies. And of course, we will continue to support our businesses when it comes to maintenance. And then remember, our formula 30%, 30%, 30%, 10%, and then there's a 10%, which we will continue to invest in safety and sustainability to ensure that we have our license to operate always in place. Now the outcome of this year is really, really good to see. We have significantly lowered our CapEx. We have still invested in growth projects, which we needed to, especially on the Fiber side, and we continue to be very, very disciplined with a very strong focus in this area. Now third one is more on how do we get there, and that is about accountability and speed of execution. We wanted to empower the segments that they have a very clear accountability and drive their segments in the way they need to and still offer from the center, language, coordination, expertise whenever it's needed. That is going really well. We have implemented this now globally in all our segments, slight differences in the segments depending on what they need in their regions or segments overall, but it's going really well. The one area where we said we're going to leverage much more the power of Huhtamaki is procurement. We've put first of April a global procurement organization in place and again, also here, we see great achievements and a really good start to that new operating model in procurement. Changes are now completed. The businesses are empowered and we are really proud to see good progress on that side. You can't do anything without a very strong global executive team. And there was a lot of change and a lot of new people coming into the team last year. Today, I'd like to introduce you to 2 new members of the team. After waiting for a long time of Katariina, 6 months, we waited for her. She joined us first of January comes with a very strong background and we are extremely happy to have Katariina now with us on the global executive team. And now we are waiting for Riikka. Riikka will join us not later than June this year. Riikka comes with a very strong background again, and she's got to be our EVP Sustainability, Corporate Affairs, Legal and our General Counsel. So that's our team, super happy about our team, and we are ready to go forward. You know that sustainability is important. We want to be the leader in sustainable packaging solutions, and we are moving clearly in that direction. We made really good progress in most of our areas which we are focusing on to take renewable and recycled materials. We went up 2 points to now almost 68. Renewable electricity, same thing. We also moved up on renewable electricity, we are now almost at 61%. Waste recycled, non-hazardous waste, we went up even 3 points and now almost at 85%. Certified recyclable fiber, we are flattish, just down actually here, which is very much driven by a mix of our different geographies. We improved our greenhouse gas emissions and we improved our total waste to landfill. Last but not least, and I'm really proud to see that we are at a record with regards to our health and safety. So we are looking at total recordable incidents and lost times and on TRIR, we again improved, and we are now at an all-time best here for the company. We will give you more details in our sustainability results call, which we offered you first time last year. So this time, it's going to happen on the 23rd of March and Rahul, our Head of Sustainability, will present and update you there. Hopefully, many of you can join us for that call. Now let's go to the business performance. And I mentioned currency before, and that's, of course, a big driver during the year. So first thing, if you look at net sales, we can see that almost 6% in the quarter headwind of currency. And here again, main one, the U.S. dollar, which in the quarter was at $1.18 million. So if you look at the organic part, we are approximately 2% down in the quarter, but again, the big hit comes from the currency to end up at EUR 981 million for the quarter. Similar picture, but not as accelerated as in the quarter, is there for the full year. Full year, the currency, it was 3.2%. So you see again the acceleration in the quarter to 6%, but of course, it's a significant hit of EUR 125 million for us. Overall, organically, we are down 1.3%. Give you an indication, over the year, the average rate for the U.S. dollar, as an example, is $1.13. Now looking at some of the key financials here. If you look at net sales, and we saw it on the slide before, so comparable net sales down a couple of percentage points. Adjusted EBIT finished with EUR 103 million. Now if you add up the EUR 4 million impact from ForEx, we would have ended up comparable to last year at EUR 107 million. Very strong margin performance 10.5%. So that's a really strong margin performance and stronger than last year as well and a very strong free cash flow in the quarter, significantly up versus last year. Similar picture for the full year. As I mentioned on the slide before, from a comparable net sales perspective, we are down 1.3%. Adjusted EBIT EUR 405 million, but you add the -- sorry, the EUR 9 million FX, so EUR 405 million plus the EUR 9 million FX, we would comparably end up at EUR 414 million, so very much in line with last year's number and a margin of 10.2%, even higher than last year, second time in our history above 10% and the highest ever. So really happy to see that margin improvement. Our adjusted EPS was EUR 