Good morning all. Welcome to Huhtamaki's Q1 2026 results call. My name is Kristian Tammela, VP of IR. We have today released the Q1 report and are hosting our AGM later today. We will now have a presentation, first by our President and CEO, Ralf Wunderlich, and then by CFO Thomas Geust. After that, we as usual, have time for Q&A. With that, let's get started in handing over to Ralf.
Thank you very much, Kristian, and welcome and good morning to all of you listening in to this results call today. I am, in fact, very pleased to report that we had comparable net sales growth in what you know is a very challenging market. Of course, our growth was supported also by volume growth, which is also very pleasing. Negative currency impact, which we have seen last year in three of the last three quarters already continued into the first quarter this year, which is giving us a negative impact both on the net sales side as well as on the EBIT side.
Our adjusted EBIT margin increased versus last year and is at 10%, so we are again, very pleased with that outcome. Our focus on capital discipline also continued and enabled us to show a very strong cash flow in the first quarter, significantly up on last year again. We are, and that's the news of February, end of February now, asked to navigate the challenges which we are seeing from the war in the Middle East so t he team is on that, and that's clearly a very important task for us going forward.
You have seen the latest changes of the management team, and I'm really happy to now say that we have a very strong management team in place which will help the company going forward. Let me dive in into the macroeconomic and geopolitical situation after the war in the Middle East started, and let me first go to some of the facts.
Facts number one is that, you know this, but it's important to repeat it, that approximately 4% of our sales is coming from that region. If I talk about the region, I really mean the U.A.E. with our two factories in Dubai, our Foodservice factory in Saudi Arabia, and our three factories in Egypt. That is approximately 4% of our sales. What happened, of course, driven by the oil price increase, which was very steep and very sudden, it's today an increase of 75% of pre-war times and w e, of course, see all of that impacting our materials, be it resin, chemicals, solvents, adhesives, everything which is related to oil but also on the energy and logistics side, we see a clear impact.
The actions we are undertaking to mitigate this. Action number one and most important is the safety of our people. Really important that we take care of our people, and we are doing that, and I'm really happy to report that up to now, no one got hurt because of the situation in the Middle East. All our sites in the regions, the six I reported before, are operating. Of course, initially, we had lots of closures, and then we started with single shifts, and then now we are back to running the operations and v ery important to report that so far we have been able to secure raw materials.
Of course, there's a risk of availability in the market. Our procurement team is working very hard on making sure that we are not running out of any raw material, so we are able to continue to support our customers and reduce the impact to our customers to ensure that they continue to win in their respective markets. We have implemented appropriate actions to pass on rising costs, both with regards to our contractual terms, but also when needed, we had to talk to customers to make sure that we pass on earlier such cost increases.
There is a possibility that the situation will have an impact on demand. We are very closely monitoring this, and we are staying on top of what it would mean to Huhtamaki if demand were to drop. Let me swiftly move on to the actions which we started taking last year to drive value for the company. You remember the three value drivers which we have implemented: profitable growth supported by all levers, capital discipline and allocation to best projects which we find at Huhtamaki, and accountability with speed of execution. We have done that early last year, and I'm again, very pleased to see that it's now really working in all our segments very well.
Let me give you some examples of what we see. We see that we have now initiated with our strong sales initiatives growth. As I mentioned before, we see comparable growth growing in the quarter, which makes us, of course, very pleased. We see that two of our segments continue to see also volume growth, which is again, another very exciting thing for us.
The mix improvement and the turnarounds actions which we did in Flexibles are continuing to progress very well. You can see this with our outcome in the Flexible segment. Pretty much exactly one year ago, we bought Zellwin Farms. Integration is going very well. It's getting close to a one year anniversary now. Again, very happy with that acquisition which we did. We are using all levers, organic and inorganic, to drive growth for Huhtamaki and w e start seeing the outcome and y es, it doesn't happen overnight. We knew this. We also knew that we needed to start that journey.
Capital discipline. We did spend significant money before 2025 and w e needed to be much more rigorous and disciplined how we allocate capital to the various segments which we have. You know that we are splitting it into three parts, equal parts for maintenance, for efficiency, and for growth, and that plays out really well. Of course, we are always reserving approximately EUR 10 million for what we call the license to operate, so safety, sustainability initiatives, which is very important. We are not jeopardizing any potential growth opportunities for the company, but we are much more disciplined. That is one of the reasons why we had a very strong cash flow outcome last year and, in fact, in the quarter this year, which I will talk about in a second, and then Thomas will dive in into more details later on.
