Huhtamäki Oyj — Earnings Release 2016

Feb 15, 2017

Huhtamäki Oyj Results 2016

January 1–December 31, 2016

Huhtamäki Oyj's Results January 1–December 31, 2016

Solid progress

Q4 2016 in brief

• Net sales grew to EUR 732 million (EUR 691 million)
• Adjusted EBIT improved to EUR 65 million (EUR 56 million); EBIT EUR 64 million (EUR 56 million)
• Adjusted EPS improved to EUR 0.44 (EUR 0.38); EPS EUR 0.42 (EUR 0.38)
• Comparable net sales growth was 3% in total and 5% in emerging markets
• Currency movements had a negative impact of EUR 2 million on the Group's net sales

FY 2016 in brief

• Net sales grew to EUR 2,865 million (EUR 2,726 million)
• Adjusted EBIT improved to EUR 268 million (EUR 238 million); EBIT EUR 266 million (EUR 215 million)
• Adjusted EPS improved to EUR 1.83 (EUR 1.65); EPS EUR 1.81 (EUR 1.42)
• Comparable net sales growth was 4% in total and 7% in emerging markets
• Currency movements had a negative impact of EUR 51 million on the Group's net sales and EUR 5 million on EBIT
• Free cash flow improved to EUR 100 million (EUR 91 million)
• The Board of Directors proposes a dividend of EUR 0.73 (0.66) per share

	Key figures
--	-------------

EUR million	Q4 2016	Q4 2015	Change	FY 2016	FY 2015	Change
Net sales	731.5	690.5	6%	2,865.0	2,726.4	5%
Adjusted EBITDA 1	95.2	82.4	16%	381.8	342.0	12%
Margin 1	13.0%	11.9%		13.3%	12.5%
EBITDA	93.7	82.4	14%	380.1	319.4	19%
Adjusted EBIT 1	65.4	55.7	17%	267.9	237.5	13%
Margin 1	8.9%	8.1%		9.4%	8.7%
EBIT	63.9	55.7	15%	266.2	214.9	24%
Adjusted EPS 1 , EUR	0.44	0.38	16%	1.83	1.65	11%
EPS, EUR	0.42	0.38	11%	1.81	1.42	27%
ROI 1				14.7%	14.7%
ROE 1				17.7%	18.1%
Capital expenditure	103.9	50.5	106%	199.1	146.9	36%
Free cash flow	21.7	53.0	-59%	100.3	91.2	10%

¹ Excluding IAC of EUR -1.5 million in Q4 2016, EUR -1.7 million in FY 2016 and EUR -22.6 million in FY 2015.

Unless otherwise stated, all figures presented in this report, including corresponding periods in 2015, cover continuing operations only. Continuing operations include the Foodservice Europe-Asia-Oceania, North America, Flexible Packaging and Molded Fiber business segments. Discontinued operations for 2015 include the Films business segment, which was sold at the end of December 2014. Unless otherwise stated, all comparisons in this report are compared to the corresponding period in 2015. Figures of return on investment (ROI), return on equity (ROE) and return on net assets (RONA) presented in this report are calculated on a 12-month rolling basis.

Impact of new ESMA guidelines

In accordance with the new guidelines on alternative performance measures issued by the European Securities and Markets Authority (ESMA) Huhtamäki Oyj has revised the terminology used in its financial reporting. The term "Items affecting comparability (IAC)" replaces the term "Non-recurring items (NRI)". IAC includes, but is not limited to, material restructuring costs, impairment losses and reversals, gains and losses relating to business combinations and disposals, gains and losses relating to sale of intangible and tangible assets, as well as material fines and penalties imposed by authorities.

Alternative performance measures are derived from performance measures reported in accordance to International Financial Reporting Standards (IFRS) by adding or deducting the IAC and they are called Adjusted. Thus the term "Adjusted earnings before interests, taxes, depreciation and amortization (Adjusted EBITDA)" replaces the term "EBITDA excluding non-recurring items", the term "Adjusted earnings before interests and taxes (Adjusted EBIT)" replaces the term "EBIT excluding non-recurring items" and the term "Adjusted earnings per share (Adjusted EPS)" replaces the term "EPS excluding non-recurring items".

Huhtamaki uses alternative performance measures to better reflect the operational business performance and to enhance comparability between financial periods. They are reported in addition to, but not substituting, the performance measures reported in accordance with IFRS.

Jukka Moisio, CEO:

"2016 was another record year for Huhtamaki. Our net sales and profitability reached all-time-high levels and met the mid-term ambitions set in early 2015. Our net sales were EUR 2.9 billion, Adjusted EBIT margin strengthened to 9.4% from previous year's 8.7% and adjusted EPS grew by 11% to EUR 1.83. I would like to thank all Huhtamaki team members for the achievements in 2016.

Our comparable growth was 4% overall and 7% in emerging markets during the year. Development was good in North America, where our past investments delivered in a growing market. Foodservice Europe-Asia-Oceania and Molded Fiber segments progressed well throughout the year. Challenging trading conditions in many African countries and the demonetization action executed in India in November 2016 burdened Flexible Packaging net sales.

During the year we made significant forward-looking growth investment decisions that help our customers serve their markets better. The most significant of those decisions was to build a manufacturing and distribution facility in Goodyear, Arizona to service customers on the U.S. West Coast and southwest. In addition we're investing in new facilities in Egypt and India, and expanding our current site in China. Our 2016 capital expenditure was almost EUR 200 million, 52% of Adjusted EBITDA, which together with EUR 120 million spent on acquisitions added the total growth spend to approx. EUR 320 million. In 2015 our growth spend was EUR 360 million.

Largest acquisition in 2016 was Delta Print and Packaging, based in Northern Ireland and Poland, which extended our European product portfolio to folded carton packaging. In addition, we increased our capabilities through acquisitions in flexible packaging in Czech Republic and in foodservice packaging in India and Saudi Arabia.

Our free cash flow improved to EUR 100 million meeting our mid-term ambition. Our ROI and ROE remained on or close to the previous year levels despite our forward-looking investment program and were 14.7% and 17.7% respectively.

Business environment in 2016 was mixed and volatility and uncertainty in the markets has continued in early 2017. We remain optimistic on the business opportunities in food and drink packaging and will advance our growth by building new capacity on four continents in 2017. As we achieved our earlier mid-term ambitions during the year, we launched new long-term ambitions at our Capital Markets Day in November 2016. Growth remains at the core of our strategy and we aim to work both on organic investments and acquisitions. In addition, we aim to improve our profitability further and maintain our financial stability."

Strategic review

During 2016 the Group continued its growth strategy in food and drink packaging. All of its businesses now concentrate on food and drink packaging, or niches where the food contact expertise and capabilities, such as clean manufacturing and product safety, are required and bring competitive advantage. The Group continues to have good positions in the current growth markets.

Several actions were taken to ensure the future growth of the company by expanding its geographic presence, product range as well as manufacturing capabilities via acquisitions and organic investments. Four acquisitions were completed during 2016. The acquired companies have operations in the UK, Poland, India, Czech Republic and Saudi-Arabia. Several organic investments were also made to support the Group's growth. Construction of four new manufacturing units started during the year. The Group also invested in adding capacity in several existing manufacturing units.

The collaborative working model introduced in 2015, focusing on best practice sharing and improving consistency throughout the business was continued. Important progress was also made in strengthening the Group's people processes to ensure successful continuation of strategy implementation both short and long-term.

Financial review Q4 2016

The Group's comparable net sales growth was 3% during the quarter. Growth was strongest in the North America and Molded Fiber business segments driven by strong volume growth and supported by favorable seasonal demand. Foodservice Europe-Asia-Oceania business segment also achieved good growth against a strong fourth quarter in the previous year. Net sales of Flexible Packaging business segment declined. The Group's comparable growth in emerging markets was 5%. Growth was strong across markets in Eastern Europe, whereas local net sales development in India was negative due to the demonetization effect, and marginally positive in China. Export sales of flexible packaging to African countries declined. The Group's net sales grew to EUR 732 million (EUR 691 million). Foreign currency translation impact on the Group's net sales was EUR -2 million (EUR 34 million) compared to 2015 exchange rates.