2.48. So the EUR 2.48 again, is same level as last year and the highest in our history. Very strong cash flow with our focus on capital discipline, we achieved EUR 311 million, that's EUR 95 million up on last year. Let me go to the 4 segments now, and let me start with Foodservice. Foodservice, we saw solid margin performance with a very strong cash delivery, albeit a soft top line. First, the quarter, as I mentioned, it is a soft top line, but we were able to grow in Middle East Africa, and we were able to grow in Eastern Europe. Overall, we see a decline on a comparable growth perspective because Western Europe and the U.K., which are big markets for us, were weak. The segment worked really hard on cost management, and that enabled us to still deliver a very strong margin of 9.8%, which is in line with last year's quarter margin of 9.9%, and it delivered EUR 46 million of cash. So double the cash of last year, so strong cash performance of the segment in the quarter. If I look at the full year for Foodservice, very similar picture on net sales and very similar pictures on actions to improve profitability, so call it self-help activities. Raw material was stable. But again, very, very good outcome from the cost-out projects, the segment did launch and execute on. And we saw a margin which improved over the full year to 9.3%. So even though we had a very soft top line, we were able to improve margin to a healthy 9.3% in Foodservice. Especially happy to see that the focus on cash also for Foodservice really played out EUR 131 million, that's EUR 30-plus million stronger than the year before. Moving swiftly on to North America. And North America is one of the two segments where we see volume growth. In a market where consumer confidence was very low, it's extremely pleasing to see that we were able to continue to have volume growth, not just in the quarter but also for the full year. You might remember Q3, so we had a very weak Q3 and we were hoping and we were seeing then that we saw operational improvements. We saw strong volumes coming in the quarter. So we were happy to see that our margin bounced back to 12%, 12.1% in the quarter. So volume up. We continue to see, as mentioned during the year, pressure on price. So pricing was down. And also North America in the quarter had a lot of focus on cash and delivered a very strong operating cash flow outcome in the quarter. Moving to the full year. Same thing I mentioned before, volume growth for the full year, that's encouraging, but negative impact overall on comparable growth because of the pricing impact. So just negative here overall on comparable growth. Now operational costs increased, and we continue to focus on taking cost out in North America to make sure that we keep our margin profile, which we promised to you between 11% and 12% going forward as well. Now our RONA is still at a very healthy 15% margin, even though it's down on last year's record performance of 19.6%. Let me move to Flexible Packaging. We have seen a significant margin improvement in Flexible Packaging during the full year and also during the quarter. With the lower volumes, which we see during the quarter and during the full year, are offset by better pricing and better mix. So really, really strong focus on getting our mix right in Flexible Packaging. Lots of activities on the cost side. And you will remember that we put 2 of our units there under turnaround activities. We talked about India and Turkey. And I'm happy to report that we have very, very strong positive impact from our turnaround activities in those 2 units. That enabled us to deliver a very strong margin in the quarter and a very strong cash flow in the quarter. For the full year, it's a similar picture. Lower volumes, but great improvement on the overall product mix, which we are selling, turnarounds going absolutely in the right direction. So as does the cost-out projects which we are running there. That enabled us to come with the best ever performance in Flexible Packaging, over 9.2% EBIT margin, also the absolute number of EUR 115 million is an all-time high as RONA is and as the cash delivery. So we are very pleased to see Flexibles going in the right direction. Last but not least, let me jump to our Fiber Packaging segment. Clearly, a very strong profitability performance in the quarter and in the full year for our Fiber segments. Net sales, just shy of last year in the quarter. But if we look at the overall product which we sell, that is, in fact, increasing comparably by 4%. Machine sales is down slightly, but overall comparable growth up 4% which enabled us to come to an adjusted EBIT of 15.4%. So very, very strong performance and a margin of 15.9%, which is stronger than last year as well. For the full year, we were able to grow comparably at 8% in the Fiber business and improving adjusted EBIT in absolute by 16% and growing the margin to 13.3% for the full year. That enabled us to grow our RONA to a very strong 18.4% in the Fiber business. You will have noted that we spent more money on the Fiber side than last year. And we did this because we see lots of opportunities to continue our growth story in the Fiber Packaging segment. So with our approach on capital discipline, putting money behind very profitable projects, we are aligned, so we are super happy to continue to invest. Let us move on to the financial review. And Thomas, if you could take over from here, please?

