Huhtamäki Oyj

Good morning all and welcome to the results call for Hurtamäki's second quarter of 2026. My name is Kristian Tammela, VP of IR. We will now present our development in the second quarter, starting with the presentation by President and CEO Ralf Wunderlich, followed by our CFO Tuomas Geust. After the presentation, we have time for Q&A. With that, let's get started and handing over to Ralf. Thank you, Christian.

Thanks for opening the call and really good to be back here. And today, of course, I'm very happy to report to you a very good outcome for both the quarter as well as the half for Utamaki. And that, especially in a market which is still very volatile, where we see a lot of uncertainties. And let me start with that one, because most importantly is that even though there is a strong crisis in the Middle East with the war in Iran, we were able to secure the safety of our co-workers in all our factories. And I'm also happy to say that we were able to secure raw materials and supply and deliver to our customers what they needed to ensure continuous supply of those. Now let me move to some of the outcomes. We had seen growth in the quarter, 2% comparable sales growth, and we were able to pass on the very steep raw material cost increases. We saw volume growth in a couple of our segments, namely flexibles and fiber. And our adjusted EBIT did increase by 1% with a strong margin of 10.3%, despite a 2 million negative currency impact in the quarter. We are continuing to be very disciplined when it comes to capital allocation. Now, it is very important if you go to the next slide to also say a few words about the situation in the Middle East. And let me start with the facts. Facts are that we have six operations, two in Dubai, one in Saudi Arabia, and three in Egypt. We are seeing a very, very strong impact in oil price increases in general, which of course then has an impact on the very, very strong increases on resin, on films, solvents, inks, other liquids and chemicals in general. The main segment involved is flexible packaging, even though all segments are of course seeing the impact. Availability of raw material varies by the region. And of course, there are risks of falling short. But you will see this later when I talk about the actions we were able to secure raw materials in all regions to ensure continuous supply. We are also seeing steep increases in energy and logistics costs. With the Middle East crisis, there are congested logistics chains. and again increased in energy and logistics costs, which we needed to manage. Now, what are the actions which we took into place? First and foremost, as mentioned before, safety and security of our co-workers. That is our highest priority. Also, all of our sites continue to operate throughout the crisis. And that was possible because of our close collaboration with both our suppliers and our customers. We were able to secure the raw materials even in the regions where it was very difficult. There was a lot of hard work done to reduce the impact to our customers and to ensure that they can supply to their customers all the time and we were able to do that. Now, the strong focus on growth and customer intimacy will continue and is absolutely needed to ensure that we can continue to deliver to our customers. At that point, I would also like to mention that the war in Europe, in the Ukraine continues to go on. And of course, safety and security of our coworkers there is as well of our first priority. Let me move on with an update on the team. I'm very happy to report that we were able to attract Thomas Morin to our management team. He is now part of the executive team and he will start with us in September. Thomas' previous job was as president and CEO of Transcontinental, a Toronto-listed packaging company. And of course, it's very, very good to have him with us on the global executive team and he will help us to continue to drive this very important segment forward in the future. As in all our quarterly meetings, I will update you on our value drivers which we implemented 18 months back. Namely, profitable growth supported by all levers. Secondly, disciplined capital allocation. And thirdly, accountability with speed of execution. If I go to the first one, profitable growth supported by all levers. What we really want to make sure is that we grow organically by being very close to our customers, both global key accounts as well as regional accounts and small accounts. All of them are very important to us and we want to improve our relationship and make sure that they win in their respective markets. And as previously mentioned, we also are looking continuously looking at inorganic growth. We had in April last year, the announcement of an acquisition in North America, and we are not stopping there. We are continuously looking at inorganic options, but we will do it in a very disciplined manner. Second point on disciplined capital allocation. We are moderating our cap expense, but we are not jeopardizing the growth opportunities which we are having. In fact, we are always looking at best yielding projects and we are allocating capital more or less equally amongst the three dimensions of maintenance, efficiency and growth. So think about this of 30% in each of those categories. And we are allocating approximately 10% to what we call license to operate. So things such as safety, regulatory requirements, sustainability and so on. So that