Net sales by business segment

EUR million	Q4 2016	Q4 2015	Change	Of Group in Q4 2016
Foodservice Europe-Asia-Oceania	193.0	168.7	14%	27%
North America	259.8	244.2	6%	34%
Flexible Packaging	213.9	214.5	0%	30%
Molded Fiber	69.0	66.5	4%	9%
Elimination of internal sales	-4.2	-3.4
Group	731.5	690.5	6%

Comparable growth by business segment

	Q4 2016	Q3 2016	Q2 2016	Q1 2016
Foodservice Europe-Asia-Oceania	3%	5%	7%	7%
North America	5%	2%	8%	10%
Flexible Packaging	-3%	-3%	2%	1%
Molded Fiber	6%	6%	5%	4%
Group	3%	2%	6%	6%

The Group's earnings improved significantly driven by solid profitability improvement in the Foodservice Europe-Asia-Oceania and Molded Fiber business segments. Good progress in the North America business segment also contributed to the earnings growth. As a result of negative net sales development the Flexible Packaging segment's earnings declined slightly, but remained on a good level. The Group's Adjusted EBIT were EUR 65 million (EUR 56 million) and reported EBIT EUR 64 million (EUR 56 million).

Adjusted EBIT by business segment

EUR million	Q4 2016	Q4 2015	Change	Of Group in Q4 2016
Foodservice Europe-Asia-Oceania 1	15.3	10.3	49%	27%
North America	25.1	23.2	8%	35%
Flexible Packaging	17.6	18.3	-4%	26%
Molded Fiber	9.9	8.0	24%	12%
Other activities	-2.5	-4.1
1 Group	65.4	55.7	17%

¹ Excluding IACs of EUR -1.5 million in Q4 2016

Adjusted EBIT excludes EUR -1.5 million of IACs. They consist of additional identified restructuring costs, which are expected to incur from actions to improve the competitiveness of the foodservice business in China as announced on June 27, 2016. IACs were booked for Q4 2016 in the Foodservice Europe-Asia-Oceania business segment.

Adjusted EBIT and IACs

EUR million	Q4 2016	Q4 2015
Adjusted EBIT	65.4	55.7
Restructuring costs	-1.5
EBIT	63.9	55.7

Net financial expenses were EUR 7 million (EUR 7 million). Tax expense was EUR 13 million (EUR 8 million).

Profit for the quarter was EUR 44 million (EUR 40 million). Adjusted EPS were EUR 0.44 (EUR 0.38) and reported EPS EUR 0.42 (EUR 0.38).

Financial review FY 2016

The Group's comparable net sales growth was 4% in 2016. Growth was strongest in the North America business segment, which exceeded the EUR 1 billion annual net sales milestone. Growth in the segment was particularly strong during the first half of the year supported by the business gained in H2 2015. Growth was on a good level also in the Foodservice Europe-Asia-Oceania and Molded Fiber business segments throughout the year. The Flexible Packaging business segment's net sales grew moderately during the first half, but declined in the second half due to challenges in African and Indian markets. The Group's comparable growth in emerging markets was 7%. Growth was strongest in Eastern Europe. Net sales grew moderately in China. The Group's net sales grew to EUR 2,865 million (EUR 2,726 million). Foreign currency translation impact on the Group's net sales was EUR -51 million (EUR 194 million) compared to 2015 exchange rates. The majority of the negative currency impact came from the weakening of emerging market currencies and the pound sterling versus euro.

Net sales by business segment

EUR million	FY 2016	FY 2015	Change	Of Group in FY 2016
Foodservice Europe-Asia-Oceania	741.0	667.5	11%	25%
North America	1,005.1	947.7	6%	35%
Flexible Packaging	868.6	868.9	0%	31%
Molded Fiber	267.8	260.3	3%	9%
Elimination of internal sales	-17.5	-18.0
Group	2,865.0	2,726.4	5%

The Group's profitability improved with all business segments contributing to earnings growth. Earnings growth was strongest in the North America business segment. Other activities had a negative impact of EUR 11 million (EUR -5 million) on the Group's earnings. The change compared to previous year was primarily related to the Group's long-term incentive plan and project-related costs. The Group's Adjusted EBIT were EUR 268 million (EUR 238 million) and reported EBIT EUR 266 million (EUR 215 million). Foreign currency translation impact on the Group's profitability was EUR -5 million (EUR 16 million).

Adjusted EBIT by business segment

EUR million	FY 2016	FY 2015	Change	Of Group in FY 2016
Foodservice Europe-Asia-Oceania 1	63.2	52.4	21%	23%
North America	107.6	88.2	22%	39%
Flexible Packaging	73.8	68.8	7%	26%
Molded Fiber	34.6	33.5	3%	12%
Other activities2	-11.3	-5.4
1, 2 Group	267.9	237.5	13%

¹ Excluding IACs of EUR -1.7 million in FY ^{2016 2} Excluding IACs of EUR –22.6 million in FY ²⁰¹⁵

Adjusted EBIT excludes EUR -1.7 million of IACs, which consist of restructuring costs of EUR 9.5 million and a gain of EUR 7.8 million relating to business combination. The restructuring costs are related to actions to improve the competitiveness of the foodservice business in China and New Zealand and a provision to cover potential environmental remediation actions at a former Huhtamaki manufacturing unit in Norway as announced on June 27, 2016. The gain relating to business combination derives from the increase of Huhtamaki's ownership in Arabian Paper Products Company as announced on March 22, 2016. IACs were booked for Q2 2016 and Q4 2016 in the Foodservice Europe-Asia-Oceania business segment.

Adjusted EBIT and IACs

EUR million	FY 2016	FY 2015
Adjusted EBIT	267.9	237.5
Restructuring costs	-9.5
Gains and losses relating to business combinations and disposals	7.8	-4.3
Fines and penalties imposed by authorities		-18.3
EBIT	266.2	214.9

Net financial expenses decreased to EUR 27 million (EUR 34 million). Tax expense increased to EUR 48 million (EUR 29 million). The corresponding tax rate was 20% (16%).

Profit for the period was EUR 192 million (EUR 151 million). Adjusted EPS were EUR 1.83 (EUR 1.65) and reported EPS EUR 1.81 (EUR 1.42).

Statement of financial position and cash flow

The Group's net debt increased and was EUR 675 million (EUR 551 million) at the end of the year. The level of net debt corresponds to a gearing ratio of 0.57 (0.53). Net debt to EBITDA ratio (excl. IACs) was 1.8 (1.6). The increase in net debt was to a large extent due to higher capital expenditure and the acquisitions executed during the year. Average maturity of external committed credit facilities and loans remained at 3.9 (3.9) years as the Group extended the maturity of its EUR 400 million syndicated revolving credit facility for a further period of one yearin December 2016.

Cash and cash equivalents were EUR 106 million (EUR 103 million) at the end of the year and the Group had EUR 303 million (EUR 309 million) of unused committed credit facilities available.

Total assets on the statement of financial position were EUR 2,875 million (EUR 2,515 million).

In accordance with its strategy, the Group continued its organic growth investments. Capital expenditure increased to EUR 199 million (EUR 147 million), of which EUR 104 million (EUR 51 million) was spent in the fourth quarter due to a major investment in a new facility in Arizona, the U.S. In addition to the U.S., largest investments for business expansion were made in Poland, the UK, China and Australia. The Group's free cash flow improved to EUR 100 million (EUR 91 million) despite high organic growth investments and higher taxes paid compared to 2015.

Acquisitions

On January 29, 2016 Huhtamaki completed the acquisition of FIOMO, a privately owned manufacturer of flexible packaging foils and labels in the Czech Republic. The debt-free purchase price was approx. EUR 28 million. The business has been consolidated into the Flexible Packaging business segment as of February 1, 2016.

On March 22, 2016 Huhtamaki announced the expansion and revision of its long-standing joint venture relationship in Arabian Paper Products Company (APPCO) with Olayan Saudi Holding Company. Huhtamaki's ownership in APPCO increased to 50% from the earlier 40%. With the expansion of the joint venture relationship Huhtamaki continued to implement its growth strategy and strengthened its position in Middle-East and North Africa. The additional shares were acquired at a price of approx. EUR 4 million. The business has been consolidated into the Foodservice Europe-Asia-Oceania business segment as of April 1, 2016.