Thank you, Ralf. I will take over now. Yes. And if I look at the big story of the year, which is really the currency movements, highlighting the fact, again, that it's a translational impact for us as a company, but given the big exposure to the U.S. dollar, obviously, the movements have been very significant. If I take the quarter alone, roughly 47% of the impact on the full year top line came in the quarter alone. And Ralf already alluded to the fact that Q4 2024, we still had a U.S. dollar at $1.04. And if you look at the average rate for the full year, it was at $1.08. Average rate for 2025 is $1.13 and as you see from the slide, we had a closing rate of $1.18 on the U.S. dollar at the end of 2025. Today, I think or yesterday, though, currency was at roughly $1.19. Highlighting also the fact that we account for the balance sheet on closing rate, while then the P&L is being translated on average rates. But as you can also see from this slide, all -- basically all other currencies were also trending negatively throughout the year. So explaining that, it's not only North America getting the currency, it's also the other segments, but as said, translational. The transactional, we are taken care of by our hedging policies. If I take a bit of a deeper dive into the P&L, I would say that the positive side of the year is our very, very continued -- strongly continued management of costs. So with that one, we were offsetting some of the negative development of top line, value-add remained strong. On the operations side, we were able to offset a lot of the salary inflation, but not fully. So without a growth, we still have a negative impact out of salary increases despite having done significant work on that topic as well. You see from this slide also that our finance cost is at EUR 60 million versus EUR 71.4 million previous year. This is the outcome of a continued debt decrease as well as the benefits from having become investment grade rated, and therefore, having a more favorable position when it comes to interest rate negotiations. The adjusted income tax at 22.4%, so roughly 22%, quite similar to previous year's levels, so maintaining that one. And then obviously, as an outcome, our adjusted EPS, as Ralf already said, we are happy to see it remain on previous year's level EUR 2.48, which as he mentioned, is an all-time high. Cash flow is something I'm significantly proud of for the year. We had a very strong EBITDA conversion to cash. You will see that the capital expenditure obviously contributed well. We said already that it doesn't impact our future growth. So we have stayed very capital disciplined when it comes to how we manage that part of the story without compromising the future. You will also see that taxes had a significant positive impact when it comes to this one. This is mostly timing related and also one on some treatment of losses. Then if we have -- then we see the net financial items basically close to previous year's level. And as you see from this slide, we had a negative full year impact of working capital. However, also here, looking at Q4, we had a good development from Q3, where we were still at a very significant lower level compared to previous year. So Q4 development, all in all, one can only conclude that the cash flow generation was really strong. And with that one, obviously, we get the benefit of a continued deflation of our net debt. So we are down at roughly EUR 1.2 billion, down versus previous year, with a net debt-to-EBITDA of 1.9x, so we have come down from the high of 2021 when we were at 3.1x and with a net debt of roughly EUR 1.5 billion. So we have delivered on the promise to after an acquisition make sure that we take care of the cash flow generation in a way that maintains the balance sheet on a strong level. When it comes to loan maturities, you can conclude from the previous slide and this one that our liquidity and combined renewal of financing puts us in a very strong position when it comes to managing our future balance sheet when it comes to debt. We did a number of transactions during 2025. And with that one, we landed at an average interest rate of roughly 4% when it comes to gross debt. So good development and a good position when it comes to maturity, good position when it comes to ability to also act on future capital needs with the EMTN program that we launched in 2025. So quite happy with our financial position all in all. And looking then at the balance sheet. Here, again, the currency impact has a significant impact on the asset development. Here highlighting here what I didn't mention on the previous one that our gearing is now at 0.61. The return on investment is slightly down versus previous year, mainly actually due to the asset levels in Q1. And as we calculated the return on investments on a 12-month rolling, it comes with a lag. You see, however, the return on equity slightly improving versus previous year. So also here a favorable development. As mentioned earlier here today, our Board of Directors is proposing a continued increase on a year-on-year basis in our dividend. With EUR 1.14, we would have a payout ratio of 46%. You can compare that to the previous year's levels so remaining on -- just in the middle of our payout ratio guidance. And with EUR 1.14, we would have increased our dividend for 17 consecutive years, which I believe is the longest for companies listed on in Finland. Track record when it comes to delivering towards our ambitions in this market environment, we have, unfortunately, not been able to meet the expectations when it comes to growth. We have been, however, done a very diligent job on the other elements. So profitability for second year in the lower end of the corridor and return on investments, I would say, despite a slightly lower level versus 2024, moving in the right direction. Those still being below. And then our net debt-to-EBITDA really at the low end of the corridor or even slightly below. And then as said, continuing to deliver dividend in proportion to our ambitions. Finalizing here with the outlook, the outlook is for 2026, basically, the same as for 2025 and also the short-term risks and uncertainties remain, from a content point of view, unchanged. So with this one, I would hand over for Q&A.