will continue and we are very disciplined when it comes to our capital allocation. Also when it comes to working capital. So it's not just about capex, it's also about working capital and especially important in times like now, where we have an extreme increase in raw material costs. So we of course see that on the inventory side and on the receivable side. So it's even more important now to be very diligent and very disciplined. Last point, how are we enabling those? We are enabling it with accountability and speed of execution. So we are empowering the segments. We are empowering the teams within the segments very, very clearly to drive their performance, to be close to customers And from a group perspective, we are the center of expertise. We govern, we coordinate, we support value creation. So whatever the segments need, we will provide to the segments. Now today, I would like to give you a bit more taste of what that really means. So if you go to the left side of the slide and what I really would like to talk about is how are we going to help the segments? First of all, of course, we are, when it comes to business as usual, we are following up on their performance. We are supporting their performance whenever they need that support. We are also looking at acceleration. How can we increase scrutiny? How can we set targets which are really ambitious for them? And then of course, and you have seen this last year, when we had a couple of turnarounds, one in India and one in Turkey, where we openly talked about, we are also having a playbook on how to improve performance when it is needed. And then we implement it with task forces existing from external teams and internal teams. So we combine those and then we go with our task force to support turnarounds. Now also important is the M&A side, so the inorganic growth side. Whenever there is a project which we like and which is in our pipeline, we will make sure that it is in businesses where we have strong teams. in regions where we have already a good presence with products and technologies which we know and we understand and of course with management teams that fit our culture and we always want to make sure that we have a clear synergy plan and clear synergy opportunities and they must be financially sound then we accelerate them and then we go after them let me remind you on our value creation model and the way we are thinking about capital allocation and the priorities. So first and foremost, of course, we are running a business and we want to grow our business, which we have profitably. So we have announced that we have an ambition and we understand we are not yet there, but we have an ambition to have a strong annual growth. And we also have an ambition to be between 10 and 12% adjusted EBIT margin, which we are already now since a couple of years. That business will require capex to continue to grow organically. And it will need also capex and capital for both on acquisitions for inorganic growth or any other acquisition type. That money will then provide us solid cash flows. That solid cash flow will be used again to invest into the business as described before, or it will be used to be returned to our shareholders. We will aim to continue to pay dividends in the range of 40 to 50% payout ratio. As a reminder, we have increased our dividends in 17 years in a row. Or we will find other ways of returning money to shareholders if we do not find better means to invest the money back into growing our business profitably. All of that is underpinned by our leverage, and we want to stay between two to three times net debt. As you know, we are currently at the lower end of that leverage range. Sustainability is very important to Utamaki, and I'm very, very happy to report that we continue to make very good progress in advancing our ambition. You have seen those six different metrics as before, and I'm very happy to report today that we have made good progress in all six of those. So recycled fiber, we are now over 99% already at recycled fiber, which is certified. We are making good progress also on renewable electricity. We are now over 61%. We are at almost 84% on non-hazardous waste. We are making good progress on greenhouse gas and here we are looking at scope one and two, as well as reducing our overall total waste to landfill where we are now at 3.6 and we are getting closer to our ambition there as well. So in all dimensions, we are making good progress. So very proud of what we are doing here. Let me move on to business performance. And of course, as mentioned before, if we started net sales, then I'm really, really happy to say that we were able to grow our business in the quarter. And if you look at our comparable sales, we did grow it by almost 2%. That's very, very exciting for us as a business. It's also exciting to see that we did grow comparably in the half. So it's a 1% growth in the half one of this year. As you can also see on that slide is that the currency impact is getting lower. So whereas there was a very strong, almost 80 million impact for the half in the quarter itself, we only had 15 million impact. Let's move to some more details. So as mentioned before, we saw growth in the quarter on the top line, but we also saw growth on the adjusted EBIT line. And that is even before we take the impact of the currency into account here. So we were at a margin of 10.3%, which is stronger than at the same period last year, where