On May 19, 2016 Huhtamaki acquired Delta Print and Packaging Limited ("Huhtamaki Delta"), a privately held folding carton packaging manufacturer based in Belfast, Northern Ireland, and its affiliated Polish unit with a new manufacturing unit in Gliwice, Poland. With the acquisition Huhtamaki entered the folding carton packaging market also in Europe, as Huhtamaki Delta is specialized in bespoke printed folding carton packaging for the UK and European foodservice, packaged food and retail markets. The debt free purchase price was GBP 80 million (approx. EUR 103 million at the time of the acquisition). The business has been consolidated into the Foodservice Europe-Asia-Oceania business segment as of May 1, 2016.

On July 22, 2016 Huhtamaki acquired 51% of Val Pack Solutions Private Limited ("Valpack"), a privately held paper cup manufacturer based in Mumbai, India. With the acquisition Huhtamaki entered the growing foodservice packaging market in India, where many of its key customers already are present. The debt-free purchase price was approx. EUR 2 million. The business has been consolidated into the Foodservice Europe-Asia-Oceania business segment as of July 22, 2016.

Significant events during the reporting period

On March 22, 2016 Huhtamaki signed a EUR 150 million freely transferable loan agreement (Schuldschein). The loan is targeted to institutional investors and is divided into two floating rate and two fixed rate tranches with maturities of 5 and 7 years. Huhtamaki will use the funds for refinancing and general corporate purposes of the Group.

On June 27, 2016 Huhtamaki announced actions to improve the competitiveness of its foodservice business in Asia and Oceania. The foodservice packaging manufacturing operations in South China will be consolidated into one efficient, modernized unit. In addition, manufacturing will be focused on a defined core foodservice packaging product range. The actions were expected to have an impact on approx. 350 employees across functions. At the foodservice packaging unit in Henderson, New Zealand, manufacturing operations were reorganized to improve efficiency of the unit. The reorganization was expected to have an impact on approx. 15 employees.

On September 16, 2016 Huhtamaki announced that it will invest in the expansion and modernization of its manufacturing unit in Guangzhou, South China. The total investment including site expansion, improvements in plant layout and new high-speed machinery is expected to be approx. EUR 15 million. The investment followed the earlier announced actions to improve the competitiveness of the foodservice business in China and consolidate the South China manufacturing operations. Majority of the investment takes place in the latter part of 2016 and early 2017, and the modernization is expected to be completed by the end of 2017. The Guangzhou manufacturing unit is part of the Foodservice Europe-Asia-Oceania business segment.

On September 19, 2016 Huhtamaki announced that it will purchase a manufacturing facility in Goodyear, Arizona, the U.S. to set up a new world class manufacturing and distribution unit. The facility is set to service the southwest and West Coast foodservice packaging and retail tableware markets. The total investment including the site purchase and modifications, improvements in infrastructure, and machinery investments and installations is expected to exceed USD 100 million (approx. EUR 90 million). Majority of the investment takes place in 2016-2017 and manufacturing is scheduled to begin in late 2017. When fully operational, the unit is expected to employ approx. 300 employees and it will become part of the North America business segment.

On October 25, 2016 Huhtamaki announced that it will set up three new manufacturing units to boost growth in its Flexible Packaging business segment. The largest of the new units will be located in the greater Cairo area in Egypt and the other two in North East India. In addition, one label manufacturing unit in the Mumbai area will be relocated and modernized. The new state of the art manufacturing unit in Egypt will be owned and operated as a joint venture of which Huhtamaki owns 75%. The total investment in Egypt is expected to be approx. EUR 23 million with Huhtamaki share at approx. EUR 17 million. The combined value of the mentioned three growth investments in India is expected to be approx. EUR 9 million. Majority of the investments takes place in 2016-2017.

On December 23, 2016 Huhtamaki announced that it has signed a confirmation to extend the maturity of its EUR 400 million syndicated revolving credit facility loan agreement for a further period of one year in accordance with the extension option of the loan agreement. The new termination date is January 9, 2022. The credit facility will be used for general corporate purposes of the Group.

Business review by segment

Foodservice Europe-Asia-Oceania

Foodservice paper and plastic disposable tableware, such as cups, is supplied to foodservice operators, fast food restaurants and coffee shops. The segment has production in Europe, South Africa, Middle East, Asia and Oceania.

EUR million	Q4 2016	Q4 2015	Change	FY 2016	FY 2015	Change
Net sales	193.0	168.7	14%	741.0	667.5	11%
Adjusted EBIT 1	15.3	10.3	49%	63.2	52.4	21%
Margin 1	7.9%	6.1%		8.5%	7.9%
EBIT	13.8	10.3	34%	61.5	52.4	17%
RONA 1				13.7%	14.2%
Capital expenditure	19.6	10.2	92%	46.9	39.6	18%
Operating cash flow	7.7	11.8	-35%	38.0	35.4	7%

¹ Excluding IAC of EUR -1.5 million in Q4 2016 and EUR -1.7 million in FY 2016

Q4 2016

Overall market conditions for foodservice packaging remained relatively stable across Europe. Strong momentum in Eastern Europe continued, especially in quick-service restaurant (QSR) and coffee categories, and demand was further supported by strengthening of certain local currencies. Market conditions were somewhat challenging in the Middle East and China. Raw material prices remained relatively stable. Competitive situation was tight.

The Foodservice Europe-Asia-Oceania segment's comparable net sales growth was 3%. In general, QSR category performed well across regions driven by good demand for paper hot cups, plastic lids and folded carton packaging. Growth was strongest across Eastern Europe driven by the specialty coffee and QSR categories. Despite volume growth in the UK net sales development was sluggish in Western Europe. Net sales development was marginally positive in China. Huhtamaki Delta has been reported as part of the segment as of May 1, 2016 and contributed EUR 17 million to the segment's net sales.

Currency movements had an adverse translation impact of EUR -4 million on the segment's reported net sales. Majority of the impact came from the weakening of the pound sterling versus euro.

The segment's earnings grew significantly as a result of healthy volume growth. Planned actions to improve competitiveness in certain units in China and New Zealand were executed and continued during the quarter, which supported the segment's earnings. Huhtamaki Delta contributed positively to the segment's earnings.

FY 2016

Overall demand for foodservice packaging was relatively healthy across markets. Momentum was good especially in the specialty coffee and QSR categories in Eastern Europe, while Western Europe remained relatively stable. In emerging markets demand development varied between markets. Raw material prices were relatively stable. Competitive situation was tight across markets.

The Foodservice Europe-Asia-Oceania segment's net sales grew, comparable net sales growth being 5%. Growth was strongest in Eastern Europe. The segment's key paper packaging categories developed positively across markets. Net sales grew moderately in China. Huhtamaki Delta contributed EUR 45 million to the segment's net sales.

Currency movements had an adverse translation impact of EUR -31 million on the segment's reported net sales.

The segment's earnings grew led by net sales growth and improved operational efficiency. Certain units in China and New Zealand had a negative impact on the segment's earnings, but actions to improve their competitiveness were started during the second quarter and supported earnings towards the end of the year. Huhtamaki Delta contributed positively to the segment's earnings.

Huhtamaki announced on September 16, 2016 that the Foodservice-Europe-Asia-Oceania segment will spend approx. EUR 15 million in the expansion and modernization of its manufacturing unit in Guangzhou, South China. Majority of the investment takes place in the latter part of 2016 and early 2017, and the modernization is expected to be completed by the end of 2017.

North America

The North America segment serves local markets with foodservice packaging, Chinet® disposable tableware, as well as ice-cream containers and other consumer goods packaging products. The segment has production in the United States and Mexico.

EUR million	Q4 2016	Q4 2015	Change	FY 2016	FY 2015	Change
Net sales	259.8	244.2	6%	1,005.1	947.7	6%
EBIT	25.1	23.2	8%	107.6	88.2	22%
Margin	9.7%	9.5%		10.7%	9.3%
RONA				16.3%	14.1%
Capital expenditure	62.1	12.0	418%	97.9	40.9	139%
Operating cash flow	-13.0	33.0	-139%	40.4	61.1	-34%

Q4 2016

Overall market conditions in the U.S. were stable. Favorable demand development for the retail tableware business continued with a good holiday season. Demand for foodservice packaging developed steadily, while demand for frozen dessert packaging remained soft. Raw material prices and other main input costs were relatively stable, but prices for plastics, energy and freight increased slightly towards the end of the year.