[Operator Instructions] The next question comes from Lewis Merrick from BNP Paribas.

Starting just on Foodservice packaging. From a top line perspective, growth was quite soft during the quarter. I mean, you mentioned the softness in Western markets and specifically the U.K. being the driver of that in the statement. Can you just elaborate on whether you think this would destocking or simply just soft underlying demand? I just got 1 follow-up.

Yes, thanks, Lewis, and good morning to you too. Yes, look, it is mainly a really soft market. Our customers tried with promotion to bring traffic back. Some of them did achieve that. And in fact, with those, we saw good numbers, but most of them did not. And that clearly impacted us, as I mentioned, especially in Western Europe, and in the U.K. In the other markets, we saw good growth. But we were hoping for more promotions to bring people back into the restaurants, which did only actually occur in a couple of our customer cases. So a bit disappointing with how the promotions ended up at the end of the year. But look, they will fight as we know, and they will continue to fight our customers, and we will continue to support them.

And just on North America, one of your peers has been quite challenging competitive dynamics right now. Just wondering, are you seeing any increased competition at the moment in some of your North American end markets?

Yes, nothing now stronger than what I reported to you before in our quarterly calls, Lewis. So we see clearly that with the overall consumer confidence levels going down, volumes not being there. Many of our competitors and suppliers also not seeing volumes. We clearly see pressure on pricing, but we saw that during the year, and that obviously was a decision we had to make on whether we are going to fight for the volumes or just let them go. We decided that the high level of margin, which we have seen in the years -- a couple of years before, they were artificially high from a time where it was exactly the opposite direction. So we decided to stay in the market. That's why we did grow volume in North America, but we had to give price for that. That will flow on year-over-year perspective into 2026, but we are not seeing more fight now than we have seen during the year 2025.

The next question comes from Robin Santavirta from DNB Carnegie.

Yes, I have 2 questions. First of all, if we look at your margin and cash flow in Q4, you had again a very strong performance, but the comparable sales is still in negative territory. So my question is, first, what is the comparable sales outlook for the Flexible Packaging and Foodservice business going into H1? And the second question I have is related to North America. We see some of your customers complaining about adverse weather patterns or snow storms in January, is that something that will impact your business in January?