Accountability and speed of execution is something which was very important to the global executive team because in a market which is so volatile, which is changing so quickly, we needed to get faster, we needed to get closer to our customers and the end markets we are playing in. We did a number of initiatives which we concluded last year, and we are again now seeing that those changes are helping our business segments to be faster, be closer to customers, and then see the outcome.
Let me now go into more details of the quarter and let's start with the top line, where I said that I'm really proud of seeing comparable growth growing. You'll see the EUR 947 million outcome for the quarter and a very, very big impact of more than EUR 60 million, EUR 63 million of currency. Adding those two numbers together, you can see that we did grow 1%, which is coming from the organic side of the business, and a small impact still in the quarter for acquisitions. It's the last quarter where we will see that impact, so r eally pleased.
As I mentioned before, North America and our Fiber Packaging! business did see growth for the quarter again. Going to the P&L. In the P&L, as just reported, we see the 1% comparable growth, so we ended up on a reported basis at EUR 947 million. Our adjusted EBIT margin did grow from 9.8% to 10%. You see the EUR 94.5 reported EBIT, adjusted EBIT there. If you add back the EUR 4.8 million currency impact, we would have been at EUR 99.3, which would compare to EUR 98.5, we would increase our adjusted EBIT on a comparable way.
Adjusted EPS landed at EUR 0.56, capital expenditure was EUR 27 million, below last year, not significantly low because we believe that we have now found the right level to continue to invest in the business, maintain the business, and get efficiency out of the business. Very pleased to say and to report that our free cash flow increased by EUR 32.5 million and was positive in the quarter with EUR 10 million. Let me walk you through the segments specifically, let me start, as always, with Foodservice.
The demand in Foodservice continued to be soft. It's especially the smaller accounts which are very soft for us in the quarter. That's partially driven by the Middle East impact, which is an important region for our Foodservice business, which had a very weak top line. Overall, as I mentioned, smaller customers are very soft in the quarter for us so w e see a comparable 8% decline because of the weak demand, but also driven by currency on that side. 8% comparable decline, 11% on a reported number decline. The segment did a great work and continued to do good work on taking cost out, so we were able to manage our adjusted EBIT and we came in at 8% margin with EUR 16.7 million in absolute EBIT for the quarter.
Capital expenditure absolutely in line with last year, but very good work on the working capital side enabled the segment to deliver very strong operating cash flow of EUR 17.7 million, so EUR 10 million ahead of the same quarter last year. Very pleasing to see the focus on the cost side, the focus on the cash side, and of course, working hard to get the small customers back to Huhtamaki and to make them win, and then also benefit on the back of that. Let me move to North America. You heard us saying in the last report that we had a very significant weather impact in North America in January. In fact, we had it in five of our factories for multiple days, so we saw significant cost increases there, which of course we see in the quarter however w hat we also see in the quarter is a very strong net sales number.
We see a comparable growth of 8%, which is fantastic but I need to be clear that this is supported by an early Easter this year. Last year, Easter was a few weeks later, so we had the impact in April. This year we have the impact, as Easter was early April, we have the impact for us in the first quarter. That clearly did help our comparable growth and still we are very proud to report the 8% comparable growth in North America. On the margin side, we ended up double digit, 10%, of course, impacted again by currency and t he big part of the just shy of EUR 5 million currency impact for the group is coming from North America, just shy of EUR 4 million from a currency perspective, and o f course, we had, as I mentioned early on, we had the impact of the weather.
If you would put those two things together, we would have ended up on the adjusted EBIT side in North America at par or even slightly ahead of what we reported last year. Pleased with the outcome of the North American business after a very difficult start due to the weather in January. Capital expenditure discipline continues, EUR 9 million versus EUR 12 million last year. Again, capital discipline implemented in all of our segments, and you see it here also in North America, really strongly implemented with a positive cash flow in the quarter for our North American business, which is very pleasing to report.