The North America segment's net sales grew, comparable net sales growth being 5%. Growth was strongest in retail business driven by private label tableware. Sales of foodservice packaging and Chinet® branded retail tableware also developed positively. Sales of frozen dessert packaging declined.

There was no significant foreign currency translation impact on the segment's reported net sales.

The segment's profitability improved. Earnings growth was a result of good manufacturing efficiency and strong volume development, especially in retail business. Continuous improvement actions further supported earnings growth. Operating cash flow was burdened by high capital expenditure.

FY 2016

The operating environment in the U.S. remained stable throughout the year with steadily growing demand for foodservice packaging and retail disposable tableware. Demand for frozen dessert packaging remained soft. Prices for paperboard and recycled fiber were stable, whereas prices for plastic resins increased moderately during the year.

The North America segment's net sales growth was good, comparable growth being 6%. Growth was driven by healthy volume development in both private label and branded retail tableware. Sales of foodservice packaging developed strongly in the first half of the year due to business gained in H2 2015. Strong seasonal demand also supported the segment's net sales development both during the summer season and the winter holiday season. Net sales of frozen dessert packaging declined in challenging market conditions.

There was no significant foreign currency translation impact on the segment's reported net sales.

The segment's earnings improved significantly, especially during the first half of the year. Good net sales development combined with relatively stable input costs and solid manufacturing efficiency contributed positively to earnings growth.

Huhtamaki announced on September 19, 2016 that the North America segment will spend approx. USD 100 million in setting up a new world class manufacturing and distribution unit in Goodyear, Arizona, the U.S. Majority of the investment takes place in 2016-2017 and manufacturing is scheduled to begin in late 2017.

Flexible Packaging

Flexible packaging is used for a wide range of consumer products including food, pet food, hygiene and health care products. The segment serves global markets from production units in Europe, Middle East, Asia and South America.

EUR million	Q4 2016	Q4 2015	Change	FY 2016	FY 2015	Change
Net sales	213.9	214.5	0%	868.6	868.9	0%
EBIT	17.6	18.3	-4%	73.8	68.8	7%
Margin	8.2%	8.5%		8.5%	7.9%
RONA				11.6%	12.3%
Capital expenditure	11.0	9.5	16%	25.7	31.6	-19%
Operating cash flow	36.2	18.7	94%	87.9	63.5	38%

Q4 2016

In Europe, demand for pet food packaging was good, while being relatively sluggish for food as well as home and personal care packaging categories. In India, the demonetization action executed by the government in early November had a negative impact on consumer demand, which was also reflected in the demand for flexible packaging. Uncertainty in trading environment due to currency fluctuations as well as tightened foreign exchange controls continued to have a negative impact on exports to African markets. Prices for plastic resins were relatively stable.

The Flexible Packaging segment's net sales declined, driven by soft local sales in India and exports to Africa. Comparable net sales growth was -3%. Net sales grew in Southeast Asia and Oceania.

There was no significant foreign currency translation impact on the segment's reported net sales.

The segment's earnings declined slightly as continued good cost containment and margin management were not sufficient to offset the adverse impact of lower net sales. Flat net sales development in India had a negative impact on the segment's earnings.

FY 2016

In Europe, demand for flexible packaging was modest throughout the year, whereas in Southeast Asia momentum remained relatively positive. In India, demand for flexible packaging developed positively until November, when the local demonetization action started to affect demand adversely. Uncertainty in trading environment due to currency fluctuations as well as tightened foreign exchange controls had a negative impact on exports to African markets. Prices for plastic resins were relatively stable.

The Flexible Packaging segment's net sales declined slightly, comparable net sales growth being -1%. The segment's overall volume development was positive, but low raw material prices had a negative impact on selling prices and thus moderated the comparable growth. Net sales grew in India and Southeast Asia driven by good volume development. Export sales to African countries declined.

Currency movements had an adverse translation impact of EUR -11 million on the segment's reported net sales.

The segment's earnings improved. Main drivers for the earnings growth were good cost containment, favorable raw material prices and positive volume development.

Huhtamaki announced on October 25, 2016 that the Flexible Packaging segment will set up three new manufacturing units to boost its growth. The largest of the new units will be located in the greater Cairo area in Egypt and the other two in North East India. In addition, one label manufacturing unit in the Mumbai area will be relocated and modernized. The total investment is expected to be approx. EUR 26 million. Majority of the investments takes place in 2016-2017.

Molded Fiber

Recycled molded fiber is used to make fresh product packaging, such as egg and fruit packaging. The segment has production in Europe, Oceania, Africa and South America.

EUR million	Q4 2016	Q4 2015	Change	FY 2016	FY 2015	Change
Net sales	69.0	66.5	4%	267.8	260.3	3%
EBIT	9.9	8.0	24%	34.6	33.5	3%
Margin	14.3%	12.0%		12.9%	12.9%
RONA				16.4%	17.7%
Capital expenditure	10.7	18.4	-42%	27.6	34.1	-19%
Operating cash flow	5.1	-5.3	196%	16.7	9.9	69%

Q4 2016

Demand for molded fiber egg packaging was solid across markets with the exception of South America, where the challenging economic conditions in Brazil led to lower demand. In Europe, the momentum was positive with holiday season supporting demand. Raw material prices were stable across markets.

The Molded Fiber segment's net sales grew, comparable net sales growth being 6%. Net sales growth was strongest in Europe, driven by strong volume growth and good utilization of added capacity in the UK, Russia and Czech Republic. Net sales grew also in Africa as a result of onboarding new business and fully utilizing the increased capacity. Net sales declined in South America.

Currency movements had an adverse translation impact of EUR -2 million on the segment's reported net sales.

The segment's earnings grew as a result of net sales growth and good operational efficiency.

FY 2016

Overall market conditions for molded fiber egg packaging were relatively stable. Demand grew in Europe and other main markets except South America. Prices for recycled fiber moved modestly throughout the year and average prices were on a somewhat higher level compared to previous year. Competitive situation remained tight.

The Molded Fiber segment's comparable net sales growth was 5%. Net sales growth was mainly driven by recent capacity additions in the UK and Eastern Europe. Good volume development in Europe supported net sales growth. Net sales declined in South America.

Currency movements had an adverse translation impact of EUR -11 million on the segment's reported net sales.

The segment's earnings improved as a result of healthy volume growth, solid operational efficiency and good cost containment.

Personnel

The Group had a total of 17,076 (15,844) employees at the end of 2016. The increase in the number of personnel was mainly due to acquisitions and investments in new capacity across business segments. The number of employees by segment was the following: Foodservice Europe-Asia-Oceania 4,945 (4,188), North America 3,778 (3,553), Flexible Packaging 6,566 (6,358), Molded Fiber 1,715 (1,682), and Other activities, including corporate functions in Finland, 72 (63). The average number of employees during the year was 16,639 (15,987).

Changes in management

Petr Domin, previously interim Executive Vice President, Molded Fiber, was appointed Executive Vice President, Molded Fiber and member of the Group Executive Team as of July 1, 2016.

Share capital and shareholders

At the end of 2016, Huhtamäki Oyj's ("the Company") registered share capital was EUR 366 million (EUR 366 million) corresponding to a total number of shares of 107,760,385 (107,760,385), including 3,903,846 (4,063,906) Company's own shares. Own shares represent 3.6% (3.8%) of the total number of shares and votes. The number of outstanding shares excluding the Company's own shares was 103,856,539 (103,696,479). The average number of outstanding shares used in EPS calculations was 103,822,029 (103,665,405), excluding the Company's own shares.

There were 26,407 (24,484) registered shareholders at the end of 2016. Foreign ownership including nominee registered shares accounted for 48% (50%).

Share trading

During 2016 the Company's share was quoted on Nasdaq Helsinki Ltd on the Nordic Large Cap list under the Industrials sector and it was a component of the Nasdaq Helsinki 25 Index.

At the end of 2016, the Company's market capitalization was EUR 3,664 million (EUR 3,474 million) excluding the Company's own shares. With a closing price of EUR 35.28 (EUR 33.50) the share price increased by 5% from the beginning of the year. During the year the volume weighted average price for the Company's share was EUR 35.77 (EUR 28.72). The highest price paid was EUR 42.33 and the lowest price paid was EUR 27.14.

