Huhtamaki Announces Organizational Alignment

Rigid plastic Consumer Goods operations in Europe and Oceania are reorganized as a separate, standalone, business entity under strategic review. This will lead to a reduction of approximately 170 employees during the first half of 2009.

17/12/08 Huhtamaki books restructuring and impairment charges of EUR 159 million in the fourth quarter 2008 and updates full year 2008 Group EBIT outlook to approximately EUR 90 million, before impact of any restructuring and impairment charges. Reasons for updated 2008 earnings outlook are soft market conditions as well as need to mark-to-market inventory values downwards as a result of sharply reduced raw material prices. The previous outlook expected Group EBIT to be below the 2007 underlying Group EBIT of EUR 136 million. 2007 underlying Group EBIT excluded restructuring, goodwill impairment and tangible asset impairment charges, total amount EUR 108 million.

Rigid packaging business organization is aligned with earlier announced strategic direction. Rigid plastic Consumer Goods operations in Europe and Oceania are reorganized as a separate, standalone, business entity under strategic review.  This reorganization will lead to a reduction of approximately 170 employees during the first half of 2009. The measures will improve the competitiveness of the business and reduce the cost base by EUR 8 million on an annual basis. A one-time restructuring charge of EUR 8 million will be recorded for these measures in the fourth quarter of 2008. Including the restructuring charges of EUR 5 million from the earlier announced processes in Phoenix and Malvern, USA, the total fourth quarter restructuring charges amount to EUR 13 million.
 
In addition, Huhtamaki will book non-cash goodwill and tangible asset impairment charges of EUR 129 million in the fourth quarter of 2008, mostly related to rigid plastics Consumer Goods businesses in Europe and Oceania. Goodwill impairment charges of EUR 65 million and tangible asset impairment charges of EUR 64 million result from the adjustment of book values to lower future cash flow expectations. Including the impairment charges of EUR 17 million from the processes in Phoenix and Malvern, the total fourth quarter impairment charges will amount to EUR 146 million.
 
The distribution of the above mentioned charges of EUR 159 million by reporting segment is following: Rigid Europe EUR 98 million, Rigid and Molded Fiber Asia-Oceania-Africa EUR 36 million, Flexibles and Films Global EUR 18 million, Rigid and Molded Fiber Americas EUR 5 million and Other activities EUR 2 million.