Let me swiftly move over to Flexible Packaging. The story continues in Flexible Packaging that with the focus of margin improvement, that one continued also into the quarter. We would put a lot of emphasis again on our mix. You see, even though comparable growth was down 3%, we continued to improve our mix, w e continued to win with the customers which are focused for us, as we are very pleased with the outcome on that side. Of course, that is translating with an amazing cost management and in an adjusted EBIT increase of 7% to EUR 28.6 million, with a margin of 9.5%. They are well in the range of where we want to see our Flexible Packaging business.
CapEx absolutely in line with last year but a very strong focus on working capital, which enabled the segment to end up on the cash flow side at EUR 20.9 million, significant increase versus the same quarter last year so w ell- done to the Flexible Packaging team. We go to Fiber Packaging!, here we also see a continuation of what I've reported to you last year. We continue to see strong comparable growth, both driven by pricing and volume. As you know, on the Fiber side, we are running at capacity. We are investing quite a bit in fiber to enable us to increase capacity as this is a business running flat out as we speak today.
Adjusted EBIT increased by EUR 2.5 million and 15.2% margin, which is a very pleasing margin to see for that segment. In Fiber, we continue to invest significant. We did it already in Q1 last year. We continued the same number this year, significant investment in our very Fiber business. We spent EUR 7.4 million in our Fiber Packaging! business. Still, they were able to deliver a very strong cash flow, just shy of EUR 6 million, EUR 5 million more than in the same quarter last year, with high CapEx clearly driven by a very strong EBIT/EBITDA delivery of the number. Let me hand over to Thomas, who will give you more details on the financial side, please.
Thank you, Ralf. Starting off with the currency impact, which still is trending negative for us. No surprise on that one, I believe, to any one of you listening into this call however m aybe pointing on some of the biggest moving parts here. If you look at the average rate for the biggest impact currency, U.S. dollar, you see that we had in the beginning of in the quarter last year, a $1.05 average rate, while we now had $1.17. Despite the U.S. dollar slightly strengthening, we had a significant negative impact of that currency in the quarter. You will also see that most of the other currencies are also trending negatively.
Maybe focusing a bit on the impact from the U.S. dollar, so i f we take a few data points out of last year, we had an average rate of the U.S. dollar of $1.09 in the first half of the year and, landing end of year at $1.13. As you said, now we are at $1.17. This means basically that the headwind will continue still in the second quarter. Although then, if continuing on the current level, slightly flattening out towards the end of the year, so less currency impact in the second half of the year, hopefully. As said, EUR 63 million almost of net sale impact translating to EUR 4.8 million in overall EBIT impact.
Similarly, despite the currency headwind, I'm very pleased to say that we are maintaining our margin or actually improving our margin slightly to 10% from 9.8% previous year and t hat's very much supported by still the very focused cost out activities, so around both taking the accountability, but also continuing on that playbook we introduced when we ran our efficiency program, which we stopped reporting mid last year but a ctivities are still going on. Also supported by a stable value add.
Looking at the finance cost, you can see that we are approximately on previous year's level, slightly up. Here, I would say one could assume a EUR 5 million-EUR 5.5 million monthly run rate costs for that item. We are still on the low side there for the first quarter ad then on the tax rate, we now reported 23.6% ETR. That's slightly below previous year when we were around 24%, and year-end, 22%, 22.4%. Tax rate roughly in line with where we are, and obviously depending on where the profits are collected, tax rate is slightly fluctuating. Looking at the EPS with all the parameters just reported here earlier, the adjusted EPS coming in at EUR 0.56 versus EUR 0.59 previous year.
Moving on to the cash flow, Ralf already mentioned that the cash flow was positive. This is not very typical actually for Huhtamaki. We are normally very strong in the fourth quarter, coming in with a low free cash flow number in the first quarter, in many cases actually a negative number. From this perspective, we are very pleased to deliver a positive cash flow. You will see from this graph that the main contributor here is working capital. We are slightly down also on capital expenditure. As you see, the taxes are paid taxes are higher than previous year, which is really around the timing of when the pay taxes come to payment.
Continuing on a healthy net debt to EBITDA level of 1.9x, our efforts to maintain a strong balance sheet has been delivered. The gearing is down slightly from fourth quarter so a lso a positive development. As stated on this slide, we have a significant cash and cash equivalents available. On top of that, we also have the unused committed credit facility of EUR 450 million available. Despite that said, we are working on our loan maturities. You'll see from this slide that in 2027 we have a significant bond maturing.