During the year the cumulative value of the Company's share turnover on Nasdaq Helsinki Ltd was EUR 2,071 million (EUR 1,787 million). The trading volume of 58 million (62 million) shares equaled an average daily turnover of 228,902 (247,918) shares. The cumulative value of the Company's share turnover including alternative trading venues, such as BATS and Turquoise, was EUR 5,993 million (EUR 3,898 million). During the year, 65% (54%) of all trading took place outside Nasdaq Helsinki Ltd. (Source: Fidessa Fragmentation Index, www.fragmentation.fidessa.com)

Resolutions of the Annual General Meeting 2016

Huhtamäki Oyj's Annual General Meeting of Shareholders (AGM) was held in Helsinki on April 21, 2016. The meeting adopted the Annual Accounts including the Consolidated Annual Accounts for 2015 and discharged the members of the Company's Board of Directors and the CEO from liability. As proposed by the Board of Directors, dividend for 2015 was set at EUR 0.66 per share compared to EUR 0.60 paid for the previous year.

Seven members of the Board of Directors were elected for a term ending at the end of the next AGM. Ms. Eija Ailasmaa, Mr. Pekka Ala-Pietilä, Mr. William R. Barker, Mr. Rolf Börjesson, Mr. Jukka Suominen and Ms. Sandra Turner were reelected as members of the Board of Directors and Mr. Doug Baillie was elected as a new member of the Board of Directors. The Board of Directors elected Mr. Pekka Ala-Pietilä as the Chairman of the Board and Mr. Jukka Suominen as the Vice-Chairman of the Board.

Ernst & Young Oy, a firm of Authorized Public Accountants, was elected as Auditor of the Company for the financial year January 1–December 31, 2016. Mr. Harri Pärssinen, APA, has been the Auditor with principal responsibility.

The Board of Directors was authorized to resolve on the repurchase of an aggregate maximum of 10,776,038 of the Company's own shares. The Board of Directors was also authorized to resolve on the issuance of shares and the issuance of special rights entitling to shares. The aggregate number of shares to be issued on the basis of the authorization may not exceed 14,000,000 shares, however so that the number of new shares to be issued may not exceed 10,000,000 shares and the number of own treasury shares to be transferred may not exceed 4,000,000 shares. The authorizations remain in force until the end of the next AGM, however, no longer than until June 30, 2017.

Short term risks and uncertainties

Volatile raw material and energy prices as well as movements in currency rates are considered to be relevant short-term business risks and uncertainties in the Group's operations. General political, economic and financial market conditions can also have an adverse effect on the implementation of the Group's strategy and on its business performance and earnings.

Outlook for 2017

The Group's trading conditions are expected to remain relatively stable during 2017. The good financial position and ability to generate a positive cash flow will enable the Group to address profitable growth opportunities. Capital expenditure is expected to be approximately at the same level as in 2016 with the majority of the investments directed to business expansion.

Dividend proposal

On December 31, 2016 Huhtamäki Oyj's non-restricted equity was EUR 664 million (EUR 696 million). The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.73 (EUR 0.66) per share be paid.

Annual General Meeting 2017

The Annual General Meeting of Shareholders will be held on Thursday, April 27, 2017 at 11.00 (EET) at Messukeskus Helsinki, Expo and Convention Centre, Messuaukio 1, 00520 Helsinki, Finland.

Financial reporting in 2017

In 2017, Huhtamaki will publish financial information as follows:

Interim Report, January 1–March 31, 2017	April 27
Half-yearly Report, January 1–June 30, 2017	July 21
Interim Report, January 1–September 30, 2017	October 26

Annual Accounts 2016 will be published on week 8 on Huhtamaki's website at www.huhtamaki.com.

Espoo, February 14, 2017

Huhtamäki Oyj Board of Directors

Group income statement (IFRS)

EUR million	Q1-Q4 2016	Q1-Q4 2015	Q4 2016	Q4 2015
Continuing operations
Net sales	2,865.0	2,726.4	731.5	690.5
Cost of goods sold	-2,355.8	-2,255.5	-606.3	-570.8
Gross profit	509.2	470.9	125.2	119.7
Other operating income	24.7	18.3	5.2	5.1
Sales and marketing	-75.4	-74.1	-19.9	-19.9
Research and development	-17.2	-15.7	-3.7	-4.0
Administration costs	-162.7	-156.3	-40.7	-44.7
Other operating expenses	-14.4	-30.3	-2.6	-1.0
Share of profit of equity-accounted investments	2.0	2.1	0.4	0.5
	-243.0	-256.0	-61.3	-64.0
Earnings before interest and taxes	266.2	214.9	63.9	55.7
Financial income	5.3	4.9	1.6	1.7
Financial expenses	-32.2	-39.1	-8.6	-8.8
Profit before taxes	239.3	180.7	56.9	48.6
Income tax expense	-47.8	-29.3	-12.9	-8.4
Profit for the period from continuing operations	191.5	151.4	44.0	40.2
Discontinued operations
Result relating to disposed operations	-	-1.3	-	-
Result for the period from discontinued operations	-	-1.3	-	-
Profit for the period	191.5	150.1	44.0	40.2
Attributable to:
Equity holders of the parent company
Profit for the period from continuing operations	187.8	148.2	43.5	39.4
Result for the period from discontinued operations	-	-1.3	-	-
Profit for the period attributable to equity holders of the parent company	187.8	146.9	43.5	39.4
Non-controlling interest
Profit for the period from continuing operations	3.7	3.2	0.5	0.8
Result for the period from discontinued operations	-	-	-	-
Profit for the period attributable to non-controlling interest	3.7	3.2	0.5	0.8
Earnings per share (EPS), EUR
Profit for the period from continuing operations	1.81	1.43	0.42	0.38
Result for the period from discontinued operations	-	-0.01	-	-
EPS attributable to equity holders of the parent company	1.81	1.42	0.42	0.38
Diluted earnings per share, EUR
Profit for the period from continuing operations	1.80	1.43	0.42	0.38
Result for the period from discontinued operations	-	-0.01	-	-
Diluted EPS attributable to equity holders of the parent company	1.80	1.42	0.42	0.38

Group statement of comprehensive income (IFRS)

EUR million	Q1-Q4 2016	Q1-Q4 2015	Q4 2016	Q4 2015
Profit for the period	191.5	150.1	44.0	40.2
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit plans	-34.1	36.9	-34.1	37.7
Taxes related to items that will not be reclassified	6.2	-9.3	6.2	-9.6
Total	-27.9	27.6	-27.9	28.1
Items that may be reclassified subsequently to profit or loss
Translation differences	44.2	51.7	64.4	21.4
Equity hedges	-6.1	-23.4	-15.3	-6.2
Cash flow hedges	0.7	-4.0	3.2	0.9
Taxes related to items that may be reclassified	-0.3	-0.1	-0.7	0.0
Total	38.5	24.2	51.6	16.1
Other comprehensive income, net of tax	10.6	51.8	23.7	44.2
Total comprehensive income	202.1	201.9	67.7	84.4
Attributable to:
Equity holders of the parent company	198.4	198.7	67.2	83.6
Non-controlling interest	3.7	3.2	0.5	0.8

Group statement of financial position (IFRS)

ASSETS Non-current assets Goodwill 669.2 571.3 Other intangible assets 39.5 29.7 Tangible assets 1,035.8 853.8 Equity-accounted investments 7.0 12.8 Available-for-sale investments 1.6 1.9 Interest-bearing receivables 4.6 4.1 Deferred tax assets 58.6 50.9 Employee benefit assets 55.8 48.8 Other non-current assets 9.6 8.6 1,881.7 1,581.9 Current assets Inventory 401.9 385.7 Interest-bearing receivables 2.2 2.0 Current tax assets 6.8 3.8 Trade and other current receivables 476.1 438.7 Cash and cash equivalents 105.9 103.2 992.9 933.4 Total assets 2,874.6 2,515.3 EQUITY AND LIABILITIES Share capital 366.4 366.4 Premium fund 115.0 115.0 Treasury shares -35.9 -37.3 Translation differences -11.4 -49.5 Fair value and other reserves -103.3 -75.8 Retained earnings 803.8 682.1 Total equity attributable to equity holders of the parent company 1,134.6 1,000.9 Non-controlling interest 47.6 35.1 Total equity 1,182.2 1,036.0 Non-current liabilities Interest-bearing liabilities 520.8 503.1 Deferred tax liabilities 92.2 78.4 Employee benefit liabilities 229.2 199.2 Provisions 26.4 27.9 Other non-current liabilities 5.5 5.4 874.1 814.0 Current liabilities Interest-bearing liabilities Current portion of long term loans 137.0 66.7 Short-term loans 129.9 90.8 Provisions 7.7 2.1 Current tax liabilities 10.4 12.9 Trade and other current liabilities 533.3 492.8 818.3 665.3 Total liabilities 1,692.4 1,479.3 Total equity and liabilities 2,874.6 2,515.3 Dec 31 2016 Dec 31 2015 Net debt 675.0 551.3 Net debt to equity (gearing) 0.57 0.53	EUR million	Dec 31 2016	Dec 31 2015