Robin, thank you for the 2 questions. So as you will appreciate, we don't give outlook numbers on volume for any of our businesses. So let me just tell you on especially Flexibles, which was core of your questions. In '25 and the quarter, very similar picture. The segment decided to go after profitability rather than any volume was important for us after years of 6% or last year 7% EBIT margin to make sure that we bring this up. One of the activities out of 3 really was mix improvement. So a strong focus on mix on products, which makes sense for us going into what we call blue loop more sustainable products. where we have capacity built. So that was really important for us from a mix change. A lot of that mix change came with substitution from prior non-sustainable products to now blue loop products and a better overall margin level. So that's one of the activities mentioned, the other one was our cost initiative taking cost out. And the third one was really the turnaround activity. So overall, Flexibles did focus on that. Look, that focus is not over. You know my words on that, one year doesn't actually give you a trend. So that focus will continue to make sure that we deliver and deliver on what we have now achieved in 1 year in Flexibles. Second question was about the weather in North America. Look, it's a timely question because, frankly, we did experience very severe weather conditions in North America in January, which absolutely impacted our business. We had to close temporarily 5 of our sites and 2 of our distribution centers. So for days, those were shut. So of course, that is going to give us an impact. We are assessing the impact currently. But as you will appreciate, it's a one-off impact and the weather is happening fortunately, onetime, but there will be clearly an impact for our North American business in January due to that. We're now back running in all our sites, Robin.

That is very clear. Can I just try on Flexibles and Foodservice? Just to get a feel and some color on order intake. Just trying to get to the point, are you seeing any signs of a bit better order intake bit better volume outlook? Or is it still a bit more of the same in terms of volume outlook? If you can share some color on that?

Yes, Robin. So a very similar question than before. So very similar answer rather than going into specifics, guidance of outlook, don't want to go there. Let me answer in, as I tried for Flexibles. So the picture on what we are trying to do with our overall product mix, which we did in '25 or started in '25, we don't see any reason why we would change that. And on Foodservice, we are so much dependent on the traffic and our customers winning with their promotions and their activities. So that's really what we are doing there. Our activities, if I may just add one word, on both, but frankly, also for the other 2 segments on winning customers, new customers, new -- more local, more regional customers are starting really to pay out. We are -- it's a long process, of course, if you don't supply them, but we are starting to see that impact. As an example, in Foodservice, Middle East Africa, we did see really good progress with local and regional customers, even more so in Eastern Europe, where we saw really some great improvements. To give you an example in Poland, we saw with 1 specific local customer, some really good traction.

The next question comes from Hai Huynh from UBS.

I have a couple. The first one is on North America. Are you starting to see any benefits from tariffs, meaning competitors having pricing pressure and they have to pass on prices and volume coming to you? Are you seeing any signs of that yet?

Look, the tariff situation is going in so many different directions currently. What we are seeing is that clearly, if you also look at Q4, our retail business, we had, as expected, a good quarter on retail. So it came back into the season, Thanksgiving as well as Christmas clearly was good for us. And a lot of that is because, first, the seasons were good for retail, but secondly, there was a shift from some of the Chinese imports and the shift of some of the extended polystyrene imports towards products, which we do. Overall, on the tariff situation, Hai, if I may answer a bit more general, overall, as we really produce and sell, so we buy, we produce, we sell all in the U.S., we don't really have so much of an impact. Competitors coming from the Far East who have currently a huge trouble on tariffs, are absorbing a lot of that currently as they are waiting for the final outcome or we see a bit of a shift from, for example, China to Vietnam. So I would say, overall, the impact on tariffs during the year for us not significant.

I meant more in terms of the benefit from competitors having pressure, but it's clear that you mentioned some of the shift happening in Q4. On the free cash flow, could you help me a little bit on how I should think about it in 2026? I see some negative working capital impact in '25. So what are the building blocks, I guess, to help us think about next year? So CapEx, I guess, will remain moderated. How do you think about working capital?

Yes. So focus on both CapEx and working capital was significantly increased during '25, and there is no reason to believe it would not continue. We are, of course, seeing some of our customers putting pressure on us with regards to payment terms. So we are, of course, now having actions in place also to look at inventory and payables to offset or hopefully more than offset that. So we are pretty positive with the overall development during '25 on how we are managing working capital. Thomas alluded before that we have had some really good progress in Q4 already. So that's very encouraging. And you are spot on. No reason to believe that we would have a different view on CapEx. That allows me maybe to stress one important point. We are not saying no to CapEx, which doesn't make sense, where we see profitability improvements where we see efficiency improvements, where we see growth opportunities, we are investing. The examples I gave, Fiber is a great example where we are growing, where we need capacity, we are putting it back in. So don't feel like we are just cutting CapEx for the sake of doing it. We're doing it because that's good management of a disciplined approach.

