Huhtamäki Navigates Middle East Turmoil with Volume Growth and Margin Discipline
Despite war-driven raw material spikes, the packaging maker delivers record Q2 EPS, passes through costs, and sees Flexibles/Fiber volumes accelerate.
HUH1V.HE · Earnings Call · 2026-07-23
A Test of Resilience
The second quarter of 2026 placed Huhtamäki squarely in the crosshairs of a geopolitical shock. The war in Iran sent oil prices from $60 to over $112 a barrel in a matter of weeks, driving steep increases in resin, films, solvents, and other raw materials. Yet the company’s response was remarkably composed. As CEO Ralf Wunderlich put it in his prepared remarks, “We were able to secure raw materials in all regions to ensure continuous supply.” — Ralf Wunderlich, President and CEO · 2026-07-23 That operational agility translated into a 2% comparable sales growth and a 10.3% adjusted EBIT margin, all while absorbing a €2 million currency headwind. The company did not just survive the quarter; it thrived, posting its strongest Q2 EPS on record at €0.64. Raw material cost inflation was the dominant theme, but Huhtamäki’s ability to pass through price increases without losing volume distinguishes it from many peers. The CEO emphasized in Q&A that this was a pure pass-through, not a margin grab, and that the team acted early to lock in supply and customer confidence. This discipline is a recurring motif in the company’s narrative, but the scale of the current shock makes it more consequential.Volume Growth at the Core
The most striking development is the broad-based volume growth in Flexibles and Fiber, two segments that have historically struggled to deliver consistent top-line expansion. Flexibles posted an impressive 14% comparable growth, and while a portion reflects raw material pass-through, the underlying volume momentum is real. In response to an analyst question about prebuying, “The volume growth, which we have seen, which we are really proud of is not due to the fact of any prebuying or stocking up.” — Ralf Wunderlich, President and CEO · 2026-07-23 Instead, the turnaround in India and Turkey—long flagged as problem areas—is finally bearing fruit. The CEO noted that India posted significant volume growth in the first half, a sharp contrast to years of decline. This is the payoff of a strategic shift first articulated in early 2025, when Ralf Wunderlich told investors, “We want to use all levers to grow the company.” — Ralf Wunderlich, President and CEO · 2025-02-14 That approach now includes a focused comparable growth agenda, with the company allocating capital to its highest-return projects. Fiber Packaging also crossed the €100 million quarterly revenue mark for the first time, a milestone driven by both volume and mix improvements.The Persistent Overhang: North America
If there is a blemish on the quarter, it is North America. The segment continues to wrestle with operational issues at its Hammond and Paris start-ups, which have pressured margins despite overall volume growth in the half. Management has deployed a task force and taken out 140 employees, but the CEO candidly admitted, “We are realistic and we know how it works. We will fix it. But I'm not expecting this to be fixed very quickly.” — Ralf Wunderlich, President and CEO · 2026-07-23 This transparency is commendable, but it means the company’s overall margin expansion will remain constrained until North America stabilizes. Interestingly, the operational challenges in the U.S. are a stark contrast to the strength seen elsewhere. The company’s consumer confidence narrative—that people are buying less but still buying—has been a consistent theme across earnings calls. In a previous quarter, the then-CEO Charles Héaulmé had warned, “Volume is of essence in order to use our capacity and absorb our structural cost and organizational cost.” — Charles Héaulmé · 2024-10-24 That message resonates today as Huhtamäki seeks to leverage its global footprint to offset regional drags.Financial Strength and the Road Ahead
The balance sheet has never been healthier. Net debt fell to 2.0x EBITDA, gearing dropped to 0.62, and the company extended its average loan maturity to 4.1 years via a new €300 million bond. CFO Thomas Geust highlighted, “EUR 0.64 is the strongest Q2 in history.” — Thomas Geust, CFO · 2026-07-23 Positive cash flow for five consecutive quarters underscores the disciplined capital allocation that has become a hallmark of this management team. Looking forward, the company maintains its outlook, citing a stable but volatile market environment. The CEO’s closing remarks offer a note of resilience that captures the company’s positioning:That long-run view, combined with strong execution in the face of geopolitical disruption, makes Huhtamäki a standout in the packaging sector this quarter. The key question is whether the volume recovery in Flexibles and Fiber can be sustained and whether North America can finally get its operational house in order.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.