we had a margin of 10.2%. a very strong adjusted EPS number of 0.64 in the quarter, again outperforming same period last year by 2%. If you look at capital expenditure and free cash flow together, and you see the delta there, and that delta which you see is explained by, if you go back to the quarter two last year, by a contractual compensation which we got in Q2 last year, which is explaining most of the difference which you have here. The rest is explained by what I mentioned in the very early stage of my presentation by the higher raw materials and hence the higher inventory and receivables which we have seen. So a very strong quarter performance for Utamaki. And also, if you go to the right side of the slide, a very strong performance in the half. So also here from a comparable perspective, as mentioned before, excluding the FX, we have growth in the quarter of 1%. Really important to see also the EBIT line increasing in the quarter if you take back the impact of the Forex. In the quarter, as mentioned as well, where we had a stronger margin, we also have it for the half year. So we are now over 10% also for the half, which is very encouraging. Very similar on adjusted EPS, 120 to the 121, so flat on the EPS line. And then, as explained before in the quarter, the same picture is true also for the half. that the delta between this half and last year's half is explained by the contractual compensation which we got last year in Q2. So a strong message also for you is that we have had now five quarters in a row with positive cash flow which we are very proud of. So our focus on very disciplined capital allocation is clearly showing the benefits already. Let me now go to the four segments in more detail. First, I'd like to start with food service. Food service in the quarter has seen negative growth of 1% in a still very challenging market and, of course, with an impact from the Middle East. They were still able to deliver a strong margin with 8.6% due to their continuous strong work on taking costs out of the system. And we are very proud to see them delivering very strong operating cash flow. In fact, slightly ahead of last year's performance, which already was a very strong performance. A very similar picture for the half. Also in the half, we are seeing negative growth of 4% for food service, We're seeing a similar margin of 8.3% as in the quarter where we had 8.6%. And also on the cash flow side, we see a similar picture where they are outperforming same period last year by 13 million, achieving 53 million of operating cash flow. Let me go over to our North American segment. And I think it's important to think about North America because of its very strong seasonality more with regards to the full half. So let me actually start with the half and making my comments. And they are very true for the quarter then as well. We were able in the half to see volume growth in our North American business. So you see comparable growth looks flattish, but in fact, it has some positive volume effects here. We were able to deliver double digit margin in North America, both in the half as well as in the quarter. And it's important to point out, as we did already last quarter, that we are seeing still operational challenges, which we are working on. They are focused on a few of our plants, which again, we have a task force to support the North American business to get those under control. but they are also focused on some of the cost increases like distribution and energy costs, which we need to work with the teams on for the overall North American segment. Let me move from North America to our flexible packaging segment. Flexible packaging saw in the quarter volume growth very strong cost management and continuous good progress on its turnarounds, which we have focused on last year. So in the quarter, we saw comparable growth of 14%. Of course, a lot of that is driven by the raw material pass on. But I would like to highlight again that we also saw volume growth in the quarter in flexible packaging. They ended up with a very strong margin of almost 11% and also delivered very strong operating cash flow, more than double of what they delivered same period last year. A similar picture also for the half. Also in the half, we saw comparable growth of 5%. We saw strong adjusted EBIT improvement, both in absolute as well as in relative terms. And also here, we see a very, very strong operating cash flow delivery. So very happy with the performance of our flexible packaging segment during the quarter and in fact, the half. Now let's move to our fiber packaging segment. In fiber, we see the first time in a quarter more than 100 million off sales. That's a comparable growth of a very strong 7% coming from both volume, price, and mix. adjusted EBIT did grow to 15.4 million so strong improvement versus same period last year and a very strong margin of over 15% for the quarter with a strong operating cash flow delivery in the quarter very similar picture also for the half here almost 200 million net sales with comparable growth of 6% strong margin for the half of over 15% Very strong operating cash flow as well. Double of what we have delivered last year with still a lot of capital expenditure because we want to, of course, invest as we have capital allocation in a very disciplined way behind our fiber packaging segment. With that, I would like to hand it over for the financial review to our CFO, Thomas Goist.