And my final question. So 1.9x EBITDA now, your CapEx remain moderated, you are focusing on working capital. So free cash flow, I see a strong free cash flow, but then you're below your target of 2 to 3x. So what are the avenues here that you might explore for the next year in terms of spending cash?

Thank you for that question. So we have been very clear on our ambition to be in the range of 2 to 3x. And we have also in our profitable growth bucket being very clear around the M&A agenda. So I would say it's quite clear with the organic side, we are more on a continued deleveraging path. So clearly, for that sake, we are continuously looking into the M&A field as well. And of course, seeing that M&A landscape is quite favorable at the moment.

The next question comes from Cole Hathorn from Jefferies.

The first is just on understanding how your raw materials and costs are developing. Would you mind talking about Foodservice and then North America separately, because I imagine besides labor inflation you should be benefiting from lower paperboard and polymer prices? I'm just like some color on how you're thinking about that into 2026. And then secondly, maybe on the commercial side following on after the cost is we have seen promotional activity. And how do you make sure that you don't concede price if you are getting a raw material tailwind? What are you commercially doing to try and minimize that price giver?

Thanks, Cole. So look, overall, on the raw material side, I think it's important to remember that other than in Fiber, in our 3 other segments with most of our customers, we have an automatic pass-through. So you would see this an impact of that maybe on the top line, but not really on the bottom line. There's a bit of timing impact here, but there's no real impact. So if we see paperboard prices going down, you would also see that we have to pass them to our customers. So the impact, again, other than a bit of timing advantage or disadvantage, you wouldn't really see. And maybe the advantage on the advantage is then taken out with regards to your inventory valuation. So we don't see this as a big impact at all. We have had a few raw material substrates, which went the other direction, just giving you an example, aluminum, which is also a substrate, which is quite important to us, went in the other direction. So we don't see currently any significant move for 2026 from what we have seen and what was negotiated in the last quarter. So on that side, no real impact.

And then the one on promotional activity. Customers have done a lot of promotional activity. I know you mentioned it for Western Europe that we hadn't quite seen that benefiting volumes. But are you seeing any of that in North America? And how could that potentially benefit you and your footprint there?

Yes. So both promotions happened in both North America and in Europe. In North America, we saw more of a positive impact for us on the Foodservice side. I have to say, so we participated and did win more of those promotions than in Europe. And you're spot on, we've got to be super disciplined on pricing with these promotions because temptation to say we win the promotion and we afterwards might also get them the volumes following that temptation is there. It doesn't always work that way. So for us, with regards to promotions, it's important we want to participate, but we've got to be disciplined on pricing. Otherwise, it's super, super difficult for us to maintain. Our take Foodservice, Global Foodservice, really difficult for us to keep our margin profile, which, as you have seen, we have improved during '25 to 9.3%.

And then finally, just on your retail plates business, you've obviously got the premium Chinet brand, which is well regarding the U.S., but there has been some capacity additions in the lower price point levels from Georgia Pacific. So I'm just wondering how is that development been in retail plates. Have you seen any down trading from consumers or any disruption in that market, considering it's a higher-margin business for you?

Yes. So we have seen that for us because, as you're rightly saying, the premium Chinet wasn't really impacted by the Georgia Pacific/Dixie investments, which we have seen. They are more competing with the imports. So they would be more competing with what I mentioned before, imports and/or the transformation from extended polystyrene towards paper. So that's more where you would see an impact going from left to right for Georgia-Pacific volume we assume. For Chinet on the other side, don't really have that. So Chinet more premium. So who wants to buy a Chinet consumer will go with Chinet. So we didn't see that impact there.

The next question comes from Pasi Vaisanen from Nordea.