Group statement of changes in equity (IFRS)

Attributable to equity holders of the parent company

EUR million	Share capital	Share issue premium	Treasury shares	Translation differences	other reserves Fair value and	Retained earnings	Total	Non-controlling interest	Total equity
Balance on Dec 31, 2014	366.4	115.0	-38.7	-77.8	-99.3	596.6	862.2	30.6	892.8
Dividends paid						-62.2	-62.2		-62.2
Share-based payments			1.4			3.6	5.0		5.0
Total comprehensive income for the year				28.3	23.5	146.9	198.7	3.2	201.9
Other changes						-2.8	-2.8	1.3	-1.5
Balance on Dec 31, 2015	366.4	115.0	-37.3	-49.5	-75.8	682.1	1,000.9	35.1	1,036.0
Dividends paid						-68.5	-68.5		-68.5
Share-based payments			1.4			5.8	7.2		7.2
Total comprehensive income for the year				38.1	-27.5	187.8	198.4	3.7	202.1
Other changes						-3.4	-3.4	8.8	5.4
Balance on Dec 31, 2016	366.4	115.0	-35.9	-11.4	-103.3	803.8	1,134.6	47.6	1,182.2

Group statement of cash flows (IFRS)

EUR million	Q1-Q4 2016	Q1-Q4 2015	Q4 2016	Q4 2015
Profit for the period*	191.5	150.1	44.0	40.2
Adjustments*	185.2	164.6	47.7	41.3
Depreciation and amortization*	113.9	104.5	29.8	26.7
Share of profit of equity-accounted investments*	-0.1	-2.1	-0.3	-0.5
Gain/loss from disposal of assets*	-0.1	-0.1	0.0	0.1
Financial expense/-income*	26.9	34.2	7.0	7.1
Income tax expense*	47.8	29.3	12.9	8.4
Other adjustments, operational*	-3.2	-1.2	-1.7	-0.5
Change in inventory*	8.8	-28.3	23.1	17.9
Change in non-interest bearing receivables*	-11.1	-19.3	29.2	14.1
Change in non-interest bearing payables*	-7.4	25.8	-5.0	6.4
Dividends received*	1.9	1.7	0.8	0.7
Interest received*	1.3	1.2	0.4	0.5
Interest paid*	-20.4	-25.7	-1.7	-2.7
Other financial expense and income*	-1.5	-3.3	-0.5	-1.1
Taxes paid*	-50.8	-29.1	-12.7	-13.8
Net cash flows from operating activities	297.5	237.7	125.3	103.5
Capital expenditure*	-199.1	-146.9	-103.9	-50.5
Proceeds from selling tangible assets*	1.9	0.4	0.3	0.0
Acquired subsidiaries and assets	-120.7	-210.8	-2.8	-
Proceeds from long-term deposits	1.4	1.2	0.2	0.2
Payment of long-term deposits	-1.7	-0.7	-1.2	0.0
Proceeds from short-term deposits	2.0	5.4	0.7	4.0
Payment of short-term deposits	-2.0	-4.8	0.0	-3.0
Net cash flows from investing activities	-318.2	-356.2	-106.7	-49.3
Proceeds from long-term borrowings	174.1	40.0	7.4	11.9
Repayment of long-term borrowings	-179.1	-94.5	-9.4	-14.2
Proceeds from short-term borrowings	2,040.4	988.5	739.8	419.9
Repayment of short-term borrowings	-1,943.2	-1,009.6	-756.5	-452.7
Dividends paid	-68.5	-62.2	-	-
Net cash flows from financing activities	23.7	-137.8	-18.7	-35.1
Change in liquid assets	2.7	-247.6	4.0 4.2	21.9
Cash flow based	3.0	-256.3	-0.1	19.1
Translation difference	-0.3	8.7	4.3	2.8
Liquid assets period start	103.2	350.8	101.7	81.3
Liquid assets period end	105.9	103.2	105.9	103.2
Free cash flow (including figures marked with *)	100.3	91.2	21.7	53.0

Notes for the results report

This results report has been prepared in accordance with IAS 34 Interim Financial Reporting. Except for the accounting policy changes listed below, the same accounting policies have been applied in the results report as in the annual financial statements for 2015. The following amended standards and interpretations, which have been adopted with effect from January 1, 2016, had no impact on the results report:

• Revised IAS 1 Presentation of Financial Statements: Disclosure Initiative. The amendment clarifies the application of materiality concept and judgement when determining where and in what order information is presented in the consolidated financial statements.

• Revised IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. The amendment clarifies that the revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets.

• Revised IAS 27 Separate Financial Statements. The amendment allows entities to use the equity method in their separate financial statements.

• Revised IFRS 11 Joint arrangements. Amendment concerns accounting for the acquisition of an interest in a joint operation.

• Annual improvements (2012-2014 Cycle, September 2014). Annual improvements include smaller amendments to four standards.

Segments

Segment information is presented according to the IFRS standards. Items below EBIT - financial items and taxes - are not allocated to the segments. Unless otherwise stated, all figures presented in the notes of the results report, including corresponding periods in 2015, cover continuing operations only.

Net sales

EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Foodservice Europe-Asia-Oceania	734.5	191.6	194.0	192.3	156.6	660.4	166.9	168.8	173.6	151.1
Intersegment net sales	6.5	1.4	1.2	1.6	2.3	7.1	1.8	0.7	1.8	2.8
North America	996.4	257.6	242.1	263.7	233.0	939.0	243.0	238.0	249.6	208.4
Intersegment net sales	8.7	2.2	2.3	2.0	2.2	8.7	1.2	2.3	2.9	2.3
Flexible Packaging	868.4	213.9	216.5	220.4	217.6	868.7	214.5	223.5	224.8	205.9
Intersegment net sales	0.2	0.0	0.0	0.1	0.1	0.2	0.0	0.1	0.0	0.1
Molded Fiber	265.7	68.4	66.6	65.6	65.1	258.3	66.1	61.9	65.6	64.7
Intersegment net sales	2.1	0.6	0.5	0.6	0.4	2.0	0.4	0.5	0.6	0.5
Elimination of intersegment net sales	-17.5	-4.2	-4.0	-4.3	-5.0	-18.0	-3.4	-3.6	-5.3	-5.7
Total	2,865.0	731.5	719.2	742.0	672.3	2,726.4	690.5	692.2	713.6	630.1
EBIT
EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Continuing operations
Foodservice Europe-Asia-Oceania¹	61.5	13.8	18.3	17.4	12.0	52.4	10.3	13.8	16.4	11.9
North America	107.6	25.1	24.5	37.2	20.8	88.2	23.2	25.0	26.2	13.8
Flexible Packaging	73.8	17.6	18.2	19.1	18.9	68.8	18.3	15.7	17.8	17.0
Molded Fiber	34.6	9.9	8.3	8.2	8.2	33.5	8.0	7.9	9.0	8.6
Other activities²	-11.3	-2.5	-2.4	-4.3	-2.1	-28.0	-4.1	0.0	-18.2	-5.7
Total continuing operations 1,2	266.2	63.9	66.9	77.6	57.8	214.9	55.7	62.4	51.2	45.6

EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Continuing operations
Foodservice Europe-Asia-Oceania¹	61.5	13.8	18.3	17.4	12.0	52.4	10.3	13.8	16.4	11.9
North America	107.6	25.1	24.5	37.2	20.8	88.2	23.2	25.0	26.2	13.8
Flexible Packaging	73.8	17.6	18.2	19.1	18.9	68.8	18.3	15.7	17.8	17.0
Molded Fiber	34.6	9.9	8.3	8.2	8.2	33.5	8.0	7.9	9.0	8.6
Other activities²	-11.3	-2.5	-2.4	-4.3	-2.1	-28.0	-4.1	0.0	-18.2	-5.7
Total continuing operations 1,2	266.2	63.9	66.9	77.6	57.8	214.9	55.7	62.4	51.2	45.6
Discontinued operations
Films³	-	-	-	-	-	-1.3	-	-	-1.3	-

¹ Q1-Q4 2016 includes items affecting comparability MEUR -1.7, Q4 2016 MEUR -1.5 and Q2 2016 MEUR -0.2.