Thank you, Ralph. And I will try to bring some more flavor to the financial numbers, starting with the slide on the currency, which still continues to burden our P&L result. However, moderating versus what we saw in the first quarter. What that in reality means is that our impact in the second quarter is 15 million on roughly on net sales, 1.6 million on EBIT. However, if you look at the year-to-date numbers, it's as high as roughly 78 million on top line and 6.4 million on EBIT. The story remains very much the same as communicated in earlier quarters. The US dollar is the currency impacting the most, also the Indian rupee impacting our results. But if you look on the average rate, you can conclude that versus first half 2025, It's only three currencies trending favorably for us. However, when you are looking at the closing rate, which is the one measuring the balance sheet, then we see already an improving trend on many of the currencies. So if we maintain this level, we hopefully will see in the second half of the year an improving trend also on the currency side. With that one I will move onwards to the financial result and a bit of more detailing here. Here I would really say that the accountability our businesses are taking now is turning into strong results. The challenges or the opportunities are slightly different in each of the businesses, and all of them are adapting to the reality, be it then higher raw material cost, be it operational challenges, or be it then challenges with the volume. Thanks to that one, we are actually able to deliver a strong EPS, so the results really flowing through to the bottom line. 64 cents is the strongest Q2 in history, according to my understanding, or at least the recent history. And that we are, of course, very satisfied with. If you are looking at the net financial items, we have a small tailwind there with mainly lower net debt levels helping us. And then tax rate being slightly lower compared to previous year. If we turn to the next slide, we come to the cash flow, which has already been described quite in detail by Ralph. So really on the profitability side, the one-time gain we received last year helping us with the cash flow in 2025. So on a comparison basis, we are actually operationally on quite the same level as previous year. The working capital where cost is coming through on inventory and payables is obviously a drag for us. And then the timing of receivables also burdening the working capital. still when looking at the other parameters, capital expenditures lower than previous year and then taxes mainly a timing thing as well as for the net financial items. So I would say operationally doing quite well on the cash flow with the discipline we have now introduced to our business performances. With that one, we are improving on all the important balance sheet ratios and starting here with the net debt side. On the net debt side, we are now down to flat two. And as you can see, we are decreasing our net debt by 87 million versus previous year, same period. So we have continued the strong deleveraging story that we have started on and continued already for a few years. If you look at the gearing level, we are down to 0.62. So also improving on that one from 0.71 previous year. And also from a cash and cash equivalent point of view, we have a good situation. And maybe on that note, moving to the loan maturities, we did a renewal of our bond. So we issued a 300 million bond during the quarter under our EMTN program with a interest rate of 387.5. At the same time, we set out a voluntary offer for the repayment of 250 million bond maturing in 2027. And with that one, we have managed to prolong with a efficient finance rate our loan maturity to 4.1 years while it was 2.9 years previous year same period. So well positioned also when it comes to the loan maturity structure. With that one, we come to the financial position. On the working capital, it's really the raw material and all the things we have been discussing here earlier impacting the situation. Net debt, as said, improved versus previous year. And then, as Ralph already alluded to, going over 12% on return on investment, something to be proud about. With that one turning to the long-term ambitions, here we are seeing a positive, comparable net sales growth in the first half. Happy with that one, although being far below our long-term ambition, but at least the trend is the right one. Looking at the adjusted EBIT margin, maintaining above 10% level is where we want to be. and then the return on investments creeping closer and closer to the lower level of the ambition level, which is 13 to 15. So now passing the 12, as said here earlier, and net debt EBITDA being on the lower end of the corridor. Dividend payout for 2025, 46%, so also that one matching the dividend ratio. Looking forward, on the outlook side, we have maintained our outlook on the previous communicated level, as well as the short-term risks and uncertainties. And with that one, I would open up for Q&A.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from HiWin from UBS. Please go ahead.