As you have seen from previous efforts from refinancing, we are continuously and diligently working on maintaining a healthy structure when it comes to maturity so a ctivities around that one can be expected. Looking at our balance sheet, on the balance sheet side, as I have mentioned so many times before, we are having translation differences on our equity. Although it's slightly improved versus the year-end level of roughly EUR 34 million, the drag is still coming through on currency. I said the working capital helped us to improve on the cash flow side.
Our return on investment is still lagging our ambition, but we believe once we are getting more top line in that we will start to see that one improving as well. That one then, how we progress on our long-term financial ambitions. You will see that our comparable net sales is significantly below the long-term ambition. However, given the last year's trend, we are very pleased to see a positive number on the comparable net sales in the first quarter. Adjusted EBIT margin continuing now on the double-digit level. Although we normally see some weakness in the first quarter, we are very pleased to see now the double-digit coming through also in the first quarter, similar to year-end 2025 and 2024.
As said earlier, the return on investment is still lagging our ambition. If approved today, we will have the dividend payout in line with our long-term ambitions. Looking forward on the outlook, the outlook remains unchanged. However, on the short-term, risk and uncertainties, we have added the sentence "ability to pass on increased input costs" just to highlight the importance of now managing this exceptional cost escalation situation we are seeing in the market, as Ralf was so well presenting on the Middle East situation. With that one, I would hand over for Q&A. Please feel free to address your questions.
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Yes, hello. Maria Wikstrom, can you hear me?
Yes.
Okay, perfect. I have a few questions. I wanted to start with North America and on currently the the volume volume growth outlook in the different segments. If we look at the reports, the Q4 reports from different Foodservice names, from Q4, I think the data was quite mixed. If you could educate us a bit what you are currently seeing in the different segments in terms of volumes in North America s o that was the first question.
Yeah. Hi, Maria. Thanks for the question. We were very pleased to see that in North America, in fact, all our three different segments did show volume growth in the first quarter. Retail, Foodservice, which you are referring to, and consumer goods as well. We see that very strong trend, of course, especially driven on the retail side by Easter but i n general, we see this continuing. Our customers, most of them certainly are winning in their markets, so we are very pleased on the Foodservice side.
You do remember that we are in North America on the Foodservice side serving especially Tier 2 customers. Yes, there is a mixed outcome for our customers in general. In particular for us, we had a strong quarter, and we don't see any signs that that would go in a different direction at the short term in North America on the volume side for Foodservice particular.
Was there anything specific on the volume development in the retail side?
Yeah. The retail side is very much driven by holidays in general. If you think Easter, you think Thanksgiving, Christmas. There are certain parts of the year where the retail side for us in North America has very significant peaks. As I was trying to explain in the beginning, North America, Maria, we had Easter last year a few weeks later, so it clearly had an April impact for us last year.
This year it was much earlier, so it was early April. We had a March positive impact, which of course helped us specifically on the retail side. That's very normal. That's our seasonality in North America, and of course, very much depends on when those dates fall. We see the impact either in Q1 or Q2 for Easter specifically. In general, you see that our Chinet products are keeping a very good position in North America. We are really fortunate that we have a strong brand. We're fortunate that consumers like our brand a lot. We see Chinet still traveling really strongly. Again, Q1 specifically of course driven by early Easter on the retail side, if that helps.
Yes. Perfect. I had two more questions if I take them one by one. The first one of those is still on the Foodservice, but more on the European perspective, which were declining in Q4, and we saw declines in now in Q1 as well. If you look at month by month, I mean, do you see now the trends still deteriorating, or are we currently seeing like some type of a bottom here?
No, we clearly see that this trend continued now for a few quarters. If there is not a specific month impact for Foodservice, it's more like the initiatives which we started last year of really going to the smaller, more local regional accounts is something which we needed to do. You could say we should have done this much earlier, but we started it last year and we start seeing that we have good discussions, promising discussions, but we need those discussions to come to fruition. This will not happen overnight, but it will happen. We are absolutely confident that it will happen, and that we will get back to growing smaller and regional accounts. On the big account side, so take our largest customers, we're doing very well.
In fact, you can see that we got the Supplier of the Year award from our largest customer. That was published just I think a few days ago. We are doing extremely well with our largest customer in Europe, and Asia Pacific, so v ery happy about that. Look, the one caveat I need to tell you is we gotta see how the Middle East crisis will play out, how long this will take. As I mentioned, we have approximately 4% of our net sales, of Huhtamaki's net sales in that, in that region. We clearly had an impact of the Middle East, after the war started on 28th of February in March. There was an impact. To be seen how long that war and that impact will take.