² Q1-Q4 2015 includes items affecting comparability MEUR -22.6, Q2 2015 MEUR -18.5 and Q1 2015 MEUR -4.1.

³ Q1-Q4 2015 and Q2 2015 include items affecting comparability MEUR -1.3.

Segments (continued)

EBITDA

EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Continuing operations
Foodservice Europe-Asia-Oceania¹	93.6	22.5	26.9	25.5	18.7	79.2	17.2	20.4	23.3	18.3
North America	144.9	35.1	33.6	46.2	30.0	124.6	32.7	34.0	35.1	22.8
Flexible Packaging	103.8	25.5	25.7	26.5	26.1	96.6	25.2	22.9	25.2	23.3
Molded Fiber	48.2	12.9	11.9	11.7	11.7	46.4	11.2	11.2	12.2	11.8
Other activities²	-10.4	-2.3	-2.0	-4.2	-1.9	-27.4	-3.9	0.1	-18.1	-5.5
Total continuing operations 1,2	380.1	93.7	96.1	105.7	84.6	319.4	82.4	88.6	77.7	70.7
Discontinued operations
Films³	-	-	-	-	-	-1.3	-	-	-1.3	-

¹ Q1-Q4 2016 includes items affecting comparability MEUR -1.7, Q4 2016 MEUR -1.5 and Q2 2016 MEUR -0.2.

² Q1-Q4 2015 includes items affecting comparability MEUR -22.6, Q2 2015 MEUR -18.5 and Q1 2015 MEUR -4.1.

³ Q1-Q4 2015 and Q2 2015 include items affecting comparability MEUR -1.3.

Depreciation and amortization

EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Foodservice Europe-Asia-Oceania	32.1	8.7	8.6	8.1	6.7	26.8	6.9	6.6	6.9	6.4
North America	37.3	10.0	9.1	9.0	9.2	36.4	9.5	9.0	8.9	9.0
Flexible Packaging	30.0	7.9	7.5	7.4	7.2	27.8	6.9	7.2	7.4	6.3
Molded Fiber	13.6	3.0	3.6	3.5	3.5	12.9	3.2	3.3	3.2	3.2
Other activities	0.9	0.2	0.4	0.1	0.2	0.6	0.2	0.1	0.1	0.2
Total	113.9	29.8	29.2	28.1	26.8	104.5	26.7	26.2	26.5	25.1

Net assets allocated to the segments⁴

EUR million	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Foodservice Europe-Asia-Oceania	534.5	520.3	514.6	366.9	371.5	372.9	385.0	377.7
North America	727.0	654.2	654.3	631.1	638.9	634.8	643.0	653.5
Flexible Packaging	644.9	639.8	648.3	631.9	611.3	604.1	608.5	630.8
Molded Fiber	220.5	216.6	215.1	202.6	197.8	192.5	189.5	189.1

4 Following statement of financial position items are included in net assets: intangible and tangible assets, equity-accounted investments, other non-current assets, inventories, trade and other current receivables (excluding accrued interest income), other non-current liabilities and trade and other current liabilities (excluding accrued interest expense).

Segments (continued)

Capital expenditure

EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Foodservice Europe-Asia-Oceania	46.9	19.6	13.8	8.2	5.3	39.6	10.2	12.1	9.8	7.5
North America	97.9	62.1	12.4	13.0	10.4	40.9	12.0	11.2	9.8	7.9
Flexible Packaging	25.7	11.0	4.9	5.7	4.1	31.6	9.5	5.2	11.1	5.8
Molded Fiber	27.6	10.7	7.9	4.7	4.3	34.1	18.4	6.3	6.0	3.4
Other activities	1.0	0.5	0.2	0.1	0.2	0.7	0.4	0.0	0.2	0.1
Total	199.1	103.9	39.2	31.7	24.3	146.9	50.5	34.8	36.9	24.7

RONA (12m roll.)

EUR million	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Foodservice Europe-Asia-Oceania	13.3%	13.5%	13.3%	14.0%	14.2%	15.2%	16.2%	17.2%
North America	16.3%	16.5%	16.6%	14.9%	14.1%	12.0%	9.5%	7.6%
Flexible Packaging	11.6%	11.9%	11.6%	11.5%	12.3%	12.4%	12.8%	12.9%
Molded Fiber	16.4%	16.0%	16.2%	17.1%	17.7%	19.1%	19.2%	20.4%

Operating cash flow

EUR million	Q1-Q4 2016	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q1-Q4 2015	Q4 2015	Q3 2015	Q2 2015	Q1 2015
Foodservice Europe-Asia-Oceania	38.0	7.7	7.2	13.7	9.4	35.4	11.8	10.0	7.7	5.9
North America	40.4	-13.0	21.0	22.1	10.3	61.1	33.0	31.7	10.1	-13.7
Flexible Packaging	87.9	36.2	27.2	7.8	16.7	63.5	18.7	9.5	22.5	12.8
Molded Fiber	16.7	5.1	3.5	4.2	3.9	9.9	-5.3	4.0	7.5	3.7

Reportable segments' net sales and EBIT form Group's total net sales and EBIT, so no reconciliations to corresponding amounts are presented.

Business combinations

On January 30, 2015 Huhtamaki completed the acquisition of Positive Packaging, a privately owned flexible packaging company with nine manufacturing facilities in India and the United Arab Emirates (UAE) as well as significant business in Africa and other countries. The measurement period ended in January 2016. The values of assets, liabilities and goodwill have not changed from the values reported in the annual financial statements for 2015.

On January 29, 2016 Huhtamaki completed the acquisition of FIOMO, a privately owned manufacturer of flexible packaging foils and labels in Czech Republic. With the acquisition Huhtamaki expanded its flexible packaging manufacturing footprint to Eastern Europe. The acquired business has been consolidated into Flexible Packaging business segment as of February 1, 2016. The goodwill is expected to be non-deductible for income tax purposes. The consideration in cash amounted to EUR 26.4 million. The costs relating to advice etc. services EUR 0.5 million are included in the Group income statement in account Other operating expenses.

On March 22, 2016 Huhtamaki expanded its long-standing relationship in Arabian Paper Products Company (APPCO) with Olayan Saudi Holding Company (OSHCO) by increasing its ownership in APPCO to 50%. Due to the revised Shareholders' Agreement relating to APPCO the Group has control in the company and the previous associate company is consolidated as a subsidiary in the Foodservice Europe-Asia-Oceania business segment as of April 1, 2016. The goodwill is expected to be non-deductible for income tax purposes. The consideration in cash for additional shares amounted to EUR 3.6 million. The costs relating to advice etc. services EUR 0.1 million are included in the Group income statement in account Other operating expenses. As a result of the transaction, a gain of EUR 7.8 million from the difference between remeasured interest according to the purchase price and previously held equity interest is recognized in the income statement.

On July 22, 2016 Huhtamaki acquired 51% of Val Pack Solutions Private Limited, a privately held paper cup manufacturer based in Mumbai, India. The acquired business has been consolidated into Foodservice Europe-Asia-Oceania business segment as of July 22, 2016. The goodwill is expected to be non-deductible for income tax purposes. The consideration in cash amounted to EUR 3.0 million. The costs relating to advice etc. services EUR 0.3 million are included in Group income statement in account Other operating expenses.