hello, thank you for taking my questions and the first one is on North America and how do you see the segment evolving over the second half and. Is is what what specifically cost operational challenges and and when do you expect the recovery to be is that going to be second half or more into the next year that's my first question.

Thank you. Thank you. Hi, good morning. Thanks for the question. So we have started talking about our North American operational issues over the last couple of quarters. Our new president, Sarah Engber, is absolutely on the issues. And as you know, we have established already last year with our turnarounds in flexibles a standard procedure on how to address those. So Between our North American operational team and our global team, we have formed teams, task force teams to address the operational issues, which are mainly, not only, but mainly coming from our startups in Hammond and Paris. They are addressed. We have taken year over year now 140 employees out. So there's going to be significant cost savings on that side. So making progress, but as you know, these things always take time. We'd like them to come quickly, but we are realistic and we know how it works. We will fix it, but I'm not expecting these to be fixed very quickly. So working on it, Sarah is on it. We are supporting her and her team. will be done as we did it in Flexible. But bear with us. It will take a bit of time.

Understood. Thank you. My second question on Flexible. Could you give us an idea of how much contribution on the sales growth and also the margins improvement come from the pricing pass-through and how much is the underlying progress?

So, look, we were able to pass on the increases which we got, and the team did an outstanding job in being on this very early on. And I have to say we worked very closely together with both suppliers and customers with the number one objective really to ensure continuous supply and making sure that our customers can support the consumer. That was number one target. Number two, because of this very steep increase, you remember pre, Pre-war, the barrel oil was somewhere around, call it $60 per barrel, and it went up to a high of $112. So it was a very steep increase in a very short period of time. So everybody in the market understood that price pass-through needed to happen very quickly to sustain operations. So that happened. There's no benefit on that side for us, but it was just a pure pass-on operation. on the increased cost. The flexible improvement which we have seen over the last couple of years now is really due to the fact that they are working really hard on getting the portfolio right, making sure that they deliver and serve what they can do best, number one. Number two, working on their cost position, taking cost out of the system, being much more efficient, working on the turnarounds. We talked India and Turkey quite a bit. But now we see volume. And I think that's really important. We have talked about last year when we were, some of us, together in Turkey to see the factory, and we have also talked here on the call about a few of the contacts which were coming our direction. So the work they did on supplying and serving big accounts regional accounts and small accounts is now taking fruit and is showing benefits. So the volume growth is, of course, helping the flexible team on top of the good cost management quite a bit. So the margin range which we have given for flexibles, which is somewhere between 9 and 11, we have now delivered three times in three quarters on that range, and I think that is the right range to think about when you talk flexible packaging high.

My third one is on demand exiting Q2 versus the first half average. Are you seeing improvements in any markets?

Look, we see and we are of course super proud and happy that we see volume growth in the quarter in fiber and flexibles. For the half, we even see volume growth in North America. I think that's also really important. You asked about North American operations before, but I think it's important to realize that over the half North America was able to grow its volume. So that's, of course, encouraging, and we all know that there is huge impact of seasonality there. So you will see a big discrepancy between the quarters depending on how the – Oyj. The market is very dynamic. Geopolitical issues are still there. You have two wars happening as we speak. And of course, consumer confidence is at a low point. So that part is, I think, something we can't influence. But we know that our customers are doing quite a bit and our customers are doing promotions. Our customers are trying to get their volume growth through as well. So being close to them, ensuring that they win in their markets will help us to win as well. So, look, I look at demand, internal perspective. I'm confident that we are doing the right thing, and I'm looking at the external market, and here I count on our customers that they are doing the right thing as well. And then let's hope for all of us that geopolitically things will calm down, hopefully.

Thank you very much. I'll get back to you.

The next question comes from Maria Wickstrom from SEB. Please go ahead.

Yes, hello. This is Maria Wickstrom from SCB. I had... few questions I wanted to touch upon the flexible the volume growth that you saw over the Q2 that more broadly like with like from which product which client segment or products I mean this volume growth is coming from us I mean alluding to the the big FMCG volume what they reported during the Q1 we didn't really see much volume growth so has this really changed the whole story now during the Q2 that we are actually seeing volumes coming back again or is this more like a company specific that you are currently seeing?