This is Pasi from Nordea. To start with the market. So could it be even a realistic scenario that your organic volume growth would be a positive in the second quarter of this year, mainly due to kind of investments you have made and also do the easier comps coming from the last year? So the question is that is the underlying market stable or still declining?

Yes. Thanks, Pasi. So look, we have invested in the past, but we have also invested this year. Even if CapEx is lower, we still have invested, and we have invested for a reason. We have invested because we believe that we can generate growth with those investments. We were with our operational issues in North America, we were hoping to be at a better point with some of the investments which we did in prior year. So no reason to believe that we wouldn't see a positive impact from that going forward. And then, of course, we -- I guess, not just us, but we are all hoping that the huge headwinds which we are seeing in the consumer, low consumer confidence levels are starting to turn. So of course, that would give us a tailwind. And you're, of course, right with lower comp in the second half that would help, I guess, the overall market and us. So we are positive that the investments which we did clearly in '25 and the progress we are making on investments made in prior years will start showing us positive impacts going forward.

Yes. Excellent. I hear you. And secondly, when looking at the crude oil price, that has actually stepped down roughly 2 years in line. So is the plastic price is actually the reason for an improvement you have seen in Flexible segment?

Yes. Pasi, I think question very similar to what we got before. We would see with the impact on oil, we would see, of course, that some of the resins will be impacted and would be impacted to go down a bit lower. But in Flexibles specifically, most of our contracts actually have an automatic pass-through. So whatever we would see here now maybe on a slightly positive side and in other years, slightly on the negative side is only an impact of a very short period because then it's passed through. So you might see it in value, but you don't see it in margin even on value add. So I think on that side, we've got to be clear that, again, Fiber is the exception here where we don't have pass-through automatic clauses, but for the others, impact of raw material timing, yes. But overall, I would say, there are clearly not the reason why we have had flexible packaging advantages in '25 versus the prior year.

Okay, I see. And maybe lastly, so have you seen any progress in India? Or are you going to make a kind of decision regarding your presence in India during this year? So is it going on track according to plans?

Yes. So it is, in fact, outperforming what we were hoping to achieve. So we are super proud with our 2 turnarounds. Our colleagues from India, I think, have announced their results a couple of days back. So I would encourage you to have a look at that. So India specifically, you can see. We are seeing significant improvements in our Indian, never say significant, I mean, significant improvements in our overall Indian performance. So very happy with the turnaround activities in India and Turkey, just to add, even if you didn't ask about Turkey, and Turkey.

The next question comes from Pallav Mittal from Barclays.

So firstly, can you talk a bit more about your Foodservice operations? Your comparable sales were down 7% and you have highlighted weakness in Western Europe and U.K. It seems like you're losing market share because I don't think the underlying demand is down 7%. So any comments on that would be very helpful.

Yes. Thanks, Pallav. As I mentioned, Western Europe and U.K. down, and those are our largest markets, so the impact of them is greater, and we can't offset with the growth which we have had in Middle East Africa and Eastern Europe that decline. Look, it depends on who your customers are. So with our largest customers, we in fact did grow. But then with a number of our not as large customers in Western Europe and the U.K., unfortunately, their promotion activities did actually not play out as good as they wanted and/or we -- because we wanted to be disciplined, we didn't participate in the promotions for the right reasons that we need to maintain our margin level. Once it's down, it's super difficult to bring it up again. So some of those decisions were our decisions, some of those decisions were our customers' decisions. But if you look at the bigger picture, market share perspective, I don't see that. I don't see us losing over -- maybe in a quarter, but over a medium to longer term, I don't see us losing market share with our customer base. So don't look at the overall Foodservice market, but really look at what we are doing, our product ranges and our customer base.

Sure. And secondly, if you could talk a bit more about your market conditions across segments so far in the quarter? And I appreciate your comments around the winter storms in the U.S. But if you could quantify whether it is likely a EUR 10 million impact or a EUR 20 million impact, any sort of quantification would be very helpful.