We clearly currently believe it will take some time, and we are making supply chain arrangements that we can supply from other plants into the region. We are of course making also lots of agreements with suppliers to ensure that we get raw material. That one is more difficult for me to tell you any timing on. I am confident that we will get the regional and smaller customers back to be supplied by Huhtamaki, but I'm not telling you that this is going to happen overnight. It's a journey which we started, and we will play it until we will win this.
Perfect. Thank you so much. Finally, I wanted to touch upon on the raw materials, so mainly on the plastic prices that have doubled within the last month. I wanted to see that, I mean, what kind of effect you will have on the profitability on doubling of the plastic prices? How quickly do you see you can transfer these prices onto your clients? If you see any availability issues when it comes to the plastic raw material prices, please.
Very relevant question, Maria, from very kindly said. You're spot on with your assumption. We have a 75% increase in oil prior war and today. Of course, everything which is related to oil, and that's not just resin, but it's also for our solvents, adhesives, inks, but then it goes into transport, logistics, is impacted. It is impacted in such a strong way that we could not just wait to tell our customers that we go with the normal lag and the normal contractual, which is typically a 3+ month lag. We went to our customers immediately, and we clearly had a very good and partnership discussion with them to say, number one, it is important for us to secure, that was part of your question, secure raw materials.
We are out talking with our customers and our suppliers to ensure that we get the raw materials, that we don't have shortages. Task number one, we are secured for the next couple of months, but this is really a month-to-month work now. This is not that you can secure for the long term, as even our suppliers don't know exactly how to forecast and allocate volumes than at the midterm. That's, that's a day-to-day work. We are on it. We were on this one from day one.
Second one is, of course, then the pass-through. We wanna make sure that the impact to our customers is minimized. We wanna make sure that they continue to win in their markets and that has first and foremost to do with ensuring that we have availability of our materials for them so t hat's what we are working in partnership with our customers on very hard but w e were clear from day one on because it was an unprecedented steep increase. It was not a small partial increase. It was an unprecedented steep increase on a very short timeframe that we told our customers from day one, "We have, unfortunately, new prices for you, which we have to pass on to you immediately. We can't just wait for the lag, which we usually do." We are on it. We were on it from day one.
This is especially for our Flexible business relevant. That's where we have most of those materials. In fact, 80% of the impact is for our Flexible business. I'm very proud of what the team is doing. They are on it daily. We have daily calls. They are daily in contact with customers and suppliers. The team, procurement team on the one side, sales team on the other side, business team overall is on this. I have a very good feel about the activities they are doing on that side, Maria.
Thank you very much. I'll let my colleagues ask second questions or next questions.
Next question comes from Hai Huynh from UBS. Please go ahead. Hai Huynh from UBS, your line is open. Next question comes from Cole Hathorn from Jefferies. Please go ahead.
Good morning. Thanks for taking my question. I have three my side. The first is just trying to put some quantifications at the EBIT level. You've been very clear that you're passing on prices faster than normal to offset the polymer costs. I'm just wondering, are you giving any kind of rough guidance? You know, is this kind of a EUR 5 million or so EBIT impact into 2Q before it's recovered and, you know, margins are sustained from 3Q onwards? Then similarly in North America, you had a few different impact. You had timing of Easter, which was positive, but you also had the weather.
Is there any way that you could kind of quantify how those move into the second quarter just so we can think about a run rate for the second quarter? The third one is more of a difficult one to answer, you know, the cost increases for polymer are clear but w e are seeing logistics costs increasing globally. I'm just wondering how you are discussing with your commercial teams to try and recoup that from a pricing perspective. We haven't necessarily seen, you know, the folding carton prices move, you know, logistics are a cost that you will need to recover or at least get some efficiencies. I'm just wondering how you're thinking about pricing for the business from here. Thank you.
Thanks, Cole. Three questions. Let me start with the first one on the raw material impact for the quarter. We are really looking at this from a full year perspective. If you go back to 2022, so post-COVID, where we had a very similar issue, the difference was it was not as steep, and maybe also not as big. We have the system in place, we have a very systematic system in place to ensure that we are passing on the one side. On the other side, as I mentioned also to Maria before, we are making sure that we have the raw material available. Number three, we make sure that we are not upsetting customers.