Thank you, Maria. So flexibles, it's really paying out that we are focusing on both FMCG, so the big global accounts, the regional accounts, and the small accounts. So that change of tract, which we did a year ago, is showing, and it's showing in all of their regions. So that's not a single region for flexibles, which is going in the wrong direction. So we see That internal work, that being very close and supporting the customer, is showing clear benefits. That's number one. Number two, Maria, as I mentioned also to Hai before, we had successfully concluded a couple of nice contracts with customers which are now showing also its benefits. So that one is also helping us on the volume side, and that is also helping us in what we call blue loop contracts, in going into new specifications which are recyclable, so only PE structures, so that's also helping us to now starting to see some gains on that side. So flexibles, all regions, all customers, and really doing well. And especially happy, I have to say, on how strong Turkey and India was. So India especially had a very strong start into the year on the volume side after... frankly, years of negative volume growth. They were able to have significant volume growth in the first half and in the second quarter specifically. So very happy with what we see Turkey, India, but all over in all regions and flexible, Maria.

Perfect, thank you. And then my second question is currently the free capacity or is there a free capacity in fiber packaging, given that you were first time exceeding 100 million revenues during Q2. So do you have more free capacity going forward or would it need more investments in the near term?

Yeah, so I'm glad you have noted the 100 million. So first time ever to break the 100 million, which of course is for us a really important mark. We are in fiber very, very close to max capacity. We are investing heavily in fiber. And you have seen also last year, but this year will be a similar picture, that that's really the segment, as it is our most profitable segment, where we are putting most of our capex in with our very strong capital discipline approach and investing into the highest value driving projects. currently not a lot but we are of course taking all the actions which we can to give them more capacity and also to internally see whether we can find other ways of increasing productivity which will give us then some more capacity

Thank you. And then my final question is on North America, and maybe we should now look at the first half and the volume development. If you could give a little bit more color on the different customer segments, I mean, how they are currently performing in North America when it comes to volumes.

Overall, as I mentioned, we have seen volume growth in the first half, and thanks for looking at the half. That makes a lot of sense. What we are seeing is that we are having a really good growth in consumer goods. We are seeing growth in retail. We don't see growth in food service. So for the half, food service is slightly down, but the two other segments are improving with consumer goods being the best performer here. Retail also slightly up. So that gives maybe some color. Look, of course, driven by, again, very strong seasonality. Even now in June, we were surprised at the end of the quarter in June how strong actually our retail business and our food service business did at the very end of the quarter with of course you know fourth of july 250 years us and world cup both helping us at the very end of the quarter quite nicely so which brings the half then to a positive volume growth perfect thank you i don't have further questions

The next question comes from Pasi Vaisanen from Nordia. Please go ahead.

Thanks. This is Pasi from Nordia. And congrats regarding the very good secret code earnings. And maybe I start with North America. I mean, the segment was quite weak. So what is actually the root cause here in the segment? You have been in North America for decades and these ramp-ups should actually not come as a surprise for you. And maybe secondly, could you also kind of indicate that where these good volumes in flexible segments, so where they relate to the raising price environment or the plastic prices, Could it be possible that customers were buying a bit extra in the second quarter and these volumes cannot be repeated in the second half of this year? And maybe lastly, also when looking at the price-related growth and volume growth on a group level, could you actually share some info regarding the outlook for the second half on a group level? Thanks.