Yes. So we are -- so getting back to what I -- I think it was Robin asking that question about the weather in North America, we are still evaluating, but we know it will hurt our January results in North America. And that's a one-off. We understand that. Clearly, in some of our markets, cold weather is not helpful. Of course, if you come to summer times, that's where we have, of course, more interest in beverage as an example than in wintertime. So cold winters in general, aren't super helpful, but we are in early February now. So giving you an idea how the quarter is looking would first be wrong because we don't give outlooks. And secondly, I just really don't have any facts to support anything stronger here. And I know that -- sorry, just to just allude to, you will appreciate that Q4 proved to be a very, very strong quarter for us. So we are, of course, really happy with the outcome of Q4 overall.

Sure. And if I can just ask 1 follow-up on the capital allocation. So you did say you could look at some bolt-on M&A, but given your net debt EBITDA at 1.9x, is share repurchases on the table? Or that is not a discussion point at the moment?

Yes. So we are -- I think Thomas made the point, of course, and we started the journey last year where we wanted to drive profitable growth with all levers. We are actively looking at bolt-on opportunities for us. We did one last year, why one and not two, three or four because we got to be super disciplined. We're only going to do them for bolt-on if they are accretive in year 1. That's clearly what we are striving to get to and we continue to work. We have a very healthy pipeline, and we are actively looking at that. But we are only going to execute if it is the right thing from a returns perspective for us. So -- and of course, the discussion on how do we return capital to share shareholders is one which the Board is always entertaining. And the one thing the Board is now proposing to the AGM is another dividend increase. As Thomas said, it's the 17th year in a row, if approved by the AGM that we are increasing dividends. That doesn't mean that the Board is not discussing and evaluating other opportunities to return capital to shareholders.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to follow up on the commentary around the M&A landscape is attractive. How do you think about M&A when you think about the Huhtamaki business because you have over time rationalized some capacity where you had too much supply. So I'm just wondering what segments are attractive to you? And how do you think about M&A to make sure that M&A is accretive, and you don't buy any excess or all the technology for the business?

Yes. Thanks, Cole. Of course, super relevant question because we have -- and you know that, we have free capacity in a number of our segments and factories. So we would not and never entertain a discussion to add to free capacity, idle capacity, even more idle capacity. So we wouldn't do that. So when we look at M&A, other than the strategic fit, other than the fit of the products, the substrates and the geography, we are, of course, looking on what do we have already on the ground, what could we do by investing organically. So that's always something which we are analyzing before we come up with the decision. So take the one we did last year, as an example, that was in egg fiber packaging in Florida. So it was interesting because in Florida, in that state, we didn't have any egg fiber production but it was something which was already very profitable and fast growing in that region. So even though we had free capacity in Hammond, we couldn't deliver from Hammond into Florida. So it made absolutely sense for us to take that on. And again, it proved to be the right steps. So summarizing Cole, we are, of course, analyzing what capacity do we have. Could we invest organically? Or does it make sense for us to add with an acquisition capacity in certain areas.

And then maybe just following up on that, it's clear to say that it's a buy versus build market when you look at kind of upstream in the paper and packaging space, but in your landscape on the downstream converting, I imagine that the competition is still a little bit more competitive for those converting assets. Is it a buyer's market out there? Or are people still looking for decent prices for their assets?

No, it's currently, I would say, it's a buyer's market currently. Look, there is, of course, now since a couple of years or certainly during the whole of '25, a very low volume market. It's clear that whether it's destocking, whether it's consumer confidence, but it's a market which is not growing and not just for us but for everybody. So of course, there are competitors out there, which are struggling. Our margin is super healthy. Our EPS is at an all-time high. Our cash flows are very healthy. So of course, we are in a good position here, but we will continue to be disciplined. Let me repeat this because it's an important message internally and externally. Only because it's a buyer's market and there might be opportunities, if they don't come with the right return profile, we are going to pass on them.

All right. That was all for the questions for today. As always, if you have any follow-up questions, please feel free to reach out to us here at the IR team. And with that, we would like to wish you a great day, and thank you for attending.