If you always take those three points as our target here to make sure that we deliver, we have a very strong feel that for the year, this will clearly help. The reorganization of our procurement organization last year to have a global organization is also extremely helpful here because they have an overview not about just one region or certain suppliers, but they have the global overview, and they are well aware and well trained on how to do this on the supplier side as well because it's not just that we are accepting any price a supplier is giving us.
Of course, we are making everything we can to, number one, get the materials and, number two, make sure that we have the lowest negative cost impact as we can. That's a general answer, so I'm very positive for the year. I'm also positive, I have to say, that there will not be a short-term significant hit for us, Cole , because of the daily work the team is doing. Because of the daily work the team is doing, they did not wait after the 28th of February for a few weeks, they went onto it immediately on all fronts, as I said before. I am very confident, number one, with the experience which we have after COVID.
Number two, with the experts and professionals we have in procurement and in sales, that we are able to do a good job in passing on and making sure that we are making our customers continue to win in their markets. That's point number two. Point number two, I think you asked me about North America and how Easter plays in and l et me start by giving you a bit more flavor about Q1. If you think about our reported number for Q1 in North America, I would encourage you to add what I said in my presentation, the approximately EUR 4 million of currency impact into North America. If you do that, you go from EUR 34 million to EUR 38 million.
I mentioned to you without giving a number that we had a significant impact of the weather in North America in January. I mentioned, too, I don't give you a number for that, but I give you a flavor that we would have ended up the quarter ahead of last year's quarter. You can make your assumptions that it was a good quarter, which of course was positively driven by additional volumes from Easter, which we will not see in April. We will see in May and June, we will see 250 years North America coming, and we will see a World Cup coming.
For the quarter for North America, we see, of course, Easter, which is gone, but we see a couple of things at the end of the quarter which should help our retail business, which is the one which is most impacted by Easter seasonality. Overall, North America Q2, I think of course we will have the April Easter impact, but I see a May and June impact, which with the two factors I mentioned, 250th anniversary North America and World Cup, it should help our business there. That's my answer to your second question. The third question is also very relevant. That was all about logistics, transport, other raw materials, impact there.
First thing first, other raw materials, yes, you're right. We don't see that impact yet. We stay tuned if it comes that we are again, like we are doing on the resin adhesive solvent side, ink side now, that we will be on it very early on and in a very clear way to make sure that we get availability, that we satisfy the customers, and that we pass on our costs. Logistics, transport, that's happening, and it's happening in two fronts. One front is it's partially very difficult to get logistics and to get transports because that of the streets still being closed. Even though there's a ceasefire, the streets are still closed, and there's a lot of logistics and transport currently not available.
That's one, and the other one is that those costs, as we see ourselves when we go to a filling station, prices are going up significantly, or book a flight ticket today, prices are going up significantly so w e see that. What we, what we do of course, also, like on the raw material side, we talk to our customers, that we need to have, surcharges, and to pass on those costs as much as possible, as there is a clear increase, very visible, Cole. Hopefully that was answering your three questions.
That was very helpful. On the logistics side, that includes actions on, you know, just the fuel charges even for kind of North America. You know, are you doing kind of surcharges there on?
Absolutely.
On any of that to offset.
Absolutely.
The logistics?
Absolutely, Cole, we do.
I've got one from an investor just asking on potential for M&A, considering, you know, the world is more uncertain. You do have a good balance sheet. You know, how are you thinking about opportunities if they arise and someone's under pressure here in an uncertain world?
Thanks for asking that one. Very relevant question and absolutely, yes. When we talk about our value drivers, I always, and I know that Thomas and Kristian do the same, we make sure that we are very clear that we are looking at organic and inorganic at all levers, and we are very active on the M&A side, it doesn't look like that because we did only one deal last year, or more or less exactly one year ago and i t's because we are so disciplined, and we do not wanna fall into the trap of doing a deal just because we want a deal, but we wanna do it when it fits, when it's financially, value accretive to our shareholders, and when we can actually run it with the management team which we know and which we have in place with a culture which fits Huhtamaki's culture.