Thanks, Pasi. Thanks also for your nice comment about our performance in Q2. So let me address one by one North America. If you remember when I came in a year and a half ago, I already very early on commented on the margin of overall, which was, from my perspective, artificially high at the 14% by a couple of percentage points, really driven by after-COVID pricing. So that one, I think, was to me at least pretty obvious. So the range in our ambition for North America is between 10% and 12%. That one is our ambition. We stick to that one and I think there's no reason to believe it shouldn't be in that range. We are in that range. Yes, we are at the lower point of that range, but we are in that range, even though we are clearly having operational issues. I think that's a starting point. Next one is we know where we have the operational issues. We have identified them. We know exactly what we need to do about them. And we are on it. Sarah Engber, our new president, with her team are clearly on it. We are supporting her from a group perspective. We have done that before. we will succeed in getting these operational issues right again and that's that's really what we are on as i mentioned before we have to realize that those operational issues won't be solved overnight but you got to start and we started a few months back addressing them really strongly and we will and we will continue to do that so i'm very confident As I said to Hai, I don't expect this to happen quickly, but I'm very confident that we'll get the operational issues right. Look, of course, another dimension is that it is important in an environment where overall, you know, the market in North America isn't growing a lot. that we need to stay close to the customers and make sure that they win in their markets and we choose the right customers. So having volume growth in the first half to us is clearly an indicator that we are doing the right thing. And of course it would help us if the market would grow faster and we would get the leverage of the volume growth as well. But again, I think we have now found the right customer base, the right pricing points for the market, and we are on the operational performance. So North America, within the communicated range, no reason to believe that we shouldn't be in that range. Second question was on flexibles, if I remember correctly. Flexible volume, the good news, is driven by volume growth in all our regions. It's not one specific. Of course, the two turnarounds, especially India but also Turkey, are the star performers. But the nice thing is that all our regions are growing. and all our regions are taking costs out and all our regions are improving their margins. So it's not driven by one, but it's driven by all because management is doing a really nice job in making sure that they get the operational efficiency right, they are close to customers and they are driving their business in an environment which is very dynamic as well as it is globally, of course. So The price passed through, which we did, is purely on the increase in raw material prices, which we have seen. And I talked about this, everything related to oil, for us, resin, for us, films, solvents, inks, frankly, all liquids, all chemicals, but also then transport and logistics were affected by that. And that passed through, which happened so steeply and so quickly, Also from an internal work, the team was on immediately and got together with suppliers and customers a clear understanding that this needed to be done. So that's really important. And of course, it was essential for us to make sure that we are not waiting too long and we are losing a quarter or longer by waiting. So that's the work they did. And of course, volatility is still there. I just looked up this morning before the call. Oil is now back to $97. It was at a high at $112. It went back to mid-60s. But now it's going up steeply again. So again, $96.88, almost $97. And unfortunately, that will drive pricing of raw materials again in the wrong direction. So that work is not stopping here. We need to do this together with customers and suppliers. Third question was, remind me, Pasi, was around cash flow?

Yeah, and just to specify the second question. Were customers buying extra in the second quarter in the flexibles due to price increases and these extra volumes cannot be repeated in the second half?

Not for the quarter. So maybe we have seen a bit of that, Pasi, what you were talking about in April, straight after the war started. But then over the quarter, that is not the case. They know our inventories. We are, of course, very transparent with what we are holding on inventories for our customers. We have bespoken products, so we produce our prints and flexibles for customers very specifically. So they know what we have in inventory. So that over the quarter is not impacting.

Okay, I hear you. And the last one was related to kind of a mix coming from the price and volumes in terms of kind of organic growth expectations for the second half.

Look, for the second half, we believe that, as I mentioned before, that our internal work will continue to help us. Being close to the customers, looking at all customer levels, the local, the regional, the global players, being close to them, executing on our promises, our contracts, will help us. So the internal work, I feel good about. I feel good about our customers' activities in the market and their promotions and all their efforts to grow volume. So I feel good about that. What I don't know and I guess no one really knows what's happening geopolitically and whether the world will be calmer and there will be consumer confidence coming back. Clearly, and Pasi, you know this, if there is no consumer confidence people buy as little as they can and at the lowest price they can so from a mixed perspective that potentially is not helpful but that's something to be seen what we can influence we are influencing and our customers are doing the same yeah I fully understand but by assuming kind of one percent volume

and 3% price-related growth for the second half, then the organic growth could be 4-5%. Would that be a positive or negative estimate for the second half?