The combined values of acquired assets and liabilities at the time of the acquisition were as follows:

EUR million
Customer relations	4.9
Tangible assets	33.3
Inventories	10.4
Trade and other receivables	10.1
Cash and cash equivalents	3.7
Total assets	62.4
Deferred taxes	-1.9
Interest-bearing loans	-18.8
Trade and other payables	-10.3
Total liabilities	-31.0
Net assets total	31.4
Non-controlling interest	-8.9
Goodwill	24.9
Remeasurements	14.4
Consideration	33.0

Analysis of combined cash flows of acquisitions

EUR million

Purchase consideration, cash payment	-33.0
Cash and cash equivalents in acquired companies	3.7
Transaction costs of the acquisition	-0.9
Net cash flow on acquisition	-30.2

The net sales of the acquired businesses included in the Group income statement since acquisition date were EUR 36.5 million and profit for the period was EUR 2.4 million. The net sales and the profit for the period of the acquired businesses would not have had material effect in the Group income statement, if the acquired businesses had been consolidated from January 1, 2016.

Business combinations

On May 19, 2016 Huhtamaki completed the acquisition of Delta Print and Packaging Limited, a privately owned folding carton packaging manufacturer in Northern Ireland and its affiliated Polish unit European Packaging Solutions Poland Sp. Z o.o. With the acquisition Huhtamaki continued to implement its growth strategy focused on food and drink packaging and entered the folding carton packaging market also in Europe. The acquired business has been consolidated into Foodservice Europe-Asia-Oceania business segment as of May 1, 2016. The goodwill is expected to be non-deductible for income tax purposes. The consideration in cash amounted to EUR 92.4 million. The costs relating to advice etc. services EUR 1.4 million are included in the Group income statement in account Other operating expenses.

The values of acquired assets and liabilities at the time of the acquisition were as follows:

EUR million
Customer relations	8.3
Tangible assets	35.3
Inventories	5.7
Trade and other receivables	14.7
Cash and cash equivalents	1.0
Total assets	65.0
Deferred taxes	-3.4
Interest-bearing loans	-11.8
Trade and other payables	-22.1
Total liabilities	-37.3
Net assets total	27.7
Goodwill	64.7
Consideration	92.4

Analysis of cash flows of acquisition

EUR million
Purchase consideration, cash payment	-92.4
Cash and cash equivalents in acquired companies	1.0
Transaction costs of the acquisition	-1.4
Net cash flow on acquisition	-92.8

The net sales of the acquired business included in the Group income statement since acquisition date were EUR 44.7 million and profit for the period was EUR 3.1 million. The Group net sales would have been EUR 2,886.6 million and profit for the period EUR 192.1 million, if the acquired business had been consolidated from January 1, 2016.

Other information

Key indicators

	Q1-Q4 2016	Q1-Q4 2015
Equity per share (EUR)	10.93	9.65
ROE, % (12m roll.)	17.6	15.6
ROI, % (12m roll.)	14.7	13.3
Personnel	17,076	15,844
Profit before taxes (EUR million)	239.3	180.7
Depreciation of tangible assets (EUR million)	105.3	97.7
Amortization of other intangible assets (EUR million)	8.6	6.8

Contingent liabilities

EUR million	Dec 31 2016	Dec 31 2015
Mortgages	-	0.0
Guarantee obligations	-	0.5
Lease payments	81.9	67.4
Capital expenditure commitments	70.5	30.4

Financial instruments measured at fair value

EUR million	Dec 31 2016	Dec 31 2015
Derivatives - assets
Currency forwards, transaction risk hedges	2.5	2.4
Currency forwards, translation risk hedges	-	-
Currency forwards, for financing purposes	0.5	2.0
Currency options, transaction risk hedges	0.6	0.4
Interest rate swaps	5.1	3.8
Electricity forwards	0.1	0.0
Available-for-sale investments	1.6	1.9
Derivatives - liabilities
Currency forwards, transaction risk hedges	3.3	1.5
Currency forwards, translation risk hedges	8.5	2.2
Currency forwards, for financing purposes	4.5	1.3
Currency options, transaction risk hedges	0.5	0.1
Interest rate swaps	0.7	1.8
Electricity forwards	0.1	0.3

The fair values of the financial instruments measured at fair value have been indirectly derived from market prices. Only fair values of electricity forwards are based on quoted prices in active markets. Quoted and unquoted shares are classified as available-for-sale investments. Quoted shares are measured at fair value. For unquoted shares the fair value cannot be measured reliably, as a result of which the investments are carried at cost.

Interest-bearing liabilities

	Dec 31 2016 Carrying		Dec 31 2015 Carrying
EUR million	amount	Fair value	amount	Fair value
Non-current	520.8	520.9	503.1	502.1
Current	266.9	266.9	157.5	157.5
Total	787.7	787.8	660.6	659.6

Other information (continued)

Exchange rates

As of July 2016 the exchange rates used at the month end are the rates of the date prior to the last working day of the month, due to the change of publication time of the ECB euro foreign exchange reference rates.

	Q1-Q4 2016	Q1-Q4 2015		Dec 31 2016	Dec 31 2015
AUD 1 =	0.6716	0.6774	AUD 1 =	0.6894	0.6713
GBP 1 =	1.2214	1.3776	GBP 1 =	1.1723	1.3625
INR 1 =	0.0134	0.0141	INR 1 =	0.0141	0.0139
RUB 1 =	0.0135	0.0147	RUB 1 =	0.0158	0.0124
THB 1 =	0.0256	0.0263	THB 1 =	0.0266	0.0255
USD 1 =	0.9035	0.9015	USD 1 =	0.9567	0.9185

Definitions for performance measures

Performance measures according to IFRS

Earnings per share (EPS) from profit for the period from continuing operations =

Earnings per share (EPS) from profit for the period from discontinued operations =

Earnings per share (EPS) attributable to equity holders of the parent company =

Diluted earnings per share (EPS) from profit for the period from continuing operations =

Diluted earnings per share (EPS) from profit for the period from discontinued operations =

Earnings per share attributable to equity holders of the parent company (diluted EPS) =

Alternative performance measures

EBITDA =

Net debt to equity (gearing) =

Return on net assets (RONA) =

Operating cash flow =

Shareholders' equity per share =

Return on equity (ROE) =

Return on investment (ROI) =

Income statement, average: Statement of financial position, month end:

	Q1-Q4 2016	Q1-Q4 2015		Dec 31 2016	Dec 31 2015
AUD 1 =	0.6716	0.6774	AUD 1 =	0.6894	0.6713
GBP 1 =	1.2214	1.3776	GBP 1 =	1.1723	1.3625
INR 1 =	0.0134	0.0141	INR 1 =	0.0141	0.0139
RUB 1 =	0.0135	0.0147	RUB 1 =	0.0158	0.0124
THB 1 =	0.0256	0.0263	THB 1 =	0.0266	0.0255
USD 1 =	0.9035	0.9015	USD 1 =	0.9567	0.9185

Profit for the period from continuing operations – non-controlling interest Average number of shares outstanding

Profit for the period from discontinued operations – non-controlling interest Average number of shares outstanding

Profit for the period – non-controlling interest Average number of shares outstanding

Diluted profit for the period from continuing operations – non-controlling interest Average fully diluted number of shares outstanding

Diluted profit for the period from discontinued operations – non-controlling interest Average fully diluted number of shares outstanding

Diluted profit for the period – non-controlling interest Average fully diluted number of shares outstanding

EBIT + depreciation and amortization

Interest-bearing net debt Total equity

100 x Earnings before interest and taxes (12m roll.) Net assets (12m roll.)

EBIT + depreciation and amortization - capital expenditure + disposals +/- change in inventories, trade receivables and trade payables

Total equity attributable to equity holders of the parent company Issue-adjusted number of shares at period end

100 x Profit for the period Total equity (average)

100 x (Profit before taxes + interest expenses + net other financial expenses) Statement of financial position total - interest-free liabilities (average)

In addition to IFRS and alternative performance measures presented above, Huhtamaki may present adjusted performance measures, which are derived from IFRS or alternative performance measures by adding or deducting items affecting comparability (IAC). The adjusted performance measures are used in addition to, but not substituing, the performance measures reported in accordance with IFRS.

Domicile: Espoo, Finland, Business Identity Code: 0140879-6 Tel +358 (0)10 686 7000, Fax +358 (0)10 686 7992, www.huhtamaki.com Huhtamäki Oyj, Revontulenkuja 1, FI-02100 Espoo, Finland