Only then we do it. We could have done a number of deals, but we didn't do it. We chose not to do them because of either one or more of the factors I just mentioned wasn't fulfilled. We are very clear on that. We are still out there actively looking at that. To your specific point, we believe that the uncertainty which we currently have might help us to get deals which are going to tick the four boxes I just mentioned. We are working on it. We continue to be disciplined, but it's high on our agenda, and our strong balance sheet will enable us to do it.
Thank you.
The next question comes from Hai Huynh from UBS. Please go ahead.
Hi, just checking if you can hear me now.
Yes. Hi, Hai.
Yeah, sorry I ran into some trouble earlier. My question was on working capital. Q1 was much less negative than last year. Can you unpack what drove that improvement, especially on the payables, and whether this is mainly timing? Does that change anything in the cash flow dynamics seasonally for 2026?
No, look, we are with our three value drivers and the second one. We just talked with Cole about the first one, growth. Let me talk to the second one, capital discipline. We are continuously making good progress on that value driver. For us, cash delivery is super important in all times, but specifically in times like now. We are also here looking at all the various drivers for cash. CapEx is one. That's the easiest one to see. Working capital is another one which is super important for us.
We believe that if you specifically talk payables, we always look at payables and receivables together and we believe that we should have similar days outstanding for either the payable or the receivable side. Of course, you know, we will have to ensure when we talk raw materials, Maria and Cole had questions about the impact of raw material. Of course, there's the one work which is the passing through and making sure customers win. There's the other side of it, which is that there will be a negative impact on our working capital because of the increase.
I think that's obvious and understood by you, Hai, but I just wanted to make sure that I make this point not to confuse you when we have Q2, Q3 calls going forward. If that continues, we will see that impact. That will be a negative impact on the working capital side. Generally, if you take this on the side, generally, we are clearly improving our working capital management. It's high on our agenda as CapEx is and as other points in our capital disciplines are.
Thank you. I have two left, if you don't mind. One on Flexible and one on Fiber. Apologies if this is repetitive, as I have been dropped off the call a couple times. Firstly, on Fiber, how sustainable is this current growth in fiber egg and food packaging? What does the order book look like? And are there signs that pricing may normalize after the recent run?
Look, on Fiber, we feel very good about our position. We have a really good quality, very good contact with our local and regional customers. We were on, if you think about our operating model, again, when I talk value drivers, the third one, I answered Maria really, and Cole on the growth. The first bucket of it, I answered, and Cole specifically also on the second bucket. Also for you on working capital, second bucket, capital discipline. Now if I think about the accountability model, of course, the Fiber segment was the first one on into that bucket, working really on making sure that the local and regional accounts are served very diligently and w e have made significant progress on that side over the last 12, 15 months so k udos to the team on that one.
That is why we are so strong on both the volume and the pricing side on Fiber part. I make sure that in every call, I did it today, let me stress that one, Hai, again. We are investing quite a bit behind Fiber segment. We've done it last year. It was the only segment where we increased CapEx last year significantly. We have again matched our CapEx in the first quarter to last quarter. Again, we are investing Fiber because we need more capacity. We are investing in a number of regions. We are investing in Egypt. We're investing in the U.K. We are investing in Czech.
We are investing in a number of our regions to ensure that we get more capacity because our Fiber business is traveling strong. More capacity would enable us to get to even more exciting growth numbers for our Fiber business. If you think Fiber and maybe a point, I'm sure you know this, Hai, from former discussions, I can't resist telling you. Of course, for us, that's mainly egg, but it's not only the egg business.
We are starting to really focus also on fruit. A lot of our investments and a lot of our activities are going also into fruit packaging, which is going to use the same raw materials, the same machineries but i t's a market where we are currently very small in, and we believe we can grow the food packaging market with our rough molded fiber products nicely as well. That's on the Fiber side. Did you have a question on Flexibles? Maybe I missed that question. If you wouldn't mind repeating it, Hai.
Hai. Yeah, sorry I got dropped off again, but I've managed to catch your answer. Just on Flexible , you mentioned, you know, a few big contract wins a few quarters ago. When does that start to meaningfully add? Is that within this year or that's more of a longer term point of view?
We are pretty confident that it will start happening this year. We have successfully trialed, we have successfully now qualified, so we will start seeing this in 2026 already, Hai.
Amazing. Thank you very much.
Thanks for your questions.
That was all we had time for today. Thank you so much for attending. Again, as normal, should you have any further questions, please feel free to reach out. With that, we wish you a great day. Thank you.