Yeah, so look, first answer, Pasi. You know we are not giving any guidance on volume nor on pricing for any period ahead of us. So I'm giving you our current view on what we are doing internally and what we are seeing from our customers. So that's number one. I think what is important with now the increase in – in oil and hence also the increase in raw material which we are expecting of course we would continue to pass this on to our customers that's pretty obvious so that work will not stop but it would go the other direction the moment of course prices are going down we would of course also give this back to customers this is for us a game which from an absolute perspective has no impact whatsoever so I can't give you any guidance on The next question comes from Marayo Adesina from Barclays. Please go ahead.

Hi there, Marayo here on behalf of Pallav Mittel. So he just had a question. Flexible packaging comparable sales are around 14% in Q2.

Is that going to be recurring or was there sort of a pre-buying and temporary price cost boost? And if so, how sustainable do you see that being?

It's very similar to what I was talking to Pasi about. So we have seen, if at all, then immediately after the war in the Middle East started in Iran, so call it maybe April, we have seen a little bit of that effect of people being super nervous and maybe pre-buying a bit. that for the quarter is not impacting our results for the quarter the volume growth in flexibles which we have seen which we are really proud of is not due to the fact of any pre-buying or or stocking up so that one i can ensure you is not impacting the quarter okay great thank you very much the next question comes from kevin fogarty from deutsche bank please go ahead

Hi, good morning, everyone, and thanks for taking my questions. I've got two, please. The first was on food service, just in terms of if you could provide any color in terms of the backdrop you see there, I guess, in terms of demand profile, what people might be thinking of for Q3 and Q4. At this point, given you mentioned geopolitical issues, and just getting the sort of delivery in first half. Any sort of thoughts there on how that might develop into Q3 and what you're seeing there would be good. And then I guess overall, in terms of your kind of stable outlook, I just wondered if you could, this is for the full year, I guess, is there any colour you can put on that in terms of, you know, you've obviously had sort of a strong pricing action You've had a quarter that's probably sort of better than we all expected, but your outlook is stable for the full year. Just if you could put any thoughts in terms of what that stable outlook actually means would be very good. And if there's any sort of self-help potential in the second half of the year to drive that.

Thanks, Kevin. So let me try to give you some more color on food service. So food service, you will have seen that we have had a very disappointing volume Q1. Q2, even though it's slightly negative, it is significantly lower. better than what we have seen in the first quarter. So that's message number one. Message number two is, of course, food service was also impacted by the Middle East wars as well. So there's a bit of an echo in the line. I hope it's getting better now. So Middle East had an impact into food service in the quarter as well. Generally speaking, we are getting good traction with our big global accounts on food service. So I think that's really encouraging to see that that relationship and that work together is helping us to follow them and support them and make them win in the market. We are not, and that's opposite to what we are seeing in Flexibles, we are not yet seeing the traction with the smaller and regional accounts. So that's a work which we have started. And as I mentioned in previous calls, those customers we have to convince and we have to win back those customers as we weren't close to them at all. So that's something where we were clearly hoping that we would get that trust and that chance back much quicker, which we are currently not yet getting. So we have to continue to work on that, continue to convince them with good service, good delivery, delivery in full, in spec all the time, helping them on innovation, to get that trust and that chance. So we are working on that. Currently, we are not at this point, so that's not helping us in our food service business, and we are convinced that we will get there eventually. So the team is working hard on that side. I can link this also to then your last question on self-help, and then I give you a bit of a view on Q3 and Q4. On the self-help side, that continues, and you have seen that even with weak top line, Thank you very much. and especially even more so in food service when you have volume decline. Of course, even more so it is important to adjust your cost base to that one. Q3, Q4, rest of the year. I mentioned a few times before, we are seeing... Oyj. So, hence, it is, you know, a relatively stable market. It's a relatively stable industry. We are in an industry which is super resilient, even if there is a global crisis. People still eat. People still drink. And that's very important for us and for you, I think, as well, to realize that we are not cyclical. We are in a resilient environment. We are a resilient company. And we are working on this, not for the short benefit, but for the long run.

Okay, great. Thanks very much. Very helpful.

All right. That was all the questions we had for today. Thank you for all the questions and interest. And with that, we wish you a great day. Thank you.