Annual report 2017: Hartmann generates growth

Hartmann grew its revenue in 2017 on the back of increased packaging volumes in both Europe and the Americas. Though faced with challenging key markets and ongoing running-in of new production capacity, we generated a profit margin of 10.7% and produced solid cash flows. Growth was driven by the core business lifting packaging volumes in 2017. Despite exceptionally large price differences between standard and premium eggs in North America and the discovery of fipronil-contaminated eggs in a few European markets, we were thus able to increase the utilisation rate of new production capacity.

CFO and interim CEO Marianne Rørslev Bock says: "We lifted revenue in 2017 and focused on establishing a strong production platform to be able to leverage favourable market trends and generate attractive growth and profitability going forward."

Q4 2017

• Revenue totalled DKK 564 million (2016: DKK 523 million), and operating profit rose to DKK 74 million (2016: DKK 59 million), taking the profit margin to 13.0% (2016: 11.2%). Earnings were supported by increased sales of packaging across Hartmann's markets and in Hartmann Technology.
• The European business grew revenue to DKK 349 million (2016: DKK 313 million) and operating profit to DKK 52 million (2016: DKK 50 million), for a profit margin of 14.7% (2016: 16.1%). Revenue growth was outweighed by higher depreciation charges, lower average selling prices and adverse currency movements. Moreover, the Q4 2016 performance included a public grant for energy-efficient production companies.
• The business in the Americas grew revenue to DKK 215 million (2016: DKK 210 million) and operating profit to DKK 25 million (2016: DKK 13 million), bringing the profit margin to 11.4% (2016: 6.3%). Earnings growth was driven by the significant progress reported by the South American business, which outweighed the slightly lower earnings from the business in North America due to higher production costs and depreciation charges.
• Currency fluctuations reduced revenue by DKK 23 million and operating profit by DKK 7 million.

2017

• Consolidated revenue grew by 5% to DKK 2,207 million (2016: DKK 2,096 million), and operating profit came to DKK 235 million (2016: DKK 248 million), taking the profit margin to 10.7% (2016: 11.8%). Our total capital expenditure was DKK 208 million, and the return on invested capital was 17% (2016: 21%).
• The board of directors proposes a dividend of DKK 9.50 (2016: DKK 9.50) per share.
• The European business grew revenue to DKK 1,290 million (2016: DKK 1,258 million), while operating profit was DKK 158 million (2016: DKK 164 million), bringing the profit margin to 12.2% (2016: 13.1%).
• The business in the Americas reported revenue of DKK 917 million (2016: DKK 838 million) and operating profit of DKK 103 million (2016: DKK 116 million), for a profit margin of 11.2% (2016: 13.8%).
• Currency fluctuations, primarily in GBP, reduced both revenue and operating profit by DKK 21 million.

Guidance and ambitions

• Anticipating enhanced capacity utilisation and continued cost adjustment, we expect to generate revenue of DKK 2.2-2.3 billion and a profit margin of 11.5-13% in 2018. Slightly lower growth rates in North America and in some European markets where demand is temporarily affected by the 2017 fipronil egg contamination are expected to detract from the 2018 performance.
• The return on invested capital is expected to be at least 18% in 2018. 
• It is Hartmann's ambition to gradually grow packaging volumes in  step with or above market growth, continually increase consolidated revenue and generate a profit margin before special items of at least 14%.